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.

  • What is the Forex Market?

    What is the Forex Market?

    2 min read

    What is the Forex Market? 2
    What is the Forex market? Actually simply. It’s the global market that provides the exchange of one currency for another.

    Also known as foreign exchange, FX or currency trading is a decentralized global market where all the world’s currencies trade.

    The forex market is the biggest, most liquid global market with an average daily trading volume exceeding $5 trillion. All the world’s stock markets together can’t even come close to this. But what does that really mean?

    Forex has no centralized market. Instead, an Forex market exists wherever the trade of two foreign currencies are taking place.
    Do you know it is open 24 hours a day, five days a week? Forex exists to handle investment and trade. The main trading centers are London, Paris, New York, Tokyo, Zurich, Frankfurt, Sydney, and Singapore.

    All levels of traders, from central banks to speculators, trade currencies with one another.

    The Foreign Exchange market, also called FOREX or FX, is the most exciting financial market in the world.

    Whether you sell $100 to buy YEN or a bank exchange $200 million for EURO with another bank, we are speaking about Forex deals. The participants on the FOREX market range from huge financial organizations trading billions, to people trading a few hundred dollars.

    Without this tool in place, foreign trade and investment would be obstructed. The major players on this field are the U.S. dollar, the British pound, and the euro. This machinery provides a clearinghouse to trade those major currencies.

    Thanks to the internet, you can trade on the FOREX market the way traders from the largest banks and investment funds do.
    All you need to get started is a computer with internet access and a trading account with a Forex broker.

    If you’ve ever traveled to some foreign country, you’ve made a forex transaction. Take a trip to Germany and you convert your dollars or some other currency into euros. When you do so, the forex exchange rate between the two currencies determines how many euros you get for your dollars. And the exchange rate fluctuates continuously because, this market, like many others, is based on supply and demand.

    How does Forex market work?

    On the Forex market, one currency is exchanged for another. The single most important thing with respect to the Forex market is the exchange rate between two currencies (a currency pair).

    You’ve probably seen it on the news or somewhere on the internet:

    What is the Forex Market?

    And you noticed the small changes if you paid attention. This small change may not seem like a big deal.

    But think of it on a larger scale.

    A giant international company may need to pay abroad employees. Imagine what that could do if simply exchanging one currency for another cost you more depending on when you do it? These few coins add up quickly. In both cases, you may want to hold your money until the forex exchange rate is more favorable.

    An exchange rate can experience prompt changes. Sometimes several times a second. So there’s a lot of activity going on 24 hours a day, 5 days a week.

    In overall, the currency exchange rate reflects the health of an economy in comparison to others. If the economies of the Eurozone are doing better than the US economy, the euro will go up compared to the dollar and vice-versa.

    You can trade currency based on what you think its value is. Just like stocks. But the difference with forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it.

    If you think it will decrease, you can sell it.

    Honestly, finding a buyer when you’re selling and a seller when you’re buying is much easier than in other markets. Maybe you hear on the news that Australia (this is just an example, don’t worry) is devaluing its currency to attract more foreign interest into its country. If you think that trend will continue, you could make a forex trade by selling the Australian dollar currency against, say, the US dollar. The more the Australian dollar devalues against the US dollar, the higher your profits. If the Australian dollar increases in value while you have a sell position open, then your losses increase. Hence, you will like to get out of the trade.

    In the moment of writing this post the chart looks like this:

    What is the Forex Market? 1

    When people talk about the “market”, they usually mean the stock market. So the NYSE, for example, sounds big.
    But if you compare it to the forex market, it would look like this:

    The currency market is over 200 times bigger!

    The tremendous number of $5 trillion covers the complete global foreign exchange market. But daily trading volume from retail traders makes up between 5-6% of overall volume, or between $300-400 billion. So, you see. It isn’t so big.

    The forex market is unmistakably huge, but not as huge as the others would like you to believe.

    Just to be honest.

    And remember’!

    Don’t waste your money!

    risk disclosure

  • Forex Trading – What Are You Really Selling or Buying?

    Forex Trading – What Are You Really Selling or Buying?

    Forex Trading Program - How To Choose The BestA forex market can be profitable for beginner traders but have to know what exactly they are trading

    By Guy Avtalyon

    Forex trading is for many people still unclear, many are confused with what they are really selling and buying in the currency market. So, let’s make clear what forex trading is!

    The forex market sharpens on the trade of currencies by both large investment banks and individuals all over the world. All trading is done over-the-counter. That adds to the market’s liquidity, enabling trades 24/7. Trading can be done in almost all currencies. However, there is a small group known as the ‘majors’. They are used in most trades. These currencies are the U.S. dollar, the euro, the British pound, the Japanese yen, the Swiss franc, the Canadian dollar, and the Australian dollar.

    Forex Trading - What Are You Really Selling or Buying? 1

    It is possible to trade many minor currencies also known as ‘exotics’. Such currencies are the Mexican peso (MXN), the Polish zloty (PLN), or the Norwegian krone (NOK). As these currencies are not so often traded the market is less liquid. So the trading spread may be wider.

    What is the aim of forex trading

    Forex trading is like any other speculation. The point is to buy a currency at one price and sell it later at a higher price. Also, traders van sell a currency at a high price and buy it at later a lower price. The point is to make a profit. Some confusion can occur as the price of one currency is always, of course, determined in another currency.

    For instance, the price of one British pound could be measured as, for example, $2. That is in case the exchange rate between GBP and USD is 2 precisely. In forex trading, in this case, the value for the British pound would be expressed as a price of 2.0000 for the forex pair GBP/USD. Currencies are arranged into pairs to show the exchange rate between the two currencies.

    In other words, the price of the first currency is expressed in the second currency. The forex market is important because it is the most liquid and largest market. Also, it is about how money is transferred around the world.

    A trade is in the forex has two sides.

    Someone is buying one currency in the pair, at the same time another person is selling the other. The positions traded in forex are often in excess of 100,000 currency units, but only a fraction of the total position comes from the investor.

    Forex Trading - What Are You Really Selling or Buying?

    Image currency pair. Source: Yahoo Finance

    The rest is implemented by a broker, which offers the leverage required to make the trade.

    How to make a profit in Forex trading

    Traders want to make a profit by betting that a currency’s value will either appreciate or depreciate against the other currency in the pair.  For example, suppose that you purchase US$100,000 by selling 70,000 euros. If you do so, you are actually betting that the value of the dollar will increase against the euro. If your bet is correct and the value of the dollar rises, you will make a profit.

    But to collect this profit, you will have to close your position. This means, you must sell the US$100,000, in which case you will receive more than 70,000 euros in return. It isn’t required from traders to settle their positions on the delivery date. That usually occurs two business days after the position is opened. Traders can roll over their positions to the next accessible delivery date.

    However, if traders take this way, they are left open to incurring a charge that can arise depending on their position and the difference between the interest rates on the two currencies in the pair.

    Forex trading spread

    It is like any other trading price. The spread for a forex pair consists of a bid price at which you can sell (that is the lower end of the spread) and an offer price at which you can buy (this is the higher end).

    When buying, the spread always reflects the price for buying the first currency of the forex pair with the second.

    For example, an offer price of 1.4000 for EUR/USD means that it will cost you $1.40 to buy €1. You would buy it if you think that the price of the euro against the dollar is going to rise. Of course, if you think you will later be able to sell your €1 for more than $1.340. That’s your betting.

    When you want to sell, the spread provides you the price for selling the first currency for the second.

    For example, a bid price of 1.4000 for EUR/USD means that you can sell €1 for $1.40. You would sell if you think that the price of the euro is going to fall against the dollar. Because you want to buy back your €1 for less than the $1.40 you originally paid for it.

