Tag: Trading strategy

All trading-strategy related articles are found here. Educative, informative and written clearly.

  • How to select trading signals?

    How to select trading signals?

    How to select trading signals?
    Trading signals are important for successful trading but too many of them will confuse you

    By Guy Avtalyon

    To select trading signals, your beliefs are the most important driver.  

    You must have the right trading signals to guide you in the intensively competitive environments you will find in the stock market, futures, forex, and options markets.

    The challenge is that it is not as simple as finding the best trading signal. Because just like everything else in your trading system, your signals should be based on your beliefs and your trading strategy.

    If this is not the case you will have trouble pulling the trigger when you get a signal. 

    Because of the way you enter and exit the market should be based on what you believe about your trading strategy and how the markets work.

    How to select trading signals based on beliefs?

    Your beliefs about the market are the most important determinant of your ideal trading system.

    The first step to ensure you select a trading signal which matches your beliefs is to document your beliefs about trade setups, entry signals, exit signals, and initial stop losses.
    Some traders believe that there is absolutely no value in using trial and error trying all different entry triggers / buy signals/sell signals hoping to find something that works.

    According to such traders, trial and error in trading signal selection will result in a curve-fitted, worthless trading system. That can be true at some point.

    The influence of trading signals

    When you apply the trial and error method, you get a curve showing the past data. You can get a system that works fantastically well on past data but doesn’t work tomorrow or into the future.

    Maybe, for that reason, it is better to start with your beliefs and your trading strategy and select trading signals that support these to reduce your chance of curve fitting.

    When you change your approach you can found enormous benefits which included:

    • Greater clarity on objectives
    • Reduced need for optimization
    • Greater real-time profitability
    • Reduced development time
    • Simplified system design

    To be clear.

    The internet is a wonderful tool, but the vast amount of information and companies/people dispensing forex trading signals and advice can be daunting and confusing to newer traders.

    Advanced traders already can recognize what constitutes quality versus hype.

    Forex signal services

    No one forex signal service will ever meet the needs of all traders, but a good service must.

    Few trading services post their performance. There are several reasons for this:

    The performance is simply not worth showing as it does little to motivate.
    The raw data, no matter how robust, falls on deaf ears.

    The first consideration is that looking for a trading signal that generates a profitable trade on its own is nonsensical. You may get the best entry signal ever created. It will be useless unless you adopt this rule as part of your trading system. Also, you’ll need all of the required components working together. Otherwise, there is no way you will make money in the long run.

    A complete trading system needs each of the following:

    Objectives
    Setup
    Entry trigger
    Initial stop loss
    Exits

    Money management and Position size rules

    The trade entry trigger is just one part of the complete system.

    Many people also suggest that it is the least important part of the system. Entry triggers are the area most prone to curve fitting, over-optimization, and random noise in the market.

    Actually, how you exit a trade once you are in determines how much profit you make from it.

    Remember, simple is better than complex. Fewer rules is better than more rules. Complex trading systems with many rules may not perform well in the future.

    Well, it is more difficult to warp fit a simple system with several rules to past data. Hence, if you have many rules and complex manipulations you can easily fit your system to the past data. This will perform it largely useless in the future!

    One trader told us: ”Use simple trading signals that fit your trading strategy and beliefs”. That helps a lot.

  • How to create your first trading strategy

    How to create your first trading strategy

    How to create your first trading strategy
    Find how to create your first trading strategy, what to look at and how it differs from investing strategy

    By Guy Avtalyon

    Okay, you want to create your first trading strategy and, to be honest, I understand your dilemma. You would like to be successful and you want to know, what strategy should you choose to nail it.

    Listen, there!

    What is the trading strategy?

    A trading strategy is a set of trading settings that serve the currency trader or stock to determine whether to buy or sell a currency or stock, where to enter and exit the position.  And how much capital they invest in trade, and in doing so, earn a difference in price.  

    The trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets.
    A broker can offer you the opportunity to enter into trades that are multiple times the value of the margin that you place. The market is fluid and you can open a trade or exit from one very quickly, so there is potential to make considerable returns.

    What is the investing strategy?

