Tag: investing

All investing related articles are found here. Educative, informative and written clearly.

  • How To Start Trading?

    How To Start Trading?

    How To Start Trading?
    Trading the stock market is easy if you know how to start.

    By Guy Avtalyon

    How to start trading? First of all, never do it on your own. Ask to be advised by some experts. It is always best to access a financial advisor who will tell you how you should invest or trade, established in your financial situation, and risk appetite. Talk to others who invest.
    Read books, journals, and newspapers for recommendations. You can talk to your stockbroker for advice but don’t listen to everything he says.
    Always take a second opinion as brokers might have vested interests. In the beginning, it is best to go for known brands and big companies that have a good business status.

    What do you need to know before you start trading?

    Without knowledge, you may feel lost. Let’s make clear the basics because you’ve decided to join the crazy world of trading stocks and shares.
    You have to know that shareholders usually have a right to vote at company conferences.

    Of course, if you own just one of the three billion Facebook shares don’t expect Mark Zuckerberg to listen to your ideas!
    Another thing you need to know is that a company’s shares are indivisible.

    You cannot buy fewer than one share.

    Shares were pieces of paper that shareholders kept in a safe but since the ‘90s, this all changed to virtual shares. Before you start trading stocks, you have to buy them! You can do this in many different but easy ways.

    Some companies allow you to buy their shares directly from them but If you can’t purchase the shares directly or you’re not sure which company to invest in, ask your bank. Also, banks offer an online trading service connected to your existing accounts.

    Ask your bank to see if this option is possible. If your bank doesn’t offer a trading service, you can buy shares through a brokerage company. You can find many of trusty brokerages, just do a search. But be cautious. Never pick the first you find, read some reviews, ask around, visit forums.

    Brokers buy and sell securities in exchange for a commission. You can set up a simple brokerage account online or hire a so-called ‘full-service broker’ who will trade stocks on your behalf. They can be a consultant or advisor for you. This will cost a little more but it is worth it because you know nothing about shares or stocks or trading or investing.

    How to start trading?

    So, you want to start trading  stocks or CFDs, but you have always remembered three things:

    1. Never invest more money than you can afford to lose. With shares and CFDs, there is a risk of losing all the money you have invested.
    2. Follow your head, not your heart. Your heart will always pull you towards certain stocks. Stop and think. Only invest in companies that seem able to grow their profits, despite your emotions.
    3. Never invest your savings in just one company. ‘Never put all your eggs in one basket,’ as the mantra goes. Place your investments across many different companies.

    This way, you’ll significantly decrease the risk of loss, and increase the chance to multiply your investment.

    When you set up your online broker account, simply take the leap and make your first trade.

    Start with small, 1, 10, or 20 shares that will serve its purpose and bring you in the game.

    If trading with real capital isn’t viable, start with a simulator for virtual trading. Numbers of different online brokers offer virtual trading for practicing and learning.

    It’s too easy to lose money in a stock exchange, so start with a virtual where the money is virtual, but the stocks, stock prices, are real. Maybe the best way is to start your trading journey with virtual money, understand how they are performing, recognize when you can sell them, is it the right time, etc.

    Before you start putting your real money, you would learn the tricks of the trade with virtual money. Take it slow. You’ll need time to understand everything. Not even the most experienced traders know everything. Most important for beginners in trading is to have a trading plan, trading strategy, and to stick to them. Also, never forget to keep up your trading journal. That is an amazing tool. Add to it all your entries, exits, price of assets you trade, at which price you bought it, and at which you sold it. That will provide you a full picture of how successful your trades were. Do it with virtual trading in a demo account, also. 

     

  • Are we witnesses of the historical period on the stock market?

    Are we witnesses of the historical period on the stock market?

    1 min read

    What are basic types of Forex trading? 1

    Is this really the historical period on the stock market?

    Longest Bull Market in History? 

    Media reports that the US stock market broke the record for longevity on August 22, 2018. And some portals were ecstatic with this information and published articles about this ”historical record”.

    This would be quite a success if it is true. But, many experts claim it is not.

    The true fact is that the longest run belongs to the 12 1/2-year periods running from October 1987 through March 2000. The present bull market started in 2009, will need to wait till 2021 to beat that record.

    According to some media and experts, bull markets are rallies that go beyond 20 percent and are never interrupted by a 20 percent fall. By the rules of Wall Street, that means the S&P 500 rally that began in March 2009 will surpass all that went before it on Wednesday.

    Historical period on the stock market?

    ”It may be peaking”, said Jim Paulsen, chief investment strategist at Leuthold Group.

    Here’s the problem: the rules aren’t made from stone. They’re not laws and even they are, people make them. So, that means the rules are not perfect and they are changeable. The 20 percent threshold people understand as arbitrary, false, an creation, fake. Experts disagree on everything and that’s good.

