Tag: trading

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

Trade signals – What Is It and How To Use?

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2 min read

Trade signals are simply when someone is making a trade call. Either to buy or sell a security or other asset, generated by analysis.

They show you that it is a good time to buy or sell a particular security.

So if they believe an asset will go higher or lower, they will tell you via some kind of message, email or software. After that, it is up to you to follow or not to follow.

Actually, trading signal is a alert that is based on technical indicators.

Trade signals come in a variety of forms. They can be bull or bear pennants, rectangles, triangles, and wedges, as well as head-and-shoulders chart patterns. Trade signals may also bring attention to abnormal volumes, options activity, and short interest.

There are lots of trade signals

As anyone can make calls, the challenge often is finding one run by an actual trader. These type of services exist in the institutional world as well. They just tend to be a little more accurate than ones you find available to retail traders.

Market Signal is an unintentional or passive passage of information or indication between participants of a market. For example, If a firm issues bonds it indirectly shows that it needs capital and also desires to retain control. Thus instead of equity capita,l it prefers loan capital. It is based on technical indicators. And usually is the sign for when to sell or buy a particular product.

It also brings the attention of users to the other options available, abnormal growth and short-term interests.

Trade signals in volatile markets

Using signals in volatile markets can help to point out opportunities to the investors. Also, they will signal them if they disappear.

There are usually two ways to deliver market signal: send news and activity. The market signal expects to deliver consumer, rivals and outlet member. And the earlier studying of the market signal which is mainly a concentration of signal’s influence.

For instance, it is the price signal where costly products make the customer think it is made of high-quality raw material.

That is a kind of advertisement in which the main aim is to make the customer think that a certain enterprise has more advantage.

Every company doesn’t market in a static environment, the competitor and member of the outlet will make prediction and reaction to enterprises, their decisions process is a dynamic market mechanism.

Trade signals in Forex

In Forex, traders are using trade signals all over the world to aid them in making critical decisions about their trades. They are one of the most important tools a trader has, and almost all traders choose to use them in one way or another.

There are many types of signals systems, some are offered for free while others for a fee but take in mind that a trustworthy service should include information about taking profit and stop loss configurations.

A forex signal is a suggestion for entering a trade on a currency pair, usually at a specific price and time.

Who can generate the trade signal? Human-analyst or an automated Forex robot supply a subscriber of the forex signal service. They are usually sent via email, website, SMS, RSS, tweet.

The majority of signal providers focus on supplying signals based on technical analysis and a minority work on fundamental analysis or price action.

Technical analysis, such as Ichimoku and candlestick charting, show both short and long-term price trends giving the signal provider flexibility in supplying a range of trade options.

The fundamental analysis gives longer-term trade ideas. Price action gives extremely short-term trade ideas, often more suited to scalping.

Trade signal in the stock market

The signal in the stock market is developed by George Lane. It is an indicator that measures the relationship between an issue’s closing price and its price range over a predetermined period of time.

A short note about George Lane (1921 – 2004): He was a securities trader, author, educator, speaker, and technical analyst. He was part of a group of futures traders in Chicago who developed the stochastic oscillator (also known as “Lane’s stochastics”). This is one of the core indicators used today among technical analysts. Lane was also President of Investment Educators Inc. in Watseka, Illinois, where he taught investors and financial professionals basic and advanced technical analysis methods. He popularized the stochastic oscillator.

Stock trading signals

Stock trading signals are simply the implementation of a trading system or method.

The actual signal is given when a traders system determines all criteria necessary for a new buy. Signal are met now and a new buy order can be placed by the trader.

Stock trading signals are most often associated with technical analysis. This is a study of price action and derivatives of price action.

An example of a technical analysis price indicator may be a Moving Average or MACD. Traders can receive stock signals on thousands of trading methods.

Trading stocks can be extremely lucrative when you are able to find trading signals that are proven to be effective. Trusted stocks signals help you predict the market investing in stocks. Doing that with live trading signals sent directly to your device, in the app. With this, you will be able to get live rates on hundreds of different assets.

How does it work?

The software scours social media and accumulates posts, comments, etc that include keywords of interest. All this data is then filtered and crunched to produce interesting statistics. Showing the true public opinion using their words, giving an in-depth insight into public minds.

Risk Disclosure (read carefully!)

