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.

  • 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.

  • Gold Markets Break Out Above The Resistance

    Gold Markets Break Out Above The Resistance

    1 min read

    Gold Markets Break Out Above The Resistance
    Gold markets rallied significantly during the trading session on Tuesday. If the US dollar continues to fall, and it certainly shows itself likely to do so, the Gold markets will quite often rally by proxy. This market has a significant amount of resistance above. We are towards the top of the overall consolidated range, you have to keep in mind.

    At this point, there is a lot of sounds spreading to the $1350 level. So, this is a very bullish looking candle. It would not be surprising to see some sort of pullback in this marketplace but now the $1325 is support level. It was resistance before.

    If gold can break above the $1350 level, the break will become the gate opened, and the market should very promptly go towards the $1400 level.

    Hence, the idea of buying pullbacks in this precious metal sounds quite good. Well, as we can see, the strong uptrend certainly looks likely to continue.

    Commodity analysts have been turning more bullish on gold

    Take a look at this chart. You can see that the market just broke out above a bullish flag, and of course, have cleared a significant resistance. So look for value and you will be rewarded.

    But the $1300 level underneath is a massive floor in the market. It will be difficult for this market to break down through there. If so, then the $1275 level should offer support. There’s a couple of various places where the buyers will return. Look at short-term charts, but you should get the opportunity to pick up gold cheaply fairly soon.

    Maybe too many traders have rallied to buy on this level.

    It would make sense that the pullback happens.

    A precious metals bullion coin sales rebounded in January with the strongest monthly sales in two years. The U.S. Mint sold 65,500 troy ounces of the gold American Eagle and 4,017,500 troy ounces of the silver American Eagle in January 2019 – 12% and 24% increases respectively over the same month last year. In January 2018, investors purchased 58,500 troy ounces in gold bullion coins and 3,235,000 in silver bullion coins.

    Many analysts credit the Washington Gold Agreement of 1999 as the seminal document at the heart of this precious metal secular bull market. In it the top central banks agreed to gradually curtail the sale and lease of gold reserves, two activities that kept the price rangebound for much of the 1990s. At the time, it was stuck in the $270 to $300 price range.  From there, it never looked back.

    Fast forward to 2011 and we begin to see central banks moving from the net seller side of the gold fundamentals ledger to become net buyers. Some analysts applauded the simple retreat from sales and leases as a major victory for gold bulls. The move to becoming net buyers was the icing on the cake. In 2018, central bank gold purchases reached their highest level in fifty years according to World Gold Council data – a profound development the machinations of which have yet to be fully digested in the marketplace.

    The bottom line

    The gold market fresh 10-month high could be the start of a renewed uptrend in the precious metal. Because the market has broken important resistance levels, according to some economists.

    Commodity analysts have been turning more bullish on gold since last month. It came after the Federal Reserve signaled that it would pause its interest rate hike cycle for the foreseeable future.

    Analysts have noted that a “patient” U.S. central bank, will keep real interest rates low and provide less of a tailwind for the U.S. dollar. Growing economic risks and the rising fear of a global recession will also keep the pressure on equity markets, economists have also said.

    risk disclosure

  • Position Trader: Know When To Go Long or Short

    Position Trader: Know When To Go Long or Short

    Position Trader: Know When To Go Long or ShortPosition trades requires just a half of hour work per day, but profits can be great.

    By Guy Avtalyon

    Position trader has a long-term approach to trading. Rather than ready, set, go, it’s more like ready, set, stay for a while. It is a trading methodology that seeks to capture trends in the market.

    The idea is to reach the income without getting stopped out on the retracements. Hence, it is great for traders who prefer analysis but may not have as much time to dedicate to continually watching stocks.

    Here, we’ll give you some insight into the pros and cons of position trading. Including what it is, is it right for you, and how to start.

    When it comes to trading, do you go long or short?

    Many traders do not have the time to trade the most well-known styles such as Intraday, Day, or Swing Trading. All of these styles want more time, a higher capital base, and the ability to be trading early morning or afternoon while the market is open.

    Position trading is a unique type of trading that is defined by longer holds of security. It provides an alternative that is actually more profitable with less time.

     

    Typically position traders hold time anywhere from a couple of weeks to a couple of months, which is the resistance that will stall or reverse the trend.

    But, it applies the same fundamental research methods as shorter-term trading.

