Category: Traders’ Secrets

Traders’ Secrets is something that everyone would like to know, right?
How is it possible that some traders are successful all the time while others fail to make a profit all the time?
That is exactly what Traders’ Secrets will show you.
Traders-Paradise’s team reveal all trading and investing secrets to you, our visitors.

What will you find here?

How to find, buy, trade stocks, currencies, cryptos. You’ll find here what are the best strategies you can use, all with full explanation and examples.
Traders-Paradise gives you, our readers, this unique chance to uncover and fully understand everything and anything about trading and investing. The material presented here is originated from the experience of many executed trades, many mistakes made by traders and investors but written on the way that teaches you how to avoid these mistakes.

Moreover, here you’ll find some rare techniques and strategies that are successful forever, for any market condition. Also, how to trade with a little money and gain consistent returns. By following these posts you’ll e able to trade with greater success. You’ll increase your profits and your wealth, of course.

The main secret of Traders’ Secrets is that there shouldn’t be any secret for traders and investors. Rise up your trade by reading these posts, articles, and analyses!

You’ll enjoy every word written here. Moreover, after all, your trading and investing knowledge will be more extensive and effective.

Traders’ Secrets will arm you with those skills, so you’ll never have a losing trade again.

Forex trading commissions – how to pay less

Forex trading commissions can eat up a big part of your Forex profit.

By Guy Avtalyon

What are Forex trading commissions? We want to share with you some little-known ways to save on commissions. Also, we will show you how to cover back your costs.

Well, in any business that you go into, you’ve got specific costs: rental cost, marketing cost, etc.

In the trading, commissions are the transaction costs. That means, we pay it to broker and that’s how the broker makes money.

How do brokers charge their Forex trading commissions?

There are 3 kinds of brokers, but let’s separate them into 2 main groups:

1 – market maker

These brokers charge a commission on the market bid/ask spread. Whatever the bid/ask spread is, they’ll quote you one or 2 pips higher.

For example: if the market is quoting at 1.2456 they will quote you at 1.2457. This extra pip goes to the broker so they can make money.

2 – ECN brokers

An ECN broker is a forex financial expert that uses electronic communications networks (ECNs) to give clients direct access to other participants in the currency market. They charge a fixed commission. The lowest commission we saw is $3,50 per lot.

That means, for every lot you trade, they will charge you $3,50 to buy and $3.50 to sell.

So, when you open and close a position, known as a round of the trip, the total commission you will pay is $7.
Let’s see what the bid/ask spread looks like for two sorts of brokers.

Assume you want to go long on one lot of EUR/USD. And you buy at 1.2456 and exit at 1.2476 making you 20 pips in profit:
20 pips x1 lot = $200

But there are commissions.

Let’s see how the different kind of brokers will charge you Forex trading commissions:

Market maker: They quote you 1.2457, which is 1 pip more, that will cost you $10 per lot. When you sell, they quote you 1.2475, which is 1 pip less, and that will cost you $10 per lot.

So we can see that the total cost of your round trip is $20 per lot. Out of your $200 profit, $20 goes to the transaction costs. That is 10% of your profit.

Your cost can be higher if they were marked up by more than one pip.

ECN broker: When you buy at 1.2456. They charge you a fixed commission of say, $3.50. When you sell, you sell at 1.2476 and again, you will pay $3.50. The total cost per lot is $7 off your round trip. It is also out of your $200 profit.

And, can you see the difference?

It’s in all the math.

What else you need to know about Forex trading commissions?

First of all, how much commission you pay when you place a trade depends on the number of lots you trade or your position size.

Meaning, the bigger your position size, the bigger the number of lots you trade, and the higher the commission you pay for your trade.

So, let’s see, what defines the number of lots you trade or your position size?

Of course, it depends on how close your stop-loss is.

Do you know the formula?

Your stop-loss distance is the only point you can really manage on a trade-by-trade basis. The smaller your stop-loss distance, the bigger the number of lots you trade, and the more commission you pay. You can check this plays out using a Forex position sizing calculator, it’s easy to find online.

So, you’ll see, your account size is $5,000 and your risk is 3% per trade, and your stop-loss is 8 pips away. With the help of this calculator you know you’ll be trading 1.875 lots. and you know that you have to pay the commission of $7 per round trip.

The math shows:

$7×1.875 lots + $13,13 commission.

But what will happen if your stop-loss is 20 pips away?

The calculator shows that the number of lots you’ll trade is 0.75. Let’s calculate the commission:
$7×0.75 lots = $5.25 commission.

Should you go for a wide stop-loss?

That can be okay if you are a position or swing trader.

But if you have experience of a few weeks or a few months your stop-loss is further, for example, 30, 100, or 200 pips away.
When you got a wide stop-loss, the number of lots you trade will be less. On the other hand, the transaction cost takes up a smaller percentage of your profit.

The one thing is certain: As a trader, you have to pay the spread and your broker always earns it. To get the best contract possible, you have to choose a reputable broker. The one who has substantial relationships with the large foreign-exchange banks.

You will find in the end, the cheapest way to trade is with a very reputable market maker who can provide the liquidity you need to trade well.

27th March 2019
The pattern day trader rule

3 min read

The pattern day trader rule is among the most misunderstood stock market terms. The rule says you must support a brokerage account balance with at least $25,000.

FINRA rules define a “pattern day trader” as any customer who executes four or more “day trades” within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades in the margin account for that same five business day period.

This rule represents a minimum requirement, and some broker-dealers use a slightly broader definition in determining whether a customer qualifies as a “pattern day trader.” Customers should contact their brokerage firms to determine whether their trading activities will cause them to be designated as pattern day traders.

Just leave this confusing definition. Forget it!

Point is that you need a minimum $25,000 to start the day trading!

Are they crazy? That’s a tonne of money, don’t you think? Who can start the stock market run with that much money? So, what a day trader has to do?

Yes, we have to leave hypotheses. There’s so-called pattern day trader rule. And it is considerably more complicated than most people think.

You probably hear about the term “day trader”, but you don’t hear “pattern day trader.”

Honestly, they’re actually the same.

However, if you want to get into day trading you have to know the rules.

The Financial Industry Regulatory Authority (FINRA) rules, provides a clear definition of who a “pattern day trader” is.

