The Seven Mistakes All Novice Traders Make and How to Correct Them
Posted on July 10, 2008 - Filed Under Tips, Trading, Tutorials | Leave a Comment
The Seven Mistakes All Novice Traders Make and How to Correct Them
We learnt the following the hard way! If any of these things applies to you, don’t worry – there is an easy solution!
MISTAKE ONE
> Lack of Knowledge and No Plan
It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course.
The stock market is not the place for the ill informed. But learning what you need is straightforward – you just need someone to show you the way.
The opposite extreme of this is those traders who spend their life looking for the Holy Grail of trading! Been there, done that!
The truth is, there is no Holy Grail. But the good news is that you don’t need it. Our trading system is highly successful, easy to learn and low risk.
MISTAKE TWO
> Unrealistic Expectations
Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write out their resignation letter before they have even placed their first trade!
Now, don’t get us wrong. The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some.
So don’t tell your boss where to put his job, just yet!
Other beginners think that trading can be 100% accurate all the time. Of course this is unrealistic. But the best thing is that with our methods you only need to get 50-60% of your trades “right” to be successful and highly profitable.
MISTAKE THREE
> Listening to Others
When traders first start out they often feel like they know nothing and that everyone else has the answers. So they listen to all the news reports and so called “experts” and get totally confused.
And they take “tips” from their buddy, who got it from some cab driver…
We will show you how you can get to know everything you need to know and so never have to listen to anyone else, ever again!
MISTAKE FOUR
> Getting in the Way
By this we mean letting your ego or your emotions get in the way of doing what you know you need to do.
When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face.
It is critical you understand how to control this side of trading. There is also one other key that almost no one seems to talk about. But more on this another time!
MISTAKE FIVE
> Poor Money Management
It never ceases to amaze us how many traders don’t understand the critical nature of money management and the related area of risk management.
This is a critical aspect of trading. If you don’t get this right you not only won’t be successful, you won’t survive!
Fortunately, it is not complex to address and the simple steps we can show you will ensure that you don’t “blow up” and that you get to keep your profits.
MISTAKE SIX
> Only Trading Market in One Direction
Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market.
If you don’t learn to trade “both” sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make.
We can show you a simple strategy that allows you to profit when stocks fall.
MISTAKE SEVEN
> Overtrading
Most traders new to trading feel they have to be in the market all the time to make any real money. And they see trading opportunities when they’re not even there (we’ve been there too).
We can show you simple techniques that ensure you only “pull the trigger” when you should. And how trading less can actually make you more!
What are Dividends and When they’re Issued?
Posted on July 10, 2008 - Filed Under Tutorials | Leave a Comment
What are Dividends and When they’re Issued?
If you’ve ever owned stocks or held certain other types of investments, you might already be familiar with the concept of dividends.
Even those people who have made investments that paid dividends may still be a little confused as to exactly what dividends are, however… after all, just because a person has received a dividend payment doesn’t mean that they fully appreciate where the payment is coming from and what its purpose is.
If you have ever found yourself wondering exactly what dividends are and why they’re issued, then the information below might just be what you’ve been looking for.
Defining the Dividend
Dividends are payments made by companies to their stockholders in order to share a portion of the profits from a particular quarter or year. The amount that any particular stockholder receives is dependent upon how many shares of stock they own and how much the total amount being divided up among the stockholders amounts to. This means that after a particularly profitable quarter a company might set aside a lump sum to be divided up amongst all of their stockholders, though each individual share might be worth only a very small amount potentially fractions of a cent, depending upon the total number of shares issued and the total amount being divided. Individuals who own large amounts of stock receive much more from the dividends than those who own only a little, but the total per-share amount is usually the same.
When Dividends Are Paid
How often dividends are paid can vary from one company to the next, but in general they are paid whenever the company reports a profit. Since most companies are required to report their profits or losses quarterly, this means that most of them have the potential to pay dividends up to four times each year. Some companies pay dividends more often than this, however, and others may pay only once per year. The more time there is between dividend payments can indicate financial and profit problems within a company, but if the company simply chooses to pay all of their dividends at once it may also lead to higher per-share payments on those dividends.
Why Dividends Are Paid
Dividends are paid by companies as a method of sharing their profitable times with the stockholders that have faith in the company, as well as a way of luring other investors into purchasing stock in the company that is paying the dividends. The more a particular company pays in dividend payments, the more likely it is to sell additional common stock… after all, if the company is well-known for high dividend payments then more people will want to get in on the action. This can actually lead to increases in stock price and additional profit for the company which can result in even more dividend payments.
