When it comes to investing, many first time investors want to
jump right in with both feet. Unfortunately, very few of those
investors are successful. Investing in anything requires some
degree of skill. It is important to remember that few
investments are a sure thing - there is the risk of losing your
money!
Before you jump right in, it is better to not only find out more
about investing and how it all works, but also to determine what
your goals are. What do you hope to achieve with your
investments? Will you be funding a college education? Buying a
home? Retiring? Before you invest a single penny, really think
about what you hope to achieve with that investment. Knowing
what your goal is will help you make smarter investment
decisions along the way!
Too often, people invest money with dreams of becoming rich
overnight. This is possible - but it is also rare. It is usually
a very bad idea to start investing with hopes of becoming rich
overnight. It is safer to invest your money in such a way that
it will grow slowly over time, and be used for retirement or a
child's education. However, if your investment goal is to get
rich quick, you should learn as much about high-yield, short
term investing as you possibly can before you invest.
You should strongly consider talking to a financial planner
before making any investments. Your financial planner can help
you determine what type of investing you must do to reach the
financial goals that you have set. He or she can give you
realistic information as to what kind of returns you can expect
and how long it will take to reach your specific goals.
Again, remember that investing requires more than calling a
broker and telling them that you want to buy stocks or bonds. It
takes a certain amount of research and knowledge about the
market if you hope to invest successfully.
๖/๒๗/๒๕๕๐
Options Offer Incredible Potential That Stocks Can Never Give
Options Offer Incredible Potential That Stocks Can Never Give Us' -- And
This Successful Trader Proves It!
Dale Whaeatley was a contractor who traveled around the country
helping the telephone companies with their excess needs that
they could not handle in-house. As with any type of contract
work, it was inconsistent. It was difficult for him to budget
his money not knowing what his income or expenses would be. Dale
went looking for an alternative source of income. He attended
the usual Real Estate seminars, but realised he had no real
interest in becoming a landlord or managing property. Instead he
turned to stocks.
Dale had played in the stock market in his 20's, but didn't
understand it. He decided to educate himself on stock trading.
During this process Dale read how options offered limited risk
and unlimited potential for gains, a strategy that appealed to
him. To learn about when to trade, he read many technical
analysis books and spent over $500 a month just for quotes and
charts. he also plotted many charts by hand. Years later, he
discovered a company called AIQ Systems and bought two of their
programs, TradingExpert and OptionExpert. Still, all Dale was
doing was spending money with no return to show for it. It was
not until he sat down and examined his winning and losing
trades, comparing them to the charts and indicators, that he
finally began to discover the value in one particular indicator,
the MACD, known as the Moving Average Convergence Divergence. He
knew that when one line crossed the other it meant to buy or
sell, but that did not work well or consistently, both
requirements for trading options, since they are wasting assets.
By examining divergences in the MACD indicator, however, one
could tell when a stock was ready to change direction with a
great degree of reliability. He concentrated on perfecting his
entry and exit strategy using this indicator, but incorporated
various indicator time frames, a process Dale had never seen
done before. Soon Dale's returns were improving dramatically.
Why did Dale choose options rather trade the stock itself?
Options offer incredible potential that stocks can never give
us. Plus chart patterns develop clearly enough to see definite
direction changes that will produce returns in excess of 1,000%
in hours, days, or weeks depending on the strength of the
pattern relative to the price. Dale's philosophy is simple, he
doesn't want to "own"anything! He just want to make money to do
the things he wants, when he wants. Sometimes the chart patterns
looks so strong that Dale is sometimes limited by the number of
contracts he can buy at one time.
The pattern of the underlying security is of primary importance
in Dale's trading system. He does not use any pricing models
such as the Black-Scholes pricing formula or any other valuation
method. These formulas are not designed to help make a profit on
options, but rather to show what happens if the underlying stock
performs in a certain fashion. There is nothing that can Dale
can do about the options prices. Whatever the bid and ask prices
are that is what he has to pay. It's the surety in the trading
startegy that is paramount.
The pattern that Dale looks for is always the same, but it could
be on different time frames (hourly, daily, weekly, monthly,
etc) depending on the time left until the option's expiration
and distance from next strike price. Whathe looks for is a
divergence in the MACD indicator compared to the price of the
underlying security. he then looks to buy call options when a
stock tests its prior low but has a positive divergence in its
MACD indicator. The opposite is true for identifying tops. He
uses this pattern because after much experimenting he found it
to be the most consistent and accurate.
Here are some great examples of Dale's trades. LAM Research
(LRCX). Lam Research hit an initial low on February 12 and then
rallied. That low was retested on March 1-5. In effect, a
double-bottom pattern was forming. The key to the entry,
however, was the positive divergence in the MACD indicator A
similar example can be seen in Nicor Inc. (GAS), the initial low
came in mid-January, the stock rallied, and then retested on
March 5. Once again there was a strong positive divergence in
the MACD indicator. March 45 calls were purchased on 03/07/07.
Finally the topping formation of Freeport-McMoran Copper & Gold
(FCX) hit level highs in April/May at the same time that its
MACD indicator was falling. That was a time to buy put options.
On a daily chart, this pattern does not always signify major
reversals, but in the Freeport-McMoran case, the weekly chart
also had a huge negative divergence. Huge downside divergences
under multiple time frames is the perfect setup.The options went
from $0.20 to $12. Dale made sixty times his money in just one
week! More recently, in May he entered Advanced Micro Devices
(AMD) and General Motors (GM) call options, and both turned into
1000% gainers in only a few days! Dale beliieves that you can
avoid losing trades with his technique. A losing trade is not
the fault of the charts, but rather the trader. It is really
just a question of discipline and knowledge coupled with action
when the correct pattern appears. If you learn the correct
technique and act only when everything is in place, you will
always make a profit.
Determining which option Dale purchases depends on several
factors, such as the stock's price, how far that is from the
strike price, how many days are left until expiration, the cost
of the option, and the option's liquidity. dale almost always
buy out-of-the-money options that expire in the near term month
if the pattern appears on the daily chart. If it appears on a
weekly or monthly time frame, he buys out-of-the-money options
that could expire several months away.Dale's selling technique
is simple when the momentum turns back against the move using
the MACD divergence line, he exits the position.