Once again, you’ll need $25K to day trade.

Well, if you don’t know the complexities of these rules, you could possibly find yourself broken one day.

Hence, here’s what you have to know to be a pattern day trader.

Day trading isn’t for everyone.

It depends on your risk tolerance. Or how much time you need to allot to learn about day trading. However, there are a few key postulates. You have to keep them on mind before you become a successful day trader.

Do you want to be a pattern day trader?

Essentially, a day trade is when you buy and sell or sell short then cover the same security during the same trading day.

If you do this more than 4 times in five business days, and if the number of day trades is more than 6% of your entire trading executions in that five business days, you’re a pattern day trader.

Nevertheless, if you trade, for example, three-day in five business days, you’re not a pattern day trader. So, you don’t need $25,000.

But if you want to trade every day, then you have to follow some rules.

Even if you’re not a pattern day trader, you can still make money.

There are so many traders able to add money to their accounts using some individual strategies. And they would never call themselves a pattern day trader.

From a pattern day trader, is demanded to maintain minimum equity of $25K on any day when executing day trades.

This minimum money must be in your account before you perform any day trades.

So what happens if you get a few losses and your capital falls below $25,000?

Breakdown the pattern day trader rule

The rule is simple. You are not ready to “day trade” until you recharge your account with the $25,000 minimum capital.

You can do this by a combination of cash and available securities, of course. The cash isn’t the only way.

Pattern day traders who exceed the day-trading buying limits will get a day-trading margin call.

After that, they have five business days to collect funds to meet the margin call.

If the margin call is not served, the account will be restricted to only two times the maintenance margin excess.

Moreover, if it’s not filled by the fifth business day, such pattern day traders will be restricted to trading only on cash. That will be the available basis for 90 days or until they meet the margin call.

Listen, it is just nonsense.

Who did tell you are not successful in the market just because you have a small account?

You just might not meet the margin requirements to be recognized a day trader.

For example, you can build your wealth on low-dollar investments.

Examples of the pattern day trader rule

Say, if you buy 200 shares of Apple. And, you sell 200 shares the same trading day.

Voila! You are a day trader!

So, according to FINRA, if you do this extra 3 times inside five business days, you are a pattern day trader.

But, for example, you bought 200 shares of Apple and did not sell until the next trading day.

This is not a day trade.

So, what if you have a small account or simply you don’t want to open an account with over $25,000?

Well, you could look to other effective trading styles.

The bottom line

The pattern day trader rule does not limit you from making more than three trades per week. You can hold stock or even two or three stocks overnight, every single night, but you are limited on your intraday trading to just three intraday trades per week.

Those who are looking to day trade need to understand how the pattern day trader rules.

You should know is a pattern day trader is for you. Anyway, there are some other ways to become a profitable trader.

And, more important, without an enormous trading account.

Don’t waste your money!
risk disclosure

26th March 2019
The Bear Market Rally How to Recognize?

What is a Bear market rally, how to recognize it, what to do?

By Guy Avtalyon

Some analysts claim that the bear market rally will come later this year or next. If it will, it is time to get out of stocks. The returns tend to be the strongest 12 months or so before the start of a collapse.

Historically, profit has been smaller for investors who got out two or three years prior to a recession.

But, past performance is no guarantee of future results.

So, are we in a bear market rally or a new bull market?

We’ve been in a bear market since the market’s peak in early October.

The current stock bull market becomes 10 years old this month.

It was a useful time to participate. Especially if you’ve held to an investment strategy that prefers dividend-paying stocks.
The bull market will end with a whimper. There will not be a bang!

We’re definitely in a bear market. It started on September 21 of last year, actually. On that day the S&P 500 last hit a record high.

A standard bull market pattern looks like an elevator. It is described as a gradually rising market with an absence of volatility.

For example, the bull market of November 2016 to January 2018 was a typical bull market.

There wasn’t one 3% pullback during the entire period. That was a new record on the market.

There is always the risk that this time is different due to changes in market structure.

We are at the beginning of a “new bull market” at least in a headline-oriented technical sense.

Will it last, or are we fated for a double top?

This month is likely going to be a crucial point in helping to find the answer.

Three big news events were set to reveal what markets the world over have been expecting for years already.

The first was the March 1 trade deal deadline that President Donald Trump had set with China.

The second is the March 29 Brexit deadline. The third materialized in February with the Federal Open Market Committee releasing its Jan. 30 meeting minutes. In those minutes, “almost all” FOMC members agreed that an announcement to end balance sheet normalization should be made “before too long.”

What is the bear market rally?

The stock market is volatile and in continuous changes. Investing in stocks is relatively risky. It can be difficult for even the most experienced analysts to predict where the market is headed at any given time.

Even throughout times where the market seems to be acting well, stock prices can apparently begin to fall.
On the other hand, there is a possibility for stock prices to rise in a poor market.

That is known as a bear market rally.

A bear market rally is a period during which stock prices increase despite the fact that the market on a whole has been on a downward swing. This is the definition.

So, once again!

The bear markets are characterized by falling stock prices. When markets upswing that can be a pleasant turn for investors. Also, it has some disadvantages.

Bear market vs bull market

The terms “bear market” and “bull market” are adopted to define the quality of the stock market over a given period of time. They are originated from the behavior of how these animals strike their victim.

When they’re on the offensive, bulls tend to attack with their horns thrust upward, but bears tend to swipe their paws down.
When is the bull market, we are talking about high investor confidence and widespread optimism. Through a bull market, stock prices frequently go up within other positive economic factors.

A bear market, as contrast, is a period of low investor trust and depression. Stock prices normally fall during bear markets. They usually project overall economic downfalls.

Dangers of bear market rallies

Through a bear market rally, stock prices regularly rise between 10% and 20%. Bear market rallies can last from a few days to several months. Anyway, they are short-lived.

The confusing thing, a bear market rally with an approaching bull market, are both periods where stock prices rise.
Where is the difference?

The difference is that bear market rallies are temporary, and they’re almost always come before periods of more drops. Just before the stock market crash of 1929, for example, there was a brief bear market rally. Unfortunately, that really was replaced by a deeper crash that in the end resulted in the Great Depression.

At first sight, a bear market rally sway appears like a good thing. The investors have a break from the descending direction of the market.

