Simple answer is there are are no definates
This is my opinion, so take it how you will, many people will try to sell you courses and video's totalling $1000's of dollars but really it comes down to a few key factors I do use graphs and fundamentals as well and keep these in mind but events over the last few years have shown there are some much higher factors at play than simply reading a graph
Are the markets sitting on a high or low?
Look at the graphs. Generally if the markets are low they will go up, maybe not that day but soon you don't need a $10000 course to tell you that. Not at this point anyway. These things have value don't get me wrong but for someone just starting up I don't think you need to do this. But thats your decision.
The most important questions you can ask yourself are:
Are they high or low on a short term basis?
Are they high or low on long term basis?
and then make your decisions accordingly
Is there something in the world that is causing a lot of fear?
ie Greek Crisis, China Slowdown and the gold and oil sell offs late have proved that while fundamentals may look good you can't control everything that happens around you
There are certain things which are out of our control. The Gold crash of late july 2015 was fuelled by someone selling off 5 tonnes of gold which flooded the market causing the price to drop. You can't predict these things and neither can I.
The only advice i can give is to sit it out if you are not on borrowed money or hopefully you've left yourself with enough margin to cover short falls if you are.
Also another thing you can't control is institutional sell offs or buy ins. Some of the bigger firms which trade billions of dollars a day can single handedly spark a mass sell off or gain from one big transaction.
Triggered selling
This has been another thorn in my side over the last few years with computerized trading becoming really popular amongst virtually everyone who trades. many people who have "sell orders" attached to their holdings to automatically sell once their prices fall through to a certain point can get sold out on a sharp market drop, this can result in a cascading effect and push the market down even further as highlighted in the GFC of 2007/8. Much of the trading now is automatically done with 'triggers' and unfortunatley it means that you have to trade with a much safter margin if you are on borrowed money than you did before the GFC hit.
Basically the rules of "saftey first" apply here, if you go in too hard you will eventually get stung. you might have a few success but you will get caught out in the long run
Friday 25 September 2015
Sunday 20 September 2015
STRATEGIES - CFD TRADING
Now this is where it gets tricky!
CFD trading is not for the faint of heart or those adverse to risk.
CFD (Contracts For Difference) trading is basically like margin trading on steroids. profits and losses are accelerated and you need to have a good understanding of how this works.
I have traded in CFDs for a while now and they are my instrument of choice but when I teach people on how to get started I always say only throw in what you can afford to loose, especially for the first couple of attempts you make at this, as you most likely will loose it while you get your head around the concept of trading shares in a 100:1 lending ratio.
a 100:1 lending ratio is a big thing to comprehend as well. say you started up a CFD account on $1000 you would already have enough leverage to buy up to $100,000 worth of your chosen asset. Essentially this means if your assett goes up 1% you stand to make $1000 but if it goes down 1% you loose your entire trading base. IG markets will generally sell you out before you go into negative balance but again check this with your provider before you put your hard earned money in. The last thing you want to do is loose your deposit AND have a debt to your service provider
As mentioned before I use a program called IG markets (I don't have any affiliation with them) which I whole heartedly recommend, I have tried a few others but this comes out on top for me. Great range of stocks, indexes, binaries, commodities and just about everything else you can ask for.
There are many tricks to using trading software this powerful and I will cover a few of them in more detail in upcoming articles
CFD trading is not for the faint of heart or those adverse to risk.
CFD (Contracts For Difference) trading is basically like margin trading on steroids. profits and losses are accelerated and you need to have a good understanding of how this works.
I have traded in CFDs for a while now and they are my instrument of choice but when I teach people on how to get started I always say only throw in what you can afford to loose, especially for the first couple of attempts you make at this, as you most likely will loose it while you get your head around the concept of trading shares in a 100:1 lending ratio.
a 100:1 lending ratio is a big thing to comprehend as well. say you started up a CFD account on $1000 you would already have enough leverage to buy up to $100,000 worth of your chosen asset. Essentially this means if your assett goes up 1% you stand to make $1000 but if it goes down 1% you loose your entire trading base. IG markets will generally sell you out before you go into negative balance but again check this with your provider before you put your hard earned money in. The last thing you want to do is loose your deposit AND have a debt to your service provider
As mentioned before I use a program called IG markets (I don't have any affiliation with them) which I whole heartedly recommend, I have tried a few others but this comes out on top for me. Great range of stocks, indexes, binaries, commodities and just about everything else you can ask for.