    “If you round the data, you’re going to get a certain number of bull markets. If you don’t round, you’re going to get a different number,” Justin Walters, co-founder of Bespoke Investment Group LLC, said by phone. “If you want to do that, that’s fine, but it’s not using the standard 20 percent definition.”

    If you want to start a fight on Wall Street just ask how old the current bull market will be on Wednesday.

    “Hold the champagne! This is not the longest bull market on record or since WWII as the current buzz on the Street would have you believe,” wrote Jeff Hirsch, editor of the Stock Trader’s Almanac, in his blog post.
    As Hirsch’s post shows, that calculation doesn’t sit well with some analysts, though not always for the same cause.

    For instance, Sam Stovall, chief investment strategist at CFRA, noted objections that argue the current bull would have to run until April 3, 2021, to claim the crown. In this case, the rub doesn’t have to do with dating the start of the bull market back to March 2009. Instead, it hinges on the contention that the 1990s bull market actually ran longer than it is widely credited.

    What is historical here?

    ”Using Ned Davis rules the longest bull began on October 11, 1990, and ran for 2836 calendar days until July 17, 1998. The current bull that began on February 11, 2016, would have to run until November 17, 2023, to beat it.” wrote Hirsch.

    So what conclusion we can have if this bull may be younger than we think?

    What we should focus on is performance. If we take this is indeed the longest bull market in history, let’s focus on returns. Through that point of view, the current bull market has returned just over 320 percent, while the bull market of the 1990s gained nearly 420 percent. To break that record would really be an achievement worth celebrating.

    It is impossible to prevent anyone from celebrating or drink champagne, but do it when you have the real reason based on irrefutable facts.

    Till then: Markets go up, markets go down.

    Risk Disclosure (read carefully!)

  • How to research and choose stock?

    How to research and choose stock?

    How to research and choose stock?
    Here you’ll find a full explanation on how to research stock.

    By Guy Avtalyon

    This is the main question: how to research stock? Investors have a name for all types of research, one of them is fundamental analysis. Fundamental analysis involves looking at numbers and other measures in a company’s financials as well as assessing the less tangible aspects of a business.

    This approach can help you decide whether a stock deserves a spot in your portfolio. Pick a company you’re interested in. Read current and past annual reports and letters to shareholders. Collect the numbers and financial ratios and compare the company’s performance history to the industry and its rivals. Then work through the list of qualitative questions.

    How to perform a technical analysis

    Technical analysis is a way to understand market psychology or what are investors’ feelings about a company, which are manifested in the stock prices. Also, technical analysts are mostly short-term holders, concerned about the timing of their buys and sells. If you can identify a pattern, you could have a chance to predict when stock prices will fall and drop.

    This is useful in how to research stock because it can inform you about when to buy or sell certain stocks.

    The technical analysis makes use of moving averages to track security prices. Moving averages measure the average price of the security over a given period of time. This helps traders to easily identify trends

    Use patterns as a tool on how to research stock:

    Patterns include known price boundaries in the market price of a stock. The high boundary is known as the “resistance.”

    The low boundary is called “support.”

    Recognizing these levels provide a trader to know when to buy (at resistance) and when to sell (at support). And there are some specific patterns that are also noticeable in stock charts.

    The most usual is  “head and shoulders.”

    This shows a top price then drops, followed by a higher peak then drops. And eventually follows a peak alike in height to the first. This pattern indicates that an upward price trend will end.

    There are also inverse head and shoulders patterns, which mark the end to a downward price trend.

    What is the difference between a trader and an investor?

    An investor search for a company with a competitive advantage in the marketplace that will provide sales and earnings growth over a long period. A trader tries to find companies with a price trend that can be utilized in the short-term.

    Traders typically use technical analysis to identify price trends. Investors typically use fundamental analysis, because they are focused on the long term. The decision, will you be a trader or investor, will determine you how to research stock.

    What orders do traders use?

    Orders are what traders use to describe the trades that they want their brokers to make for them. There are a lot of different types of orders.The simplest type of order is a market order, which buys or sells a set number of shares of a security at the prevalent market price. A limit order buys or sells a security when its price reaches a decision point. For instance, placing a buy limit order on security will order the broker to only purchase the security if the price fell to a some defined level.

    This allows a trader to specify the maximum amount willing to pay, a limit order guarantees the price the trader will pay or be paid, but not that the trade will happen.

    Stop order tell the broker to buy or sell a security if the price rises above or falls below a certain point. But, the price that the stop order will be filled at is not guaranteed because it is the current market price.

    What is short selling?

    Short selling is when a trader sells shares of a security that they do not yet own or have borrowed.