    The investment strategy is a set of rules, behaviors, or procedures, designed to guide an investor’s selection of an investment portfolio. People have different profit objectives, and their individual skills make different tactics and strategies appropriate.

    To complicated? Wait!!! There are more!

    A trading strategy can be – automated (various robots for trading, etc.) – manual (the vast majority of traders use their own trading system.)

    We would like to show you some of them which are successful. We will give you a brief description of 5 simple strategies that can help you to maximize your profits:

    Swing trading

    You can enter a successful swing trade by timing your trade. Do that when is a breakout after a consolidation.
    What does this mean? A period of consolidation occurs when a currency pair moves in an almost precisely defined price range. A breakout will occur. What really happens is that the values of the currencies “breakout” the resistance level. If you predict the breakout accurately, you’ll profit from that trade.

    A swing trade uses a channel trading strategy. Trades take place between the support and resistance levels of swing highs and swing lows.

     

    Rangebound trading

    Here you will need to identify a currency pair that trades within a certain range. Then, you have to identify the support and resistance levels and then time your trade by taking these movements into account.

    It is likely that there will not be a big difference between the upper and lower prices of the range. Because of this reason, you could trade in one of two ways.

    The first option is to trade within the range which will limit your profits as the price difference is bound to be minimal.

    The second way is to look for a breakout from the range. If this happens, you will have to react quickly. You can make a quick profit, but you can lose out. When you see a “false breakout” be extremely cautious because it may mean the market is moving against you so you’ll end up in losses.

    Position trading

    A position trade is not a short-term trade. It is based on macroeconomic trends. It could run over weeks or months or years. Traders take a long-term position based on an understanding of how inflation or the rate at which an economy is growing, will affect the value of a currency.

    If you want to adopt this strategy, you have to stay stick to two rules. First, do not use much leverage. A maximum of 10:1 is quite good in the forex trading. Secondly, the size should be relatively small. This is because you are thinking that some large movement in the relative price of the currency pair is possible.

    Carry trade

    A carry trade means to enter the trade that could take advantage of the interest rate differential of the two currencies.  That means you will be selling a currency with a low-interest rate and buying one that provides a greater rate of interest. Normally, you would choose a currency pair where the higher interest rate currency will appreciate to the lower interest rate currency.

    Carry trades can be high-risk. They are based on a combination of technical and fundamental analysis.

    Momentum trading

    Well, you have to know that the price constantly lies, but momentum tells the facts.
    At the simplest level, you can use momentum trading when rates are going up, then you should buy and when they are declining, you should sell and maximize your profits in the forex market.

    If you want to implement this strategy, you have to identify the currency pairs that show the greatest momentum and have moved most strongly. It is possible by tracking price movements over a period of several weeks.

    Then trade those pairs that show the greatest momentum.

    What do you need to be successful in trading?

    Let’s go back to the beginning and say a few words about how for every trader is important to use a reliable and robust trading platform. You will need an Expert Advisor (EA). It allows you to conduct backtesting of your trading strategy before you commit your funds. You will need one that functions effectively on your smartphone and your tablet as well, a versatile platform that works well under Windows, MacOS, and Linux.

    A system with 100% success does not exist so that you must not expect any of these systems to get your earnings each and every time. But, while following all the rules you can only end up in the plus!

    How to create the first trading strategy?

    New traders start to learn trading strategies from other traders. They are mirroring strategies from experienced traders. But, how do they get started with their trading strategy?

    Fun fact 1: Creating your first trading strategy is easy.
    Fun fact 2: Creating a profitable trading strategy is hard.

    Basically, you have to follow some basic steps while formulating your first trading strategy. Building your own can be fun, easy, and surprisingly quick.

    But, don’t expect your first trading strategy will make you rich.

    So, what you have to do?

    Recognize the real reason why you want to enter the market and have principles.

    Before you start creating your own trading strategy, you must have an idea of how the market works. Most importantly, you need to answer this question.

    How to make money from trading?

    To answer this question you have to read and learn about both technical and fundamental analysis. Avoid get-rich-quick offers.  Take care of demand and supply. Never have trust in theories that claim that people are perfectly rational.