    How to calculate your profit?

    This is just an example, don’t panic, please.

    Suppose the spread for EUR/USD is 0.8414-0.8415. If you think the price of the euro is going to rise against the dollar you would buy euros at the offer price of 0.8415 per euro. Say in this case you buy €10,000 at a cost to you of $8415.

    The spread for EUR/USD rises to 0.8532-0.8533 and you decide to sell your euros back into dollars at the bid price of 0.8532. The €10,000 you previously bought is now therefore sold for $8532. Your profit on this transaction is $8532 minus the original cost of buying the euros ($8415) which is $117.

    Remember, your profit is always determined in the second currency of the forex pair.

    Let’s suppose in the first example you believe the price of the euro is going to fall. So you decide to sell €10,000 at the first bid price of 0.8414, for $8414.

    In this example, you are right and the spread for EUR/USD falls to 0.8312-0.8313. You decide to buy back your €$10,000 at the offer price of 0.8313, a cost of $8313. The cost of buying back the euros is $111 less than you originally sold the euros for, so this is your profit on the transaction. To repeat, the profit you’ll possibly make is determined in the second currency of the forex pair.

    The most common patterns in Forex trading

    There are 3:  Head & Shoulders pattern, Pin Bar, and Double Top / Bottom

    How to use Head & Shoulders pattern?

    Head & Shoulders pattern is an easy way to develop trading skills.
    The first thing you must know is that Head and Shoulders is a reversal pattern. Meaning, when it’s an uptrend, the price goes up, doing its shoulders and head patterns and then reverse for a downtrend.

    Those are somehow easy to locate when using this image to see what we should look for in an actual chart.

    In the image below, you can how it looks on a real EUR/USD chart:

    How to use the Pin bar pattern?

    One of the most important candlestick patterns you should pay close attention to.
    If a pin bar appears it means that there is a very high probability that trend may reverse or pullback. The pin bar is often called “Pinocchio” bar, and it looks like this:

     

    How to use a Double Top / Bottom pattern?

    Often, if you see a double top like in the following image, it can mean there’s a downtrend on the way.

     

    If you want to go for regulated forex trading, at least start with simulated trading.

    However, only do this on a trusted platform because there are many scams on platforms that falsify your trades, They can make you think you are gaining, thereby seducing you to perform the real funds.
    Happy Forex trading!

    Don’t waste your money.

  • The types of stocks and stock trading

    The types of stocks and stock trading

    The types of stocks and stock tradingWhat are the main types of stocks, what are the main types of stock trading? Here is all about them you ever wanted to know.

    By Gorica Gligorijevic

    The types of stocks can be different. There are 3 stocks major groups divvy up the stock market into smaller pieces.

    Here are the 3 main types of stocks:

    Traders-Paradise will point these three types that are most interesting to investors and traders. We want to explain all benefits and disadvantages if any for each of them

    Common stocks

    The term originates from the availability. These stocks are the most common among others. They make up the bulk of the buzz on Wall Street. Common stock is a part of ownership in the company. Common stockholders have a right to a company’s profits and value, as well as a vote in major decisions and board elections. You can see their prices quoted online, in newspapers, financial publications, etc. Common stocks may pay a dividend but not necessarily. They are riskier than preferred stock.

    Over the long run, these stocks, from the point of capital growth, will yield higher returns than almost any other investment. But it isn’t without costs. Common stocks involve the most risk.

    When people talk about types of stocks, in general, they are most likely referring to this type. Common shares represent ownership in a company and a part (dividends) on a portion of profits. Investors have one vote per share to choose the board members. They monitor the major decisions made by directors.

    But this is the place where privileges stop. For example, if a company goes bankrupt, the common stockholders will not get the money before the creditors, bondholders. Only when they all are paid it’s time for stockholders to be paid.

    When you buy common stocks, you become a partial owner of the business in the way. Stocks are bought in shares. The more shares you have, the bigger your share of the profits. It commonly refers to dividends. Investors usually get one vote per share. Voting is a privilege given to a shareholder and is used in situations such as as-as the election of the board members who oversee the major decisions made by management.

    Preferred stocks

    This is another one among the types of stocks. Preferred stock represents some level of ownership in a company but regularly doesn’t come with the same voting rights. They are issued with known dividends much higher than the common stock. An added advantage is that in the case of liquidation preferred stockholders are paid off before the common stockholder. These stocks are safer than common stocks.

    Preferred stocks can be callable, which means that the issuing company can buy back issued preferred stocks at a premium on its own accord.

    Stocks are also convertible, that allow a preferred stockholder to change their preferred stocks into common stock.

    The owners of the preferred stock take on most of the risk. For example, if the company misses one of the dividend payments, it doesn’t result in a failure.

    In most cases, a missed dividend payment accrues and the company will eventually pay it back to the investors. The dividend on the preferred stock must be paid before any dividend is paid to the common stockholder. Preferred stock is however junior to debt.

    Share classes

    This is considered to be one of the types of stocks for many reasons.  Common and preferred are the main kinds of stock. However, it’s also possible for companies to modify different classes of stock in any way they want. The most frequent reason for this is the company wants the voting power to remain with a certain group. Hence, different classes of shares give different voting rights.

    For example, one class of shares would be held by a select group who are given 10 votes per share while a second class would be issued to the majority of investors who are given 1 vote per share.

    If there is more than one class of stock, the classes are traditionally characterized as Class A and Class B.

    In many instances though, the company may choose to decouple the voting rights from the shareholding by creating multiple classes of stock. The most common way this is done is via the issuance of A and B classes of shares. Shares are normally sold to the public but they may carry very little voting right. Most of the voting rights may be concentrated in the B shares, which may primarily be held by the management or the founders/founding families of the company.

    This is one way of enabling the public to finance and participate in the growth of the business. But, at the same time, not giving up the ability to control the direction of the company. This may be useful for the management or the founders of the company to continue to run the business in line with their original vision.

    However, this also creates various conflicts or issues such as:

    1) The A-shares are less desirable and will trade at a discount to the B shares due to the limited voting rights,
    2) This discourages the shareholders or an activist investor to come in and make changes to the management or the business direction that may be sorely needed, and,
    3) This encourages the management or the B shareholders to run the company for their own benefit and not for the benefit of the public shareholders.

    Some of the well-known companies that have their shareholding organized this way are Ford Motor Company, Google Inc, and Alibaba.

    For example, Berkshire Hathaway (ticker: BRK), Warren Buffett’s company, has two classes of stock.
    You can notice the difference in the ticker symbol. For example, BRKa or BRKb, also, BRK.A, or BRK.B.

    What are the 3 main types of stock trading?

    Based on the duration of stock holding, the different types of stock trading can be classified as:

    Day Trading

    It is a type of stock trading where both buying and selling of a financial instrument are done on the same day. This means, all the tradings are closed before the market closes for the day. Traders who participate in day trading are described as active traders or day traders. Day trading requires a fast decision and quick action.

    We don’t advise this type of stock trading to a beginner.

    Short Term Trading

    A trade period of more than one day to a few weeks is viewed as a short term trade. Traders buy and hold in position from one day to a few weeks. They enter the short trade when creating a sell position.
    It is closed by buying after one day or in a few weeks.

    For example, swing trading and pattern trading are varieties of short trading.

    Long Term Trading

    In this type of stock trading, the stock is held for many months to many years. The investment decision is made by a fundamental analysis of a stock. Why traders like this type of trading? Well, it is due to the profit that comes from the company’s growth, the other reason is dividends.
    For example, value Investing and the buy-and-hold strategy.

    All about types of stocks and stock trading

    So we can say, stocks are claims of ownership in the business that is publicly distributed.