    It is typically done with the hope that the market price of the security will fall. As a result, the trader can buy the shares at a lower price than sold them for in the short sale. Short selling is useful to exit a trade in profit or to hedge against risk. But it is very risky.

    This should only be done by experienced traders who understand the market thoroughly.

    What matters is developing greater self-confidence and knowing the limitations of what you can really learn and find out.

    Also, there is a combination of stop and limit orders called a stop-limit order. When the price of the security passes a certain level, this order specifies that the order becomes a limit order rather than a market order as it does in a regular stop order.

     

  • Trade in Indian stock market and win in the markets

    Trade in Indian stock market and win in the markets

    How to trade in Indian stock market and win in the markets?
    To trade in India, you must have an exit strategy. And hesitancy isn’t helpful.

    By Guy Avtalyon

    To start trade in Indian stock market, you’ll need :

    1. trading account
    2. demat account
    3. savings account

    Trading and demat accounts are combinedly created which are then linked to your savings account.

    A trading account is used to buy or sell the shares while a demat account is used to store the shares.

    A great help when creating these accounts may come from the broker for a minimum charge. We would suggest you find a flat broker as the brokerage is less.

    In India, the broker must be SEBI certified.

    The markets are a mind game and to win this game, you will need a good plan and education.

    You have to think before you do anything. It is necessary to measure every move because it will have an influence on your next moves. You must have a strategy in mind to modify in case things do n’t correspond with your plan. 

    The most important thing will be to follow the plan consistently. Actually, there is no sure-shot formula for success in the stock market.  Just like any other skills, a new investor can learn stock with trial and error coupled with patience, discipline, research, and a sound understanding of the market.

    What should your plan have?

    How to trade in the Indian stock market?

    You have to define a logical expectation of return from your capital. How much capital to be put? There are some examples.

    Rs 25000/- is just a suggestive minimum, but depending on your strategy you have to find what is convenient capital requirement build on your style of investing or trading. To win this game, you have to decide the right mix of players which means, you have to work out a list of stocks, indices, options, that work for you in order to score your return objectives.

    So, the most important is to design a strategy to pick stocks/contracts to trade/invest in. You have to define a clear risk management strategy. If some stock is having a bad day on the market, you have to formulate a strategy, how much diversified the portfolio should be in order to cut losers and hold on to winners. This means a clear well-defined risk management strategy.

    You have to have well-defined rules when entering the basic factors. For example, results, sales growth, or technical factors like breakout along with a clear exit strategy. This means you have to have some entry and exit strategy.

    HOW TO MAKE YOUR RISK MANAGEMENT

    Risk Rules: The first step is to define how much to risk or how much to lose on one single trade.

    Just on the available trading or investing capital, you should decide reasonable limits you are comfortable losing. This is important because if you know the loss taking capacity, then trades will be done without fear of losing.  And when fear is not disturbing, you can make a decision without any emotions in your mind.  Fear of loss is the biggest barrier in trading and investing and the only way to overcome is pre-defining the risk rules in the form of loss-limits.

    Size of the trade: Don’t bet everything on one trade and go broke. Or bet too little and disable full profits to stay in the business.

    Both of these will drive you off the markets. In the first case, there is too many emotions or greed. When the trade goes against, it will be hard to press the exit button and you go broke because the position was large. The right side of the trade is such that which limits the losses to 1% or max 2% of the trading capital.

    Why trade in the Indian stock market

    There are some examples, for the people in India especially. On a trading capital e.g. Rs 2 lac, you can afford to lose max Rs 4000. Therefore actually trading is at 3000. And stop-loss is put in 2800, hence maximum loss per share would be 200.

    But 4000 is the maximum loss defined, as per strategy, therefore 4000/200 = 20 share can be bought at 3000 entailing a total investment of Rs. 60,000 (3000*20). With max risk at Rs. 4000 on this trade. Similarly, for investments, you should not invest more than 10% of the capital in any single stock. For the capital of Rs.2 lac, max Rs. 20,000 can be invested in a single stock, thereby creating a portfolio of 20 stocks.

    These rules are not mathematical rules of exactness, they are suggestive and followed hence as best practices.

    Exit strategy: In trading, you must have an exit strategy. It is important to know when to get out and mark profits or losses.

    What can help you to trade in the Indian market?

    Hesitance isn’t helpful when trade in the Indian stock market.

    Some traders in India have a pre-defined profit target of three times risk. If risk per trade is estimated at Rs. 4000 then the profit will be registered when Rs.12000 profits are achieved.

    The other exit strategy is when prices fall 10% from the top value. In that case and only then, the trader will square a long position. There are different ways of exiting the trade, it is crucial to have the exit strategy in place before entering the combat zone called the stock market.