    Your principles will define your every step in the market, so it is very important to stick with it. It will need your full attention. It is an urge to follow one principle in your first trading strategy. Never choose complicated solutions. The simpler, the better. Trade by the KISS rule (Keep It Simple Stupid).

    In the beginning, you don’t want to be astounded by a complex strategy. Besides, a trading strategy with more moving parts is harder to manage and improve.

    How to choose a market for first trading strategy?

    What do you want to trade: Forex, Options, Futures, Equities?

    If you want to trade forex, you have to understand what you are buying and selling with a currency quote. You have to learn about the different models of forex brokers.  You have to know how the margin is calculated. If you want to trade equities, you must know what a share means or the difference between a blue-chip and penny stock.

    There’s a lot to learn about each market but you can not start to learn until you choose your trading market. The rule of thumb is that you must understand the market you choose to trade.

    Define a trading frame

    Yeah, I know.

    It’s not easy to decide on a trading time frame. At first, you will not know if you like more quick scalping or daily swing trading.

    Maybe an idea to try intraday trading isn’t bad. You’ll be able to watch the market for long-term periods. But you have to know, when you trade fast time frames, you get fast feedback which shortens your learning period.

    If you are not able to watch the market for long-term periods, start with end-of-day charts. With some effort, you can learn enough to decide if swing trading is for you.

    What have you to define?

    Entry trigger. – It will help you enter the market without hesitation or demur. Both, bar and candlestick patterns are useful triggers. If you prefer indicators, oscillators like the RSI and stochastics are good solutions also.

    You have to plan your exit trigger. – The market can go against you, causing you limitless losses. Having a stop-loss option is crucial. You need to plan when to exit if things go wrong and also you need to plan when to exit if things do go your way. The market will not go in your favor always. That’s why you have to know when is the moment to take profits.

    Take care about the position size

    Set your risk limit. – Once you have your entry and exit rules sorted out, you can work on limiting risk. The basic way to do so is by position sizing. This means that for a certain trading setup, your position size determines how much money you are putting on the line. If you double your position size, and you will double your risk. You should be very careful about your position size.

    And it’s time to choose a tool to determine the trend. – You don’t trade when you see a Pin Bar (shortener for ‘Pinocchio Bar,’ a single candlestick set up that clues price action traders into potential reversals in the market). Trade only when the market is rising, and you should use a bullish Pin Bar to trigger your trade. You don’t trade when you see a Gimmee Bar (price action reversal candle formation). Trade only when you conclude that the market is going sideways, and you use a Gimmee Bar to enter the market.

    You have to decide on a tool to help you judge the market context, trending or not, up or down. For example, choose price action tools like swing pivots or trend lines. You can also use technical indicators like moving averages and MACD (Moving Average Convergence Divergence).

    Write down your first trading plan

    Write down your trading rules. – It is always good advice. Your trading strategy is still simple and you might be able to memorize the trading rules. But you must write down your trading rules. If you write down the trading plan you will get a robust and trustworthy method. Just in order to ensure discipline and consistency. It also gives you a record of your trading strategy. You will find it useful when you have to improve it.

    When you have written rules, you can backtest the strategy. – When you have a discretionary trading strategy, backtesting can be an arduous process. Discretionary trading is decision-based trading where the trader decides which trades to make based on current market conditions, and system trading is rule-based trading where the trading system decides which trades to make, regardless of current conditions. So, if you have a discretionary trading strategy you need to replay the market price action and record your trades manually.

    But if you have a mechanical trading strategy and a coding background, you can speed up this stage. Looking through the trades one by one is a fantastic way to develop your market instincts. This can also help you think of ways to improve your trading strategy.

    Should you be worried if the first trading strategy is not profitable?

    It’s okay. Your trading strategy is not fixed, it is a living thing. As your experience and knowledge grow, your trading strategy will improve. Try to avoid radical changes to your trading strategy.

    Your goal is to achieve a positive expectancy with every trade. Not positive profits for each trade. Statistics have to work for you.

    One thing is the most important when you create your first strategy and enter the market for the first time.

    Don’t be stubborn on the market. That could be the biggest mistake.