Dale educates others on the technique in his Options Hunter
weekly webinar service, information can be found at
http://www.aiqsystems.com/optionshunter.htm He began teaching
others when some investors asked him to explain his trading
style and ever since then he has been talking about his
discovery to everyone he meets. Dale has taught people around
the world, some that he met on airplanes in the seat next to him
and in other casual situations. He enjoys showing people
extraordinary possibilities. Dale wishes he had someone to teach
him in the beginning how to avoid the pain of investing but, as
the saying goes, "The harder the conflict, the more glorious the
triumph. What we achieve too easily, we esteem too lightly."
Dale learned that the separation between rich and poor is
because rich people continue to do the things that produced
their wealth and poor people continue to do the things that
created their poverty. Dale believes it is a choice each of us
makes and he wants to help others to make the same choices and
to feel empowered in their own lives. There was a time when he
worried about everyone "catching on" if he told them what he
did, but after teaching so many people over the years exactly
what he does, he is still amazed that only a small number of
people actually apply the strategy. Dale has found it has more
to do with individuals and their preconceived ideas about
returns and investing, along with the fear within themselves
that actually prevents them from being successful. People all
need to look hard at their beliefs before expecting to become
successful options traders, or succeeding with anything in life.
Dale'sOptions Hunter service began rather slowly because people
came from different backgrounds and experience levels. Some were
beginners and others experienced. As time went by, however,
those who stayed have found many charts without Dale having to
hold their hands. One week, as the market was beginning to
change its momentum, many subscribers chimed in with about 15
stocks that all had the correct look and the next week some of
the options were jumping over 1,000%. There have been traders in
the group buy calls on QLGC, HD, CAL, AIG, MM, VLO and the
homebuilders and mortgage related companies (even with all of
the bad news out about subprime lending, etc).
This Successful Trader Proves It!
Dale Whaeatley was a contractor who traveled around the country
helping the telephone companies with their excess needs that
they could not handle in-house. As with any type of contract
work, it was inconsistent. It was difficult for him to budget
his money not knowing what his income or expenses would be. Dale
went looking for an alternative source of income. He attended
the usual Real Estate seminars, but realised he had no real
interest in becoming a landlord or managing property. Instead he
turned to stocks.
Dale had played in the stock market in his 20's, but didn't
understand it. He decided to educate himself on stock trading.
During this process Dale read how options offered limited risk
and unlimited potential for gains, a strategy that appealed to
him. To learn about when to trade, he read many technical
analysis books and spent over $500 a month just for quotes and
charts. he also plotted many charts by hand. Years later, he
discovered a company called AIQ Systems and bought two of their
programs, TradingExpert and OptionExpert. Still, all Dale was
doing was spending money with no return to show for it. It was
not until he sat down and examined his winning and losing
trades, comparing them to the charts and indicators, that he
finally began to discover the value in one particular indicator,
the MACD, known as the Moving Average Convergence Divergence. He
knew that when one line crossed the other it meant to buy or
sell, but that did not work well or consistently, both
requirements for trading options, since they are wasting assets.
By examining divergences in the MACD indicator, however, one
could tell when a stock was ready to change direction with a
great degree of reliability. He concentrated on perfecting his
entry and exit strategy using this indicator, but incorporated
various indicator time frames, a process Dale had never seen
done before. Soon Dale's returns were improving dramatically.
Why did Dale choose options rather trade the stock itself?
Options offer incredible potential that stocks can never give
us. Plus chart patterns develop clearly enough to see definite
direction changes that will produce returns in excess of 1,000%
in hours, days, or weeks depending on the strength of the
pattern relative to the price. Dale's philosophy is simple, he
doesn't want to "own"anything! He just want to make money to do
the things he wants, when he wants. Sometimes the chart patterns
looks so strong that Dale is sometimes limited by the number of
contracts he can buy at one time.
The pattern of the underlying security is of primary importance
in Dale's trading system. He does not use any pricing models
such as the Black-Scholes pricing formula or any other valuation
method. These formulas are not designed to help make a profit on
options, but rather to show what happens if the underlying stock
performs in a certain fashion. There is nothing that can Dale
can do about the options prices. Whatever the bid and ask prices
are that is what he has to pay. It's the surety in the trading
startegy that is paramount.
The pattern that Dale looks for is always the same, but it could
be on different time frames (hourly, daily, weekly, monthly,
etc) depending on the time left until the option's expiration
and distance from next strike price. Whathe looks for is a
divergence in the MACD indicator compared to the price of the
underlying security. he then looks to buy call options when a
stock tests its prior low but has a positive divergence in its
MACD indicator. The opposite is true for identifying tops. He
uses this pattern because after much experimenting he found it
to be the most consistent and accurate.
Here are some great examples of Dale's trades. LAM Research
(LRCX). Lam Research hit an initial low on February 12 and then
rallied. That low was retested on March 1-5. In effect, a
double-bottom pattern was forming. The key to the entry,
however, was the positive divergence in the MACD indicator A
similar example can be seen in Nicor Inc. (GAS), the initial low
came in mid-January, the stock rallied, and then retested on
March 5. Once again there was a strong positive divergence in
the MACD indicator. March 45 calls were purchased on 03/07/07.
Finally the topping formation of Freeport-McMoran Copper & Gold
(FCX) hit level highs in April/May at the same time that its
MACD indicator was falling. That was a time to buy put options.
On a daily chart, this pattern does not always signify major
reversals, but in the Freeport-McMoran case, the weekly chart
also had a huge negative divergence. Huge downside divergences
under multiple time frames is the perfect setup.The options went
from $0.20 to $12. Dale made sixty times his money in just one
week! More recently, in May he entered Advanced Micro Devices
(AMD) and General Motors (GM) call options, and both turned into
1000% gainers in only a few days! Dale beliieves that you can
avoid losing trades with his technique. A losing trade is not
the fault of the charts, but rather the trader. It is really
just a question of discipline and knowledge coupled with action
when the correct pattern appears. If you learn the correct
technique and act only when everything is in place, you will
always make a profit.
