Education —
Weekly Ramblings of an Australian Stock Trader - incorporating
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Category — Education

5 Steps to Profitable Investing on the Stockmarket.

Here is a simple 5 Step process to help get you started out on the right track..

1. Finding a stock.

This is the most obvious and most difficult step in stock trading. With well over 10,000 stocks to trade in a good guideline is to consider first in which sector you wish to trade in first.

Of course you would be looking at a sector that is receiving good media coverage and in which the stocks concerned are going upwards in value.It stands to reason that you would not be looking too hard at a sector that was experiencing a severe downturn.

Once you have decided in which sector you want to invest in, you can then commence to start researching for a stock.
It is always best to have a system of rules already in place that will be used before buy each stock. [Read more →]

December 14, 2011   No Comments

The Emotions and the Roles They Play.

The “PRICE” of a stock at any given time is due to the buyer and seller of this particular stock reaching a mutual agreement with regard to its current value.

When the price goes up it is because the seller thinks it is worth more or there is a short supply of stock available.

The opposite happens when there is an excess of stock available, this effectively pushes the price downwards. So the current share price is an accurate gauge of the market value of the stock at this point in time.

PRICE is involved when you buy the stock, your potential exit price to limit losses [stop loss] and potential exit price to make your profits. [Read more →]

December 12, 2011   No Comments

Five Very Important Rules For Traders.

Here are Five very important rules for those traders who are currently  investing in the Stock Market.  If you abide by these rules, you will most certainly  become more profitable in the long term.

Rule Number1

You must never risk more capital than you can ill afford to lose.  No trader is ever perfect, you are guaranteed to have losing trades at some time or ever in your trading career.  There is no  trading system in existence that will give you 100% accuracy all the  time. So expect to lose some capital somewhere along the line.

Rule Number 2

Always remember  to reduce your losses to a minimum and let your profitable trades compound to bigger gains.  The secret to not losing all of your capital is to use stop loss orders consistently and persistently and do not let your emotions dominate your trading.  It is far better to lose a little and exit out of a trade, than to hang on  hoping that your trade will turn around and  thereby suffer a greater loss. [Read more →]

December 6, 2011   No Comments

Techniques Needed to Become a Successful Small Cap Trader.

Small Cap stocks represent an excellent investment vehicle for producing gains, while the risks are equally as high. When you finally decide to get involved in Small Cap stocks, there are a few things that you need to know first.

In fact, whether you have been burned by Small Cap stocks in the past, or have never even invested, the following theories are designed to give you an instant and significant advantage over all those inexperienced and uninformed traders.

Lots of traders have made lots of money from trading Small Cap stocks. Lots of traders have lost plenty, as well. What is the difference between a successful micro-cap trader, and one who continually loses?

Here are the two examples.

1.One trader uses professional stock picks and research. Does their own due diligence. Observes patience. Takes lessons from past trades and stock activity. Takes lessons from other traders. Decides between 5 to10 stocks at a time. [Read more →]

November 30, 2011   No Comments

Feeling the Loss?

This informative newsletter was contributed with the kind permission of Louise Bedford who is one of Australia’s most recognised private traders. Louise is also the best-selling author of The Secret of Writing Options, The Secret of Candlestick Charting, Trading Secrets and Charting Secrets.
I highly recommend them to you as they are invaluable in locating those profitable stocks.  You will find this article plus a host of other invaluable information by clicking on this link or why not subscribe to their free newsletter. Click Here.

Feeling the Loss?

Louise Bedford

The recent market activity has driven some traders almost around the bend. I thought you might like to see my email reply to a particularly deflated, frustrated and irritated trader who emailed me recently.

He asked how he should handle his losses, especially because he hadn’t told his wife about the extent of his losses. In fact, he hadn’t even calculated how much he had actually lost because he was terrified. Here’s what I said:

“A few things spring to mind, in no particular order:

1) Firstly I feel you need to bite the bullet and quantify your loss.

This will make the size of the problem concrete. I know this is confronting. It’s only after this that you’ll be able to start dealing with the psychological aftermath of the problem - but until you actually know the size of the problem you can’t really take any corrective action.

2) Have you heard of a Morning Journal?

It’s where you write for 30 minutes in the morning about everything and anything.

I feel that you need to ask yourself the question and write about it in your Morning Journal: a) “Why did this occur?” and b) “Is there anything that can be done to avoid this situation again?”

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November 29, 2011   No Comments

The Value of Paper Trading.

Paper trading is widely discussed regarding its merits, and whether it is of any value to a trader as they try to make the transition to become a real trader.