    Pros:

    • It requires less than 30 minutes a day
    • It’s fitting for those with a full-time job
    • Less stress compared to swing and day trading

    Cons:

    • You’ll watch your winning trades turn into losing trades, often
    • Your winning rate is too low. It is around 30 – 40%.

    Can you accept this?
    Excellent!
    Let’s go further!

    If you search online for position trading, you will find a decent amount of information about forex trading.

    But very limited information you can find about position trading stocks.

    Let’s say, the first challenge, then, is to find a definition of position trading.

    Position trader definition

    A position trader is a trader who holds a position, usually stocks, for the long-term. It can be from weeks to months and even years. Position traders usually use a combination of technical and fundamental analysis. That’s in order to make proper trading decisions and often do more to evaluate the companies behind the stocks.

    Position trader, often known as “buy and hold” trader, takes longer-term positions usually based on long-term charts and macroeconomic circumstances. These traders work in almost every market, including stocks, ETFs, forex, and futures.
    They aren’t only committed to buying. They can also hold long-term short positions making money as an asset decline in value.

    Position trading benefits

    Position trading is taking a position in an asset, expecting to participate in a major trend. Such traders aren’t concerned with minor price fluctuations or pullbacks. Instead, they want to capture the bulk of the trend, which can last for months or years.

    The main glamour of this approach is that it doesn’t require much time. Once the fundamental research is done, and the position trader has decided how they want to trade the asset, they enter a trade and there’s little left to do. They monitor their position from time to time. But since trivial price fluctuations aren’t a concern, the position requires little oversight.

    Who is a position trader

    It is the opposite of the day trader. Day traders make trades each day and spend hours trading.

    Swing trading is less time-intensive than day trading since trades last a couple days to several weeks. But this still expects time to monitor and find new positions each week.

    Position traders usually make zero or three trades a year in assets they own. Swing traders would make a few hundred trades per year, and day traders would make hundreds to thousands of trades at the same time-frame.

    Where to find trends

    Support and resistance let you buy low and sell high.

    An uptrend occurs only after breaking above the highs of a range. So, if you want to enter your trades before the price breaks out, you have to do so at the moment when the market is changing.

    And the best place to go long is at support, the point when the market is moving.

    Trends often begin with a breakout of a range or other chart pattern that had limited the price action. So, when the price breaks out of the pattern it can often trend for some time. This is especially true if the chart pattern lasted for a number of years. That indicates the price could trend for a number of years once it breaks out.

    Chart patterns range, triangles, cup and handles, head and shoulders, an inverse head and shoulders, all indicate a trend could begin or re-rise.

    As an investor, you want to pick a stock that will benefit you over time from a long-term trend.

    The timeline isn’t a fixed and unchangeable part,  you might hold a position for a week to even years.

    In an aim to ensure that your investment can pay off over time as a position trader, you need to put a lot of emphasis on fundamental analysis. You have to do plenty of research about potential companies, examining press releases, earnings reports, and analyzing charts before making decisions about which stocks to trade.

    But position trading is not the same as long-term investing.

    When position trading you must have this approach: it’s actually the last level of trading before you called it long-term investing.

    The main difference between position trading and long-term investing is that the former can be a long-term position, but depending on the trajectory of the trend, it might not be. Hence, the latter is only a long-term position.

    Why use position trading

    This is a simple but important fact: If you want to be a successful trader, it’s important to figure out what type of trading the best suits you.

    This is usually the sum of various factors:

    • The size of your account
    • The amount of attention and time you can dedicate to trading
    • How fast you want to grow your account
    • And last but not least, of course, your risk tolerance.

    Your trading experience also matters.

    We wouldn’t tell anyone to jump right in and try to take advantage of pre-market trading, for example.

    This is a more advanced method that requires experience and courage.

    How to find position trades

    There are several ways to position trading. For example, buying assets that have strong trending potential but haven’t started trending yet. Or alternatively, buying an asset that has already begun to trend.

    Buying assets that have already begun to trend is a less intensive attempt. Hence, it is favored by many position traders.

    Finding a trend is the main component of a position trade. This will usually eliminate any assets trading within a range.

    Unless the price range is very large and crosses for many years. In such a case, it could take years for the price to move from one side of the range to the other. But this suits the position trader very well.

    Is a position trader a long-term investor?

    No, it’s different. Being a trader, what might attract you to try this style?

    The main benefit, position trading is somewhat accessible to new traders. The speed isn’t as wild as day trading or swing trading. So you have a bit more time to draft your course of action and build a trading plan.