Determining which option Dale purchases depends on several
factors, such as the stock's price, how far that is from the
strike price, how many days are left until expiration, the cost
of the option, and the option's liquidity. dale almost always
buy out-of-the-money options that expire in the near term month
if the pattern appears on the daily chart. If it appears on a
weekly or monthly time frame, he buys out-of-the-money options
that could expire several months away.Dale's selling technique
is simple when the momentum turns back against the move using
the MACD divergence line, he exits the position.
Dale educates others on the technique in his Options Hunter
weekly webinar service, information can be found at
http://www.aiqsystems.com/optionshunter.htm He began teaching
others when some investors asked him to explain his trading
style and ever since then he has been talking about his
discovery to everyone he meets. Dale has taught people around
the world, some that he met on airplanes in the seat next to him
and in other casual situations. He enjoys showing people
extraordinary possibilities. Dale wishes he had someone to teach
him in the beginning how to avoid the pain of investing but, as
the saying goes, "The harder the conflict, the more glorious the
triumph. What we achieve too easily, we esteem too lightly."
Dale learned that the separation between rich and poor is
because rich people continue to do the things that produced
their wealth and poor people continue to do the things that
created their poverty. Dale believes it is a choice each of us
makes and he wants to help others to make the same choices and
to feel empowered in their own lives. There was a time when he
worried about everyone "catching on" if he told them what he
did, but after teaching so many people over the years exactly
what he does, he is still amazed that only a small number of
people actually apply the strategy. Dale has found it has more
to do with individuals and their preconceived ideas about
returns and investing, along with the fear within themselves
that actually prevents them from being successful. People all
need to look hard at their beliefs before expecting to become
successful options traders, or succeeding with anything in life.
Dale'sOptions Hunter service began rather slowly because people
came from different backgrounds and experience levels. Some were
beginners and others experienced. As time went by, however,
those who stayed have found many charts without Dale having to
hold their hands. One week, as the market was beginning to
change its momentum, many subscribers chimed in with about 15
stocks that all had the correct look and the next week some of
the options were jumping over 1,000%. There have been traders in
the group buy calls on QLGC, HD, CAL, AIG, MM, VLO and the
homebuilders and mortgage related companies (even with all of
the bad news out about subprime lending, etc).
Bonds Can Be As Risky As Stocks
If you are new to investing perhaps you are not familiar with
bonds. Before you get started, you need to understand some of
the risks associated with bond investing. Most people assume
that all interest-bearing securities are completely risk free,
but this is not the case. Even if you know a lot about
investing, you may not be aware of some of the risk
characteristics associated with bonds.
The most important thing to take into account is the interest
rate. The Federal Reserve (also known as the Fed) meets every
6-8 weeks to evaluate the health of the economy. At each
meeting, the Fed renders a decision regarding interest rates.
If inflation is rising, the Fed will need to raise interest
rates to tighten the money supply. If inflation is moderate or
contained, the Fed will likely leave rates unchanged. However,
if the economy is slowing down and there is very little
inflation or maybe even deflation, then the Fed might decide to
reduce interest rates to create a stimulus for economic growth.
The reason why you need to consider present and future interest
rate levels is because as interest rates increase, bond prices
go down, and vice versa. If you are able to hold your bond until
maturity, then interest rate movements do not really matter,
because you will redeem the principal upon redemption. But
often, investors have to cash out their bonds well before the
maturity date. If interest rates have moved up since you
purchased the bond, and you sell it prior to maturity, then the
bond will be worth less than your initial investment.
You should also be aware of the claim status of the bond you are
buying. Claim status refers to your ability to liquidate your
investment in the event the bond issuer goes bankrupt. If you
are buying a government bond, such as a Treasury Bill, claim
status is irrelevant, because the odds of the Federal Government
going bankrupt are slim and none.
If you are buying a corporate bond, however, there is always a
chance that the issuer could go out of business. In the event of
liquidation, bondholders are given priority over stockholders.
However, there are often different classes of bondholders.
Senior note holders can often claim against certain kinds of
physical collateral in the event of bankruptcy, such as
equipment (computers, machines, etc.). Regular bondholders can
not always claim against physically collateral, and are next in
line after the senior note holders.
Next, you should always check the three main features of the
bond you are buying; the coupon rate, the maturity date, and the
call provisions. The coupon rate is the interest rate. Most
bonds pay an interest rate semiannually or annually.
The maturity date is the date that the bond will be redeemed by
the issuer; simply put, the maturity date is when the company
must pay back to you the principal you loaned to them. The call
provisions are the rights of the issuer to buy back your bond
prior to maturity. Some bonds are non-callable, while others are
callable, meaning that the company can buy your bond back before
maturity, usually at a higher price than what you paid.
Finally, you should also understand that if economic conditions
become more favorable after you a buy a bond, and interest rates
start to go down again, the issuer will likely issue a lot more
bonds to take advantage of the low interest rates, and will use
the proceeds to try to buy back any callable bonds it issued
previously. So, when interest rates go down, there is an
increasing likelihood that your bond will be redeemed prior to
maturity, if in fact the bond is callable.
You should invest in bonds. However, you should also take into
account the risk factors we have covered. Your portfolio should
contain a mix of corporate, federal, municipal, and even junk
bonds (there is always a default risk associated with junk
bonds, but they pay a huge interest rate). Talk to your broker
about diversifying the kinds of bonds in your portfolio and you
will reduce your overall risk and maximize your return.
bonds. Before you get started, you need to understand some of
the risks associated with bond investing. Most people assume
that all interest-bearing securities are completely risk free,
but this is not the case. Even if you know a lot about
investing, you may not be aware of some of the risk
characteristics associated with bonds.
The most important thing to take into account is the interest
rate. The Federal Reserve (also known as the Fed) meets every
6-8 weeks to evaluate the health of the economy. At each
meeting, the Fed renders a decision regarding interest rates.