  • How I Lost 10.000 dollars On A Trading Platform

    How I Lost 10.000 dollars On A Trading Platform

    How I Lost 10.000 dollars On A Trading Platform
    Lost money in trading isn’t a big deal. But lost self-confidence is the disaster.

    How I lost 10.000 dollars on a trading platform? It was a painful experience and I want to share that with you. When you hear that somebody lost $10,000 on a trading platform, what is your first thought? How stupid he/she must be!

    Thank you. I’m that one. I lost! So, what?

    My entire savings were gone. Don’t even think that I traded without knowledge. I went through all the forex courses available to the time and I’ve spent a lot of money to pay for them.

    Let’s go back to that moment in my trading history.

    Only a few hours ago everything was fine. But what happened? Let’s take a look. I lost! OMG, I lost all my savings!

    First of all, I was so-called, “day trader”. There was no reason I couldn’t have made a billion dollars day trading. Actually, I was the exception. I made a nice sum of money before stopping. The secret was that I treated the thing with respect. I did not plan to get rich overnight, but in a reasonable time, yes. My plan was to become indecently rich in 2-3 years. And I was on my way to becoming so. In fact, I was like many others. Becoming filthy rich for 2-3 years?

    How stupid I was!

    Fun fact: I was trading without proper preparation and education.

    Ha? What do you think about me now?

    I never listened to what my father told me:

    “Don’t gamble, it is not worth it. Build up your assets with honest work and time. There is a time and a place for everything. With gambling, enough is never enough.”

    I thought I knew everything and I have the holy grail in my hands. Just because I bought a trading robot. Yeah, that was very smart of me. Well, after 6 months, my trading account was gone. 

    Kaboom! It exploded and disappeared in its own smoke! That’s how I lost 10.000 dollars on a trading platform.

    I lost everything! How it was possible? I believed marketers and some guys with their “track records”, and hundreds, thousands of testimonials. It is hard to resist when you read or hear some of them.

    Would you really like to know how I lost 10.000 dollars on a trading platform?

    How I Lost 10.000 dollars On A Trading Platform

    Take a look at the image above. What can you see? Stop-loss levels. My trading strategy didn’t have stop-losses. I didn’t see the point of using it! The truth is, with a stop loss, you’d get sold out at a loss, and then the market would move back and you would have ended up making money if not sold. But I didn’t see that opportunity, I just wanted to earn a big sum of money.

    I had no strategy except to make money

    And I really believed that the robot knows what it is doing. I started investing slowly. It was fun. I checked the price of my investment, followed the news on Twitter, and talk about the company’s products. Then the stock price plummeted and I didn’t have a stop loss and that ruined me. Can you understand how I lost 10.000 on ta trading platform now?

    Only then I realized that I had chosen the wrong stock, the wrong company.

    My skipping of stop-losses and liquidating my position at a very low price. That triggered a chain reaction with all my positions being liquidated in a few minutes. The market was having one of its ‘corrections’. I’d received multiple margin calls overnight that had gone unanswered, so my CFD provider sold my positions out.

    The people I was playing against were in many instances the big financial institutions. These institutions’ employees aren’t so many traders as risk managers.

    I didn’t realize that trading is like a game of tennis.

    You need to know who your opponent is

    Today I know what was obvious, that this would never have worked. Do you really think that some rich guy believes in some trading robot account to make his buying decisions?

    Of course NOT! But  I have seen a number of miracles happen.

    And the truth is only ONE! Trading without the right knowledge leads to a deep disaster.

    When I see people who are day traders and they are following some crap newsletter or some coach with a fudged up track record, I am going crazy.  I can’t even see someone watching FOREX algorithm sales pitch or sniveling over some poor stock report.

    I have that one desire, I just want to say to them: you are guaranteed to lose money in any period of time unless you learn to trade well. If you trade without the proper education you should go to some casino or play the lottery. You would have better chances to win. Not to lost.

    Yes, how I lost 10.000 dollars on a trading platform? I faced that beast.

    The nature of the beast is that even if you are financially educated and you think you know everything about trading, investing or markets at all, you still haven’t guaranteed to win.

    For you to know, I’m not selling anything. It didn’t even cross my mind to teach you how to trade. Hm, maybe I could sell my ideas, I could run some newsletter and give you trading ideas? That kind of person makes a lot of money, indeed. And they are generous when they have some secret ideas to share with you for free.