    Position trading is less demanding on a day-to-day basis. You don’t have to watch charts on an hourly basis. All that is need is to check your investment to make certain it’s operating according to the trend you identified previously.

    On a deeper level, position trading can also be more attractive in various types of markets.

    For example, if there is a bull market in a scene and there are strong rising trends, it can be a good time to engage in position trading.

  • Cryptocurrency Stocks – The Best to Buy in 2019

    Cryptocurrency Stocks – The Best to Buy in 2019

    Cryptocurrency Stocks - The Best to Buy in 2019Instead of buying cryptos, you can invest in it, you just have to choose will you do it directly or indirectly. Traders-Paradise explains how to invest in cryptocurrency stocks.

    By Guy Avtalyon

    Cryptocurrency stocks are continuing to attract new investors in 2019. However, most beginners have problems finding the next cryptocurrency to invest in 2019 We understand how upsetting it is when you first begin looking for cryptocurrency investments. And that’s why we want to help.

    We can understand your wondering “Should I be investing in Bitcoin or Ethereum or some other crypto?”

    We want to explain how to invest in cryptocurrency stocks.

    This is for you, beginners.

    You’ll have to decide on the way how you want to invest in cryptocurrency: directly or through, for example, the stocks, which is indirectly way.

    Then, if you want to invest directly, you’ll need to decide if you want to be in direct control of your cryptocurrency, or if you would like to use some custodial service.

    A lot of things is already said about the future of cryptocurrencies. Some people believe that the cryptocurrency period won’t last long. On the other side, the others think they’re going to be around forever.

    It is tricky to predict the future of cryptocurrencies, but what we do know is that the demand of cryptocurrencies is only increasing. One of the reasons for that is because of blockchain technology, which is the principal technology behind all cryptocurrencies.

    But before you start, follow Warren Buffett’s advice  “Never invest in something you don’t understand”. Start to read more about cryptocurrencies to go get a sense of information before you dive into the world of cryptocurrencies.

    When you start your learning task, you will find a lot of blogs and videos online. Some of them are very ignorant, but some are too difficult.

    They are either too specific or too general. The learning path isn’t always clear.

    So, let’s make it easier.

    To start investing in cryptocurrency stocks directly you’ll need:

    1. A cryptocurrency wallet. This will provide you with direct control of your cryptocurrency.
    2. A method of obtaining cryptocurrency. Honestly, you will need a cryptocurrency exchange or broker to buy cryptocurrency or to trade cryptocurrency.
    3. A method for selling cryptocurrency. Part of investing is occurring in the ability to cash out. To cash out you’ll probably need to change your cryptocurrency back to some top coin like Bitcoin, Ethereum, or Ripple. So, you’ll need access to the platform that lets you trade those for fiat currencies.

    To start investing in cryptocurrency stocks indirectly through a stock, you’ll need

    First, you’ll need to select between a limited set of options. They include:

    1. A cryptocurrency IRA.
    2. A stock that is related to cryptocurrency.
    3. A private fund which means you’ll need to be an accredited investor and meet certain capital requirements.
    4. Each method of investing in cryptocurrency has its own pros and cons.

    If you know something about the cryptocurrency markets, you then know that 2018 wasn’t an excellent year. Bitcoin has lost 74% of its value last year. The most other major cryptocurrencies have done even worse. Last year, Ripple, Ethereum, and Litecoin are down by 80%, 81%, and 85%, each.

    But, there’s still a lot of interest in blockchain technology and cryptocurrencies. So, it’s possible that we may see a flood in bitcoin or some of the other digital assets.

    That’s why, instead of investing directly in cryptocurrencies, it could be a smart idea to put your money in a business that will do just nice no matter what happens in the cryptocurrency world. And that will do even better, of course, if the crypto world has a good year in 2019.

    What are the best cryptocurrency stocks to buy in Traders Paradise’s opinion?

    1. Bitcoin Investment Trust (GBTC) 

    Barry Silbert has been a figure behind many cryptocurrency trends over many years. He was best recognized for Second Market. It was a well-known system to trade stocks in private companies. His Digital Currency Group (DCG) was originally a part of Second Market, combining a cryptocurrency trading firm called Genesis Global Trading with an asset management firm, Grayscale Investments.