True is, bear market rallies can be terrible for investors who start buying stocks because they hope that things are turning around on a long-term cornerstone.

And, what happens then?

They lose money when those rallies end and the market proceeds its continuing drop.

The reality is that it is hard to separate the bear market rallies and new bull markets.

It makes buying stocks a gamble.

Especially if you are for short-term investors looking to get in and get out quickly.

Long-term investors are not burned when bear market rallies give way to plunging stock prices.

They can wait for the crisis to go away.

Don’t waste your money!

25th March 2019
Choosing the Right Forex Broker

How to choose the right Forex broker? What are the best of the best in the market?

By Traders-Paradise Team

Choosing the right Forex broker is not an easy job. When we are evaluating any Forex trading broker, we examine their reputation in essence. Sometimes we can find a reputable broker but sometimes we face scammers.

You wouldn’t believe how many scammers are out there! Even among customer’s feedbacks from forums discussions. You can find the opinions of other customers.

But can you believe them?

We recently heard about services that provide so-called ”black-marketing” for customers.

Choosing the right Forex broker can be disappointing.

Here, in this Traders Paradise site, you’ll be provided with all the information you need. And, moreover, we are giving our honest opinions based on our research

So, why would you need us for that? Choosing the right Forex broker is a remarkable decision. We tested the most popular brokers and what we found is in the article below. We did it for you because choosing the right Forex broker is a hard-working job these days.

Let’s begin.

ZuluTrade

Zulutrade provides multiple automation and the copy trading options across forex, indices, stocks, cryptocurrency, and commodities markets It is a market leader in automated trading. From scripts to auto execution, APIs, or copy trading. The exchange is a global social trading and copy trading platform for the forex market and cryptocurrency market. It is extremely popular. They have over 1 million users and $1.1 trillion in daily volume executed between all its active member accounts.

WOW, impressive statistics!

That’s why ZuluTrade become an epicenter of the social impetus for market members. You can use its platform to copy the best ZuluTrade traders. It is an easy way, you don’t have to pay attention to charts or analysis. The charts are so boring, yeah? Hmmm!

OK, but it is their advantage, not yours.

Moreover, they have more than 100,000 different signal providers. What do you say? Great? Yes, it is great.

ZuluTrade is a next-generation signal service. When you subscribe to some of these traders, the signals that they provide will then be automatically applied in your own trading account. In real-time. This is a completely free service and it really is a win-win. Signal providers earn plentiful commissions if they are permanently profitable.

And you, as signal subscribers, you want to earn decent profits. Right? It will cost you nothing. Zero! We hope this helps you in choosing the right Forex broker. Unlike many other forex signal services that charge a monthly fee, ZuluTrade is a perfectly free trading service.
Of course, they have earned. ZuluTrade has a relationship with many of the forex brokers and takes a small commission from the spread of each trade. Part of them goes to the signal providers if they are profitable. But only IF.

One of the main benefits of joining ZuluTrade is that you can make money from forex trading without having to trade the markets yourself. Therefore it is ideal if you are lucky and have a full-time job, so can be lucky twice.

Lucky you, you don’t need any previous knowledge of forex trading. Because you won’t be the one making the trading decisions. Isn’t it good? But think once again to educate yourself about the various different aspects of currency trading. This will help you to estimate all of the signal providers and understand how they trade the markets.

You don’t want to be just a follower, you want to KNOW what are you doing. So, learn!

Tradeo

Tradeo operates as an independent broker, focusing more on Social Trading features than on Copy Trading ones. Its Social Webtrader is cutting edge, and among the most “social” platforms in the field.

The Signals section is certainly interesting, it’s a sort of Feed that collects the trades made by other community traders. It is offering users the chance to see click on any operation to see its details, and to copy it, still with just one click. Tradeo really stands out is in the trader compensation system.

Basically, Tradeo has no compensation system for Signal Providers, meaning no one is rewarded when someone copies their trades. With the platform that fully integrates both social and trade execution within the same visual interface.

Tradeo offers its clients access to the MetaTrader 4 (MT4).

This is the trading platform which is one of the world’s most popular Forex trading platforms. MT4 allows traders to access advanced technical analysis and to use automated trading systems. The broker’s own platform has tools that are best used for social trading. It is also stable. And we must say, we think they have tighter spreads compared with other brokers since they follow an STP system. With this, we could say that you can profit well. However, their withdrawal process becomes a downside.

You could receive it after a week. That’s a pretty long wait and we hope they work on that. Also, it has the Live stream of trading signals that allows you to view what other traders are buying and selling in real-time and also Live market notification that keeps up-to-date with market movements and improves your trading decisions.

It highlights their reliability is the quality of their customer support service. To provide their clients with unfettered access to the support services, Tradeo has made their support services available on a 24 hours basis through email, live chat, or the telephone. This means that regardless of the time of day, a trader can always request assistance from the support staff at this broker.
Remember, choosing the right Forex broker is not an easygoing job.

TD Ameritrade

Despite higher trading fees, TD Ameritrade got top marks for its $0 minimum, free tools, and research and multiple trading platforms. The company offers an electronic trading platform for the purchase and sale of financial securities. Such as stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed-income investments.

It also provides margin lending, and cash management services. Ameritrade develops and affords innovative brokerage products and services. They are tailored to meet the varying investing and portfolio management needs of individual investors and institutional distribution partners.

Through its brokerage subsidiaries, it provides a dynamic balance of investment products and services that fit the changing needs of investors. The company’s full spectrum of services for the individual investor includes a leading active trader program.
Such as long-term investor solutions, including a national branch system. As well as relationships with one of the largest

networks of independent registered investment advisors.

TD Ameritrade is a well-known and popular stock trading platform. It provides powerful software for traders of all levels, includes some of the best trading tools, and has recently lowered its pricing. It is a good option for experts and beginners.

Its think-or-swim platform is expansive but also well organized. Thinkorswim is a desktop software product by TD Ameritrade that offers tools and educational services for online investing. It is geared for self-directed stock, options and futures traders. It is easy for use, you can find securities and add them to a watchlist or buy them very quickly.

TD Ameritrade’s platform comes with a variety of premade watch-lists. You can make trades directly from these watches-lists. Also, it has a powerful search function that allows you to search for stocks by industry. Also, you can create alerts for multiple scenarios and price ranges, a useful tool that can help you quickly move on price movements.