    Stop-loss strategy: No matter what strategy you adopt, 90% of trades is how to control the losses. Portfolio returns often look bad because of a few trades went wrong where the exit stop loss wasn’t defined or activate.

    Because leverage is used this is more important in trading.

    You generally keep a stop exit when price adversely moves beyond, say 2 times average true range (ATR) or crosses key support or resistance field.

    Some prefer to keep the stop at 8% of the purchase price when we are speaking about investing. Whatever your strategies are, it is a must to exit a losing trade.

    Trading vs Investing

    Both require a different set of skills, mental attitudes, and different rules.

    The important decision-making points wherein strategy differs are Stop Loss or Hold On, long term or short term, analyzing price or analyzing the value, to follow the market or to predict are some of the contrasting and opposite action points which need to be applied to either investing or trading to the exclusion of each other. Doesn’t matter whether you are a trader or investor.

    Markets swing both ways, the bear market is going to follow the bull market.

    That means you should not have a prejudice towards long trades, selling short should also be done with the same comfort.

    By refusing to sell short you forgo huge opportunity to make money when the markets are in bear zone.
    Keep in mind, money can be made in 2 ways when trading:

    1. Buying Low and Selling High!
    2. Selling High and Buying Low!

    The hardest thing in the financial markets is the ability to consistently execute the plan with strong discipline.

    This rarely happens and that is why the results are so poor. The majority of the traders do not make money, because they lack discipline. To control over self all the time is really hard, but stay disciplined all the time is the most important ingredient for success.

    Whoever does it has wealth.

    Trading and Investing are essentially connected with human emotions.

    Basically, the human being makes the decision but the emotions act as barriers that impede good decisions. Sometimes the biggest battle is inside your own mind. To be a successful trader or investor you need to understand your own temperament. Whether you are patient or impatient, fearful, or fearless. A slow decision-maker or fast decision-maker, emotional or unemotional.

    Identify your psychological outlook and select the style which suits you the best, and you can have sustained success in trading and investing. Any money-making skills have to be self-acquired. You can’t postpone efforts to self-learn the art of making money through hard work and education. There is nothing that can substitute self-acquired knowledge and experience. You will have to write your own test in the markets.
    No copying or cheating will help you to pass the test! So, don’t listen to too many forecasters or advisers!

    What is the math of profit

    It is very easy when trade in the Indian stock market.

    Reduce costs, profits will automatically increase.

    Businesses are becoming digital driving down their cost of operations dramatically.
    Every trader and investor must act in order to reduce costs and increase profits dramatically.

    And you have to go with the trend.

    Once the phase of the market is identified as a bull or bear, then one should trade or invest in that direction.

    Also, it is not necessary to trade obsessively. Unfortunately, more tradings don’t mean more returns. Contrary, as investors’ motion increases, return decreases. Sometimes if there is no clear trend in the markets, it might be better to be an observer than be a compulsory participant. Both, in life simple things are more effective and in trading or investing. The strategy should be simple and easily understood too.

    The key to success is to stick to your rules of entry/exit points, to have solid risk management, self-control to stick to the plan. Also, the ability to control your emotions is the key to success. There is no other mystery to success in the markets.

    And read about the best Indian investors.

  • How To Learn About Trading and Master it?

    How To Learn About Trading and Master it?

    1 min read

    How To Learn About Trading?

    How to learn about trading or investing? First of all, don’t worry, you are not alone.

    I’ll start by telling you, there are a lot of people who are trying to make money online. You can find a very good way to make money online and for free.

    To be honest, I am not a fan of pay-to-be-rich-quick scams online. In other words, I think trading or investing is permanent learning. And life goal is to be successful in this field for a long time. 

    For new investors wanting to take their first steps, I offer great answers to the simple question.

    “How do I get started? How can I learn about trading?”

    The first step on how to learn about trading 

    Your first step should have multiple sources of a good education. Trying and errors combined with the ability to continue will finally lead to success.

    Read books, read articles, find a mentor or advisor, study the greats. Also, read and follow the market, consider paid subscriptions and be careful. 

    For some starting level investor, the stock market can be a lot difficult to understand. Without a good knowledge, no one is capable to dive into it.

    There are two main schools of thought regarding how to choose stocks.

    The first called fundamental analysis and second called technical analysis.

    How To Learn About Trading? 1

    The first refers to the use of a company’s financial reports and public statements to analyze the strength of the business. Balance sheets, income statements, yearly and quarterly earnings, and news releases are all important tools for fundamental analysis. You can find those reports online, as are tutorials on how to read them.

    The second refers that swings in stock prices follow sample that traders can learn to detect and profit from.