    The Bitcoin Investment Trust (OTCMKTS: GBTC) brings digital currency investment to small investors. It is currently traded through what was called the “pink sheets.” The attempt to get a listing through the NYSEARCA platform having failed in September last year.

    Some investment gurus called GBTC a joke. But they had to face it has won the race and become the first publicly traded Bitcoin fund.

    Moreover, the GBTC value is 85% greater than the value of the bitcoin it has. There are reasons for this. For one, you can buy GBTC in a tax-advantaged account like a retirement account. GBTC is publicly traded, which means you can get out any time you want, and the coins are being kept safely.

    One of the primary media for cryptocurrency news, Coindesk, is a subsidiary of Digital Currency Group (DCG).
    If you are a small investor or investing in a retirement account, GBTC may be the best bet you have for profiting on the future of Bitcoin Nvidia Corporation (NVDA).

    2. Nvidia Corporation (NVDA) cryptocurrency stocks

    Even if you’re not excited in cryptocurrencies, Nvidia Corporation (NASDAQ:NVDA) is a stock worth owning. The stocks increased by nearly 70% during 2017, revenue was growing almost 40% during the same fiscal year. This company is currently possible to reach over $8 billion in revenue and take 25% of that revenue as the net income.

    Nvidia is also a very valuable cryptocurrency stock, with a market cap of $111 billion. It is almost 14 times bigger revenue estimated for this year and a tremendous 53 times earnings. High-performance graphics processors, originally designed for video games, appeared as great for the serious work of finding decryption keys that symbolize crypto-coins. But that is not the only reason to buy it.

    The best reason to buy Nvidia stock is its cloud. Data centers are now going through their first upgrade cycle, to support Artificial Intelligence (AI) applications like voice interfaces, self-driving cars, and the Internet of Things (IoT).

    Instant response is the key here. The low-end processor clouds like those of Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), just don’t have the processing power needed for the next decade’s growth markets.

    Graphics chip leader NVIDIA has done greatly well in recent years thanks to booming sales for PC gaming and data center applications.

    3. Square (NYSE:SQ)

    Cryptocurrency stocks Square has developed quite a bit over the past few years. At first, it was a niche manufacturer of payment processing hardware for small businesses into a lender.

    Its growth isn’t only impressive. It continues to rise. The company’s revenue increased by 68% year over year in the most recent quarter. Also, the payment processing volume continues to rise, the services-based revenue is 155% higher than a year ago. Also, there is the Cash App, a great source of potential income.

    Square allowed its Cash App customers to begin buying and selling Bitcoin last year. When cryptocurrencies start to experience a recovery, it could evolve into a significant part of the market.

    This is our opinion based on personal experience, paste performances, and data analysis. You may have some other feeling about where to invest. And it is alright. That hunch you have could lead you to the incredible gains. But, our suggestion is to read and examine.

     

  • The risk-reward Ratio

    The risk-reward Ratio

    3 min read

     

    The risk-reward ratio is a formula used to measure the expected gains of a given investment against the risk of loss.

    It is typically shown as a figure for the assessed risk separated by a colon from the figure for the prospective reward. The adequate ratio can vary, but trade experts recommend a ratio between 2:1 and 3:1 to determine a worthy investment.  

    Typically, the ratio quantifies the relationship between the potential money lost, should the investment or action fail, versus the money realized if all goes as planned.

    In other words, the risk-reward ratio measures how much your potential reward is, for every coin you risk.

    For example:

    If you have a risk-reward ratio of 1:2, it means you’re risking $1 to potentially make $2.

    But, if you have a risk-reward ratio of 1:4, it means you’re risking $1 to potentially make $4.
    Investors use the risk-reward ratio to define the viability or worthiness of a given investment. You can limit risk by issuing stop-loss orders,  sometimes. That will trigger automatic sales of stock or other securities when they hit a particular price. If you don’t implement such a mechanism in place, the risk is likely endless.

    How to use the risk-reward ratio like a pro

    Let’s be clear: the win rate in trading it totally trivial on its own. Some traders put way too much importance on the win rate. At the same time, they don’t understand that a win rate will not tell you anything about the quality of a practice or a trader.

    The truth is that trader can lose money with a 70% or even with a 90% win rate if few losers are so big that they wipe out trader’s winners. But, the trader can have a successful system even with a win rate of 40% or only 30% if such a trader lets winners run and cut losses short.

    It all comes down to the reward-risk ratio.