    However, this ownership can come in many different ways. We presented you with different types of stocks that you may find in your investment business. Not all of these are exactly an alternative of stock ownership, but we have included these here.

    A stock trader job can be very profitable.

    You realize that there is plenty of benefits to stock trading. You have legitimate reasons to enter the field of stock trading. It is now time to decide what type of trader type you want to be.

    All you have to do is to adopt the correct strategy in your future investment profit making!

     

  • Lot size in forex – What is it and How to calculate it?

    Lot size in forex – What is it and How to calculate it?

    (Updated October 2021)

    2 min read

    Trade Crypto And Stocks / Forex - How To Do That 2
    What is a lot? A lot is the smallest available trade size that you can place when trading the Forex market. The brokers will point to lots by parts of 1000 or a micro lot. You have to know that lot size directly influences the risk you are taking.

    Hence, finding the best lot size with a tool like a risk management calculator can help you determine the desired lot size. It has to be based on the size of your accounts. No matter if you exercise or trade for real. You must understand the amount you would able to risk.

    In the stock market, lot size refers to the number of shares you buy in one transaction.

    In options trading, lot size signifies the total number of contracts contained in one derivative security. The theory of lot size allows financial markets to regulate price quotes.

    It basically refers to the size of the trade that you make in the financial market. With the regulation of prices, investors are always aware of exactly how many units they are buying an individual contract. Hence, they can quickly evaluate what is the price they are paying for each unit.

    What is a lot size in forex? How to calculate it?
    As it is already written in our previous post, currency movements are measured in pips and depending on your lot size a pip movement will have a different monetary value.

    How much is 1 Lot?

    In Forex, 1 standard lot refers to the volume of 100.000 units. So when you buy 1 lot of a forex pair, that means you purchased 100.000 units from the base currency.

    Assume that you want to buy EUR/USD and let’s say that the EUR/USD exchange rate is 1.10.

    When you buy 1 lot of EURUSD you will be making $110.000 worth of purchase.

    If you are using leverage on your broker you don’t need to have $110.000. With 1:100 leverage, you will only need $1.100 (110.000 / 100 = $1.100) in order to be able to execute the order.

    When the leverage goes higher, the margin you need to open the trade goes lower.

    For example, if you are using 1:500 leverage, you need only $220 (110.000 / 500 = $220) to buy 1 standard lot of EUR/USD.

    For 1 lot or standard lot, worth of one pip is equal to $10 if USD is on the counter currency in that pair. Therefore, if EUR/USD goes upwards for 100 pips after you buy, you will make $1000 of profit.

    Every trader must define the volume of the trades based on own risk perception. The bigger lot means bigger the profit/loss from the trades.

    Of course, it is reasonable sometime to open trades under 1 lot using the mini lot, micro lot and nano lot.

    Mini Lot size

    Suppose you are new in forex trading, it is strongly recommended to use mini, micro or nano lots to avoid big losses.

    Mini lot is equal to 10% of standard lot (100.000 x 0.10 = 10.000 units). Thus, when you open 0.10 lot, you will trade 1 mini lot. With every mini lot, the worth of 1 pip for EUR/USD equals to $1.

    If you are a novice and you want to start trading using mini lots, be well capitalized.

    $1 per pip seems like a small amount but in forex trading, the market can move 100 pips in a day, occasionally even in an hour. If the market moves against you, that is a $100 loss. To trade a mini account, you should start with at least $2000.

    Micro Lot size

    Micro lot is equal to %1 of standard lot (100.000 x 0.01 = 1.000 units).

    When you trade 0.01 lot of EUR/USD, you buy or sell 1.000 units of EURUSD.

    The worth of every 1 pip for EUR/USD is $0.10 if you use a micro lot (0.01).

    Micro lots are the smallest tradable lot.

    A micro lot is a portion of 1000 units of your accounting funding currency.

    If your account is financed in US dollars a micro lot is $1000 worth of the base currency you want to trade. If you are trading a dollar-based pair, 1 pip would be equal to 10 cents.

    Micro lots are very good for beginners.

    Nano Lot size

    Nano lot, named cent lot by some forex brokers, is equal to either 100 or 10 units. In some forex brokers, nano lot refers to 10 units while in some other brokers, it may refer to 100 units.

    Nano lot is not offered by many forex brokers.

    Truly, only a few brokers offer this option as an account type such as FXTM and XM.

    Nano lot is the safest way to trade if you are a novice trader or if you want to test a new trading strategy.

    You can go through the training process with much less risk and loss.

    Also, if you bought a new expert advisor or are trying a new trading strategy, it is smart to use nano lot for the first few weeks. Just in order to avoid big losses.

    The bottom line

    It is smart to likening the lot size that you trade and how a market move would affect you to the amount of support you have when something suddenly happens.

    When you place an extremely large trade size relative to your accounts, you can be faced with many troubles.

    Even small movement in the market could send a trader the point of no return.

  • What Are Pips in Forex Trading?

    What Are Pips in Forex Trading?

    (Updated October 2021)

    3 min read

    Two Different Approaches to Profitable Forex Trading 3
    The pips, short for ”percentage in point” or ”price interest point”, is the smallest fractional price move in the exchange market. When a price change on the exchange it is referred to as a Pip or Pipette change.

    Pip is a standard unit for measuring how much an exchange rate has changed in value.

    As most currency pairs are priced to 4 decimals places ($0.0001) the smallest change would be to the last number after the decimal point.

    The most notable exceptions are those FX pairs involving the Japanese Yen. For pairs involving the JPY, 1 pip is a movement in the second decimal place.

    Originally, a pip was effectively the smallest increment in which an FX price would move. Though, with the advent of more explicit systems of pricing, this original definition is no longer valid.

    Traditionally, FX prices were quoted to a set number of decimal places. Most commonly, it was four decimal places. And, basically, a pip was a one-point movement in the final decimal place quoted.

    Traders frequently use pips to footnote gains or losses. A pip estimates the amount of change in the exchange rate for a currency pair. You can calculate it by using the last decimal point.

    Since most major currency pairs are priced to 4 decimal places, the smallest change is that of the last decimal point which is equivalent to 1/100 of 1%, or one basis point.

    When a trader to says that made 30 pips on the trade, for instance, that means the trader profited by 30 pips. The actual cash amount this represents depends on the pip value.

    For example, if the price of EUR/USD moves from 1.1371 to 1.1372 this would be a one pip or ‘point’ movement.
    A pip is equivalent to a change of 1 point in fourth decimal in the exchange rate of the currency pair.

    How to calculate the pips value?

    1. Start with 10,000.  Multiply 10,000 by .0001 since 1/10,000th is a pip for all pairs (except JPY pairs).
    10,000 x .0001 = 1

    2. You now know each pip is worth 1 USD. That will be valued in the “counter currency” or second currency of the pair.

    3.  In this example, we are using the EUR/USD, so USD is the counter currency of the pair. Here, 1 pip is worth 1 USD dollar for 1 – 10k lot of EUR/USD.

    A short note about what is a lot in Forex?
    In the past, spot forex was only traded in specific amounts called lots, or basically the number of currency units you will buy or sell.
    The standard size for a lot is 100,000 units of currency, and now, there are also mini micro, and nano lot sizes that are 10,000, 1,000, and 100 units.

    Here is how to calculate Pip value when your base currency is not the same as the second currency in the pair.

    The example below shows how you can calculate the value of 1 Pip for 1 – 10K lot of EUR/GBP where the base currency of the account is USD.