    Technical analysis

    Technical analysis is not as widely accepted or practiced as fundamental analysis.  Therefore many traders use a combination of the two techniques to choose stocks.

    Choosing a company with healthy fundamentals and then from time to time trading on a technical indicator is a safer strategy than relying only on technical indicators.

    How To Learn About Trading? 2

    Before you decide to buy or sell any stock, you should completely research the company, its leadership, and its competition. There are various sites which offer excellent compilations of news stories, financial statements, and stock price charts. Stock sites also show professional analysts’ ratings of a given stock, which indicates whether that analyst advises a trader to buy, hold or sell a stock. 

    Before you enter the trade

    Before you begin buying and selling stocks, you have to decide which online trading service you want to use, firstly. 

    Choosing your brokerage partner carefully can directly affect your bottom line.

    The best advice I got as an online trader is to choose my brokerage partner with open eyes.

    What you have to do, how to learn about trading:

    Practice with an online stock simulator: Using these allows you to practice your skills with zero risks. Many come with tutorials and forums to discuss investing strategies.

    However, keep in mind that simulators don’t reflect the real emotions of trading and consequently are best used to test theoretical trading systems.

    Trade penny stocks: You can find companies offer stocks that are traded for a very low cost. This wonderful opportunity to practice leveraging the market without a lot of risks.

    Trading penny stocks mean trading outside the major stock exchanges. You can trade them on the over-the-counter-bulletin-board (OTCBB) or through daily publications called pink sheets.

    The bottom line

    In conclusion, educate yourself about financial performance indicators.

    Read the news and financial websites. Listen to podcasts or watch online investment courses.

    Join a local investment club to learn from more experienced investors.

    Books provide a wealth of information and are inexpensive compared to the costs of classes, seminars, and educational DVDs sold across the web.

    Risk Disclosure (read carefully!)



  • How to Buy Stock Options??

    How to Buy Stock Options??

    HOW TO BUY STOCK OPTIONS? 1
    Buying and selling stock options isn’t just new territory for many investors, it’s a whole new language, new world.

    By Guy Avtalyon

    Let’s see how to buy stock options. They are not new, there are historical findings that confirm their use during the Antiquity period.

    You might suppose these options markets are another superfine financial instrument that Wall Street gurus created for their own dishonest purposes, but you would be wrong.

    Actually, options contracts did not originate on Wall Street at all. These types of instruments exist for thousand – long before they began officially trading in 1973 under the name of the Chicago Board of Options.

    Since you have a better understanding of what options are (calls and puts) let’s look at how to buy a call option in a more detailed explanation.

    How to buy stock options

    At first, place, how to buy a call option. To buy a call you must first recognize the stock you think is going up and find the stock’s ticker image.  

    When you get a quote on a stock on most sites you may click on a link for that stock options chain which lists every actively traded call and put option that exists for that stock. 

    Let’s go step by step:

    1) Identify the stock that you think is going to go up in price
    2) Review stock Option Chain
    3) Select the Expiration Month
    4) Select the Strike Price
    5) Determine if the market price of the call option seems reasonable

    Are there the options for all and every stock?

    Well, this is a fantastic question because options cannot be traded for all stocks. Some of them don’t have the options. You can buy options for only the most popular stocks. They are tradable. Also, there is no possibility to always buy a call with the strike price that you want for some options.

    Strike prices are generally, in intervals of $5 e.g. $30, $35, $40. Occasionally, you can find $34,5 or $32,5 available for popular stocks.

    Also, there is no possibility to always find the expiration month you are looking for on the option for which you want to buy a call. Most of all, you will see the expiration months for the closest two months. Then every 3 months thereafter. Surprisingly, if you find the option that you want to buy a call on, you still need to make sure it has enough volume trading on it. Just to provide liquidity so that you can sell it if you decide to.

    Are options frequently traded on the most stocks?

    The most stock options are infrequently traded. Therefore have a higher bid/ask spread.

    To buy a call you have to understand what the option prices mean and you have to find one that is reasonably priced.

    If trading is at $22,5 a share in September and you are looking to buy a call of the November $32 call option, the call option price is regulated like a stock, fully on a supply and demand basis.

    If the price of the call option is $0.5 then not many people are expecting to rise above $60; and if the price of that call option is $4,00, then you know that a lot of people are expecting that option to rise above $60. The most important thing to understand when you want to buy a call is that option prices are a function of the price of the underlying stock, the price, period left to expiration, and volatility of stock itself. The volatility and the expected volatility of the stock are keeping traders in different opinions and hence drives prices.
    The most important\ thing to understand when you want to buy a call is that option prices are a function.

    The function of the price of the underlying stock, the price, period left to expiration, and volatility of stock itself.