    How I lost 10.000 dollars is true BS! 

    I am not saying all that information is bad, you just have to be careful and try not to follow anyone uncritically.

    The Forex systems and robots stirred by internet marketers are a joke. Especially if you think that’s how they make money on Wall Street. And believe me, they DO make tons of money. The markets are full of sharks and they will eat you quickly if you don’t stick to simple and reasonable rules instead of their predatory advice.

    Forget about making 20% per month. That’s how poor people like to think.

    I learned a few key points when I lost on a trading platform exactly $10,000. My risk tolerance was pretty high. I never felt the need to sell. I regret losing the money, but I never regret making the investment.

    The lesson to myself was: you have to know whether it will move up or down and markets must agree with your judgment and you also need to know when the stock will move.

    To be successful with individual stock investing, you must predict its future movement AND when that movement will come. You’ve got to be fluid as a trader and there are no guarantees.

    The Forex market is the most volatile market in the world and therefore it cannot be manipulated.

    KISS, live long and prosper, and trade smartly!

     

  • Good And Bad Investment

    Good And Bad Investment

    2 min read


    When you work hard to earn money and you earned a surplus that you can invest, you want to make sure it isn’t going to disappear on you. Take your time to carefully understand an investment prior to putting your money into it. It is a very important concept. 

    Sometimes it’s better to miss out on a great investment than it is to be involved in a bad one.

    Of course, there are good and bad investments, but the question is how to tell if something is a good or bad investment.

    The act of accumulating and investing wealth is a dangerous proposition.

    The hardest part of the process isn’t picking the right investments, but rather, guarding our hearts from the greed of money.
    We need to always be aware of the desires and possibilities, especially when money is involved.

    While supposedly ”market-beating” brokers and advisors tend to profit in all market conditions. On the other side, we have the performance of the typical investor over the past 20 years. But we can precisely describe them as shockingly poor.

    There is a lot of confusion surrounding investments, but truth is that investment is anything that you can buy and hold on to in order to gain value.

    Literally, the investment can be anything you can buy and sell.

    The key is to realize there is no such thing as a naturally good or bad investment.

    What I mean is if you make right timing, you can be wrong about valuation and strategy, and still come out with a profit.
    Or if your valuation is strong, you can be wrong about timing and strategy and still come out with a profit. You may have a

    positive expectation with good risk management. In other words, your strategy is good.

    But your profit is assured over time even though any single investment can fail on timing and valuation.

    Successful investing is all in the process: risk management, strategy, and timing. It takes work and effort.

    There is no one-stop solution. There is no magic pill. If you’re looking for instant solution and asking what is a good investment, your thinking is in the wrong direction.


    Everything, but literally everything can be a bad or good investment, depending on the moment you enter, the strategy, the trading plan, investment plan.

    For someone who is trying to identify solid investment opportunities from among various available choices, it would be helpful if you are able to identify financial opportunities as distinctively good or bad.

    However, it’s not always a black-and-white task.

    Some of the processes depend on your own good perception. There are some red marks that forewarn of a potential losing bet. However, as well as some positive signs that could lead to a profitable investment.

    The average investor’s investments underperformed the returns of almost every asset class. Part of the reason for this is the tendency of investors to buy high and sell low.

    In times of market volatility, many investors panic and dump their stocks. They often make poor investment choices. They are seduced by the promise of high returns from investment products. That is difficult to understand and hampered with high fees.

    A good investment is one that meets your goals and objectives.

    A bad investment is one that doesn’t meet your goals and objectives.

    To find good investments you must have an understanding of what is realistic. What kind of return should you expect on an investment? If you have a good sense of what is and is not possible you are less likely to get scammed.

    You must be able to keep your eye on your chosen investment, and this is something that can be hard to do. Not all investments are easy to track in this way. The best thing to do is to make sure that your focus is primarily on material assets, as these are the kinds of things you can easily see, and they are more likely to be easily tracked too. As long as you can keep an eye on your investments, you can be sure that you are doing with it what you should be doing in order to make money.

    I presented you a few essential rules you can use to avoid bad investments and recognize good.