Thinkorswim includes a customizable dock, which is always visible and provides the tools and information to spot market opportunities and implement stock trading strategies.

Our favorite is the Portfolio Planner tool. It is helpful for creating a suitably balanced portfolio of stocks, ETFs, mutual funds, and bonds. Investors have two opportunities. They can either build a customized model or pick a prebuilt one. Moreover, it is also a helpful monitoring tool to control allocation direction. Hence, it provides you to properly rebalance over time.

The command center screen brings all your important information together in one place. If you want something marvelous when choosing the right Forex broker, try them. Traders can use with no minimum or specific trade criteria for access.

Wallstreet-forex robot

If you want something different when choosing the right Forex broker and full algo experience, try WallStreet Forex Robot 2.0 Evolution. Its performance is very good for your real money accounts. Everyone who is interested in WallStreet Forex Robot 2.0 Evolution can visit their official website and check the robot’s latest performance on real money accounts.

One more thing WallStreet 2.0 Evolution comes with +2 bonus robots WallStreet ASIA and WallStreet Recovery PRO. Their performances are good. If you follow all their instructions your success is guaranteed.
It is worth checking their website.

You can see the live results of the robots on our real money accounts. If you tried the older version of the Wall Street Forex Robot, then you’ll notice a major difference. Now, the site has a very pro expression. You will find an intuitive user interface. Navigating the site is so simple. The entire system is smooth-running.

Traders Paradise can assure you that you’ll enjoy the latest version of the program. This high-grade program has a lot to offer advanced and new traders. The program involves a Broker Spy Module. This module is created to protect the trader from scams and unethical brokers. The main advantage is the program works by automatically scanning for new updates and settings.

Hey, you won’t have to worry about restarting the robot. This is a great feature. The software is designed to ensure brokers cannot steal your money. This new program doesn’t allow the scam broker to fool the software using methods such as delayed order executions and spreads. The software will monitor for broker movements and investments all time and can easily recognize a scammer, 24/7.

We hope this helps you in choosing the right Forex broker.

81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether
you can afford to take the high risk of losing your money.

24th March 2019
Bear Market Definition And How to Profit From It

When the investors don’t have hope in stocks and start to sell, the stock price will drop more and more

By Guy Avtalyon

The bear market is a period of consistently falling stock prices. Usually, a bear market is defined by a 20% or bigger drop in stock prices lengthening over a time frame of two months or longer.

The variation in prices is measured using the movements of a major stock index. For example, the Dow Jones Industrial Average or Standard & Poor 500 Index.

A bear market is distinct from a correction. Correction occurs when stock prices drop by 10 percent over a shorter time frame, usually less than two months. The average bear market lasts 1.4 years. The average cumulative loss is 41% during that period.

A bear market is when the prices of stocks or bonds are falling. In fact, a bear market could describe any market if the prices are decreasing.

The term is typically used in relating to the stock market, but it can also describe specific sectors such as real estate, bond or foreign exchange.

A bull market, on the other hand, is the opposite. In a bull market, the price trend is upwards.
Bear markets are cruel when they ran. The experience of any stock investor who was invested in stocks during 1973–1975, 2000–2002, or 2008, shows that.

Luckily, bear markets tend to be much shorter than bull markets. Also, if you’re well-diversified, you can get through without much loss.

For clever investors, bear markets can provide opportunities to boost the portfolio. Also, it is a good time to lay the groundwork for more long-term wealth-building. We will talk about this later.

Examples of a Bear market

A famous example of a bearish market is the recession that followed the great Wall Street stock market crash of 1929.
The investors were massively fighting to get out of the market. They tried to avoid extreme losses and kept on selling their stocks. Hence, they caused a further drop in the market.

The market collapsed on October 29, 1929. Then came depression in the economy, known as the Great Depression.

In fact, the Dow Jones Industrial Average declined by 89% through 1932. Then came the housing bubble of 2006. Real estate prices skyrocketed by more than 100% due to speculative borrowing. The consumers could get a mortgage to buy a new house. Moreover, more and more people were into the real estate investment spiral. Their plan was to make a profit from purchasing rental properties and selling them later.

These two circumstances boosted housing demand, but real estate prices too.

What happens in a Bear market

Bear markets mean low investor’s trust and huge pessimism.

The investors continue to lose hope in stocks. They begin to sell securities in order to protect their investments from potential losses. This movement can trigger further declines in stock prices.

Then you have speculators on the scene.

They come back into the market to capitalize on lower prices, which is good. Because, if stocks begin to gain impulse through reinvestment, a bear market can turn into a bull market.

What triggers a Bear market

Well, it can be triggered by plenty of factors. For example, the main economic transformations, such as fluctuations in oil prices, can influence the evolution of a bear market. Volatility in foreign markets or political disagreements on a global level may also cause the movements in the market.

For investors, the primary attention in a bear market is how to minimize losses. To achieve this, many investors may try to turn the market when buying and selling.

But that’s a wrong dance at best.

The end of the bear market is generally when stock prices move upward again by 20% or more.

How to profit in the Bear market

In a bear market, the stocks of both great and poor companies go down. But poor stocks tend to stay down, while great stocks recover and grow again.

The strategy for investors is easy. If the stock of a valuable company goes down, that is buying opportunity.

Good material is on sale!

Thanks to the bear market you can reveal a great stock at a bargain price.

Also, if during the bear market, stock price drops, but the company is powerful, still has a profit and still pays the dividend, you might be sure such a company is a good buying opportunity.

If you see a stock whose company has a bond rating of AAA, that may be a good buy in the time of the bear market!
Bear markets may be hard for good stocks. But to be honest, they’re brutal to bad stocks.

When a bad stock goes down, it often goes into a more drastic decline as more and more investors look into it. Many investors would short the stock and profit when it continues falling.

Going short is a risky way to bet. Why?

If you’re wrong and the stock goes up, you may have unlimited losses. A better way is to consider buying long-dated put options.

That may give you the profit if you’re right and the stock falls. But, at the same time, it limits your losses if you’re wrong.

Is margin trading useful?

Use margin wisely, and you will have a powerful tool in the bear market.

Using margin to gain dividend-paying stocks after they’ve corrected is an excellent tactic.