    The reward to risk ratio (RRR, or reward risk ratio) is probably the most important metric in trading. A trader who understands the RRR can improve his chances of becoming profitable.

    But, however, there are some myths about risk-reward.

    Myth 1

    “You need a minimum of 1:2 risk reward ratio.”

    That is nonsense.

    Why?

    Because the risk-reward ratio is insignificant on its own.

    We will give you an example:

    Let’s say you have a risk-reward ratio of 1:2. This means, for every trade you win, you make $2.

    But, your winning rate is 30%.

    To have a clear picture, out of 10 trades, you have 7 losing trades and 3 winners.

    Let’s do the math…
    Total Loss = $1 * 7 = -$7
    Total Gain = $2 * 3 = $6
    Net loss = -$1

    You see, you are not the winner.

    And you understand the risk-reward ratio by itself is an insignificant metric.

    There is nothing like good or bad risk-reward ratios. It just comes down to how you use it. You can even trade profitably with a risk-reward ratio of 1:1 or less.

    So, you must combine your risk-reward ratio with your winning rate to know whether you’ll make money in the long run. That is known as your expectancy.

    Myth 2

    The risk-reward ratio is useless

    Some traders like to say the reward-risk ratio is useless. It cannot be further from the truth.

    When you use the RRR in combination with other trading metrics, such as win rate, for example, it instantly matures as one of the most important trading tools.

    Without knowing the risk-reward ratio of a single trade, it is literally impossible to trade profitably.

    The risk-reward ratio isn’t enough

    Do you want to know the secret code?

    Here it is.
    E= [1+ (W/L)] x P – 1

    Now let’s put this all together and let’s take a look at some performance statistics and how the RRR fits in.

    Below, we see a performance simulation based off a strategy with a win rate of 50% and a risk of 2.5% per trade. The RRR was first set to 2:1 on average per trade.

    The Risk - Reward Ratio 3

    You can see that out of those 20 simulated outcomes (the different graphs), all of them were positive after 500 trades.

    Remember, with a win rate of 50%, you just need a RRR greater than 1:1 to trade profitably. With a 2:1 RRR you can potentially trader very profitable with a win rate of 50%.

    Now let’s take a look when the only thing we change is the RRR. Everything else is the same.

    Assume that each trade has a RRR of 1:1.

    Out of the 20 simulated outcomes, only a few will generate a positive outcome and many show a negative outcome.

    To conclude, with a win rate of 50%, trading a RRR of 1:1 is very volatile and variance will be huge. You have to remember, with a win rate of 50%, you need a RRR greater than 1:1.

    Now let’s take a look when the only thing we change is the RRR. Everything else is the same.

    Assume that each trade has a RRR of 1:1.

    Out of the 20 simulated outcomes, only a few will generate a positive outcome and many show a negative outcome.

    The Risk - Reward Ratio 4

    To conclude, with a win rate of 50%, trading a RRR of 1:1 is very volatile and variance will be huge. You have to remember, with a win rate of 50%, you need a RRR greater than 1:1.

    The bottom line

    Portfolio with more unknown factors may have a higher probability of failure but at the same time offer a significantly higher return if they are successful. The ideal is the low risk-reward ratio – the little risk of failure and a high potential for reward. 

    risk disclosure

  • Investing in foreign markets – How to that

    Investing in foreign markets – How to that

    2 min read

    Investing in foreign markets - How to that

    Investing in foreign markets may sound intriguing or intimidating.

    Yes, international investing can be a difficult attempt. There are communication hurdles. Also, there are problems with money transfers to foreign exchanges. And regulations can be tricky. On the other hand, financial advisors suggest holding at least some foreign stocks in a diversified portfolio.

    Luckily, there are easy ways for Investing in foreign markets. That excludes picking up a new language or exchanging your local money for euros or dollars or something like that.

    One of the best ways to diversify your portfolio is to put some of your money in global investments. Foreign markets may react differently to economic conditions than, for example, U.S. markets. It is possible that strong performance abroad helps to compensate for weak performance at home.

    Foreign stocks can diversify your portfolio as we said, but they may open up chances for growth and success. In general, there are three ways you can use to make your portfolio more international in its exposure.

    Having an international stock appearance in your investments is a smart move that can improve your overall returns.

    International stocks add diversification

    You know the idiom: Don’t put all your eggs in one basket.

    This saying is particularly relevant when investing. Diversification or holding a mixture of stocks across different countries, industries, and areas of companies is a simple way to increase long-term investment returns while decreasing risk.