    Those are not must-follow rules. You can think of them more as guidelines. Especially if you’re a new investor, using these rules to stay away from bad investments can help you to make better choices.
    And never look for the big, fast wins. You’ll be crushed.

    Risk Disclosure (read carefully!)



  • Is It Possible to Lose Money Trading BTC and Crypto?

    Is It Possible to Lose Money Trading BTC and Crypto?

    Is It Possible to Lose Money Trading Bitcoin and Crypto?
    Never trade Bitcoin or any other crypto without a strategy.

    By Guy Avtalyon

    Yes, it is possible to lose money trading BTC and crypto. It is, at the same time, one of the prettiest ways to be rich or poor.

    First of all, trading cryptocurrencies is not an easy task – it is a CHALLENGE and FIGHT!
    That’s the point!

    Frankly, you are not the only one who loses money right now. But remember like in a war: the Lost battle is not lost war.

    It shouldn’t be the question of WHY people lose money in crypto trading (it’s almost the same in every trading), the challenge is how people manage it in general.

    Crypto trading is one of the best “money-making” methods today. If done right you can’t lose money. If not it so easy to lose money trading BTC.

    In order to avoid failure, Traders Paradise will introduce several reasons why people are losing money by trading crypto.

    Is there a reason to get panic?

    Well, actually there is no reason.

    One of the biggest and most important tools that traders have is technical analysis.

    But there are so many and plenty of ways to lose money! Trust me!

    For example, you can use social media predictions. Or you follow someone in the hope that he/she knows what to do.

    And there can be the first catch.

    You can lose money if you can become a victim of fake news. Because naturally, marketing always goes through these channels to keep up with the current information highway traffic. It wouldn’t be a good idea to buy coins by following “Tips” given by ICO’s or people that are trying to sell their coins to increase the value of what they have.

    Right? They’re trying to create a fake “hype” that can end up in disaster.

    That’s why you should always do your own researches. Clear?

    FOMO or “Fear of Missing Out” is something that most people are actually feeling today. The Bitcoin train left the station a long time ago leaving people with doubts which altcoin could be the next rocket star. When Bitcoin has soared up to heights that no one has ever dreamed, a lot of people were in awe and dismayed that they didn’t buy BTC earlier.

    This sense of lost opportunity again triggers, always when a price of a coin goes up making people buy at the wrong time (the price is high, damn) with the fear of it not going back down.

    Strategy!!!

    Of course, you MUST have a strategy! Crypto trading is very severe. Before entering the crypto trading you have to be well prepared. Otherwise, you can lose money trading bitcoin. Entering into the space of crypto trading without having any strategy ready for use is just like putting a hand into the basket full of dangerous snakes.

    You will not survive! You should buy some books about trading strategies.

    “Hold on for dear life.” HODL, damn! Crypto trading platforms or websites have a feature known as “Stop Loss”. There you will be able to control the loss of your assets by setting a “safety net” that would stop your loss on time and not drag you down to limbo. Limbo is not a good place!

    Leverage! Too much of it is bad.

    Leverage can be devastating if not used properly. It is when a trader uses borrowed money to increase trading position beyond what such could from existing cash balance on the trading account. The broker allows leverage through margin trading and borrows missing funds

    If you are trading with a 20:1 leverage you can earn $20 if the price of your trade goes up by $2.

    But if your investment loses and it goes down $2 you also lose $20 instead of earning when the price goes down.

    A leverage trade is always expressed as a ratio: for a 20:1 leverage, you will be able to buy $20 assets with only $1. Old trading saying is “Do not ever trade more than you can afford to lose!”

    The most popular adage in the trading world refers to a making margin trading or the use of leverage to go beyond the line of trading more than you can afford.

    Since you are already in debt the minute you took the leverage.

    And now you have the right reason to invest some time in learning.

    You don’t need a degree! All you need is to read and to make a decision or you will face all ways of successfully losing money in trading Bitcoin and crypto.

    Good luck!

  • Making Money From Home – How Is It Possible?

    Making Money From Home – How Is It Possible?


    An ideal job for most of the young people is remote work and here are some possible jobs for making money from your home.