    1. Start with 10,000. Multiple 10,000 by .0001 since 1/10,000th is a pip for all pairs (except JPY pairs). 10,000* .0001 = “1”.
    2. You now know each pip is worth “1”. That will be valued in the “counter currency” (second currency) of the pair.  In this example, we are using the EUR/GBP, so GBP is the counter currency of the pair.
    3. Take the current exchange rate of the GBP/USD and multiply it by “1” to calculate the value of 1 pip in your base currency.
    4. For example, GBP/USD is trading at $1.32 and 1 Pip for EUR/GBP would be equal to $1.32 USD.

    Value of pips

    The value of the pips for your trade can differ depending on your trading lot size.

    The difference in pips between the bid and ask is called the spread. The spread is essentially how your broker makes money because most Forex brokers don’t take the official commission.

    When your trade is positive in pips, you are making a profit. But, when it’s negative, you are losing money.

    Some Forex brokers also provide trades to grow in fractional pips. Fractional pips accept for even tighter control on profits and losses and offer adaptability on spreads.

    Major currencies pips

    Pip values vary per currency as they are dependent on how the currency is traded. On some trading platforms even though rare, it is possible to record a price move in half-pip increments. Therefore the value of one pip is generally a standard on most interfaces. However, it depends on the trading platform.

    There are systems that show 4 digits (pips) and those that show 5 (pipettes).

    The major currencies are the Japanese Yen (JPY), Great British Pound (GBP), US Dollar (USD), Euro (EUR) and the Canadian Dollar (CAD). These major currencies can be paired with each other or some exotic currencies.

    It is important to keep up-to-date of forex daily average ranges when trading, in order to estimate volatility in the Forex Market. Should the pairs not meet estimated ranges then you will not be hitting your profits. So you have to set up lower targets.

    Do pips value have relevance when hedging

    Many traders believe that there is no risk position because they are hedged. Hedging is a risk-taking position because a widening spread picks into both positions. When a dynamic event happens, the difference between the bid and ask can widen by more than 100 pips in usually liquid pairs. If a trader is hedging a pair that’s not liquid, the spread can be even more aggressive. And can result in a large loss to a hedged trader.

    What about currencies that are not quoted to 4 decimal places?

    The most well-known currency is the Japanese Yen. Currency pairs involving the yen were traditionally quoted to two decimal places. FX pips for such pairs are therefore governed by the second decimal place. So how to calculate pips with the USD/JPY currency pair: If you sell one lot of the USD/JPY, a downward movement of one FX pip in the price will enable you to earn 1,000 yen.

    The bottom line

    We hope you have the answer to the question of ‘what a pip is in Forex trading’. Being familiar with the unit of measurement for changes in FX valuations is a crucial first step.

    Before you finish this post, try to answer these 3 simple questions and check your new knowledge. But be honest and try not to look for the answers below.

    1. A $350,000 trade involving the EUR/GDP pair is closed at 0.8714 after gaining 29 pips.
    2. A $175,000 trade involving the AUD/NZD pair is closed at 1.2703 after losing 17 pips.
    3. Currency Pair: CHF/JPY, Exchange Rate at Close: 83.84, Pip Change: +18, Trade Amount: 500,000 CHF
    4. Currency Pair: USD/JPY, Exchange Rate at Close: 91.16, Pip Change: -27, Trade Amount: 200,000 USD

    The answers:

    1. Number of GBP per pip: 350,000 × 0.0001 = 35
    Per Pip Value: 35 ÷ 0.8714 = 40.17 EUR per pip
    Trade Profit / (Loss): 29 pips × 40.17 = 1, 164.93 Euros

    2. Number of NZD per pip: 175,000 × 0.0001 = 17.5
    Per Pip Value: 17.5 ÷ 1.2703 = 13.78 AUD per pip
    Trade Profit / (Loss): (17) pips × 13.78 = (-234.26) Australian Dollars

    3. Number of JPY per pip: 500,000 × 0.01 = 5,000 (Remember, Yen-based currency pairs are an exception and are displayed to only two decimal places)
    Per Pip Value: 5,000 ÷ 83.84 = 59.64 CHF per pip
    Trade Profit / (Loss): 18 pips × 59.64 = 1,073.52 Swiss Francs

    4. Number of JPY per pip: 200,000 × 0.01 = 2,000
    Per Pip Value: 2,000 ÷ 91.16 = 21.94 USD per pip
    Trade Profit / (Loss): (27) pips × 21.94 = (-592.38) U.S. Dollars

  • Forex Traders – Why Some Lose Money?

    Forex Traders – Why Some Lose Money?

    4 min read

    Forex Traders - Why Some Lose Money? 2by Gorica Gligorijevic

    Forex traders are those who use price movement in the Foreign exchange currency market to make the profit. Generally, the fact is that most forex traders lose. About 95% of forex traders lose money and giving up at the end.  

    But you would like to be among 5% of successful traders.

    First of all, Forex trading like any trading is a bunch of psychology.

    Do you know the most common traps among failing forex traders?

    Do you have what it is necessary to be a winning forex trader?

    The purpose of forex trading is to exchange one currency for another in the expectation that the price will change. Like any other trading.

    For example, you purchase 10,000 euros at the EUR/USD exchange rate of 1.2000. And one week later you exchange your 10,000 euros back into U.S. dollar at the exchange rate of 1.2500. So, the math says, you earn a profit of $500.

    The currency you bought increased in value compared to the one you sold.

    The aim of forex trading is simple:

    You want to buy a currency at one price and sell it at a higher price in order to make a profit. Or, to sell a currency at one price and buy it at a lower price.

    But, at the Forex market, the price of one currency pair can change the value several times in a few minutes.

    In periods of intense trading, within one minute, the price may change the value tens or even hundreds times.

    But you have to know something, the market is not your rival. You don’t have to conquer it. If you want to be a successful trader, you should define the trend and enjoy the trade.

    The market can disturb you.

    Especially, if you try to get too much with too small capital.

    Having the wrong mindset frequently makes the trade too aggressively. Or if you try to go against trends, you are on your way to disaster.

    There are so many reasons for the losses, including bad money management, bad timing, or an unproductive strategy. But there is a deeper reason why most forex traders lose.

    Majority of forex traders will lose despite what techniques they apply. Every forex trader knows how to trade famously, but in theory. Because knowing and doing are two very different things.

    So, why is that?

    We are not going to tell you a story about psychological reasons or fears, greed, and hope. Traders Paradise has a different approach. So, let’s see what we have here.

    As first, we have to look at how prices move. We also have to know that there is a considerable number of people who will be there, right when the price is about to change.

    This is the moment where mass losses happen.

    At the moment when buying insanity grips a market, something that will pass!

    Of course, everything passes.

    But at this very moment, when you see the other people buying! That makes you think that it is the right time to buy and the other people will buy after you.

    Every time you execute a speculative investment, you are doing so because you suppose other people will purchase after you. That push the price up. And you can sell for a profit.

    Prices only rise if more people are willing to buy, more than are willing to sell.

    Yes, we can do some fancy analysis and make forecasts about the price. But all we are really doing is making a bet that people will buy or sell. It is people that buy and sell and cause prices to move. Those people create repeating patterns, that we can trade-off of, in the markets.

    The uptrend is generated by more and more people continuing to move the price up.

    There is no other way that price can go up. Behind that, always stand forex traders’ will to pay above first established price.

    And what happens then?

    There are no more traders who are willing to buy at higher prices.

    Moreover, there are more traders willing to sell than to buy. The traders who bought near the peak are left getting the losses.

    The main problem is that a considerable number of traders are involved near the top.

    For instance, some stock has been rising for 3 years. So, as more traders find out about it they start gathering in. But there is a limited number of traders who are willing to buy it. Once the crowds have accumulated, there is no one else to buy. And the forex traders who bought earlier in the trend start to sell. That can scare the traders who bought late in the trend. So, what we have now? The domino effect starts carrying prices back down.