One viewpoint is that since paper trading is not real, the profits are meaningless, and are no indication of real money profitability. An opposite viewpoint would state that paper trading is an important step in the trader’s learning progression, and regardless of whether it is real, if the trader cannot ‘properly’ paper trade, then they will not be able to real money trade.

Paper Trading Viewpoints.

Consider: simulator fill prices are not real and won’t be attainable with real money. Even if this is correct, is it really an issue unless the trader intends to be a scalper, trading for very small profits, and thus each tick is critical? Granted, but shouldn’t a beginning trader be very selective, focusing on learning their method and the ‘best’ setups that method provides? This would be my viewpoint, and in this capacity paper trading fill prices are not an issue. [Read more →]

November 28, 2011   No Comments

Research is the Name of the Game

I do most of my research after the day’s trading has finished. Firstly I look for stocks that have performed well today and add them to my prospect list. This number varies from time to time but the average number can be as high as 50 or so.

The reason for so many prospects is because only a small percentage will eventually match my entry criteria. So because of this I am entering new names continually on a daily basis. There is no restriction to which sector they belong to either. They could be the banking or the mining sector, I try not to have favorites, but I must admit I find this hard to do at times.

A great source of future prospects is “The Changes in Substantial Shareholders section.”This is where you can see who the big companies are currently investing in, usually in large amounts. Remember they are not buying for the fun of it. You can guarantee they have done their research properly and see it as a good investment for the future. [Read more →]

November 26, 2011   No Comments

Basic Hints on How to Find Profitable Stocks.

Stock picking can be a extremely perplexing procedure and investors have very different ideas on how to achieve the desired outcome. Nevertheless, it may be very wise to follow some basic steps which will assist you to minimize the risk of the investments that you end up choosing.

This article will outline some basic steps for picking those high performance stocks that we all aspire to find.

You must have firmly placed in your mind exactly the time frame and the general strategy of the stock. This step is very important because it will influence as to the type of stocks you buy.

We shall presume that you have decided to be a long term investor. Therefore you would then be wanting to locate stocks that possess sustainable,good competitive advantages along with stable or increasing growth for the future.

The way to locating these High Performance stocks is by considering the historical performance of each stock over the past couple of years.Once you have found a likely stock you would then need to do a simple business S.W.O.T.analysis on the company. Swot basically means: Strength-Weakness-Opportunity-Threat.) [Read more →]

November 19, 2011   No Comments

Pinnacle Digest Newsletter 14th November

This article is contributed by One of the TOP sites for up to date information on the Canadian and US Stock Markets. For more information subscribe to their free newsletter.

Dear member,

“A knowledge of the psychology of crowds is to-day the last resource of the statesman who wishes not to govern them - that is becoming a very difficult matter - but at any rate not to be too much governed by them.”
Gustave le Bon, (2006) The Crowd: A Study of the Popular Mind

As an investor, you don’t want to be reactive to the crowd’s action, but rather proactive to what the crowds will do. Understanding the psychology of crowds will help you avoid the many emotional knee jerk reactions this market will take.

During the last 3 and a half years, from the time the crisis hit in late summer 2008 until now, it has been the most volatile period for stocks in history. Obviously the initial collapse in 2008, which began due to the sub-prime crisis, among other imbalances, brought on a sell-off comparable only to the market crash of 1929. But beyond the crash of 2008, volatility has remained unprecedentedly elevated.

Is this unprecedented volatility a co-incidence to the fact our society has never been so intertwined with technology and media? Doubtful. When those bad unemployment numbers cross the wire, and within seconds are up on Bloomberg, you, along with hundreds of millions of investors worldwide, are reading them. All you need is a computer (which nearly everyone has) and you are plugged into the global finance markets at a second’s notice. [Read more →]

November 14, 2011   No Comments

Psychological Share Trading.

The title sounds very outlandish and somewhat unnerving. But in reality it is about one of the most common and basic traits in our nature that in reality make us what we are, and only too often this will dictate how and why we trade the way we do, Often to our own detriment and financial hardship.

They are your own every day emotions. These emotions can be found hard at work every day in the stock market, not only when the trading floor is open but also after hours as well, for they will dictate what happens in tomorrow’s trading and how the market will then behave.

The first one is FEAR. There is a good acronym that is very apt here .False Expectations Appearing Real.

Fear can and does assume many forms. The fear of missing the boat will cause you to abandon your preset price and chase the share price upwards. Therefore you end up paying more than you originally planned for. [Read more →]

November 10, 2011   No Comments