Getting the Most Out of Your Dividends
In order to get the most out of the dividends that you receive on your investments, it is generally recommended that you reinvest the dividends into the companies that pay them. While this may seem as though you’re simply giving them their money back, you’re receiving additional shares of the company’s stock in exchange for the dividend. This will increase future dividend payments (since they’re based upon how much stock that you own), and can set you up to make a lot more money than the actual dividend payment was for since increases in stock prices will affect the newly-purchased stock as well.
Tips for Day Traders
Posted on June 2, 2008 - Filed Under Tips, Tutorials | 2 Comments
TIPS FOR DAY TRADERS
1) If you are getting profit then please do book your profit first. Do not wait for more profit.
2) Do not wait or keep any trade more than 1:30hours. First book the profit or loss & then do new trade.
3) If advance Shares are more than Decline Shares then never make short position.
4) When you see that Numeric of Decline Shares is increasing means”GIRNE WALE SHARES” on that time short the position in Nifty.
5) Many times I saw that, only on the basis of day Trade Shares or depends only on Future’s Window short or buy position have been done by many Traders. But if sellers stand in more numbers then do not do any short position, first do wait and watch the shares rate & now do your position short on Higher Level Rates. Same as above if Buyers stand in more quantity wait for some time & when rates of the shares are coming lower, on that time you just buy.
6) If any Shares & Future Scripts do trade up to the 10 minutes of Crucial Point, that time should be buy & book the profit on R1-R2. When you are going to short the position do trade down to the 10 minutes of Crucial Point (According to below) & book the profit on S1-S2.
7) Always keep stop loss on Crucial Point.
If any Shares do trade on the 5DMA then be buy on that time but first see Crucial point.
9) If any shares do trade under the 5DMA, just do short the position but first see the Crucial Point carefully.
10) Never over the position for any greediness.
11) Do trade only depends on your capability.
12) Your money is only yours, don’t turn it into loss.
13) Safe & profitable trading is that should be do 1 or 2 trade only in a day & if you are getting profit of Rs. 500/- to 1000/-, you can hold this trade or you can keep it for Delivery base.
14) Please listen & watch carefully that whole profit is not only for yours.
15) You cannot catch Higher Level & the Bottom Level, so please be carefully always.
Note: If you will do trade according to these above tips, you will never take any losses in future.
What is Technical Analysis
Posted on January 22, 2008 - Filed Under Tutorials | Leave a Comment
What is Technical Analysis?
How is it different from Fundamental Analysis ?
Technical Analysis is a method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns.
A stock market term - The attempt to look for numerical trends in a random function. The stock market used to be filled with technical analysts deciding what to buy and sell, until it was decided that their success rate is no better than chance. Now technical stock analysis is virtually non-existent. The Readers Submitted Examples page has more on this topic.
Research and examination of the market and securities as it relates to their supply and demand in the marketplace. The technician uses charts and computer programs to identify and project price trends. The analysis includes studying price movements and trading volumes to determine patterns such as Head and Shoulder Formations and W Formations. Other indicators include support and resistance levels, and moving averages. In contrast to fundamental analysis, technical analysis does not consider a corporation’s financial data.
Technical analysts study trading histories to identify price trends in particular stocks, mutual funds, commodities, or options in specific market sectors or in the overall financial markets. They use their findings to predict probable, often short-term, trading patterns in the investments that they study. The speed (and advocates would say the accuracy) with which the analysts do their work depends on the development of increasingly sophisticated computer programs.
Technical Analysis supposes markets have memory.If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor’s behavior) will persist or break. It gives some results but can be deceptive as it relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representiveness heuristic (spotting patterns where there are none)
Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should come as no surprise. People using fundamental analysis have always looked at the past performance of companies by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analyst’s belief that securities move according to very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable.
There are many instances of investors successfully trading a security using only their knowledge of the security’s chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis.
Fundamental Analysis
Fundamental analysis looks at a share’s market price in light of the company’s underlying business proposition and financial situation. It involves making both quantitative and qualitative judgements about a company. Fundamental analysis can be contrasted with ‘technical analysis’, which seeks to make judgements about the performance of a share based solely on its historic price behavior and without reference to the underlying business, the sector it’s in, or the economy as a whole. This is done by tracking and charting the companies stock price, volume of shares traded day to day, both on the company itself and also on its competitors. In this way investors hope to build up a picture of future price movements.
What is NET ASSET VALUE
Posted on January 22, 2008 - Filed Under Tutorials | Leave a Comment
What is NET ASSET VALUE ?
The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund’s securities and other items of value and dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund.
The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV.
Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.
Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund’s net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. So if a fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.50.00.
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