    The best example is Bitcoin.

    Bitcoin had been rising regularly between 2016 and 2017. But there was not a lot of interest from the traders. In the middle of 2017, traders became motivated. There was an explosion in interest, bringing a whole new batch of buyers into Bitcoin.

    Forex Traders - Why Some Lose Money?People searching “Bitcoin”. Source: Google

    This number ‘100’ on the chart above represents the peak popularity.

    So many people Googled “bitcoin”. They were searching for information. They wanted to know more about it. And what happened?

    The number of people searching for “bitcoin” matched with the price of bitcoin peaking.

    Forex Traders - Why Some Lose Money? 1image source Yahoo Finance

    A whole batch of people who had never heard of bitcoin became interested in it. They helped fuel the rally. When popularity hit its critical mass, there was no one left to buy.

    So, participation was the highest near the top.

    The smart investors made money off this buying rage, but the masses who created the buying frenzy lost a lot of money.

    You have all on the chart.

    The point is, most people get involved close to turning points. That means most people lose. They catalyze for turning the market the other way.

    The mass insanity causes that limit to be hit.

    There will always be plenty of people who don’t want to get included. Such believe that the price is already too costly. But the market keeps going higher and so a few joins in and buy.

    The market won’t hit a highest or reverse by itself.

    Forex traders have to make the extreme situation and market will explode. The growth and failure cycles will never end. Great uptrends and downtrends are systemic. You will never find one without the other.

    Prosperous Forex traders always find something that works and stick to it. They never let others drag them away from their strategy. Unsuccessful traders here go wrong and that’s why the most of them lose money. For example, traders hear that some asset is doing very good. But after a few days, the same traders can hear that asset is doing very bad. And that news is spread by media, forums, experts.

    So, what to do?

    To bet against everyone and be wrong?

    We believe what we hear most often.

    It will cost you if you are not part of the masses. You can’t trade with others. You have to walk carefully and alone. Most people will not accept your view. If you trade contrary to the crowd, and you are right, people will hate you.
    Why?

    Because you made money while they lost everything. Sound absurd, we know that.

    But if you want to be a winning trader, you must stay strong through major market turns when the majority lose.
    People prefer submissive company and they will not love you.

    When the outlook is most suspicious, because everyone is losing money in the market and you see how bad the markets are, there is a strong motive to sell and follow the crowd.

    Once again, the crowd makes a poor decision, which can’t help doing, and the market turns the other way.

    Forex traders lose by acting in mass at the same time.

    The masses can’t avoid it. It is an energy that exhausts the trend and reverses it.

    Even if a long-term chart of the stock market shows the price of stocks rising, you have to know that most of the people are with empty wallets because they were buying near peaks and selling near bottoms.

    Social influence

    Behind the reason for losing money while taking part in the market, lays social influence too.

    Victorious traders find something that works.

    So, they stick to it, and not let others remove them away from their adopted strategy. On the other side, we have unsuccessful traders. They go wrong, they stay in the crowd, and the crowd loses money.

    Such traders can’t jerk themselves away from the crowd when it is time to do so.

    When you hear from the media is how good this asset is doing, or how bad that asset is doing, it’s really hard to take an opposite view. We want to believe what we hear most often.

    If you make a bet against everyone else and you are wrong, you will experience regret missing out while others profit.

    Do you think this social price for not being among others, sounds funny?

    You need to walk carefully because most people will not support your view. Assume you have a contrarian view to the masses, and you are right, ha?

    Your friends, not only the opponents, may dislike you because you made money while they lost a lot. Is it still funny?

    Gaining traders are often “tortured” during major market turns when the bulk lose.

    Just recall one name: Warren Buffett. Who like him? But there are a lot of people admiring him.

    We will share some of his genius thoughts:

    * Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
    * The best thing I did was to choose the right heroes.
    * Price is what you pay. Value is what you get.
    * We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
    * A public-opinion poll is no substitute for thought.

    Why all these matters?

    Everyone wants to trade their own way. But don’t end up being with the crowd that loses money. Your social mood, whether it be optimism, greed, fear, is fueled by the same aspect accepted in society.

    There is nothing wrong to be part of the crowd.

    But…

    Yes, it is quite easy to say “I will follow the crowd and get out before them.” But it is pretty difficult because everyone in the crowd believes the same.

    Assume you understand bid and ask prices. Right?

    When people start to sell there are only so many shares are each price level.

    And if you want to get out you need to sell to a lower bid price, then a lower, and a lower, and lower. Not everyone can get out at a good price.

    There is only a few quickest who get out before the real loss is done.
    Be one of them.

    risk disclosure

  • Stock Market Corrections – All You Need to Know

    Stock Market Corrections – All You Need to Know

    Stock Market Corrections - All You Need to Know 2What is a stock market correction and how to deal with it?

    By Guy Avtalyon

    A stock market corrections are regularly interpreted as a drop in stock prices of 10% or higher from their most recent peak. If prices drop by 20% or more, we call it a bear market.

    Prices bounce, excitement hides logic, signals arrive and disappear. The reasons for treating equities as a poor barometer for the economy are many. Right now, that might be for the best. Stock market corrections occur, normal, about every 8 to 12 months, and last about 54 days.

    A 5% to 10% correction is vital for this stock market, warns Jefferies strategist.

    What happens when the market declines, why it does so, and how long a drop may last?

    For example, news that the S&P 500 has fallen more than 3% in one day can cause uncertainty even for the most experienced investor. Such falls can be scary because it’s impossible to predict how difficult or long-lasting losses will be. And even if you believe the market will finally rebound, it’s hard to follow the value of your investments shorten in front of your eyes.

    But, a stock market drop doesn’t mean it’s time to panic.

    Since 1926, there have been 20 stock market corrections during bull markets, meaning 20 times the market declined 10% but did not subsequently fall into the bear market territory.

    You have to know, the stock market’s condition is always rising and falling. Occasionally, the market will experience short-term gains, but after will come drops. And again, and again, the same scenario. The gains in value are usually due to mass psychology because investors are driven by the expectation of recognized gains. When more investors buy into the trend, the price increases. Once the price is high enough, buying slows, and some investors begin to sell to lock in their gains. This decrease in price, following a short-term increase, is a market correction.

    Stock market corrections are followed by…

    Market corrections are usually followed once an increase in market prices has come and gone. A correction in a stock’s price following an upswing is characteristic of a stock’s true market value. It may not indicate a loss in value because it shows a market’s return to balance.

    Market corrections are a significant part of technical analysis. Many investors will use indicators to try to determine when the correction will begin and end in order to buy when prices are lower.

    Why the stock market crashes?

    The market drives for many reasons. It can be because the economy is weakening or because of investors’ perceptions and emotions. The fear of loss, for example, is one of those reasons.

    The market dips because investors are more motivated to sell than to buy. That’s a simple law of supply and demand. However, it doesn’t explain why investors are selling.

    Investors are looking in the future. They try to determine if their investments will increase in value. Investors watch for signs, news, rumors, and all about how the market will move.

    While the reasons for a one-day drop may change, a longer-term decline is usually caused by one or several of the other reasons:

    A slowing or reducing economy

    This is a “fundamental” reason for the market to sink. If the economy is slowing or entering a recession, or investors are expecting it to slow, companies will earn less. Hence, investors bid down their stocks.

    Fear

    In the stock market, the opposite of greed is fear. If investors think the market is going to drop, they’ll stop buying stocks, and sellers will going lower with their prices to find buyers.

    The absence of “animal spirits”

    This an old maxim. It refers to the waves of investor emotion and risk-taking through a bull market. As they see the chance for profits, people enter the market, pushing stock prices up. When this animal spirit dries up? When the fear is on the scene.