But, keep in mind that when you employ margin, you do add an element of speculation to the mix.

For example, if you buy 100 shares of a dividend-paying stock with 100% of your own money means you made a great investment. But if you buy the same stock with margin the risk is added.

You wouldn’t like to use margin before the stock corrected or declined. Remember, the brokerage firm wants you to have enough “stock collateral”.

Say, you use margin when the stock is high and it later falls!

Well, it can be dangerous, indeed.

But if you use margin to buy the stock after a notable fall is much less risky.

The best tips

You can profit in the bear market also if you buy a call option, for example.

But it is about speculating, not investing. The call option is a derivative, and it has a finite shelf life. If you’re not careful it can expire worthlessly.

The good side of a call option, it is cheap to buy and it is a very cheap vehicle in a bear market. This means if the stock price dropped but the company is in good health, betting on a rebound for the company’s stock can be profitable.

Also, you can write a covered call option.

That means you accept an obligation to sell your stock to the buyer of the call that you wrote at a specified price if the stock rises and meets or exceeds the strike price. As a return, you receive income.

Where is the benefit?

If the stock doesn’t increase to the option’s specified price during the life of the option, you can keep both your stock and the income from writing the call option.

Writing covered call options is an almost safe way to boost the yield on your stock position by up to 5%, or even more.

The catch here is that you may sacrifice the opportunity to make gains above that specified price.

But if you did right, a covered call option can be a practically risk-free strategy.

Bear market cost investors money because security prices generally fall. It doesn’t always give advance notice of its arrival. But bear markets don’t last forever.

You must know when to buy and when to sell to maximize your profits. Many investors try to “time the market,” or estimate when a bear market has begun and when it is possible to end up.

The technical analysis is specially engaged in this work. You have to be patient. Just keep watching the company’s vital statistics. If the company looks good, then keep collecting your dividend.

Don’t waste your money!

22nd March 2019
Simple Forex strategy but Profitable

(Updated Oct. 21)

2 min read

A simple Forex strategy but profitable is the key to constant long-term profitability.

Why is that?

Because it allows traders to benefit on their advantage without emotions day in and day out. We want to present you a simple but profitable forex trading strategy.

Traders Paradise found it is a swing trading system, and we will trade on a daily chart.

So it is vital to follow along carefully and make sure that you understand all the steps.

Why swing is a simple and profitable trading strategy?

The more simple your trading strategy is, meaning less moving parts, the better it performs.

Do you remember from our previous posts: KISS rule!

Simple means a robust trading system which can manage through many market conditions.

Yes, you may find that many traders use so many different trading indicators.

And they are still looking to be consistent?

You have to find what your indicators do. That’s your first task.

Now, get rid of the indicators that really are not benefiting you.

This simple profitable forex strategy has a few moving parts.

If you still don’t know them, they are simple to learn.

So, what you have to learn?

How to use Fibonacci? Find here>>>.

Do you know how to enter a trade? Find here>>>

And you will need to know how to use Stochastics indicator.

We suppose that you already know what is it.

The Stochastic Oscillator is a technical indicator that helps traders determine where a trend might be ending.

The oscillator works on the following hypothesis:

During an uptrend, prices will remain equal to or above the previous period closing price.

But, during a downtrend, prices will likely remain equal to or below the previous closing price.

The Stochastic help you determine if it’s still good for you to enter a trade after a moving average crossover. Also, it helps you to avoid oversold and overbought zones.

More about Swing traders

Swing traders hold their positions for a few days, but rarely more than a week.

Identifying and driving on trends early is the central objective of this trading style. The profit goal tends to be set higher than that of day trading. Hence, the swing trader is expecting that by holding out for a few days, there is a better chance of capturing a larger price movement.

Unlike the day trader, the swing trader has to deal with overnight risk.

Swing trading requires less monitoring of the market. This type of trading is generally favored by people who hold their day jobs.

Honestly, if swing trader wants to be successful, such must still keep up-to-date with the latest fundamental and technical changes in the market. Even if they are not monitoring the market all the time.

Back to our simple and profitable forex trading strategy

This is the daily chart of the USDJPY Forex pair.

What can you see?

Point 1 is the beginning of the Fib pull

Mark 2 is where the pull of the Fib tool was ended

With 3 we marked the zone of the 61.8% retracement level and below that, in the red rectangular area, you can see overbought Stochastic.

4 is point shows the price put in an inside bar/spinning top candlestick. The trade is shorting the lows.

Mark 5 is a profit target

You have to manage your trade while it is in progress. Hence, you may be stopped out depending on how tight your stop placement is. Many Forex traders make a common mistake. They use too tight a stop because they want a larger position size. Don’t do that!

The bottom line

Simple, profitable Forex trading system depends on your skills an affinity.

This is a simple trading system but it’s not easy yet. Every trade will not be a winner. The key is whether you can leap back after a loss. Anyway, you should test it out to see if it suits you.

If you have tested your forex system thoroughly through backtesting and by trading it on a DEMO account for at least 2 months you should feel confident enough to know that as long as you follow your rules, you will end up profitable in the long run.

Trust your system and trust yourself!

Don’t waste your money!

risk disclosure

21st March 2019
Support and resistance – Understanding Critical Rules

You can recognize support and resistance as horizontal trendlines which cause a stock’s direction to reverse.

By Guy Avtalyon

Support and resistance are two of the essential technical patterns. Also, they are very effective.

When the price is falling, support signifies the moment when buying overwhelms selling and prices reverse. Opposite, when stocks are moving upward, resistance is the point where selling is much bigger than buying, and the price rises stop.

In other words, support and resistance levels are important points in time where the forces of supply and demand meet.

The support and resistance levels are essential when technical analysts have to discover market sentiment and supply and demand.

Let’s take a look basic first.

Take a look at any trading chart. You’ll notice a zigzag form that is making its way up. So you can normally conclude it is a bull market. Every time when the market moves up and then pulls back, the highest point reached before it pulled back is now resistance. Remember this!

As the market remains up again, the lowest point reached before it started back is one that traders support now. So you can see, resistance and support are constantly created as the market changes over time.

When the support or resistance levels are broken, the supply and demand relationships that form these levels will change. If that happens, new levels of support and resistance will probably be established.