    The volatility and the expected volatility of the stock are keeping traders in different opinions and hence drives prices.

    Many genuine investors and traders wake up in the morning and sneak a peek at the stock futures to anticipate where the market will open in comparison to the previous day’s close.

    What are the main characteristics of call options?

    – The security on which to buy call options.

    Suppose you think XYZ company stock is going to rise over a specific period of time. You can consider buying XYZ call options.

    – The number of options contracts to buy.

    Each option contract holds 100 shares of the underlying stock. Buying 3 call options contracts, for example, grants the owner the right, but not the obligation, to buy 300 shares (3 x 100 = 300)

    – The strike price.

    Strike price refers to the price at which the owner of options can buy, let’s say the stock when the option is exercised.

    For example, XYZ company ‘s 100 call options allow the owner the right to buy the stock at $30, regardless of what the current market price is. In this case, $30 is the strike price (this is known as the exercise price too).

    – The trade amount that can be supported.

    This means the maximum amount of money you want to use to buy call options.

    – The expiration month.

    Options do not last forever. They have an expiration date.

    Say, if the stock closes below the strike price and a call option has not been exercised by the expiration date. It expires worthless. And the trader no longer has the right to buy the underlying asset and the trader loses the premium paid for the option.

    Most stocks have options contracts that last up to nine months. Traditional options contracts typically expire on the third Friday of each month. So, you must be aware of how to buy stock options.

    –The price to pay for the options.

    When you buy the stock for the stock price, you buy options for what’s known as the premium.

    Premium is the price to buy options. In 100 XXX call options example, the premium might be $4 per contract.

    It means the total cost of buying one XXX 100 call option contract would be $400 ($4 premium per contract x 100 shares that the options control x 1 contract = $400).

    If the premium were $6 per contract, instead of $4, the total cost of buying 2 contracts would be $1,200 ($6 per contract x 100 shares that the options control x 2 total contracts = $1,200).

    – The type of order.

    Options prices are constantly changing, like stocks. So, you may choose the type of trading order with which to purchase some options contract.
    There are several types of orders, including market, limit, stop-loss, stop-limit, trailing-stop-loss, and trailing-stop-limit.

     

  • Investment Opportunities – How To Identify

    Investment Opportunities – How To Identify

    How To Identify Investment Opportunities
    It isn’t easy to find investment opportunities and anyone can fall into many traps while seeking that. Here is how to avoid them.

    By Guy Avtalyon

    Someone would say: We all know the basic words to successful investing: Buy low and sell high. But it isn’t so easy to find good investment opportunities.

    What else or different you can tell us?

    First of all, I have to tell you that investors need to have rules.

    Otherwise, the common saying can be difficult to perform, especially when many of your friends and colleagues are doing the opposite. If you don’t have a solid structure and order you are predestined to fail.

    Investing or trading is like a robotic work, without emotion and always strong adherent to your rules.

    You can find more and more investment opportunities opening themselves up to the investors. But not all of them are good investment opportunities. In fact, so many opportunities have drawbacks. First, you can be confused and may not pick the right one. Second, you might want to pick too many. That is dangerous per se. You can end up running like a headless fly, monitoring too many stocks, with investing more than it is reasonable. Hence, you may neglect something very important for your investment goals and financial security. The consequence easily could be your empty bank account or you’ll end up in debts.
    The following are things to look for when finding an investment opportunity.  If some investment opportunity has most of these things or all of them, you are looking at one that is likely to bring you wealth.

    For example, if you don’t see yourself owning stock in a company you are looking for in the next ten years, then you should stay away from investing in that company. Most of the money made in business investments come from owning stock in the company. Investors are leaving it alone until the value rises and reinvesting your dividends versus rapidly buying and selling your stock in a business. That is the so-called long-term viability.

    You have to measure the risk involved in a market investment against the potential reward. A good ratio is one to three. After that, you should set up a maximum acceptable loss.

    What is the first rule of investing?

    BUY LOW!

    Determine the baseline value for an investment or trade, and wait to buy it until the price is below what is reasonable. When the stock market declines and other investors panicked and start short selling, that is the best time to look for buying opportunities. Ideally, you want to purchase an asset after the price falls significantly, with the expectation that it will rise again in the future and produce a good return.

    All rules of investing

    The second rule of all investment is to SELL HIGH!

     

    After the price rises dramatically it is time to consider selling an asset. This is often a time of stock market growth when many people are impatient to buy into a rising market. When some investment shows significant gains, this is the ideal time to cash out and lock in your return. You could gather the income into a secure investment or look for a new underperforming asset and try to repeat your success.

    How to find investment opportunities?

    The golden rule is to LEARN FROM YOUR LOSSES! Yes!