    Outside and big events

    This mixed category includes everything that might frighten the market: wars, attacks, oil-supply shocks and other events that are not completely economic.

    And what happens today? Are we approaching a point where we will see how much gravy is left in this stock market?

    Are the stock market corrections really vital for today’s stock market?

    There are several signs of a stock market correction. Last year was the most volatile year in the stock market since the recession. The volatility can increase stock market crises. But, volatility is just one reason the biggest hedge fund managers and respected economists are predicting a 2019 crash.

    Another reason is the rising interest rates.

    Increasing interest rates is a strategy to control the rise of inflation. How does it work? Increasing the cost of credit and making saving more attractive hits a balance between spending and saving.

    Though, this approach can be dangerous. Lower buyer spending has a negative influence on the revenue of the businesses.

    Decreasing revenue causes slips spending across both the consumer and business aspects. At the same time, higher interest rates make it harder for financially weak companies to meet their debt obligations.

     

    A wild flow can lead to economic depreciation, dropping stock prices, and stock market crashes. It’s not surprising that interest rate hikes have preceded over 10 economic recessions in the past 40 years.

    Experts predictions

    Rising volatility and interest rates are affecting investors and economists to warn of an approaching stock market crash.

    According to hedge fund manager Paul Tudor Jones, “We have the strongest economy in 40 years, at full employment. The mood is euphoric. But it is unsustainable and comes with costs such as bubbles in stocks and credit.”

    Scott Minerd, Chairman of Investments and Global Chief Investment Officer of Guggenheim Partners has forecast a 40% retracement, while economist Ted Bauman believes the market could fall by 70%. Finally, the CIA’s Financial Threat and Asymmetric Warfare Advisor Jim Rickards has claimed that a 70% drop is the best-case scenario.

    How traders can take advantage of stock market corrections

    Honestly, along with great volatility can come great rewards. The right financial tools give traders the chance to profit no matter if markets are rising or falling.

    Advanced traders can switch any potential market crash into a profit. They know how to hedge their existing investments until the market turns. In such periods they implement short trades. Despite, the volatile markets can produce higher trading risks. So proper risk management and volatility protection are essential.

    How to deal with a stock market corrections

    Most traders lose money when trying to move their money around to join the ups and avoid the downs.

    Most people lack the discipline to stick to a winning investing playbook in correcting markets. Also, they tend to transact at the wrong times causing even bigger losses

    In the past 5 years, the Dow Jones Industrial Average has almost doubled without any important pullback. For each of those years, a notable number of analysts have called for a correction or even a recession. These forecasts pushed investors to pull out of the market too early and lose the important gains.

    If you are going to invest in the market, it is best to understand that stock market corrections are going to occur. Often, it is best to ride out your mix of investments that have more potential for less risk.

    Resist the urge to trade and profit from them. Remember, never catch a falling knife.

  • Stocks Trading Software – The Best For Beginners

    Stocks Trading Software – The Best For Beginners

    5 min read

    Stocks Trading Software - The Best For Beginners
    Stock trading software is a program that allows you to research potential stocks, view charts, read analyses, set up watchlists, and more.

    With today’s volatile market trends, picking the right stock trading software is crucial. Honestly, there are very few stocks worth trading each day. That means you have to identify them before they make their big move. And, that separates the profitable traders and the rest. Before you enter, you have to check the trading software reviews first.

    Much of the stock market uses extremely sophisticated computer programs to analyze data at unbelievable speeds.
    Unfortunately, the majority don’t have access to those applications. But still, we can take advantages of technology.

    The better stock trading software you use, the better trader you are.

    They are easy to use, comfortable, intuitive, feature-rich, and full of useful information.

    Trading software is a set of computer programs that facilitate trading in financial instruments such as stocks and currencies. It also helps develop stock-picking decisions through fundamental and technical analysis features. Some software also allows transaction processing.

    Brokerages offer the trading software either for free or for discounted pricing. Sometimes they offer software as a stimulus to obtain a particular amount of trading volumes. Independent vendors also supply software to assist traders.

    Importance of accurate stock market data

    A stock market is a place where you may trade shares of publicly listed companies. Investors in the stock market want to gain their returns by buying and selling their investments at a fitting time.

    Stock market data is highly time variant and follow a non-linear pattern.

    Analyzing stock market data is very important for divining the future prices of the stock. Therefore accurate stock market data entry is important for traders, investors, and market analysts. Accurate stock market data provides them to keep abreast of market trends. Stock market companies employ data entry services to maintain all types of stock market records.

    Stocks Trading Software - The Best For Beginners 1
    The main part of the stock market is the price of shares. But it varies very often. The price of shares is reported every minute because of people who are buying and selling shares. Any error in the entry of data can cause tremendous losses to companies and individual traders and investors.

    Entering the data is a very important factor in the stock market. That financial data has to be entered perfectly. Inaccurate data can create market volatility that can cause the disorder.

    Stock splits, mergers and spin-offs are common activities that take place every year.

    Stock splits occur when the price and volume of shares change when two companies merge. In that situation, one of the shares stops be traded and their value gets added. When there is the spin-off, a company may separate and also, there will be a change in the price of shares. In such circumstances, the stock data must be updated to reduce market volatility.

    Historical data about stock markets is also fundamental for long term investors. It is helpful for them to understand the type of shares and its price variations.

    Accurate data entry is necessary for stock markets. If traders have reliable data they can identify the right time to buy and sell shares and earn the profit.

    What to look for in trading software components

    • Analytical methods and strategies

    If you want to be an active trader, which is different from the long-term buy-and-hold, you must have the opportunity to use several strategies, including day trading and swing trading.

    In day trading, the position is closed out within the same day.

    Swing trading involves holding a security for one to several days in an attempt to profit on the swings or price changes.

    Good trading software must offers traders the ability to control and manage open positions. Some of the order types are a market order or pending order. A pending order can be a buy limit, buy stop, sell limit or sell stop. A trader should have the opportunity to attach a stop loss or take profit order to a pending order, for example.  

    • Historical and real-time data

    Real-time data is an indication and information promptly provided. OK, there can be a short delay because of the time of distribution of information. Many websites promise free real-time quotes, but they are regularly delayed by up to 20 minutes.

    Real-time data is important for traders. Even a small variation between the quote and the actual price of the security may lead to the reducing of profits or a loss.

    Historical quotes are also important. Because the price of assets moves in known patterns and trends which tend to return over time

    • Stock screener

    Stock screeners are tools which can separate stocks based on criteria defined by the trader.

    Every good software must have a screener.

    • Backtesting software

    You must have the opportunity to test an opened trading strategy using historical data. Backtesting assists as a method for testing the effectiveness of the strategy. It simulates the trading strategy across a particular time frame and then analyzes the results from the perspective of return and risk.

    • Live news

    The market is volatile and it moves on a multitude of developments, including economics, geopolitics, and corporate news. We know that stocks are highly volatile.

    If a trader wants to make a profit such has to react immediately to market news thanks to a live news reference.

    • Portfolio tracking

    This will help you keep a close track of all previous trades, helping you to identify mistakes and hone your strategy.

    How to correctly use stock trading software

    The new stock trading software programs can look scaring to the beginner, we know that. But, don’t be. The better choice is to engage yourself and get used to its features.

    The charts are the most important hallmarks for the best stock trading software programs out there. Because you need charts that are easy to read, customizable, and trackable.

    The top stock trading software platforms offer paper trading, which we always highly recommend. Do your paper trading like a stock simulation program. You execute trades, buy, sell, and short,  without placing money. If you are new on this field and you’ve never traded before, this is a great way to enter.