Support

Support is the level at which demand is powerful enough to keep the stock from falling any further. In the image above you can see that each time the price reaches the support level, it has difficulty penetrating that level. The rationale is that as the price drops and approaches support, buyers (demand) become more inclined to buy and sellers (supply) become less willing to sell.

Support is the price level at which demand is considered to be powerful enough to stop the price from decreasing further. As the price declines towards support and gets cheaper, buyers become more willing to buy. Hence, the sellers become less willing to sell. By the time the price reaches the support level, it is believed that demand will overcome supply and prevent the price from falling below support.

Resistance

Resistance is the level at which supply is powerful enough to prevent the stock from going higher. Each time the price reaches the resistance level, it has hard to move higher. The rationale is that as the price rises and approaches resistance, sellers (supply) become more inclined to sell and buyers (demand) become less willing to buy.

Resistance is the price level at which selling is considered to be strong enough to stop the price to rise further. As the price advances towards resistance, sellers become more willing to sell, but buyers become less willing to buy. When the price hits the resistance level, it is signal that supply will overcome demand and stop the price to rise above resistance.

Precisely recognizing these trend changes allows you to establish initial price targets and to develop your own sell discipline. Understanding the details of support and resistance levels will improve your chances of success.

Support and resistance understand the critical rules

Trends challenges

Support and resistance usually work as crucial trend changes. When a current trendline reaches resistance, you should be ready for a vital shift.

If support displays the flags of the violation, that same level will become a future resistance. As the chart illustrates, the same horizontal trendline continues after support is violated, but with differing effect.

Retests reinforce

Also, when retests reinforce, you have to follow one rule. The more often you test a trendline, the more valid it becomes. For example, if the chart shows solid resistance at some price and, let’s say during the three or four months you notice separate challenges of this level, you should expect future rallies to halt at this price.

Volume reinforces

If a resistance or support level is in association with the increasing volume, the trend becomes more valid. Consider the trading history in the chart.
Do you see the dates?
Every time when the price level is tested, the volume increases. When pattern adds weight to some level it indicates that overcoming that price point will take significant time.

Timepoints

The new set level is more useful. A difficulty with this bear market is that many traders recognize quick losses from the past while they were looking for support levels. Unfortunately, following a distant history, isn’t helpful.

This is a real-life example, by examining a three-year graph of Google (GOOG), we see solid support at $520. The support level hadn’t be tested for more than a year, and what happened? Stocks dropped in the fall of 2008.
This made support less important.
When GOOG quickly traded through $520 and continued dropping, traders were surprised and had losses.

The importance of support and resistance

The technical analysis serves to determine the future price of a security or market. Some investors will use both, fundamental analysis and technical analysis. Hence, they’ll use fundamental analysis to decide what stock to buy and technical analysis to decide when to buy.

Don’t forget that technical analysis is not an exact science and it is subject to interpretation. As with any discipline, it takes work and dedication to become adept at it.

Support and resistance are primary and essential technical analysis tools. On every time frame, intra-day, daily, weekly, and monthly, support and resistance levels are focused on by traders. Knowledge of these levels could hold a trader on the right side of the market.

18th March 2019
Long and Short Trade

3 min read

Long and Short refer to whether a trade was initiated by buying first or selling first.

To be more specific.

A long trade is opened by buying with the expectation to sell at a higher price in the future and earn a profit.

But, a short trade is opened by selling, before buying, with the intent to buy back the stock at a lower price and gain a profit.

In the trading of assets, an investor can take two types of positions: long and short.

And such investor can either buy an asset (going long) or sell it (going short).

Long and short positions are further complicated by the two types of options, the call and put. So, the investor may enter into a long put, a long call, a short put, or a short call.

Furthermore, the investor can mix long and short positions into complex trading and hedging strategies.

The simplest way to classify “long” and “short” trades is to state that in any trade, you are long of that from which you will profit if it rises in relative value. Hence, you are short of that from which you will profit if it falls in relative value.

Here is the example, assume that you buy a stock of XYZ company with Euro. So, you are “long” stock of XYZ and “short” of Euro. This is because for you to profit, the value of the XYZ company stock must rise against the Euro, or alternatively, the value of the Euro must fall against the stock of XYZ company.

You should know that in a trade where you are short of a currency against some tangible asset, you would usually refer to that only as a “long” trade.

So, not saying that you were “short” of the cash denomination.

What is the Short trade

If you believe that a market is going to go down, you can make money by short trading or short selling that market.

Short selling (also known as going short or shorting) means that you’re selling the market first and then striving to buy it later at a lower price.

How can you sell a stock before you buy it?

It’s truly not as hard as it looks.

To sell a stock that you don’t own, for instance, you need to borrow it. Your broker may let you borrow a stock owned by another trader or, less commonly, owned by the broker himself.

When you’re able to exit your short position, you cover the position by buying back the stock you had shorted.

In other words, selling before you buy really means you’re borrowing the stock before you short sell it.

That’s all the wisdom.

Hence, going short can be very distinct from going long.

One thing is very important. Stocks and commodities, but particularly stocks, may have a “long bias”.

Why this is so important?

Because this nature means that their value is more likely to rise over time than fall.

Falls in stock markets, or “bear markets”, tend to be faster and more violent than rising markets, also called “bull markets”.

“Shorting” is frustrating to most new traders because in the physical world we have to buy something and later sell it.

In the financial markets, we can buy and then sell or sell then buy.

Why short trading is so exciting

Selling first and then buying later has many advantages.

The fear is a stronger emotion than greed. Hence, markets tend to go down faster than they go up.

short trading is so exciting

When traders feel fear, they want to exit their long positions immediately. The truth is that markets can go into a free fall. Therefore it’s typically possible to make money faster by short selling than by buying.
If you short trade, you basically increase your ability to make money in different market conditions, even uncertain. When you are going short, you give yourself more chances to make money.

Moreover, shorting options can provide a hedge against your long positions.

About options READ HERE>>>

Options are less expensive than buying the stock itself and, therefore, can act as a type of insurance policy against a stock position.

Taking a short position on a stock with an option would actually involve buying a put option. That can seem a bit confusing. You have short exposure to the stock as the value of the put option rises as the stock price goes lower.

Point is, and also the benefit, that you pay a small premium, which can be viewed like a deposit that allows you to sell the stock at a higher price if the stock moves down.