9th September 2018
What is Speculation? Trading or Gambling?

3 min read

The definition of speculation says:

The speculation involves trading a financial instrument involving high risk, in expectation of significant returns.
The motive is to take maximum advantage of fluctuations in the market.

Who are speculators?

Speculators are prevalent in the markets where price movements of securities are highly frequent and volatile. They play very important roles in the markets. Because they can absorb excess risk. And provide much-needed liquidity in the market by buying and selling when other investors don’t participate.

What is speculation?

Let’s be clear.

Speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more worthy in the future.

Speaking about finance as a field, speculation is also the practice of engaging in risky financial transactions. In an attempt to profit from short-term fluctuations in the market value of a tradable financial instrument.

Rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, dividends, or interest.

Not one speculator pay attention to the fundamental value of a security. Instead, speculators are focused purely on price movements. Speculation can involve any tradable good or financial instrument. Speculators are particularly familiar with markets for stocks, bonds, commodity futures, currencies, fine art, collectibles, real estate, and derivatives.

Why speculators are important?

Speculators play one of four primary roles in financial markets, besides hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageurs who look for profit from situations where fungible instruments trade at different prices in different market segments, and investors who seek profit through long-term ownership of an instrument’s underlying attributes.

Why wouldn’t we consult history?

The appearance of the stock ticker machine in 1867, removed the obligation for traders to be physically present on the floor of a stock exchange. Since then, stock speculation went through a dramatic expansion through the end of the 1920s.

The number of shareholders increased tremendously. Let’ say, from 4.4 million in 1900 to 26 million in 1932.

Whether speculation has a place in the portfolios of investors is the subject of much debate. Some investors believe the market is always fairly priced. They are thinking about speculation as an unreliable and unwise way to profits. Speculators believe that the market has a lot of variables and each of them is the opportunity for capital growth.

The view of what distinguishes investment from speculation and speculation from excessive speculation varies widely among pundits, legislators, and academics.

Speculation as higher risk

Some sources note that speculation is simply a higher risk form of investment. Others define speculation more narrowly as positions not characterized as hedging.

The U.S. Commodity Futures Trading Commission defines a speculator as “a trader who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.”

The agency emphasizes that speculators serve important market functions. But defines excessive speculation as harmful to the proper functioning of futures markets.

Frankly, some speculation is necessary and unavoidable.

Why?

In many common-stock situations, you can find substantial possibilities of both profit and loss, and the risks therein must be assumed by someone.

True?

Many long-term investors, even those who buy and hold for decades, maybe classified as speculators. Of course, excepting only the rare few who are primarily motivated by income. Or the safety of principal and not eventually selling at a profit.

We already conclude the trading is art.

But we have to admit that speculators are real artists.

Yes, we know that some market pros have the opinion that speculators are gamblers. But as we said above, a healthy market is made up of not only hedgers and arbitrageurs, but also speculators.

Economist John Maynard Keynes said that speculation is knowing the future of the market better than the market itself.

And you know who Keynes was. This giant of finance, English economist, journalist, and financier is best known for his Keynesian economics, theories on the causes of prolonged unemployment.

He developed, so-called, Keynesian economics during the 1930s in an attempt to understand the Great Depression. Keynesian economics is a theory of total spending in the economy (called aggregate demand). And its effects on output and inflation.

A Keynesian believes that aggregate demand is influenced by a host of economic decisions, both public and private and sometimes behaves erratically.

Let’s go back to speculations.

Speculation usually involves more risks than investment.

That’s true.

But, everyone has to recognize the price-stabilizing role of speculators. One who tends to even out price-fluctuations due to changes in the conditions of demand or supply. Only because they have better than average foresight.

One of them explained the benefits of speculation. Victor Niederhoffer, in his book “The Speculator as Hero” wrote:

”Let’s consider some of the principles that explain the causes of shortages and surpluses and the role of speculators. When a harvest is too small to satisfy consumption at its normal rate, speculators come in, hoping to profit from the scarcity by buying. Their purchases raise the price, thereby checking consumption so that the smaller supply will last longer. Producers encouraged by the high price further lessen the shortage by growing or importing to reduce the shortage. On the other side, when the price is higher than the speculators think the facts warrant, they sell. This reduces prices, encouraging consumption and exports and helping to reduce the surplus.”