    In trying to buy low and sell high, you are forced to make some mistakes. If it is easy to buy low and sell high, everyone would do it. Try not to lose sleep over it or give up investing altogether when you lose money on some investment. Maybe you just have to take a break for a while and later capture market returns with an index fund. Or you will learn to more carefully research investment before putting more than you can luxuriously afford to lose on the line. Your fears can’t be the limiting factor that mutes your potential. Let that storm be the fuel that moves you to success.

    Where to find investment opportunities?

    Use your fear to produce better outcomes!

    You should have a list of the investments you have made in the past. Think about what you could do to produce better outcomes in the future. You can get colossal insight from physically writing down outcomes you would like to avoid. That can prevent you from making emotional investment decisions. If you have a financial planner or adviser or someone else who will look over your investment ideas, that adds gravely deeper layers of reliability and responsibility.

    You have to have a plan to avoid later regrets!

    Of course, that large loss can cause you to regret because of bad investment decision. There’s also the regret that comes from watching other investments got wings. When you have a good plan of inventorying and you analyze your investment options often, that can help avoid a negative result. Writing it down makes it easier to stick to a plan.

    Ultimately, investing is about finding the lifestyle that you want to live. So, you can’t do that if never find good Investment opportunities.

    Choosing wisely may produce enough wealth to allow you to retire sooner or walk away from an annoying job. All you need is to use logic and stick to a financial plan to successfully build wealth.

  • Avoid Bad Investment Moves – Strategies that work

    Avoid Bad Investment Moves – Strategies that work

    2 min read

    Strategies to Avoid Bad Investment Moves

    It is possible to avoid many bad investments.

    If you know what “catches” to look out for and which clarifying questions to ask.

    Most bad investment scenarios can be avoided by following simple rules.

    First of all, you have to avoid emotional and personal investing mistakes, wisely avoid.

    Many investors, even the well learned, can confirm they made a rushed and impulsive decision and didn’t avoid a bad investment.

    Also, many have made decisions while high on emotions so as to score instant satisfaction.

    The danger of making bad investment choices cannot be overemphasized. You can use an extensive set of control strategies that people use to limit bad decisions.

    What are some of the bad investment choices you can make?

    * Failures of rationality – This represents the lack of possibility to see the bigger picture. The investor considers decisions in isolation and doesn’t include their impact on an entire portfolio.

    The consequence is that you can invest too much in a single asset class, industry, Or geographic market. Yes, because you know a lot about it and are comfortable with such decisions. 

    * Using a short-term decision horizon – when an investor is ignoring the appropriate goal of long-term wealth accumulation.

    The favor is short-term returns. 

    But you are here to stay. Right?

    The consequence is that losses are more likely in the short run. Much more than over longer time periods.

    People are twice as sensitive to losses as to gains. This behavioral phenomenon is known as “myopic loss aversion”. And their inclination to take short-term risks is too low.  So they often make the wrong investment decisions.
    Strategies to Avoid Bad Investment Moves 3
    * Buying high and selling low – means doing what’s comfortable amidst either bullish or bearish market conditions. The consequence is that when you are buying while markets are high or selling when markets are low is a risky strategy that fails to take advantage of market opportunities. A buy-and-hold strategy turns out to be superior.

    * Trading too frequently – this is the result of multiple emotional and personality-driven characteristic. That produces an irrational tendency toward action.

    The consequence is that investment costs are higher.  As the frequency of making the other types of poor decisions is increased.

    Strategies to Avoid Bad Investment Moves 4
    The experts recommend these seven self-control strategies. They can help counter your tendencies to make bad decisions and avoid a bad investment. The use of these strategies was not limited to investments and often included other behaviors and other important lifestyle decisions.

    Here are the seven strategies and their application to financial decisions:

    1. Limiting options – Purchase illiquid investments to avoid the urge to sell investments when the market is falling.
    3. Avoidance – Avoid information about how the market or portfolio is performing to stick to a long-term investment strategy.
    4. Rules – Use the rules to help make better financial decisions, such as only spending out of income and never out of capital.
    5. Deadlines – Set your own financial deadlines aiming to save a certain amount of money by the end of the year.
    6. Cooling off – Wait a few days after making a big financial decision, before executing it.
    7. Delegation – Delegate your financial decisions with others, allow your investment advisor to manage your portfolio.
    8. Other people – Use the help of other people to reach their financial goals. Make some appointment with your financial advisor to make and execute a financial plan. Certainly, you don’t want all your money in just one kind of investment. So you can safely choose a single advisor or firm to handle a range of investments.

    The stock market’s tendency to produce large gains and losses. So there is no shortage of faulty advice and irrational decisions. 

    As an investor, the best thing you can do to pad your portfolio for the long term is to implement a rational investment strategy. The one you are comfortable with and willing to stick to. 