    An easy way to invest internationally is through a mutual fund that holds foreign securities. You get the privilege to choose from stock, bond or money market funds in several categories.

    The easiest way to invest in foreign markets is by buying exchange-traded funds (ETFs) or mutual funds that hold a basket of international stocks and bonds. The foreign holdings over multiple industries and countries, provide investors with the highly-diversified foreign component to their portfolio in just one easy purchase.

    In general, there are three ways you can invest internationally.

    Investing directly in foreign stocks.

    Using internationally focused exchange-traded funds to gain foreign exposure.

    Buying shares of multinational corporations that are based in the U.S. but do almost all of their business internationally.

    Let’s break down each of them.

    Buying foreign stocks directly

    The most reasonable way for Investing in foreign markets is to buy shares of foreign companies. You can find many foreign companies that list their stock on major U.S. exchanges. Moreover, investing in those companies is identical to buying shares of any U.S. company.

    For stocks that aren’t listed on major U.S. exchanges, investing gets complex. Some foreign companies trade on an over-the-counter basis. That makes them available with many brokerage accounts. But, at the same time, makes them subject to less liquid trading conditions.

    Still, other foreign stocks have no U.S. availability at all, so investors have to buy shares directly on foreign stock exchanges. There are limited numbers of brokers offer direct purchase and sale of foreign stocks on exchanges outside the U.S. This means, for example, you can count on finding the exact stock you’re looking for with a great deal of work.

    Try your hand at paper trading with foreign investments you find intriguing. This virtual-trading practice, offered by many online brokers, will allow you to learn to invest in new markets without risking any money.

    Buying international stocks through an ETF

    Many exchange-traded funds have a focus on foreign stocks. They offer a more diversified entrance at international investing. Also, they have a wide variety of different funds to choose from.

    Some international ETFs endeavor to offer stocks of the entire global market. Others focus in on particular regions, countries, industries, or other classifications of international stocks. One of the most common characteristics involves ETFs that focus on stocks in developed markets. That is versus those that concentrate on emerging market stocks. Many ETFs have limitation to one or the other of these groups.

    The benefit of international ETFs is that they’re listed on U.S. stock exchanges and are easy to trade. Fees can be higher than with domestic stock ETFs, so you have to look carefully at costs.

    Buying U.S. stocks that concentrate abroad

    Many U.S. companies have increased their presence to international markets.

    For example, Philip Morris International only sells cigarettes and other tobacco products outside the U.S. Some other companies keep a minimal U.S. presence. But they are available internationally.

    American companies win reputation abroad, especially in the consumer sector. So, the investors have to consider not only U.S. economic and industry conditions but also what companies face in their abroad markets.

    Risks of investing internationally

    Investing internationally carries the same risk associated with all investing. The market conditions can change, causing your investments to lose value.

    Political risk – Changes to government and political systems can cause devastation on a nation’s investment markets.

    Currency risk – Exchange-rate fluctuations can boost or limit investment returns.

    Market risk – Many abroad markets are characterized by wide price oscillations.

    The bottom line

    Investing in foreign markets are a great way to build international exposure in any portfolio. And you don’t have to worry about foreign stocks or regulations. Moreover, investors can achieve proper diversification for their portfolios by Investing in foreign markets.

    risk disclosure

  • Shorting Stock – Explanation

    Shorting Stock – Explanation

    Shorting Stock - Explanation 1Shorting a stock looks very simple. But, this isn’t a strategy for beginners.

    By Guy Avtalyon

    Shorting a stock is when a trader borrows stocks and quickly sells them. She or he does that in the hope that can buy them back later at a lower price and return them to the broker or lender. Of course, the trader pockets the difference in the stock price. Shorting is riskier than simply buying stocks. A trader that practice shorting is taking a short position, while investors that are buying and holding stocks have so-called a long position.

    In other words, when some trader starts short selling, he or she borrows stocks from an existing stockholder through the brokerage. Than sells borrowed shares at the current market price and takes the cash.

    What is shorting stocks? 

    Generally speaking, when you invest in stocks, you expect to profit from a company’s great times and increasing profits.

    But this is a whole different type of traders, called shorts. They do just the contrary. They search the Internet for news about car industry recalls, for example, and look for ways to cash when the stock of such a company is falling.