Short selling also has several disadvantages

First of all, going short is more expensive than going long. When you short a stock, you’re borrowing the stock and have to pay a fee for doing so.

In theory, short selling has an endless risk.

If the market goes against you (meaning going up), there’s no limit how high the price can go.

Not all stocks are available for going short, and some of those that are accessible aren’t always possible. This reduces the space of stocks suitable for you to trade.

Further, short trade must be done in a margin account. Are you comfortable trading with borrowed money? It’s up to you to decide.

Remember, when you short a stock, you don’t own it. You’re borrowing it from your broker who still owns it.

So, the broker will want the dividend if you’re holding the short position when the company issues dividends.

What is a long trade

When the investors are in a long trade, they bought an asset with the hope the price will go up.

In a long (or buy) position, the investor is hoping for the price to rise. An investor in a long position will profit from a rise in price.

The typical stock purchase is a long stock asset purchase.

A long call position is one where an investor purchases a call option. Thus, a long call also benefits from a rise in the underlying assets price.

A long put position involves the purchase of a put option.

The logic behind the “long” aspect of the put follows the same logic of the long call. A put option rises in value when the underlying asset drops in value. A long put rises in value with a drop in the underlying asset.

The traders often will use the terms “buy” or “long”. Hence, the trading software may have an entry button marked “buy,” while other trade entry buttons marked “long.” The term often is used to describe an open position, which indicates the trader currently owns shares of some company.

Traders usually say they are “going long” or “go long” to show their interest in buying a specific asset.

When they go long, their profit potential is unlimited. The price of the asset can rise endlessly. For example, if you buy 100 shares of stock at $2, that stock could go to $4, $8, $50, $100, etc.

The traders use to trade for smaller moves.

The risk is limited to the stock going to zero. In the example above, the largest loss possible is if the share price goes to $0, resulting in a $2 loss per share.

Trading the long means that you have used a buy order as your opening trade or ‘gone long’. This means that you are anticipating a rise in price and will use a sell order to close your position.

Long and Short Forex Trades

In Forex, things are different, because whether you are making “long” or “short” trades, you are always long of one currency and short of another. If you buy or go long, EUR/USD for example, you are buying EUR with USD. You are long EUR and short USD. If you sell or go short, EUR/USD, then you are long USD and short EUR. It is really all the same.

The only significant factor regarding the long and short trades question in Forex is any interest you might need to pay to your Forex broker if you hold a position overnight, or alternatively receive from your broker. This is calculated by reference to the interest rates at which banks lend particular currencies to each other, at least in theory. Unfortunately, Forex brokers sometimes use this as a subtle way to make some extra money from their clients.

Long and Short Trade

For example, let’s say you go long EUR/USD. You have, at least theoretically, bought EUR with USD. If the interbank interest rate for USD is higher than it is for EUR, your broker might be paying you some money each time you hold the position over the New York rollover time (i.e. daily). This is because you are getting interested in your USD greater than the interest they are getting on the EUR, and in theory, positions are “squared” at every New York rollover. On the other hand, if the interest rate on the currency you are long of is less than the rate for the currency you are short of, you will be charged some amount representing the difference every day that the position is kept open.

All about unknown terms you can read HERE

Don’t waste your money!

risk disclosure

15th March 2019
Types of orders execution – How to Buy and Sell
There are different types of orders execution and each of them has a strictly defined function.

By Guy Avtalyon

Types of orders are market orders, limit orders, and stop-loss orders.

So, you have to understand what happens when you click the “enter” button on your online trading account. Your order isn’t always filled immediately, you have to know that.

The variety of potential ways in which an order can be filled can be surprising.

How and where your order is executed have an influence on the cost of your transaction and the price you pay for the stock.

Types of execution orders
- Instant Execution
These execution types of orders type mean the broker guarantees to carry out the order at the price set by the trader or not to execute the order at all.

The trader can set a slippage or a maximum allowable price deviation or at which the order can be executed.

When it happens that the price has varied during the processing request but still remained within the set slippage, the order will be executed with a price correction.

In the case that the price has gone beyond the limits of the slippage corridor or the slippage parameter has not been set, the order will be rejected. Therefore, the trader will receive a requote price change message.

In such a situation the trader can accept the new price and the order will be executed or can refuse the order.

The advantage of instant execution as types of orders is the opportunity to enter the market at a fixed price. Hence, that is of great importance for some trading strategies.

Also, the main disadvantage of instant execution is ‘requotes’. Their number of which increases or decreases depending on the volatility of the market.
- Market Execution
This execution type practically allows any order from the trader will be executed at the current price on the market at the moment of order processing. The price can be either higher or lower than the one the trader can see in the window of the screen.

As a rule, the trader accesses the market quicker when using market execution. The foremost benefit of this execution type is the chance for 100% market access.

Its disadvantage is a high risk of a lossmaking position when the market is highly volatile, when the price may strongly fluctuate during short periods of time.

What are the different types of orders

Market order

This is an order for buying or selling security quickly. Market order guarantees that your order will be executed, but does not guarantee the price you’ll get. This order will execute at or close to the current bid or ask price.

Yet, it is important for you to remember that the last traded price is not certainly the price at which a market order will be executed.

A market order is the most common type of order and it is almost always filled because no price is defined.

Limit order

This is an order to buy or sell a security at a specific price, which is called limit, or better.

A buy limit order will always be executed at the limit price or lower.

The sell limit order will always be executed at the limit price or higher.

For example, if you want to buy shares of ABC stock for no more than $20. So, you can set a limit order for this price level and your order will only execute if the price of ABC stock is $20 or lower.

Limit orders are suitable only for investors who strictly determined the price at which they are willing to trade.

Stop order is one of the types of orders

Stop order is also known as a stop-loss order This is the type of order that allows traders to buy or sell a stock once the price of the stock reaches the specified price, known as the stop price. When the stop price level is reached, your stop order will become a market order.

Buy stop order

This means, entered at a stop price above the current market price. Use a buy stop order to reduce a loss or protect a profit on a stock that you want to sell short.

A sell stop order is entered at a stop price lower than the current market price. Use this order to reduce a loss or protect a profit on a stock you own.

GTC or Good till canceled

This is a modification of a limit order. Traders use it either to buy or to sell a security. This type of order remains in force until it is canceled by the customer or executed by the broker.