If inflation is rising, the Fed will need to raise interest
rates to tighten the money supply. If inflation is moderate or
contained, the Fed will likely leave rates unchanged. However,
if the economy is slowing down and there is very little
inflation or maybe even deflation, then the Fed might decide to
reduce interest rates to create a stimulus for economic growth.
The reason why you need to consider present and future interest
rate levels is because as interest rates increase, bond prices
go down, and vice versa. If you are able to hold your bond until
maturity, then interest rate movements do not really matter,
because you will redeem the principal upon redemption. But
often, investors have to cash out their bonds well before the
maturity date. If interest rates have moved up since you
purchased the bond, and you sell it prior to maturity, then the
bond will be worth less than your initial investment.
You should also be aware of the claim status of the bond you are
buying. Claim status refers to your ability to liquidate your
investment in the event the bond issuer goes bankrupt. If you
are buying a government bond, such as a Treasury Bill, claim
status is irrelevant, because the odds of the Federal Government
going bankrupt are slim and none.
If you are buying a corporate bond, however, there is always a
chance that the issuer could go out of business. In the event of
liquidation, bondholders are given priority over stockholders.
However, there are often different classes of bondholders.
Senior note holders can often claim against certain kinds of
physical collateral in the event of bankruptcy, such as
equipment (computers, machines, etc.). Regular bondholders can
not always claim against physically collateral, and are next in
line after the senior note holders.
Next, you should always check the three main features of the
bond you are buying; the coupon rate, the maturity date, and the
call provisions. The coupon rate is the interest rate. Most
bonds pay an interest rate semiannually or annually.
The maturity date is the date that the bond will be redeemed by
the issuer; simply put, the maturity date is when the company
must pay back to you the principal you loaned to them. The call
provisions are the rights of the issuer to buy back your bond
prior to maturity. Some bonds are non-callable, while others are
callable, meaning that the company can buy your bond back before
maturity, usually at a higher price than what you paid.
Finally, you should also understand that if economic conditions
become more favorable after you a buy a bond, and interest rates
start to go down again, the issuer will likely issue a lot more
bonds to take advantage of the low interest rates, and will use
the proceeds to try to buy back any callable bonds it issued
previously. So, when interest rates go down, there is an
increasing likelihood that your bond will be redeemed prior to
maturity, if in fact the bond is callable.
You should invest in bonds. However, you should also take into
account the risk factors we have covered. Your portfolio should
contain a mix of corporate, federal, municipal, and even junk
bonds (there is always a default risk associated with junk
bonds, but they pay a huge interest rate). Talk to your broker
about diversifying the kinds of bonds in your portfolio and you
will reduce your overall risk and maximize your return.
Stock Investing For Beginners
Before you can start investing the first thing you should do is
make an assessment of your personal financial position. Before
you can invest in anything you need to have the necessary
capital available. Perhaps the best way to tackle things would
be to list all your assets i.e. real estate, savings, cash,
mutual funds etc set against this your liabilities mortgages,
loans and` credit card debt, this will give you an indication of
the amount of capital you have available for investment.
Before you consider any form of investment it is much better to
clear high charging debts particularly if you are not using them
to acquire an appreciating asset, such as the mortgage on your
home. Credit cards, particularly store cards and personal loans
with higher monthly payments should be paid off before you
consider investing capital in the stock market.
Once you are certain that you have capital available for
investment in the next thing is to decide on your risk level, or
to put it another way the amount of volatility in the stock
price that you can live with, and still be able to sleep at
night! The general guideline is that the higher the risk the
greater the potential gain, that is why you should only invest
in the stock market with capital that you do not need for
immediate daily requirements. If you are only prepared to take a
low risk and are happy to accept a correspondingly low return
Money Market Funds would probably be most appropriate for you,
the stock market however offers the potential for a much greater
gain with a correspondingly higher risk.
Once you decide to start investing take it slowly at the
beginning, only invest part of your capital preferably no more
than 20% in one or two stocks, this will allow you to get the
feel of things without risking everything, you may also wish to
diversify your holdings and have a mixture of stocks and bonds
and mutual funds this will have the effect of reducing your risk
and of course will also reduce your potential reward.
The actual mechanics of investing in stocks or mutual funds is
very easy to do, online there are many investment services that
offer up to date information about stocks and once you are ready
to invest it is very easy to find and no-frills online
stockbroker who will work to one very low commission rates. If
you require more information and a high level of service you can
always use of full-service stockbroker but of course this will
involve significantly higher charges.
Providing you take the time to thoroughly researched the subject
before you commit your hard earned capital, stock market
investing can be very rewarding even for beginners.
make an assessment of your personal financial position. Before
you can invest in anything you need to have the necessary
capital available. Perhaps the best way to tackle things would
be to list all your assets i.e. real estate, savings, cash,
mutual funds etc set against this your liabilities mortgages,
loans and` credit card debt, this will give you an indication of
the amount of capital you have available for investment.
Before you consider any form of investment it is much better to
clear high charging debts particularly if you are not using them
to acquire an appreciating asset, such as the mortgage on your
home. Credit cards, particularly store cards and personal loans
with higher monthly payments should be paid off before you
consider investing capital in the stock market.
Once you are certain that you have capital available for
investment in the next thing is to decide on your risk level, or
to put it another way the amount of volatility in the stock
price that you can live with, and still be able to sleep at
night! The general guideline is that the higher the risk the
greater the potential gain, that is why you should only invest
in the stock market with capital that you do not need for
immediate daily requirements. If you are only prepared to take a
low risk and are happy to accept a correspondingly low return
Money Market Funds would probably be most appropriate for you,
the stock market however offers the potential for a much greater
gain with a correspondingly higher risk.
Once you decide to start investing take it slowly at the
beginning, only invest part of your capital preferably no more
than 20% in one or two stocks, this will allow you to get the
feel of things without risking everything, you may also wish to
diversify your holdings and have a mixture of stocks and bonds
and mutual funds this will have the effect of reducing your risk
and of course will also reduce your potential reward.
