CAPITALISING ON YOUR SUCCESS

Ok, things are starting to go good and you're making money consistently, everything is looking good.... What to do now?


SEPERATE YOUR MONEY

Diversify your money maybe put a set amount from your earnings into another place  like pay off debts, especially if you have mortgage - maybe start another account (IG markets lets you have multiple accounts) and maybe trade something different like gold or an FX using the same strategies....

MINIMISE YOUR RISK

If you started (like I advised) on 1 x ASX200 contract on $2000 and you want to increase your earnings you can play 2 x ASX200 on each trade. I like to see my risk reduce each time I up the bet so maybe i wouldn't start trading on 2 contracts until I hit $5000  (and hopefully have taken back my initial investment in payments)  and 3x contracts till I hit $9000 this means that If I was to get to an account balance of $9000 I'm probably making $150 per day (thats my average anyway) on trading 3 x contracts and this is where I find it becomes a very real and valuable addition to my income. $3000 per contract would give me an approximate trading range of 450-500 points  which gives me a greater safety range than trading one contract per $2000 (which would give a 300-350 point range) the further along things progress  I would maybe to to 4 x contracts on $16000 and 5 x contracts on say $25000 which would give you  saftey margin of 650 points (approx) which is a fair trading range and will allow you to sleep at night without constant fear of being sold off in the event of a sudden dip or whatnot.

I view trading on 1 x contract on $2000 bit of a risk and in the last 2 months there's been two events where I would have been sold out. But unfortunately we all have to start somewhere, some start on less than but at the end of the day $2000 is not a lot of money but once you get past $5000 and then $9000 this is serious money to most people and its a good idea to minimise the risk (even though by now its not really your money your playing with) its a valuable lump sum and and even more invaluable tool to make a regular income out of NOT something to be taken lightly. It is better to have this amount coming in regularly Ideally i want to have this coming in as an income for the rest of my life, the actual dollar amount for me is not as important than the security of having something come in like clockwork every day or week but thats just me, you may make more money by upping your bets and taking a risk but you may also get sold out and have to start all over again

I'm now trading over $3000 per contract and it is this that managed to get me through the turbulence of the last couple of months hopefully soon i'll be trading on $4000 or more and believe me its much better for your heart and sleeping patterns :)

SWINGING MARKETS

As you get more exposure to the world of stock trading (and it is its own little world) you'll have a better understanding of what's going on around you and how certain things can affect the markets. I've been involved in varying degrees in the markets for almost 20 years now and things still suprise me. Lately I've seen a lot of movements that really seem counter intuitive, confounding me and many of the so called experts.  I have to say since the GFC many of the logical rules of trading have gone right out the window, never more so than the last couple of years where I've seen some massive swings in the market for virtually no reason (except maybe for market manipulation and computer generated trades)

Infact I will say I've NEVER seen the market so constantly swing around like this. this makes it really hard for anyone on borrowed money (either margin lending or CFDs) to hold their positions without getting sold out.

If you're buying shares outright you really don't have too much to worry about in this situation.... just keep holding on to your shares till they bounce back to a point where you can sell them (hopefully at a tidy profit). With the huge swings we've been having you might find there are plenty more profit taking/buying  opportunities if your timing is good

If you're on borrowed money you really NEED to do the calculations and figure out how big the swings in your particular feild have been and whether or not you can hang on to them if (and when)  those swings occur again. Again because I trade on the Australian market I look at the ASX200 as my purchase of choice and need to either be able to loose the positions I have in the even of a big swing going against me or hold on them (this year the ASX200 which is what I buy and sell routinely swung by 1300 points from top to bottom of the cycle. Outside of the major crash which sparked off the GFC I've never seen that happen. I would have to ask myself "Is it worth trading to a 1300 point (20%) swing?" The capital requirements for that would be exponentially larger than trading to  say a 600 point swing.

For the most part there's no real right or wrong answer for this but as long as you're aware of the risks and capital requirements for each scenario and most importantly you're not playing with money you can't afford to loose, I would say its always worth the effort and time


NOW FOLKS STAY TUNED VERY SHORTLY I'LL BE DETAILING MY TRADING STRATEGY WHICH ALLOWS ME TO LIVE OFF THE SHARE MARKET :)