The art of speculating covers a wide range of trading tactics. Including pairs trading, swing trading, employing hedging strategies and recognizing chart patterns. Speculators are well skilled at fundamental analysis. Including spot over- or under-valued companies, the amount of short interest a company holds. And, analysis of earnings and other SEC statements. A speculator with skills and good performance knows that the short-term movements of the investment markets are largely tied to world events.

According to the Los Angeles Times, baby boomers are trying a new investment strategy for their retirements accounts.
Instead of the passive investment strategy that most employees use, an increasing number of people have turned to speculate. In an attempt to catch up on shortfalls in their retirement accounts.

How to become speculator?

Every trader who wants to become speculator has to spend many years of learning, watching, practicing.

Such one must learn how the market behaves and watch how favorite stocks react to market events.

For many traders, the book, “How to Make Money in Stocks” by William O’Neil, is a value for learning the art of speculation.

This book and many others provide ambitious trader practical tips on trading and risk management.

Speculation popularity is spreading rapidly because of the easy access to world investment markets through online brokerage portals.

But speculation is difficult to master, so you have to learn a lot if you mean to become speculator one day.

After you have a continuous track record of success through both up and down markets, it’s time to consider speculating with real money.

Successful speculating takes a lot of skill, time and experience to master. Most people who work outside of the financial industry don’t have that.

That’s why the speculators are real artists.

Risk Disclosure (read carefully!)

7th September 2018
Asian shares a sea of red on trade, emerging market anxieties

(Reuster)

According to Reuters, Asian shares fell for a sixth straight session on Thursday as oil skidded and safe-haven gold gained, with investor confidence shaken by turmoil in emerging markets and jitters over a potentially severe escalation in the U.S.-China trade war. MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS fell 0.4 percent to hit its lowest since mid-August. Japan’s Nikkei .N225 slipped 0.2 percent while Australian and New Zealand indices.NZ50 fell more than 1 percent each.

China’s blue-chip index.CSI300 slipped 0.2 percent while Hong Kong’s Hang Seng index.HSI dipped 0.5 percent. Read the full article about Asian shares here…

Introducing the Australian Stock Market

6th September 2018
Scams – How to avoid scams in trading and investing
Scams in the world of trading are not rare, so pay attention to the following situations.

By Guy Avtalyon

The intent of all the scammers is to get hold of your money. Scams come to us with many faces, different forms, but all of them have one goal: to make us poor. They are getting us to reveal our personal details, steal our information, or make us to voluntarily give them cash.

At first, everyone thought the Internet was a safe place. But we all can become an easy target for evil actors who want to steal our personal data.

How to recognize scams?

Criminal minds can reach into our private lives, our homes, and our work offices.

And there is little we can do about it. Attack tactics and tools vary from traditional attacks from malicious software to ingenious phishing scams. They are usually developed in regions where justice can’t easily reach out to catch them.

The forex market involves very active trading of over $1 trillion each day, with futures and currency options, it is closer to $5 trillion daily. The market does not have strong regulation, although things have started to improve recently.
Let’s say, everyone wanting help in making money in the stock market will be interested in finding a trading system.

There are plenty available.

Unfortunately, there are so many humbugs in the trading system.

How to separate the legitimate trading systems from the scammers?

Based on research and experience, here are some good ways to mark trading system scams:
- Do your own research. There is no need to be in a hurry when you have to invest your own money. You should first read up on the steps of investing. Make sure you know at least the basic setups of trading and investing. Be very cautious with online trading.
- Choose a trading system. Successful trading systems can be a hedge fund or mutual fund. If you want to invest in something that has clear systematic knowledge-based information, you have to pick some trusty trading system.
- * Examine a trial period. An investment scam often does not include trial-periods or customer satisfaction. Before you invest your money, you should invest your time in researching the terms and conditions of the item.
- * Check a broker report. It has to be registered, so you may get reports that include information such as qualifications, reliability, and employment history. This can help you to spot any previous problems or concerns before investing.
Cybercriminals will pull you to believe you can make money easy and fast on the internet. They’ll promise you plans and methods of getting rich quickly. It is quite simple especially when someone is in a difficult financial situation.

How do trading scams work?

This scamming method is similar to the romance scam.