    It’s possible to make money when prices are going down. Of course, if you are willing to accept the risks which are big. One of the strategies to profit on a downward-trending stock is selling short. The hope behind shorting a stock is that its price will decrease or the company will go bankrupt. Of course, it can lead to total ruin for the stock owners. 

    Shorting a stock means you are profiting if the stock price drops inside the timeframe from your entering the deal and turning back the stock. But if stock price increases, you’ll take a loss. You can short almost every asset, stocks, ETFs, and REITs, but never mutual funds.

    What short-seller do?

    The short seller is a trader who is buying the stock back but at a much lower price. However, the short seller must promise to return the borrowed stock at some period in the future. Otherwise, the true owner or broker will never borrow the trader a stock.
    Borrowed shares have no dividends until the short seller turns them back. Even more, he has to compensate for missing payments to the lender from his own pocket. So, when short-selling it is very important to have accurate information.

    When you want to close your short position, you have the obligation to buy the same number of shares at the current price and return them to the lender. Your profit or your loss comes from the difference between the price you sold the stock and the price you bought them for.
    The stock for short selling can come from the broker’s inventory, a client of the firm, or from another brokerage company. When the shares are sold, the profits are added to your account.

    How to shorting a stock

    That involves some important steps. One of them is a short-term strategy.

    Selling short is essentially created for a quick profit in stocks that you expect to decrease in value.
    The main risk of shorting a stock is a possibility for the price to increase, and as a result, you’ll have a losing trade and losses. The possible stock price valuing is theoretically unlimited. Therefore, you are maybe exposed to great losses in a short position.
    Also, shorting stocks involves margin. Hence, a short-seller can be subject to a margin call if the stock price moves up. A margin call requires a short seller to deposit additional money into the account to fill the initial margin balance.
    Also, there are some restrictions on who can sell short, which stocks can be shorted, etc. You must be familiar with the regulation if want to short a stock. For example, some limitations are put on stocks wit low price.

    Who can short stocks?

    First of all, it isn’t for amateurs.

    Unlimited losses and a margin account can be exceptionally dangerous for an amateur trader. Especially you don’t completely understand the risk you’ll face whenever you enter a short position without protection.
    Due to the possible large losses that short selling generates, brokerages lower this strategy to margin accounts. In case you use a cash account without margin, you’ll not be allowed to short selling.
    If you’re not a short seller and don’t like your stocks to be borrowed, the best option is to open a cash account. That will hold away short-sellers to borrow your stocks without your personal permission.
    This is usually good practice, anyway.

    Is timing important for shorting a stock?

    In short, yes. The most important for shorting a stock is to know which one or more could be overvalued, also when it may drop, and when it may rise in value.
    Shorting a stock is possible because the stock can be overvalued. For example, the housing bubble in 2008. Firstly, we had an enormous increase in housing costs. So, when the bubble popped we had a correction in the stock market. Remember, stocks can be overvalued or undervalued. In shorting is important to know which one is overvalued.

    How long to stay in a short position?

    You can enter and exit a short position on the same day.  Or you may hold on the position for several days or weeks depending on the strategy and how the stock is performing. Timing is especially important to short selling.  But the possible influence of tax practice is important also. So, we have to say, this is a strategy that requires practice and study.

    Tools for shorting the stock

    Shorting a stock is a strategy that demands to identify winners and losers.
    For example, you may choose to go long a carmaker because you expect it’s possible to take market share. But, at the same time, you can go short to another carmaker that might sink.
    Shorting is useful to hedge the current long position. For example, you hold stocks of the company and you expect it to decline in the next few months. But you don’t want to sell that stock. So, you could hedge the long position by shorting that stock while expecting it to decrease. When the stock turn to grow again all you need is to close the short position.

    But you must be very careful.

    Shorting a stock appears as very simple. But, keep in mind, this isn’t a strategy for beginners. Only the advanced traders who recognize the potential problems should think about shorting.

    A valuable tool is the “short ratio”, you can see it specified for each individual stock. The short ratio commonly means how many days the stock needs to cover all the short positions. However, there is another benefit to that figure. It reveals the number of shares that are currently shorted by traders in comparison to the number of shares that are available overall.
    How to get this number?
    Multiply the current short ratio by the 30-day average daily volume of stocks.
    Just use it as a quick measure of investors’ sentiment towards a stock. For example, a high short ratio usually shows the belief that stock is falling. There are some exceptions, but understanding those exceptions is the key to victorious short selling.
    Stay tuned!