The actual mechanics of investing in stocks or mutual funds is
very easy to do, online there are many investment services that
offer up to date information about stocks and once you are ready
to invest it is very easy to find and no-frills online
stockbroker who will work to one very low commission rates. If
you require more information and a high level of service you can
always use of full-service stockbroker but of course this will
involve significantly higher charges.
Providing you take the time to thoroughly researched the subject
before you commit your hard earned capital, stock market
investing can be very rewarding even for beginners.
Looking to invest????
Are you interested in trying to invest to help meet your needs
for the short term or the long term?? well i have found that
after i read this ebook i have been able to add more income to
what i am already making. if you want more information go to
http://tlwatson.dtcoach.hop.clickbank.net/
for the short term or the long term?? well i have found that
after i read this ebook i have been able to add more income to
what i am already making. if you want more information go to
http://tlwatson.dtcoach.hop.clickbank.net/
His Trading Method's Made Millions Learn Them
W D Gann is one of the most famous traders of all time and his
unique methods helped him make a fortune of around $50.00
million and best of all he wrote and recorded the way he did it,
so anyone can have access to his trading strategy and aplly it
for profit.
Trading is one of the ways that small traders can start with
small stakes and build real wealth quickly.
The good news is everything about trading can be specifically
learned and Gann outlined all his methods in writing for traders
to profit from and enjoy today.
His methods are applicable to any financial market from forex to
stocks to bonds so you can choose where to apply them, depending
on the risk you wish to take.
Let's look at why you should study Gann and his methods of
making money.
1. He Had a Track Record
Many e-book sellers or traders sell information but it's
worthless they don't trade it themselves and simply make up a
track record.
Gann made money and his track record and invited newspapers and
journalists to track his trades such was his confidence in how
to make money.
2. Gann and the Law of the Market Movement
Gann pointed out quite rightly, that market prices depended on
humans and that their psychology was constant - Because human
nature was constant this nature would show up in repetitive
price patterns that could be traded for profit
Gann was a technical trader and like all charts believed that
what happened in the past would happen again and the key to
making profits was to look for recurring price patterns to put
the odds in his favor
3. Gann's method The method was based upon several concepts and
one revolutionary which was his concept of price and time.
Gann believed that important price movements occurred when price
and time converged.
If price and time however were in synch or did not converge,
then time was more important than price.
Time for Gann was the ultimate indicator for seeking clues to
price direction.
As he once said:
"Just remember one thing, whatever has happened in the past in
the stock market and Wall Street will happen again.
Advances in bull markets will come in the future, and panics
will come in the future, just as they have in the past. This is
the working out of a natural law"
Gann had many components of his trading plan and his work with
the Fibonacci number sequence and Gann angles were legendary.
5. Learning Gann's Methods
If you have never traded before you will have to make yourself
familiar with the concepts of technical analysis and there is
plenty of free material on the net.
Then simply buy is books and study them - They take a little
while to get to grips with and you will need to practice the
method, but it will be time well spent.
When you have finished your study you will have a method that
you can understand and apply with confidence which is the key to
trading with discipline and you know it is based on sound logic
- as it made real dollars in real trading.
Gann has been dead for over half a century, yet savvy traders
all around the world are still building wealth applying his
unique and proven methods.
unique methods helped him make a fortune of around $50.00
million and best of all he wrote and recorded the way he did it,
so anyone can have access to his trading strategy and aplly it
for profit.
Trading is one of the ways that small traders can start with
small stakes and build real wealth quickly.
The good news is everything about trading can be specifically
learned and Gann outlined all his methods in writing for traders
to profit from and enjoy today.
His methods are applicable to any financial market from forex to
stocks to bonds so you can choose where to apply them, depending
on the risk you wish to take.
Let's look at why you should study Gann and his methods of
making money.
1. He Had a Track Record
Many e-book sellers or traders sell information but it's
worthless they don't trade it themselves and simply make up a
track record.
Gann made money and his track record and invited newspapers and
journalists to track his trades such was his confidence in how
to make money.
2. Gann and the Law of the Market Movement
Gann pointed out quite rightly, that market prices depended on
humans and that their psychology was constant - Because human
nature was constant this nature would show up in repetitive
price patterns that could be traded for profit
Gann was a technical trader and like all charts believed that
what happened in the past would happen again and the key to
making profits was to look for recurring price patterns to put
the odds in his favor
3. Gann's method The method was based upon several concepts and
one revolutionary which was his concept of price and time.
Gann believed that important price movements occurred when price
and time converged.
If price and time however were in synch or did not converge,
then time was more important than price.
Time for Gann was the ultimate indicator for seeking clues to
price direction.
As he once said:
"Just remember one thing, whatever has happened in the past in
the stock market and Wall Street will happen again.
Advances in bull markets will come in the future, and panics
will come in the future, just as they have in the past. This is
the working out of a natural law"
Gann had many components of his trading plan and his work with
the Fibonacci number sequence and Gann angles were legendary.
5. Learning Gann's Methods
If you have never traded before you will have to make yourself
familiar with the concepts of technical analysis and there is
plenty of free material on the net.
Then simply buy is books and study them - They take a little
while to get to grips with and you will need to practice the
method, but it will be time well spent.
When you have finished your study you will have a method that
you can understand and apply with confidence which is the key to
trading with discipline and you know it is based on sound logic
- as it made real dollars in real trading.
Gann has been dead for over half a century, yet savvy traders
all around the world are still building wealth applying his
unique and proven methods.
