Volume today is light today. The indexes are are virtually flat - there is a lot of focus on Europe, never-the-less... trade your stocks and follow your rules. Don't worry what everyone else is doing. Here are some stocks that are moving and caught my eye. It doesn't mean I am bullish or bearish on these, just means they are moving or have some significance. Learn the trading business and find your strategy.
October 26th, 2012
October 25th, 2012
In this video I want to show you how support can become resistant or resistance can become support.
Let's discuss support - which is where the stock is being held up. Stocks bounce at support level and drop back down on resistance level. It is this just a price level - it doesn't mean it can't break it or go the other way. It just means that that's a solid level that have to go through in order to make some kind of progress now support can become resistant.
Watch various levels of support and resistance so you can see where the stock is being held up or is pressed.
October 24th, 2012
Patience is probably one of the hardest thing to learn for beginner traders. one of the most common mistakes in stock market trading is getting out or getting in too early. It takes years of experience to know and understand when it's the right time to get in order to get out. Most beginners have an itchy trigger finger, that is why patience is so critical to stock market success. Otherwise you could be jumping in and out of trades all too often because of volatility.
Getting in to early
Getting into early into a stock trade is common for beginners because they are anxious to make a quick buck. Without being in a trade you cannot make money. However, a common beginners mistake is to force a trade. If you do not see an opportunity, then do not force the trade - chances are you are forcing it and getting it to early. If you are early, things can change, stocks can reverse, or do the opposite of what you expect since they have not reached your entry trigger.
Getting out to early
Another common issue with beginners is getting out too early. Even if you got in at the appropriate time, most beginners sell quickly instead of letting their profits run as much as possible. They will pull the trigger to sell and get out making a measly $100 (in the stock market that's usually minor) if the stock goes up just a fraction or a tick from their entry price. In this case you are playing by ticks and just hoping and guessing. Don't do that!
Allow things to set up properly and ride the wave as much as possible. Know your trading strategy and your trading edge. Stick with it.
October 22nd, 2012
- The stock market is going up
- There is positive momentum
- The term "bulls" is used because of the way a bull attacks (on an upward pattern)
- The phrase "a bull for McDonald's" means you are long or positive on McDonald's
- The stock market is going down
- There is negative momentum
- The term "bears" is used because of the way a bull attacks (on a downward pattern)
- The phrase "a bear for McDonald's" means you are negative on McDonald's and you think the stock will go down for McDonald's
October 19th, 2012
Education, paper trading and live trading with low shares should be used together to acheive success in the stock market.
What is Paper Trading?
- Trading stocks with a fake account or with fake money
- A way to practice before doing live trading
October 17th, 2012
Trading is hard work at the start, but it should be effortless during the trading process. Good or professional traders know this. In fact, trading should be boring to some degree when you have your system and methodology down. The reason for this is you know when to pull the triggers and when. If something happens, you know what to do. You know how to react when the time is right. However, it requires hard work to get to this level. It's all about discipline.
When you get ready for anything, a marathon, football game, tennis match, etc - typically the preparation of that is much harder than the actual match or game itself. Take David Blaine, the man who held his breath for 15 minutes under water. When he discussed how he did it, he mentioned he trained for months. He lived in oxygen deprivation environments for an extended period of time and it required a lot of training. When it came time to actually hold his breath, the event only lasted a merely 15 minutes. However the training took several months and a great deal of pain to get there.
Think of trading in the same way. The action of actually executing the trades is easy. It will be easy for you to hit the buy and sell triggers - whether you are successful or a failure that will depend on the training and the hard work you put in before you execute your trades. If you work hard, study, and put time into it there is no reason why you can not be successful. However if you follow everyone else, do not put in your own time, or don't do your own homework - you are just in for a crap shoot.
October 15th, 2012
Simple definition of stock = a piece of ownership of a company
- If you purchase stock in Google, you own a small fraction of Google.
- When you purchase stock, you're buying a piece of the company.
- People buy stock in order to invest
- Companies sell stock in order to gain revenue (money to build/grow the company)
October 12th, 2012
These terms are more efficient than terms like "buy" and "sell" because they tell your position--your mindset on a particular stock or on the industry.
- Positive on the market
- You can also be "long" on a particular stock: If you are long Nike, you're expecting it to go up
- Negative on the market
- You can also be "short" on a particular stock: If you are short Nike, you're expecting it to go down
- Selling with the intention to buy the shares back at a lower price
Benefits of using "Long"/"Short" vs. "Buy"/"Sell"
- If you have 1,000 shares of Nike and you tell someone you sold 500 shares, they could assume you think Nike is going to go down even though you are still positive 500 shares.
- If you think a certain stock will go down and you decide to sell all 1,000 shares and later purchase 300 shares, and you tell someone that you bought the 300 shares, it is not clear that you are still negative 700 shares. They may not understand that you think Nike will go down.
- "Long" and "short" remove the ambiguity associated with the terms "buy" and "sell."
October 10th, 2012
There are few true facts about humans. Most are followers - many are not leaders. We all seek instant gratification - wanting to skip the hard work in between. Even if you know this, its still hard to go against it when a tip is presented to you to make your life easier.
Let me tell you the story of two traders. One of my friends was staying at my house for a bit. We were still in the early days of trading, and he setup his computer setup in the other room. It almost felt like were room mates even though we were out of college. We just wanted to interact during market hours, play concepts off of one another. He had his screens and I had mine.
We started going about our day and one stock in particular which we both owned - I was long and he was short. (I can not remember the stock at this point in time). He was looking at it from the short side and I was looking at it from the long side.
The day goes by and we had various interactions about the direction of the stock. I started to doubt myself and ended up selling my shares.
So what did the stock end up doing? It went down for the day and then popped back up higher than ever over the next week.
Whats the lesson?
After me and my friend talked, he was trading on day-to-day basis. He wasn't looking to trade for more than 2 days. As for me I was looking at a longer term horizon such as a week, maybe more. Lesson learned that you should always stick to your own rules and your own trading strategies. We were both right but our time horizon was different. Doubt caused me to make changes in my plan or strategy. Its a psychology game, so stick to your rules and your strategies.
October 4th, 2012
Netflix is gaining ground its second day and following through. But be super careful... its still considered a piece of crap by the pros.
Why? Well because look how much dumping they did on it just not to long ago. I assure you they are not anxious to jump back in it. It does look temping, but temptation is full of evil. I'm staying away for quite a while still and waiting for the stock to prove to me that it is worth it. What you do is up to you