    When you’re familiar with paper trading, you should move on to the real account. Otherwise, you will never get a profit from the stock market.

    The whole truth is that everyone uses stock trading software in a different way. Maybe you will reveal a new strategy to pick data from software programs.

    Trading software providers tout their platforms’ endless features. Some are really good but some are trash. Here’s a kind of guide that can help you make smart investment decisions.

    Analyze

    Scanner: Scanning tools continually comb the stock market for trading possibilities. You can personalize your scanning tool to explore specific models and get a signal when they are found.

    Charts: Customizable charts will help you to analyze the markets. Choose several indicators to compare new or historical data. You have to know changes in the market to recognize stock patterns.

    Monitor

    Streaming data: Permanent access to data gives you the information and you are able to make smart decisions about your investments. Software platforms provide access to data about stock prices, companies’ worth, quarterly reports, etc.

    News: Better trading platforms can provide up-to-date news from third-party sources to keep you on course.

    Research reports: Trading software gives you access to related industry studies from third parties about particular stocks or analysis of more extensive market issues.

    Trade

    Simulation: Yes, paper trading or simulators give you a chance to practice without real money.

    Automated trading: A tool that buys and sells securities automatically based on pre-programmed criteria. It is used frequently by advanced investors who make various trades each day.

    Customer service: Online trading platforms are a “do-it-yourself” mind. But most major software providers have some type of customer service, whether it’s 24/7 assistance, live-chat capabilities or a chance to speak with an advisor.

    Online platforms are generally much cheaper than full-service brokers. Still, think carefully about what you spend on trading software.

    It isn’t hard to find providers that give traders the option to test the stock trading software before signing up to pay for the service. Some also offer commission-free trades and cash bonuses.

    Top Stock Trading Software – The Opinion of Traders Paradise

    E-TRADE

    Choose between E-Trade 360 for casual investors, or E-Trade Pro for active investors. A mobile version is also available for on-the-go trading.

    Stocks Trading Software - The Best For Beginners 2

    E-trade stock trading software

    It isn’t just a stock trading platform. It ranks among some of favorite stock trading brokerages for a number of reasons.

    Namely, its access to real-time data, research, and analysis in its brokerage platform. Nothing is powerful as historical and real-time data that enables you to act on the best stock trades possible. E-Trade also offers a collection of educational sources: webinars, blog posts, and news.

    It isn’t among the cheapest, but it’s commissions aren’t the steepest either. You can start your stocks trade at $6.95 with volume discount available, options start at $0.50 per contract. And, moreover, the brokerage even offers hundreds of commission-free ETFs.

    Anyway, it is best for experienced traders.

    • TD Ameritrade

    TD Ameritrade stock trading software is well suited for investors of all skill levels. Traders will appreciate the wide range of tools and screeners, and its platform for practicing simulated trades is one of the best.

    Ameritrade

    TD Ameritrade stock trading software

    TD Ameritrade has some of the most extensive tools we tested. And, very important, it continues to add to its toolbox.

    There is the brokerage’s chatbot to execute trades and access market news on Twitter or on Facebook Messenger to perform a range of functions. It is from looking up stock quotes to placing trades and chatting with a live agent.

    TD Ameritrade’s powerful trading platform, Thinkorswim,  is customized for novice and advanced traders. The control center screen delivers all important information together in one place. So, you can create alerts, access research from over 400 technical studies, search for stocks and interact with real traders.

    It’s also the go-to destination for practicing simulated trades with paper money.

    Educational offers combine videos, webcasts, and tutorials, for both novice traders and experienced investors. Its broker-assisted trade fee is a high $44.99, but its other hallmarks can make it worthy of the high cost.

    TD Ameritrade is best for simulated trades in Traders Paradise’s opinion.

    • Fidelity

    This trading service combines a wide range of investment choices. Along with advanced analytical research from some 20 providers, including Argus.

    Argus Research is one of the newest options for research providers to Fidelity.

    The main plus, Fidelity has low pricing.

    Fidelity

    Fidelity stock trading software

    You can choose from over 10,000 mutual funds and 93 commission-free exchange-traded funds (ETFs). The brokerage permanently enhances its platform. So, here you can find two new screeners: one that enables you to tailor your screen with up to 140 criteria for stocks, and an ETF research tool and screener.

    Also, new is Trade Armor, a tool that lets you to visually search profit and loss scenarios. All that by using charts, news, alerts, and research for potential or existing stock positions.

    Fidelity’s Learning Center offers a full table of issues classified by skill level.

    There is no minimum to open a brokerage account to buy stocks or shares in an ETF, but most mutual funds require an initial $2,500 investment.

    The mobile app features all the tools to manage your accounts. Also, you can inspect your balances, account positions and watch lists. Moreover, you can search for information and real-time quotes for trades.

    The bottom line

    When you start to evaluate how easy a stock trading software is to use, you should consider several questions.

    Is it easy to make watchlists? Could you set up alerts? Can you customize them? What kinds of screening tools are available?

    Are the charting tools work well? What technical indicators can you use?

    One of the most important things is a fast and efficiently accessible order process. Markets change instantly and being able to execute the order in a short time is an important part of your investments.

    risk disclosure

  • Bargain Hunting – The Holy Grail of Investing

    Bargain Hunting – The Holy Grail of Investing

    Bargain Hunting - The Holy Grail of InvestingIf you understand the terms overvalued and undervalued you will find plenty of stocks that look cheap

    By Guy Avtalyon

    Stock investors are bargain hunting! From time to time, that is a title for a lot of news reports when it is a general market decline. For example, after the 2007/2008 prices have been cut by 40-60% so for sure there were some bargains out there.

    People’s intuition about what is worth to buy can have dangerous side effects when it comes to investing. However, winning instincts can be very profitable. This is what the concept of value investing is all about.

    People spend their money to buy expensive things in order to indicate status. But the other way is to get a good bargain. If you can combine both, it would be ideal. Having the status-symbol normally cost a lot, so we would like to get them at a good bargain. That sounds like a good deal.

    The dogma that expensive things are better, forms human behavior in some unusual ways.

    What is Bargain Hunting

    For example in drug testing, patients mostly find they feel better if they know that the medicine that they use is more expensive. Incredible! That means that people instinctively look for bargains. They use price itself as information to estimate if something is a good bargain. That is indirect logic.

    The defining value investing, hence, comes down to the simple concept of buying quality stocks that are undervalued. Not always the cheap is bad, and if something is expensive, then it isn’t always good. Bargain hunting means that a stock is worth less than it should be and is therefore undervalued. The ability to pick undervalued stocks or so-called value-investing is quite a talent. But is there really such a thing as an undervalued stock?

    The stock price is a mixture of investors’ estimates for later growth. So, the opinion as to whether that stock is undervalued can be very questionable.

    How the bargain hunting works

    In less than 10 minutes reading about stocks you will come across the terms overvalued and undervalued. If you do a bit more examination, you will find plenty of stocks that look cheap to one financial theorist, but expensive to others.

    How exactly can you calculate the value of a stock?

    Well, it depends. There are a number of different metrics that may answer that question under different conditions. Here are some simple methods.

    Use Price-earnings ratio (P/E)

    The price-earnings ratio is one of the simplest valuation metrics. Just divide the price per share by earnings per share.

    That’s the P/E. The lower the P/E, the less value it has.

    Many investors like to use trailing 12-month earnings because they’re tangible results. But many like using calculations for the next period. Well, investors care most about the future, not what a stock’s already done.