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Stock Picking: How to Pick Ready-to-Move Stocks
Not all stocks have the potential to move. That's why it'simportant to be able to filter out stocks that aren't likely tomove right away. After all, stock trading is about making moneyand it's difficult to make money investing on stocks that aren'tgoing to move anytime soon. If liquidity is what you're looking for, high priced stocks mayinitially draw your attention. You may appreciate the tradingvolume of pricy stocks. However, such stocks are less likely tohave the kind of price volatility you're looking for. Keep in mind that with penny priced stocks, the price may be toolow to have a trade volume that can support profitability. Ingeneral, keep in mind that the lower the price of the stock, themore difficult it is to trade for profit. The price of thesestocks may be all over the place, which has the consequence ofstressing out most traders as they watch their stock price varyall over the map. Use the Goldilocks rule when trading stock: some are too cheap,some are too expensive, but the stocks that are most likely tomove are just right. Making sure that the stocks you're tradingare in this range will ensure a return on your investment in adecent amount of time. Where does this Goldilocks range hit?Trading is different for everyone and this is true for findingyour ideal range as well. Nevertheless, a good stock picking price range can be as high as 20 dollars or aslow as 5 dollars. If the stock you're interested in is withinthat price range you're on the right track. Another important thing to check for is the trading volume ofthe stock that interests you. The stock trade volume should beat the highest 2 million and at the lowest 100,000. Keep this inmind when searching for stocks that are likely to move. The problem with stocks that are ready to move is that sometimesthey jump around a lot. In order to make sure you still make aprofit with your stock, watch it as it moves in the few minutesafter the market opens. Often, the high of the day will be setearly. If it looks like this applies, you can try having a sell limitjust below the high of the day. Of course, if it looks like theprice is approaching the high of the day with good momentumlater on, you should consider raising that limit price. Youmight also consider setting the stock's buy stop right below aparticularly significant low price. This is a much better technique than simply watching the stockconstantly with your finger on the sell button. Get somepractice finding the Goldilocks sweet spot and you'll soon findyourself trading in highly movable stock!
Stock Trading: How to Place Stops and Limits
Getting into a trade is often the most glamorous part of stocktrading. Knowing which trades are likely to turn a profit anddiving into those trades can make a day trader feel reallyknowledgeable and involved in the market. Being a good trader doesn't only mean knowing when to get into atrade, it also means knowing when to get out. The followingguidelines are meant to get you started, but remember thattrading is a continuing journey of discovery about the tradablenuances of market moves. Make sure you're familiar with historical support and resistancelevels. Also, check out momentum readings as well as BollingerBands to inform you about where to put stop and limit orders. It's also a good idea to use trailing stops. They will allow youto ratchet up a sell stop slowly as your positions change to bein your favor. When getting involved in stock trading,sometimes avoiding mistakes is more important than doing theright thing. Don't place your stops according to how much moneyyou need to make. The market doesn't distribute profits based onthe needs of its investors. Just because you need to make 500dollars this week and you can't afford to lose more than 250,the market doesn't really care. Sometimes the amount of money you need to make will correlatewith how you set your limits and stops. However, these figuresrarely work out to be the same. Thus, you should never use yourneeds as a guide to where to place your stops and your limits. Another important thing to remember is not to invest when youare "on tilt". Being on tilt means that you have just lost somemoney on a trade and you want to make it back quickly. Supposeyou have just lost $300 on your last trade. You shouldn't setyour exit limits to make all that money back on your next trade.After all, the smart limits on this next trade are not dictatedby how well (or how poorly) you did on your last trade. Stock trading "on tilt" is a sure way to lose money. Use thestock trading tips mentioned earlier to guide your trades ratherthan using impulses based on flimsy reasoning and financialneed. Always let the market determine where you should put your stopsand how you should set your limits. Letting go of yourexpectations will help you be an objective trader and willincrease your profits.
Important Information About Stock Investing
Many people think stock investing is a get rich quick scheme,others say there is very little difference between investing inthe stock market and going to Las Vegas and taking a chance onthe tables. The truth is stock investing is a recognized meansof achieving financial freedom. In the past only the very wealthy were able to afford to investin the stock market but now stock investing is becomingincreasingly popular as a way for ordinary people to investtheir money because now that it is possible to trade online,stock investing has become an efficient and easy to use means ofbuilding wealth. Stock market investing can be conducted in either an aggressiveor conservative manner depending on your personal attitude torisk, it is a very good way to benefit from a growing economyand even when the overall economy takes a downturn by carefullyselecting the stocks you are investing in you can protectyourself is from the worst effects of recession. There is a wealth of information on the Internet to help you getstarted with stock investing, most of the information deals withwhat are known as common stocks that is the basic stock in thecompany that is made available for purchase by the generalpublic. One trap that it is possible to fall into is informationoverload, too much information in to shorter period of time canbe very difficult to take in, the best tip I give you is toodecided on a small number of high-quality information sites andstick with them for all your research. When doing any stock investing you must remember that there arerisks involved and you can always lose money, unfortunately alot of people who are unfamiliar with the stock market tend toconcentrate on this aspect of risk and the potential of lossrather than seeing the significant opportunities that arepresented by the stock market. Minimising the risk in stockinvesting is a lot easier than many people think, the sameknowledge that will help you grow your wealth will also make itpossible for you to minimise the risk you are exposed to. As youbecome more knowledgeable about stock investing you will getbetter and better at choosing individual stocks and become moreaware of any risks that may be attached to them. Successful stock traders make sure that they never invest alarge part of their money in any one transaction in some waysthey're like successful casino gamblers they established amaximum value that can be risked on a single trade or a hand ofcards and they will not exceed that, so limiting any potentialrisk. The key to being successful in the long term with stockinvesting is to ignore the opinions of others and make up yourown mind, having done the necessary research, once you havedecided on a course of action stick to it. Stock investing is not just a get rich quick scheme but arecognized method of gaining financial freedom, it is notsomething you should go into lightly but it does offer a veryreal opportunity to gain financial independence.