    If you are looking to make a big win by betting with your money, try the casino.

    You should be proud of your investment decisions in the long run. In that way, your portfolio will reflect the solidity of your actions.

    You would this: Bargain Hunting – The Holy Grail of Investing

    Risk Disclosure (read carefully!)

  • Forex Trading is Profitable. Right or wrong?

    Forex Trading is Profitable. Right or wrong?

    2 min read

    Is Forex Trading Profitable?

    Forex trading is profitable but the market isn’t endless, you have to know that.

    The size of your trade has an important impact on how you can bring a trade out.

    Don’t look at the percentage of what a so-called pro-trader does. People like to think in percentages way too much.

    Percentage of what?

    When you start, you can have someone who would be your ideal or paragon. But you always have to keep in mind that such trader is already experienced in trading.

    She or he does some things spontaneously, and you are the one who just stepped in on this scene. But if you’ve mastered some trading skills and have tested them well on some free demo account, you may have even one advantage.

    The experienced traders have more money, it is a blessing and a burden at the same time. But you can be more flexible to trade with high precision very close to how the market moves.

    What I want to say is, you should never underestimate a “small” position. Forex trading is profitable even in that situation.

    For the FX market, you can be small fish.  

    But that “small fish” can make a couple of hundred USD per pip. Is it good enough for you? Well, that’s why comparing percentages without comparing the actual pot is an unnecessary exercise. 
    Is Forex Trading Profitable? 1
    But it isn’t easy. Hard and smart work lies behind it. Of course, you have to involve a bit of luck to find the right stocks, right things while your motivation is still on the top. But when you make any success, you will see it is worth it.

    But you have to be dedicated to trading in order to be able to trade when markets move the most. If you live in a European time zone it is from the early morning to the afternoon. But if you live in some other part of this lovely planet I would recommend to your attention, one of my older posts.

    Some traders said: I’m trading short term on the 1-minute candlestick chart.

    Take this as a recommendation:

    Average holding time depends on what the markets offer you but it is rarely under 6 minutes and rarely over 20 minutes.

    Stay focused on reversal signals and have pay attention to good ones and fake-signals apart. Support/resistance areas play a role but you need to practice to be good at it.

    You have to treat trading as a profession or a business.

    Only in that way success will come.

    Why I’m saying this to you?

    Is Forex Trading Profitable? 2I have a friend. Forex trading has been an expensive venture for him, indeed. In his first 2 years of trading, he lost $30k. He almost went bankrupt because he was naive and greedy. His main problem was, he entered at the wrong time and exit at the wrong time. No matter what he did he was always on the wrong end. At that moment we couldn’t talk about how forex trading is profitable, right? This improved drastically when he found his own method. (And maybe this is the secret of any successful trader.) Now he has been profitable for over 15 months.

    Forex trading is profitable but not for everyone

    But I’ve seen a numerous amount of people lose everything in trading.
    Hundred and thousand times you should ask yourself:

    Why do I trade? To become rich? Is it a hobby?

    Do I love it or I hate it? Is forex trading harmful to me?

    Why I am forcing myself to all of this? Just for a chance to be a member of the profitable 5% club?

    Did you ever hear the saying: “If you don’t know who you are, the market is an expensive place to find out.”

    And the most important question is: Is trading really worth the effort invested?

    Trading attracts mostly because of the freedom it provides.


    Trading Forex isn’t a “get rich quick” method.

    With constant profits in order to make enough money not only to live but to build up a constant surplus.

    So, you can move on with your plans and plan your life. Maybe your focus on how much money you can make per year isn’t the best.

    You may think you can see better, you know better and you can believe in that. But that is a great paradox and tiny line.

    If you cross it, it can be the biggest tragedy. In every single moment, you have to take care of risk control.

    It doesn’t matter what you see or you think you know.

    Risk control! Double-check! Opened eyes! Use the excel.

    Sometimes, even the things you wrote before can be very helpful. Having some downloaded system is useful but money management is KEY to success.

    To gain knowledge of how to make a profit is much much more than what you can learn from a job in the corporate world.

    The knowledge has to be the goal.

    Yeah, I know. Time is money.

    Forex trading is profitable for me.

    Is it worth it? Yes!

    Should you continue trading? Yes!

    Should you continue with your studying? Yes!

    Should you continue looking for a job? Yes!

    Can you manage to do all of these things at the same time? It is up to You.

    The main factor for success is your permanent education and training. You have to believe in yourself and find what works for you.

    The only thing that brings you to your failures may be your ego.

    And if you aren’t ready to keep going after a series of losses, Forex probably isn’t for you.

    Risk Disclosure (read carefully!)