Cyberattackers approach to the emotional side of victims. For example, the false posting of non-existent jobs for a variety of positions is one of the online criminals’ methods.

Using different job types, such as work-at-home, the victim is pushed to give personal and financial data with the promise of a well-paid job. Of course, it carries lots of money in a very short time. For sure.

Never share sensitive financial information with anyone you don’t know well. Scammers can reach you out via phone, SMS, or email. They can contact you, pretending they are from a financial institution or government agency.

They could tell your account is compromised or needs to be updated. These criminals are trying to trick you into giving them your credit card number, Social Security number. This scam is known as phishing.

Keep in mind, your bank or credit card provider will never ask you for personal data in that way. If you receive a suspicious call or email, call the credit card provider or bank immediately to check on your account status.

Let’s go back to trading.

One of the challenges a novice forex investor faces is how to determine which operators to trust in the forex market and which to avoid. Signal sellers are a good example. Some analysts propose that many or even most signal sellers are scammers. A frequent criticism is that if it were really possible to use a system to beat the market, why would anyone that has this information make it widely available?

Other analysts distinguish between known scammers and more reputable information sources such as Metatrader, that offer a well-thought-out signaling service.

Behind these views lies a larger difference of opinion on whether anyone can predict the next move in a trading market. The best way to determine if a signal seller can benefit you is to open a demo trading account with one of the better-known forex brokers. Be patient, and you’ll determine whether predictive signaling works for you or doesn’t.

Some forex brokers do not deal fairly with their customers and defraud them. You should trade with a broker that also handles other stock market trades and is subject to SEC and FINRA oversight.

The forex trade itself may be unregulated, but no broker as the subject of such oversight would risk its license for other securities by defrauding its forex customers.

Follow these signals because such scammers are always coming back. With the same or slightly altered face.
5th September 2018
The Barriers to Learning About Stocks and how to avoid them

Be objective, don’t expect the success overnight, have reasonable expectations, think in all probabilities.

By Guy Avtalyon

First of all, never base your decisions on emotions, rumors, or rush to the next hot opportunity. This is one of the most influential barriers to learning about stocks.

You will end up losing money as a result. Some investors despite their problems, continue with the same actions and keep getting the same bad results.
Investors have to remove barriers on their path to success. Otherwise, success will never come. All investors must seek to continuously remove new barriers as they appear.

What kind of barriers to learning about stocks you may have?

Emotions

The fear and greed! Many investors experienced the obscure of ability to rationally consider through an investing opportunity. This leads to poor investment decisions and a loss of money.

For instance, it is in an investor’s best interest to sell high and buy low, investors hate to sell winners and are unwilling to buy out-of-favor stocks. Why so many investors hold winning investments too long? When they fall back, they continue to hold on to them, hoping they will return to their previous highs. They even lie that they will sell if the price returns to the level at which they bought it.

Also, there are investors who hold on to losing investments! Okay, they might be in love but why to hold for so long? They have some hope. If they wait and hold longer, their shares will recover. That might happen never.

They can sell to at least break even, very often such investors become losers. Because their capital is tied up in a losing investment and is unable to produce a return. This reduces account balances and expands stress levels.

Most investors admit that holding investments too long is the mistake that was most detrimental to their success.

Less knowledge

Some investors think if you just buy and sell the right stock, you will always make money.

That’s wrong! Totally mistake! Barriers to learning about stocks!

Sometimes, investors can have less understanding of how markets work. That drives stock prices and successful investing performance.

Also, so many investors tend to overestimate their strength to beat the market. As a result, they take on unnecessary risks. People are often drawn to powerful performance, even when it’s not sustainable.

Many investors follow the hottest sector and don’t have a sufficient understanding of the risks involved.

For instance, investors realize they should not overweight their portfolios with too much money in one investment, but they continue to do so. It isn’t rare that people buy too much stock in the company where they are employed, because the company’s available retirement funds and use of options as a part of their compensation package makes this easy.

Barriers to learning about stocks may leave investors with a portfolio that lacks diversification.

Some other investors don’t understand how bonds work, and they avoid them. Few of them realize that bonds hold a preferred position should a company declare bankruptcy.

Many others don’t realize that when interest rates rise, bond prices go down. When it comes to understanding important concepts such as how a central bank sets interest rates and the yield curve, even fewer investors have sufficient knowledge to make rational decisions.