Investing - Managing Risk with Warrants, Options & Leaps
Regardless of what the markets are currently doing, now, morethan ever is the time to take action to protect your portfolio. Over the last few weeks investors have been very very surprisedat the performance of virtually all of the markets with the biginitial shock coming from the 9% decline in the Shanghai marketsovernight. Many analysts have had some great insight into whatthe problems are, the effects of them and how investors shouldapproach the markets. Unfortunately, we have many differentopinions from these analysts. While differing opinions are greatto read it can and does create much doubt in the mind of theaverage investor. This is truly a time that you, the investor,must firmly believe in your investment philosophy or at aminimum attempt to protect yourself in the event you are wrong. We at Precious Metals Warrants (http://www.preciousmetalswarrants.com,)personally follow many ofthe top analysts and also read as much as possible on websitesfor information and conflicting opinions. While, yes, we haveour own opinions much is based upon the collective views of someof the top analysts in the world. When our favorites are not onthe same path we attempt to evaluate the risk of our investmentsand how to manage this risk with long term warrants, options orLeaps. Recently Jim Rogers, which I like to refer to respectfully asMr. Commodity, was quoted as, predicting "a real estate crashthat would trigger defaults and spread contagion to emergingmarkets. You cannot believe how bad it's going to get before itgets any better. It's going to be a disaster for many who don'thave a clue about what happens when a real estate bubblepops....the crisis would spread to emerging markets which nowfaced a prolonged bear run. This is the end of the liquidityparty. Some emerging markets will go down 80 percent, some willgo down 50 percent, some will most probably collapse." Dr. Marc Faber says, "most investors are heading for hugelosses...but gold to outperform." Richard Russell says, "gold looks fine. Stop worrying." Chris Laird speaks of a, "World Liquidity Crisis Emerging." Another analyst writing on these websites which I respect isAdam Hamilton. Adam sees the possibility of a 2 year bear marketin the equity markets similar to the 1973 - 1974 with a drop ofapproximately 45 - 50% in the Dow by the end of December 2008.On the other hand he sees gold, silver and the commodity sectorsincreasing as eventually the fear and the fleeing money in theequity markets will find a new home in the commodities. He seesthis commodity cycle, by historical standards, as being onlyabout half over with much more excitement to come. Short-term we did have all markets recently going down together- equities, gold, silver, mining stocks, etc. This has nowscared many precious metals investors into thinking that if theequity markets collapse, then so will gold, silver, and themining shares. This we believe, however, will be only ashort-term disconnect before the money goes into the commoditysectors. A few of the mine fields in the investment arena today: * World Liquidity * Yen Carry Trade (and the unwinding thereof) * Derivative markets * U.S. Sub-Prime mortgage market * U.S. Dollar * U.S. Deficits * Iraq and Iran Any of the above could bring down the entire house of cards aswe know it today. Scary times? You bet. I personally suspect oneday an event will occur in the derivative markets or with theunwinding of the Yen carry trade. These are areas of which theaverage investor has absolutely zero knowledge other thanperhaps hearing the terms mentioned in the financial press or onCNBC. Think about it, investors would not even know what hitthem nor be able to explain it. Like being hit by a truck andnot even seeing it coming at you. At least it will be quick butthe financial pain could easily last a lifetime if you are notproperly positioned. With the above gloomy backdrop, what is the level of risk youare willing to accept? Remember as investors, each of us must make this decision eachday in the financial markets. The decision of risk is ours andours alone, not our brokers or advisors. The ultimateresponsibility lies with each of us. At the end of the day, ifour investments do not perform, we must take responsibility forthe losses ourselves. Should we as investors be concerned about unfolding events?Should we be fearful? Should we be running for the exits? Maybeall of the above are appropriate as this is surely a time forimmediate reflection on our investments and the protectionthereof. Allow me to address briefly how two different classes ofinvestors could address this financial dilemma: 1. If you are an investor still primarily investing intraditional equities and perhaps the emerging markets: * Liquidate all your stocks or positions * Liquidate enough to be comfortable * Use Puts, i.e. Leaps on the Standard & Poor's 500 fordownside protection * Invest in precious metals, the bullion, mining shares,long-term warrants, call options, * Leaps or ETF's on gold or silver. 2. If you are an investor heavily involved in the preciousmetals sector, mutual funds, mining shares or long-term warrants: * Liquidate enough of your positions to be comfortable holdingthe cash in Euros * Increase exposure to the bullion or ETF's on gold or silver * Purchase Leap Puts on an index, i.e. Standard & Poor's 500for downside protection Will the current storms pass without incident? Perhaps, butfinancial well being and decision making are now front rowcenter.
Essential Investment Books - What I Learned Losing a MILLIONDollars
This book by Jim Paul and Brendan Moynihan is a book any tradershould read - The book correctly states that there are lots ofdifferent ways to make money and only a few ways to lose it.Therefore you need to concentrate on not losing first If you have not read this book you will see the markets in acompletely different light and one that could lead you to biggerprofits and is simply one of the best investment books everwrittten. What I Learned Losing a Million Dollars is a fascinating,insightful, easy-to-read true story of Jim Paul's rise from ahumble country background to jet-setting millionaire trader andGovernor of the Chicago Mercantile Exchange. It is an examination of the lessons he learned from losing amillion dollars in the market which brought about his demise andthen covers his rise from the ashes. This book contains no technical theories and really focuses onhow NOT To lose money - there are plenty of ways to make moneyso how come most traders lose it? The answer lies as we have stated that: It's not how you make money that's important there are many waysto do that, but are only a few ways to lose it and if you aremindful of them and don't make losing mistakes - you can emergea winner. The book is essentially divided into two parts: Section 1 The first half of the book about Jim's life makes you feel closeto him and the experience he is facing as his world crashesaround him. It's both funny and sad in equal measure and is asuperb fiction story. Section 2 After the loss and its aftermath, comes the authors views ofwhat he had learned and this really is original, thoughtprovoking and insightful. The authors show you how to identifyand manage the risks, both monetary and emotional that is partof any decision making including trading. Playing great defense The authors covers the key areas ALL losing traders fail in,that let losses get out of control. Key areas covered are: - The three biggest mistakes traders make and how to avoidthem. - Why the most important part of building wealth is not losingit. - The psychological pattern which all losses take in a tradershead, regardless of the position size The discussion on the risk/reward ratio, and why most otherbooks get it wrong is perhaps the most interesting part of thebook. This point is worth the books price alone as the aothor explains Why you have to take into account the PROBABILITY of return, andPROBABILITY of loss, when trading and not simply divide the sizeof your expected return by the size of your expected loss, asmost authors suggest - if you do you will lose! This really is the key point of the book if you want to keeplosses under control as it states in the preface. "This book is a case study of the classic tale of countlessentrepreneurs: the risk taker who sees an opportunity, the ideathat clicks the intoxicating growth, the errors and thecollapse. Our case is that of a trader, but as with all casestudies and parables the lessons can be applied to a great manyother situations. If you want a book to show you the importance of emotionaldiscipline and the art of risk management, then this is it. This book has recently gone out of print, so get your hands on asecond hand copy or get to the library and read it.