    By Guy Avtalyon

    Making money from home is possible and maybe the most popular these days.

    But, what do your fellows or cousins say when you express your desire to make a lot of money from home?

    Most of them say: “Okay, then go to school. Be a good student. Find a good job and work hard. ” You already know that, and it’s great to have an education. But this is not a guarantee that you will make big money.  On the other hand, you know that there are many people who make a lot of money in a relatively easy and effortless way.

    And whenever you mention to your crowd that you know some guy or girl who are making money from home, what answers you have as feedback?

    “He’s/she’s a thief.” “He/she has connections everywhere.” “It’s not an honest business.” “He/she was lucky.” “He’s/she’s one in a million.” And a bunch of similar stories.

    Yeah! Tell me something about that!

    However, these are just excuses.

    OK, the truth is that you have to work for money. But it is not enough just to do something. It’s important to do it SMART.

    There is a saying: Do it smart, not hard.

    And that’s true. If hard work is the only important thing to gain wealth, all the people in the world would be at least millionaires.

    What does SMART work mean and how can you make money without HARD work?

    It’s very simple.

    Smart work means doing the work once, then for months (sometimes for years) to enjoy the fruits of your work.

    Passive income is making money from home

    When you heard someone say, “I started looking for ways to get a passive income.”
    Probably never.

    But you’ve heard a thousand times: “I started looking for a job.” (Or worse: “I’m waiting for a job.”)

    And when you try to explain passive income to someone, they immediately say that you are lazy.

    I’ve heard of innumerable ways of passive earning. You can write a song, record a home video, patent an idea, write a book. You can sell handmade on Etsy, you can be freelancer, virtual assistant, or you can sell cookies. Or even simpler, you may begin to earn money from home, by trading.

    With the rapid development of computers, mobile devices, and faster Internet, there are more and more opportunities for automating some jobs and generating passive income.

    I’ll give you the ultimate beginner’s guide to trading online. First of all, you have to recognize different kinds of trading.

    What to trade while making money from home

    STOCK TRADING: That is the art of buying, holding, and selling stocks (also called shares) of securities listed on public stock exchanges.

    FOREX TRADING: That is the art of buying and selling currencies in the hopes of making profits on the difference in the value of such currencies in global economics.

    OPTIONS TRADING: That is the form of derivative trading in which people trade contracts that give them the rights (but not obligation) to buy or sell an underlying asset at a predetermined price.

    BINARY OPTIONS TRADING: Form of trading in which traders expect to earn a predetermined payout or nothing at all (they are also called all-or-nothing options) based on the success of their ‘prophecy’ of the outcome of a specific market event. Little complicated and not secure.

    YOUR FIRST TRADE

    You’ll need to decide on the kind of assets or securities you want to trade. After that, you’ll need to make is choosing the right broker or brokerage firm through which you’ll access the markets. That’s very important because the broker you choose will have a direct influence on securities you’ll be able to trade, on tools you’ll have at your disposal, how much you’ll pay in fees, and what final returns you can expect on your trades.

    You have to find a broker that would charge relatively low fees and provide you with a full package of resources to make your trading experience easier.

    TRADING STRATEGIES

    The main difference between trading and investments is that a trader seeks out market movements for profit, on the other hand, an investor waits to profit from long-term price movements in the assets in their portfolio. A trader will make tens or hundreds of trades within a week while an investor will buy and hold an asset for months or years. The first action in creating your trading strategy is to create a trading plan.

    A trading plan is like writing a business plan for some entrepreneurs. It will help you to make a realistic decision in periods of rapid market movement when your emotions might lead you to make impulsive decisions.

    A trading strategy should include specific goals such as: getting out of debt, retiring early, making your first million. Also, your trading strategy should include your asset allocation and diversification moves.  As a beginner, you shouldn’t put more than 5% of your trading capital per trade. Make sure your trading strategy contains a mix of fundamental analysis of global events, like wars that impact oil prices, but also technical analysis like trading rules based on price and volume transformations.

    It is important because you can use this information to determine your entry into trades, your exit when the trade goes your way, and your escape when the trade goes against your plans. In you, your best interest is to develop the disciple to incorporate stop/limit loss orders into every trade you place.