There are many tricks to using trading software this powerful and I will cover a few of them in more detail in upcoming articles
Friday 11 September 2015
STRATEGIES - MARGIN LOAN
Ok this is a big step for a trader to trade on borrowed money.
Essentally the idea of a margin loan is to magnify your wins by the factor of how much leverage you can get against your original amount of money.
It is important to note that you can also magnify the losses you can make against these as well and depending on how your platform operates you may also accrue losses over and above the deposit you borrowed against. Best to check with your platform help team how they operate things like margin calls and sell offs. Some sites may give you a day to top up funds and others may just sell you out as soon as you hit a certain point and others might have inbuilt protection to stop your account going into negative territory whereby you owe the credit provider money for shares you don't even have.
This sounds scary but you need to know the effects of what a run of bad luck or bad stock pics and do to your account. if you are borrowing on a factor of 4:1 its not out of the question for a stock to fall below acceptable security levels and you will either have to put more of your own money in or loose the stock
One other factor you have to watch out for is that you are paying interest for your positions it is important to know how the bank or service provider you are with bills your interest and how much of it you will be paying vs. stock you will be holding. Some providers might charge interest daily some might charge it monthly.
Remember: in the event of a downturn you are still paying interest even though you may be holding on to stock for a long time until the stock recovers to the point where you can sell it off again.
Generally speaking if you are on say a 4:1 margin rate it would take a fairly huge downturn in the market to land you in trouble but these seem to be appearing once a year at the time of writing this you either have to be prepared to loose some stock holdings at a cost to your portfolio or be prepared to top it up with cash if need be
Essentally the idea of a margin loan is to magnify your wins by the factor of how much leverage you can get against your original amount of money.
It is important to note that you can also magnify the losses you can make against these as well and depending on how your platform operates you may also accrue losses over and above the deposit you borrowed against. Best to check with your platform help team how they operate things like margin calls and sell offs. Some sites may give you a day to top up funds and others may just sell you out as soon as you hit a certain point and others might have inbuilt protection to stop your account going into negative territory whereby you owe the credit provider money for shares you don't even have.
This sounds scary but you need to know the effects of what a run of bad luck or bad stock pics and do to your account. if you are borrowing on a factor of 4:1 its not out of the question for a stock to fall below acceptable security levels and you will either have to put more of your own money in or loose the stock
One other factor you have to watch out for is that you are paying interest for your positions it is important to know how the bank or service provider you are with bills your interest and how much of it you will be paying vs. stock you will be holding. Some providers might charge interest daily some might charge it monthly.
Remember: in the event of a downturn you are still paying interest even though you may be holding on to stock for a long time until the stock recovers to the point where you can sell it off again.
Generally speaking if you are on say a 4:1 margin rate it would take a fairly huge downturn in the market to land you in trouble but these seem to be appearing once a year at the time of writing this you either have to be prepared to loose some stock holdings at a cost to your portfolio or be prepared to top it up with cash if need be
Friday 4 September 2015
STRATEGIES - TRADING
As the name suggests you are actively trading shares if you choose to adopt this method. Which ever site you use should have news or information on whats going on in the world of finance and reasonable graphing software.
Markets usually crash or have a "correction" at least once (usually twice) a year. If you're a little more tuned into the market you'll be able to follow the news and have a fair idea if the market is down or up.
Your timing in this area is crucial. If you buy at a market low you have a much better chance of making a good profit on the upswing. best way to do this in my opinion is to keep saving your money and wait till a drop in the market occurs, at least 5% of the peak maybe even wait till a 10% drop and jump in. Again I would say choose solid stocks with a good return, as they are less likely to collapse in a market downswing. Many times if you time the buy in right you can make 10% on them in a matter of a few months.