And more interesting, most investors do not know when to sell a stock that has substantially appreciated. They continue to hold the stock instead of selling part of their position.

In that way, they could capture some of the profit and make capital convenient and available for other investments. They can’t realize that as the price of the stock goes up their portfolio becomes even more unbalanced.

The market has the ability to balance portfolios for investors, sometimes to their astonishment. Many investors are confused by the idea that rebalancing entails selling some of the investments that have performed best and buying more quality stocks that have lagged.

Losing the Bigger Picture

Despite many investors like to say they invest with a long-term perspective, they continue to make decisions based on short-term movements and ideas. Most investors believe that setting long-term goals for such things as buying a home or providing for retirement are important. But still, they fail to establish viable financial plans to do so.

Without these plans, their decisions are decaying. Basing decisions on unpredictable market fluctuations can be very dangerous because there is a good chance that these investors will make the wrong decision. That can obstruct their ability to achieve their long-term goals.

When the investors realize that the market has risen, they pour cash into stocks and mutual funds, trying to grab part of the profit the professionals have realized. When the market puts in a decline, some investors panic and sell close the bottom. And very often, this pattern continues, causing such investors to lose much of their capital.

How to remove barriers to learning about stocks

No matter what your barriers are, it is important to put together and plan to remove them. Here are some steps you can take to eliminate these barriers to your investing success. Experts advise doing this.

* Learn to monitor your performance: Measuring your performance creates a record of what has worked and what has not. This can help you to recognize problems that you repeat. You should record the overall market trend, the sector trend, the reason for making the trade, the exit target, and the trailing stop. Do this for each trade no matter if you sell or buy. This record is very useful in evaluating your investing activities and can be used to identify what barriers you are meeting that obstruct your success.

* After you have measured your actions, you can identify what you have to change: Inspect your past tradings and find patterns that show to barriers to success. Maybe you impulsively buy the next stock without thinking? Does your explanation prove to be wrong most of the time? The key is to identify the investing behavior that inhibits your performance.

Stay focused and avoid barriers

* Stay focused on what you need to change. Like any effort to change behavior, you must remain focused on the actions you take to reinforce the investing behavior you wish to have. If you think you are not focused on how to change your behavior, then take a break from your investing until you recover your focus.

* Determine how you will understand your losses. Keep in mind that losses are part of investing. Learning how to deal with them is one of the most important pieces of successful investing behavior. You have to define what your loss looks like through your stop loss and reasons for the trade. You must accept the loss as part of the trading. Accepting a loss is a trading skill that is a crucial behavior. Making a losing trade ahs to be an acceptable process in your trading strategy, you’ll eliminate the emotion and fear that comes from a loss. You’ll jump to the next opportunity without fear.

* Become an expert at one investing strategy: There are many ways to evaluate the market and select stocks that offer good investment opportunities. Don’t try to understand every perspective on a stock. It is best to get to know one reliable investing strategy. In that way, you will gain confidence in your investing access. This knowledge will form a valid base for your investing. And when you become an expert you can expand your knowledge base by adding a new approach.

Think twice to avoid barriers

* Think in probabilities: The market is in permanent movement. It forces the investor to continually evaluate the risk-reward ratio of each opportunity. You can’t move the market, that’s why you need to rate what is the greatest possibility that will move the market, key sectors and the stocks you are watching. Evaluating what is most possible to happen in the sense of probabilities could help you to make a valid investing estimation.

* Learn how to be objective: Many investors want to believe that the market will do what they think it should do, rather than what it actually does. Any limits you place on the market will usually turn out to be wrong. The market does what the market does. Investors are best served if they maintain an objective perspective. If you are neutral, then you will not feel any pressure to move quickly. You will not be afraid to make an investment decision. And the most important, you will not force your opinion on the market, but rather sense what the market is trying to tell you.

Do not expect this to happen overnight. Removing the barrier is a long-term process. But if you have a defined plan, you will be able to create a program to remove the barriers that keep you from achieving success as an investor.

31st August 2018
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.
28th August 2018
Are we witnesses of the historical period on the stock market?

1 min read

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!)

22nd August 2018
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.

21st August 2018
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.
19th August 2018
How To Learn About Trading and Master it?

1 min read

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.

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.

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!)

16th August 2018