    EXAMPLE
    Stock price = $30/share
    Previous year’s earnings = $2/share
    P/E = 15

    Use price/earnings-growth ratio (PEG)

    The utilities, for example, trade at low P/E, indicating low expectations for future growth. HiTech companies frequently trade at high P/E because investors are counting on fantastic growth. Price/earnings growth (PEG) is transforming growth expectations into the valuation. To calculate this you have to divide P/E by annual earnings per share growth. With PEG, less than 1 is rated undervalued, and anything over 1 is rated overpriced.

    EXAMPLE
    Stock P/E = 15
    Estimated 5-year annual earnings growth: 15%
    PEG = 1

    Use price-sales ratio (P/S)

    When some company hasn’t earned, it has revenues, after all.

    A low P/S is cheap and a high P/S is expensive. For example, Twitter was flagged for having a high P/S early after its initial public offering. It was more than double of Facebook. But, that corrected thanks to disappointing results. Twitter’s P/S dropped from nearly 30 in December 2013 to about 5 as shares plunged more than 70 percent.

    EXAMPLE
    Stock price = $30/share
    Previous year’s revenues = $5/share
    P/S = 5

    Use price-dividend (P/D)

    Price-dividend is a less used metric, but it is quite good for measuring dividend stocks. To calculate, you have to divide the price by dividend. This ratio will tell you how much you have to pay to receive $1 in dividend payments. This is most useful in comparing a stock’s value against itself or against other dividend payers.

    EXAMPLE
    Stock X price = $30/share
    Previous year’s dividend = $1/share
    P/D = 30

    Enterprise value-sales is an alternative to price-sales, just like Enterprise value-EBITDA is an alternative to P/E. But you can use them, of course.

    The most important, all this is in the future, so you have no control over it.

    The only thing you can control is the price at which you can buy the stock. Moreover, whether you buy it at all at a settled price. Everything that happens in the future is in the shadow of the price. The same investment can be good or bad depending on what price you paid.

    How to find bargain hunting?

    Let’s say, it is impossible to estimate an investment without the context of its price. There are equity investments which are bad despite the price. Still, there aren’t any investments that are good despite the price. If there is no bargain to be had, the instinct of buying only at a bargain is the most important thing in investing.

  • Day trading stocks – How to find best trading platform

    Day trading stocks – How to find best trading platform

    4 min read

    Day trading stocks - How to find best trading platform
    Day trading stocks are powerful and exciting. Moreover, they are easy to buy and sell. With the progress of technology, the market is easily available. Speculating on prices going up or down in the short term is absolutely visible.

    Also, stocks are simple to understand and follow.

    Attempt to identify which stocks to trade intraday won’t be as challenging as it is in other markets. But if you want excitement, you can choose to trade in the complex technical world of cryptocurrencies or forex. Even if it burns your mind. Of course, you can manage with the triumphs and potential traps of Google and Facebook far easier.

    Day trading vs stock investing

    Before you start day trading stocks, you should analyze whether it surely suits your conditions.

    For example, intraday trading regularly expects a couple of hours each day. One of these hours has to be early in the morning. You have to be there when the market opens.

    Longer term stock investing, however, normally takes less time. It gives you more flexibility as to when you do your research and analysis.

    Further, intraday trading returns can beat those of long-term investing. This is the influence of leverage. This allows you to borrow money to capitalize on chances, to trade on margin, in other words. However, with grown profit potential also comes a greater risk of losses. Do you know that? Moreover, you will also invest more time into day trading for those returns.

    Somebody would say day trading is harder because you focus on day trading one stock only. This is because interpreting the stock ticker and spotting gaps over the long term are far easier. You also don’t have to hurry to make judgments when investing. Hence, this also means intraday trading can provide a more exciting and stimulating environment.

    Day trading stocks - How to find best trading platform 1

    Day trading stocks platform

    The major advantage of CFDs and spread betting over traditional assets investment is the ability to “go short“. It isn’t easy to make money in a collapsing market using traditional approaches. Day traders, however, can trade regardless of whether they think the value will rise or fall.

    Frankly, there is no precise answer in terms of day trading vs long-term stocks. Spotting trends and growth stocks in some ways may be more simple when long-term investing. On the other hand, intraday trading may yield you higher returns.

    How to day trading stocks

    The best day trading stocks can give you opportunities through price movements and opulence of shares being traded. This will provide you to enter and exit those opportunities quickly. We recognize these circumstances as volatility and volume. So, let’s break down these terms:

    Volume

    Volume is the total number of shares traded in a security or market during a specific period. Each transaction adds to the total volume. If, for example, in one day is made 32 transactions, the volume for that given day is 32.

    How a day trader can use this in order to make his stock picks?

    Volume is an indicator giving weight to a market move. If there is an unexpected spike, the strength of that movement is dependant on the volume during that time period.

    In simple words, the greater the volume, the more significant the move.

    How to use volume?

    If you have a solid capital, you need stocks with notable volume. Well, your brokerage account will possibly provide you with a list of the top 20-25 stocks. But you would like to expand your search a little wider.

    That way you can find opportunities that are below other trader’s radar. You have to find stocks with a spike in volume.

    For example, a stock mostly trades 2.5 million shares per day. But you notice that it usually trades 4 million shares by 9 AM.

    What does it mean? It means that you have made a good examination and you have a better opportunity.

    Hence, you have to choose the platform with the diligent screener for high volume stocks.

    Volatility

    Volatility refers to the amount of risk/unpredictability in the size of changes in a security’s value. If there is high volatility the value could be spread over a large range of values. This means the price of the security could change dramatically in a short frame of time. It is perfect for the fast-moving day trader.

    On the opposite situation, if it has low volatility, the security’s value will remain almost steady. But it will offer less opportunity for a quick profit.

    How to use volatility

    One way is to use the beta. The beta predicts the total volatility of a security’s returns against the returns of a relevant benchmark (normally the S&P 500).

    Day trading stocks - How to find best trading platform 2

    Day trading stocks

    A stock with a beta value of 1.4 has moved approximately 140% for every 100% in the benchmark.

    So, a stock with a beta of just .6 has moved 60% for every 100% in the comparative index.

    The way you use these parts will affect your possible profit and will depend on your strategies for day trading stocks.

    Day trading platform

    This is the general name for any software that helps you analyze, and make a trade. It may grant you access to all the technical analysis and indicator tools and resources you need. The best day trading platform may also identify trades and even automate or execute them in line with your strategy. No matter you’re after trading platform for beginners, or as an advanced trader. With more options than ever before, doing your research is more important than ever.

    Firstly, you’ll find out exactly how these platforms work. Also, you will touch upon the platform’s demo accounts, equipment, and regional differences.

    It may be difficult when you select a broker for day trading. As a trader, you want to pay several dollars per trade. That’s because you want low-cost trades. But a  platform with great tools is important to you too. Therefore, you have to pay more and you are agreed with that.

    Some day traders will tell you the platform design isn’t important so much. Day trading as a profession is risky business. So, it is very important to find the best trading platform.

    So, we feel free to recommend 2 of plenty we tested for day trading stocks.

    • Fidelity

    Fidelity Investments 1
    It is a full-service broker with over 19 million retail brokerage accounts and over $2 trillion in client assets.

    Fidelity charges $4.95 per stock trade, $4.95 plus $.65 per contract for options trades, and is highly regarded for its quality customer service, extensive retirement services, and all-around investment offering.

    The company’s tradition of putting clients’ interests “before our own is a big part of what makes Fidelity special,” the fund firm says in its mission statement.

    Streaming quotes are included as well as 48 total columns of data to choose from. Furthermore, the workflow is seamless, making it a breeze to transition into equity research or into the docked order ticket to place a trade.
    More about Fidelity you can read on our Wall of Fame.

    • TD AMERITRADE

    TD Ameritrade 1
    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 provides 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.