Here's a favorate example of mine, It's an Australian share, Commonwealth Bank of Australia (CBA) graphed out using my platform of choice over the course of the last year or so (mid 2014-mid 2015) Looking closely you look at it you can find a few great opportunities both at the bottom of the graph where the shares took a hit (due to share market corrections and dividend distribution) if you were to buy in at the lows there was a 20% climb to where it peaked. Nobody expects you to get in right at the bottom and sell right at the top but even a 7-10% gain in the matter of months (and maybe a dividend cheque on top of that) is not at all unreasonable to expect. Many share traders will be able to buy and sell the same shares multiple times in a year and and make 20% per share using the market highs and lows.
Again same rules as "BUY AND HOLD" apply. try and spread your investments over a few shares, ideally at least 10 so that hopefully you'll be buying and selling and constantly generating money every cycle and if one share doesn't do what you expect it to at least most of the others should.
Most shares will follow the market and rise and fall according unless some major news within that company alters the share price.
Whether you hold out for a 1 percent rise and keep buying and selling more regularly or just move them around when the market moves in opposite ends of the cycle you should make money faster using this method rather than just buying and holding.
There is no right and wrong with this when you choose to get in and out .... if you make a small 1% profit it is still more than you had before and if you make 5-10 percent thats also good too..... 1% rises are easy to get and may occur a lot more often than 10 percent rises. you might make 10 1% trades or one 10% trade. either way you are making money you didn't have before.
This idea will work with most of the bigger shares on the market in either Australia, USA or UK indexes
There are more ideas i'll cover later but this is probably the main concept to get your head around
Markets usually crash or have a "correction" at least once (usually twice) a year. If you're a little more tuned into the market you'll be able to follow the news and have a fair idea if the market is down or up.
Your timing in this area is crucial. If you buy at a market low you have a much better chance of making a good profit on the upswing. best way to do this in my opinion is to keep saving your money and wait till a drop in the market occurs, at least 5% of the peak maybe even wait till a 10% drop and jump in. Again I would say choose solid stocks with a good return, as they are less likely to collapse in a market downswing. Many times if you time the buy in right you can make 10% on them in a matter of a few months.
Here's a favorate example of mine, It's an Australian share, Commonwealth Bank of Australia (CBA) graphed out using my platform of choice over the course of the last year or so (mid 2014-mid 2015) Looking closely you look at it you can find a few great opportunities both at the bottom of the graph where the shares took a hit (due to share market corrections and dividend distribution) if you were to buy in at the lows there was a 20% climb to where it peaked. Nobody expects you to get in right at the bottom and sell right at the top but even a 7-10% gain in the matter of months (and maybe a dividend cheque on top of that) is not at all unreasonable to expect. Many share traders will be able to buy and sell the same shares multiple times in a year and and make 20% per share using the market highs and lows.
Again same rules as "BUY AND HOLD" apply. try and spread your investments over a few shares, ideally at least 10 so that hopefully you'll be buying and selling and constantly generating money every cycle and if one share doesn't do what you expect it to at least most of the others should.
Most shares will follow the market and rise and fall according unless some major news within that company alters the share price.
Whether you hold out for a 1 percent rise and keep buying and selling more regularly or just move them around when the market moves in opposite ends of the cycle you should make money faster using this method rather than just buying and holding.
There is no right and wrong with this when you choose to get in and out .... if you make a small 1% profit it is still more than you had before and if you make 5-10 percent thats also good too..... 1% rises are easy to get and may occur a lot more often than 10 percent rises. you might make 10 1% trades or one 10% trade. either way you are making money you didn't have before.
This idea will work with most of the bigger shares on the market in either Australia, USA or UK indexes
There are more ideas i'll cover later but this is probably the main concept to get your head around
Subscribe to:
Posts (Atom)