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Bias and Self Validation
It's important to look at the markets without bias. Beingunaware of one's own bias can result in at least missedopportunities, or worse, swimming upstream with a poorrisk/reward profile. For most, it's tough to avoid a "bullish"bias. This is, of course, the predominant "retail investor"perspective. This perspective on the markets believes that theonly way money is made is for prices to rise. "Buy low and sellhigh." At least as far as most accounts go, that's true. Fewinvestors are aware of inversely correlated funds, and there'sdefinitely no way they would short the markets. This perspective is very one dimensional. Instead of just askingthe above questions, it's worthwhile to approach yourtrading/investing with some "devil's advocate" style thinking -even if your account doesn't leave you tools to profit from abearish scenario. Instead of just asking the question, "whatshould I be buying now" - look at the perspective, "is this agood setup to short?" Self validation is even more dangerous than bias. Having made adecision, the investor faces the mind numbing onslaught ofself-validation. We've all experienced this - and it's easiestto see third hand. Picture your friend who just bought a newcar/house/computer/etc, and now wants to explain to you whytheir decision was superior to the alternative productsavailable. You may agree - or you may perceive their argumentsas a shield for buyer's remorse. Self validation always affects investors - those who havealready bought in, tend to focus on the data that confirms theirlong position. Those investors out of the market will tend todownplay the former's data and focus on bearish analysis. Thisdoesn't seem like a big deal when you're "right", ie: the marketis confirming your analysis. This is where complacency can setin, because the market's trend will not last forever.Eventually, you'll become "wrong" - the market will start tomove opposite your position - and it's here we must beware ofthe trap of self validation. It's OK to change your mind, acceptnew data, and reanalyze the situation. The point of this is toprevent your small losses from becoming big losses. "Don't fightthe market" goes the platitude. The challenge is to understandyour margin for error - your pain tolerance. Now that I've discussed those concepts, I'm a stationary targetfor accusations of personifying either. Last week, both the Wilshire 4500 and the S&P500 recoverednearly all the setbacks from earlier this month. Both bouncedcleanly off their 50 day moving averages (twice), and look tohave established a floor of support. The question is whetherthere's a ceiling of resistance waiting next week. If these indices top their highs of early June, I'll be back instocks due to the following: * The NYSE Bullish Percent is (currently) still on offense. * Support has been confirmed at the 50 day MA. * The market will have shown buying interest above the previoushighs. However, given that I'm currently out of the market, therisk/reward profile is not conducive to me buying inanticipation of the last point above. There is much evidence toshow supply is overpowering demand: * 4 of 10 Stockcharts.com's sector bullish percents have movedto defense, including Finance, Health Care, Materials, andUtilities. * The NYSE weekly advance/decline chart broke below its 50 dayMA. I discussed the significance of this in an earlier post. Seethe sidebar chart for the latest. * So far, the market hasn't topped the highs of earlier thismonth. In fact - Friday's market rose quickly to just short ofthose highs, and then started a slow steady decline. The more likely scenario in my mind (here come the accusationsof self validation), is a retest of the 50 day MA next week. Ifthat happens, I think supply pressure would be sufficient to putthe S&P bullish percent on defense. Either way, I've got agameplan.
Determining Where You Will Invest
There are several different types of investments, and there aremany factors in determining where you should invest your funds. Of course, determining where you will invest begins withresearching the various available types of investments,determining your risk tolerance, and determining your investmentstyle - along with your financial goals. If you were going to purchase a new car, you would do quite abit of research before making a final decision and a purchase.You would never consider purchasing a car that you had not fullylooked over and taken for a test drive. Investing works much thesame way. You will of course learn as much about the investment aspossible, and you would want to see how past investors have doneas well. It's common sense! Learning about the stock market and investments takes a lot oftime... but it is time well spent. There are numerous books andwebsites on the topic, and you can even take college levelcourses on the topic - which is what stock brokers do. Withaccess to the Internet, you can actually play the stock market -with fake money - to get a feel for how it works.
Why Oil Stocks May be Good for Your Portfolio
Stock markets love a consensus, but the oil market is one wherereaching any type of consensus is very hard to achieve. There ismuch battle going about oil stocks and related issues. Someexpect stocks and bonds for oil and various petroleum productsto keep rising. Some expect them to peak soon. Others expectthem to go down in the not-so near future, but downnevertheless. So, who to listen to? Regarding oil stocks, a fundamental that has to be understoodabout the oil market is that is it driven by the market laws ofdemand and supply. Demand for oil is on the increase slope.Economic recovery by major world players means that there ismore demand for oil. Other emerging big players, like China, arein more and more need of oil, thus raising demand. Countrieslike China, India and South Korea are also into building theirown oil reserves in prediction for increased need in their owneconomy. This in turn, leads to an increase in demand. However,while supply of oil is still satisfactory, it is however to benoted that there is a tightening of supply on the market. Addedto this is the fact that experts are remarking that oil suppliesare dwindling. Combined with the other pertinent fact that thereis an absence of supply growth, it all leads to imply thatsupply may not be able to meet the requirements of demand in thefuture. Since the price mechanism is determined by these market laws,what happens when demand exceeds supply? Prices go up. Needlessto say, increasing prices mean increase in value of oil stocks.This is why it is a good idea to hold on to those stocks. A number of stock investment and stock broking companies provideadvice and handling of stocks portfolios. These qualifiedcompanies thus look into the screening, research, and analysisneeded to ensure the best oil investment for one's portfolio andneeds. However, in recent times, and especially due to theInternet, the layman can also attempt to invest on his own inoil stocks. Use of tools such as specialized web sites andbusiness search trackers on the Web allow for screening andanalysis of major market players. However, there is not much ofa security net when one uses one's own counsel for investment.Careful analysis and diligence is thus the key for thesetransactions.
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