    New traders can use technology to lower the entry barriers to trading by automating many of the activities.

    THERE ARE SOME OF THEM:

    * Trading bots – This is simply computer programs with instructions based on a predetermined set of market indicators and parameters. You can use automated trading systems to trade stocks, options, futures, and foreign exchange products. It is based on a predefined set of rules, which determine when to enter an order, when to exit a position and how much money to invest in each trading product. Trading bots are especially helpful to beginner traders and sometimes, a bot can be an important market ally for reducing your losses.

    * Stock screeners – That can help you filter the stocks in the market to narrow down potential winners before their big breaks. Screeners are helpful to identify top winners and losers, stocks on momentum, and stocks that are possible to break out above resistance levels or break down below support levels.

    * Social trading – This is a type of trading in which traders rely on users’ financial content, gathered from different networks. This type of trading provides you the platform, so you can be part of a society of successful traders. That may help you to make your own trading decisions.

    WHAT YOU HAVE TO REMEMBER

    Always use a trading plan, don’t underestimating the importance of a trading journal, change trading strategy after every trade.

    Test your trading skills on some FREE DEMO ACCOUNT in a virtual environment before you start risking your own money. Practice trading strategies so that when you’re ready to enter the real market, you’ve had the practice you need.

    Do you have any experience in trading? Share with others.

     

  • Trading Or Investing – What’s Better Strategy?

    Trading Or Investing – What’s Better Strategy?


    Understand the differences between trading and investing to be able to choose your strategy for approaching the stock market

    By Guy Avtalyon

    Trading or investing? Actually they are two very different strategies of trying to profit in the financial markets. The goal of investing is to continuously build wealth over a long time through the buying and holding of a portfolio of stocks, mutual funds, bonds, and other investment products.
    Investors usually increase their profits through compounding or reinvesting any profits and dividends into new stocks

    Trading versus Investing

    Investments are usually kept for years, sometimes even decades. There are many advantages to investing for a long time, for example, interest, dividends, can give profits also. Investors are more concerned with market fundamentals, such as price/earnings ratios and management predictions.

    On the other hand, trading involves the more frequent buying and selling of stock, commodities, currency pairs, or other, with the goal of generating returns that outperform buy-and-hold investing. Trading profits are generated by buying at a lower price and selling at a higher price within a short period of time. But, trading profits are made also by selling at a higher price and buying to cover at a lower price (known as “selling short”) to profit in falling markets.

    For traders, the stock price action is more important. If the selling price goes up, they will usually want to sell the stocks they hold. Trading is more the art of right timing while investing is the ability to create wealth by increasing interest, plus dividends over the years. Investors’goal is to keep excellent stocks in the market. Trading will give you a chance to profit on short-term market movements.

    Investing means to hold stocks for a longer time, longer than 5 years, for example. But some investors hold their excellent stocks for decades and sometimes they are the part of the inheritance.

    Stock investor versus stock trader

    Stock traders and stock investors approach the stock market with the same objective but use different modus operandi. But stock investor tries to achieve this through a single transaction, whereas the stock trader chooses multiple transactions but in quick succession. The stock investor just buys and holds while the stock trader buys and sells stocks on a continuous basis.

    Select stocks for investment

    Stock investors are very patient and have the tendency to hold stocks until the market realizes their actual worth.

    Stock traders are simply concerned about the price movement and they are ready to buy an overvalued stock if the price movement suggests so. They are least worried about the valuation of the stock.

    Trading tools for trading and investing

    Stock investors rely on fundamental analysis for identifying investment avenues. They utilize top-down and bottoms-up approach together with ratio analysis for stock selection.

    Stock traders employ technical analysis to maximize their returns. They are concerned about past and current price movements.

    Different market niche

    Stock investors pay more attention to taking dividends payments while traders never or rarely pay attention to dividends. This limitation makes the derivative market more suitable for traders and the cash market for investors.

    Why you have to know all of this?

    You have to know, to recognize, your own psychology before entering the market. To find which of this technique suits you better. Identifying your personality will enable you to employ the right tools and techniques to be a winner.

    If you are comfy with speculation, be a trader, and if you are a hunker, choose to be an investor.