Fill-or-Kill order

This type of order is sent to the floor for immediate execution. If it cannot be filled immediately, it is automatically canceled.

AON All-or-None

In this type of limit order, the broker is focused to attempt to fill the entire amount of the order or none of it. This order differs from a fill-or-kill order because, with an all-or-none order, here is no requests for quick execution.

Are orders execution so mattering?

The importance of orders execution depends on the type of order you submit.

For example, if you are putting a limit order, your risk is the order might not be filled. But, if you are setting a market order, speed and price execution is more critical.

You have to know, the execution is no backup for an investment plan.

Today’s markets include real risks, therefore they can cause the execution of orders at prices significantly different than anticipated. But, with a long-term extent, these varieties are only one step on the road to successful investing.
15th March 2019
Forex trading for a living – How and Why

3 min read

Forex trading for a living is valid for retail investors. Well, that means that trading Forex for a living is possible. The trouble for most people is that they commonly lack the needed trading skill, steadiness, training, or pragmatic mindset to make it trading Forex full time.

The Forex market is the most liquid market in the world. There are various shareholders from across the world trading in it.
Thanks to the Internet Forex trading is accessible for almost anyone. This means the market is no longer for the sharks of investment banks and multinational companies.

From some reasons, forex trading has a bad reputation. The reasons are well-known. Scam artists and brokers that trade against their customers are the main reason for that.

But for some people, forex trading for a living is a way of life and profession as well.

Can you trading Forex market for a living

Ambitious traders often ask is it really possible to make a living trading the Forex market.

The answer is yes.

But we owe you a true answer.

Yes, you can be trading Forex market but you have to do a lot of things in a proper way.

The key is simple. You have to learn to become a profitable trader and then act.

Easier said than done. But, you can be trading Forex market for a living, and we personally know people who make steady money in the markets.

So, there are no barriers.

So, what it takes to be able to trading Forex for a living?

To do so, however, you have to put a large number of banknotes on the market, and trading them regularly.

How much money do you need for Forex trading for a living?

If you want to make a living trading the Forex market is sufficient starting capital. If you don’t have enough you have to accept that you will not be making a living from trading Forex quickly.

The exact amount of money to trade full-time is different for everyone. Generally speaking, you will need a nice amount of money at your disposal. Of course, in order to trade a large position size and make enough money.

And, at the same time, not risking too much of your account on any one trade.

Maybe you should start as a part-time trader for extra income. It is easier to achieve in the early stages of your trading work. Instead of putting pressure on yourself to make a lot of money fast, you should focus on creating a consistently profitable track record and self-confidence.

And the money will come.

It is interesting, even when you have a large amount of money to trade with, if you do not focus on the principles of successful Forex trading, you will lose anyway.

How should you start Forex trading for a living?

Gradually! Perhaps it will take about six months to get the basic knowledge and understand how everything works.

You have to read a lot of trading literature at the time, for instance. Maybe you will talk to traders on different forums, exchange notes and ideas for the strategies and ask a lot of questions. That will be a good way to learn

This community will answer your questions and help you understand a lot of the most difficult theories.

Then, you should start with a demo account.

There you will trade without real money involved.

It’s a good plan to feel the stress of actual trading but you will not risk your real money.

You should practice trading a couple of weeks, getting how to use it, and then start an account with real money. Honestly, some traders think that trading with real money is the only way to learn.

It is a good idea to start with a small account. For example, with $20 or $25. If you gain a profit quickly, don’t worry, you will lose it faster. But it will be a good lesson.

You will realize what ‘risk management’ really is and why traders think that it’s important. So, go back to the books, and try to develop your own trading strategy.

Real trading will start later, on a standard account with a $500 deposit, for example.

Basic paths on Forex trading for a living

Each path has its advantages and disadvantages. It’s up to you to consider each of them before you decide for forex trading for a living.

You have to prove to yourself that you are able to make money trading forex.

This means, you can make money consistently and you’ve increased your skills to be a successful forex trader.

After you recognize this rule, you can start to trade full time.

If you have a day job, it can be quite a challenge to trade forex full time.

In that case, you have a good cash defense to keep you going for some time.

Actually, you need to have some cash saved. The ideal situation is to have at least 2 years worth of cash to live on.

This may give you a stress-free trading environment from the start.

The determination to succeed is another path.

This is when you’ve started making some good amount of money and you think you can do it as a full-time thing.

Or maybe you already have enough money in the bank and forex trading forms an only little part of that.

For example, you have $200,000 cash in the bank and you put in $70,000 to start trading forex full time.

The $200,000 is for you to live, as a reserve, whilst that $70,000 trading account is what you try to make your living on. That’s why you might want to put that amount on Forex trading for a living.

The truth is, you need to very carefully consider all your options before you jump into the Forex market.

Frankly, you have only two options: you can succeed or you can fail.

Why do people decide for Forex trading for a Living?

For the money, of course!

We are not going to lie. People get into trading because they want to make large amounts of money and travel the world doing it. Some people trade because they obsessively love it and it is a part of their identity.

So, the reasons can be very different.

Lots of people have heard stories about people coming to the Forex market and making a killing overnight. Maybe some of those stories are what set you out on your journey to trading Forex for a living. Those stories can be true, but what they have forgotten to mention is that behind such success are the years of hard work and fight. It isn’t easy to make it to the top.

What tools do you need for Forex trading for a living?

Education. This is a big topic to consider. You can read our tutorials. If you know nothing about Forex trading then this is probably the best place to start your learning journey.

Broker and trading account. Also, you can find all about the best platforms and brokerages on our Wall of Fame.

Good platform. Once you sign up with some broker of your choice (check out our broker review page HERE.) you then need to download and install the platform. And if you are into algorithms their platform will suit you. Try using a demo account first so that you can learn how to use the platform properly.

The bottom line

Here are all the basics that you need to get started Forex trading for a living. It’s up to you to do the work and put in the time. Trading for a living requires a lot of hard work, enthusiasm, and commitment to make it work.

You have to be firm to make it work even in the times when something is going wrong.

But, if you give it your all, the rewards at the other end are unquestionably worth it. When you approach trading with the respect and commitment it deserves then you can live the dream of Forex trading for a living.

Don’t waste your money!

risk disclosure

14th March 2019