Monday, June 28, 2010

Stock Trading For Idiots

By Robert Buran
First of all I am going to tell you that I am a stock trading idiot and proud of it. I have made millions of dollars trading stocks and I am blessed with the inability to understand the technical analysis of markets.

You should be happy that you are a stock market idiot because this fact may help you in making real money in the stock market.

Some of the smartest people I know are in the stock trading business and many are stock brokers and financial experts. I am going to let you in on a dirty little secret. Of all the forces in the economy that have caused people to lose money in the stock market, none have been greater than the advice of financial experts and brokers. There does in fact seem to exist an inverse relationship between intelligence and effective stock trading. It would seem that the smarter a person is that the more effective they are in finding ways to cause you to lose your money in the stock market.

It has been scientifically proven that the performance of stock brokers in picking profitable stocks could be replicated by having monkeys throw darts at a page of stock listings in the Wall Street Journal. So the first lesson for the wannabe stock trader is to plan to MAKE YOUR STOCK TRADING DECISIONS YOURSELF and stay away from those stock brokers in their pin stripe suits and shiny shoes.

AND STAY AWAY FROM TECHNICAL ANALYSIS, ALSO KNOWN AS WIGGLY LINE THEORY

You should also stay away from technical analysis. Technical analysis of market behavior is pseudo science and frequently promoted by snake oil salesmen disguised as brokers and other financial experts. Other technical analysis proponents include trading system vendors and trading system software companies.

 For some brokers and financial wizards technical analysis is a kind of religion promoted to explain what otherwise cannot be explained about markets. It is the opium of stock market losers everywhere. I call it WIGGLY LINE THEORY.

For example, the proponents of technical analysis may tell you to buy XYZ stock when the 15 day moving average crosses the 45 day moving average and then take profits on your positions next year when the stock moves into "overbought" territory provided that the stochastic confirms the sell signal.

Hogwash and financial sophistry I say. Again technical analysis of market behavior is pseudo science and if you are really fascinated by the technical analysis of markets you might also consider the study of cloud formations. Both technical analysis and cloud formations have a kind of imaginative beauty to them and both can appear to have shape and meaning. But then as the market moves and the winds blow those shapes and meaning disappear and are soon forgotten. It is not a good idea to use technical analysis to determine where to put your money.

You may ask, "But all the financial experts use technical analysis and why can I not use this science to make financial decisions regarding stock market investment?"

This is my answer: In the simplest terms technical analysis is pretty useless, not because its math and formulas are flawed, but because the data it attempts to organize and make sense of is predominantly random. Short term stock market movement is predominantly random. It is difficult to make sense of random data no matter how sophisticated are your methods of analysis. It is garbage in and garbage out. The randomness of the markets defeats technical analysis along with the bravest and brightest financial experts and traders.

Be happy you are a stock market idiot. If you cannot understand it you can easily shut out the noise and not become unnecessarily confused.

MARKET MOMENTUM THEORY AND POOL HALLS

So what should we, the stock market dummies of the world, use to defeat and take money from the bravest and the brightest financial experts and traders? What has worked for me, and in fact has made millions of dollars for me, is not technical analysis, but something I call market momentum theory. Market momentum theory is based more on physics than math. I did not learn market momentum theory in an economics school; I learned market momentum theory in a pool hall.

Let me illustrate with a pool hall example. In pool one player makes the opening break shot by striking the cue ball with the cue tip causing the ball to move towards the racked balls on the opposite side of the pool table. The cue ball can end up anywhere on the table, in a pocket or even on the floor. However, because the original momentum pushed the ball from one side of the table to the other side of the table, probability favors that the ball will stop rolling on the opposite side of the pool table from where it was initially struck with the cue tip.

We can easily transfer this theory and apply it to stock market movement. First we must define "significant price movement" and we can call it the "cue ball condition". So let us say that in a hypothetical market the "cue ball condition" is met if price moves higher by five dollars. OK, now let us say that a market closes at a certain price on Monday. But on Tuesday the market meets the "cue ball condition" by moving five dollars higher and so we decide to buy it at that price. Now using the previously mentioned market movement theory we decide to always sell our positions acquired on Tuesday on the open on Thursday.

So what will happen? Well what will happen is that we will make money over time and that about 55% of our trades will be profitable. Why?

Because by first defining significant momentum we in effect turn stock market price movement into a cue ball headed for the opposite side of the pool table. There is no guarantee that the ball will always end up on the opposite side of the pool table but momentum theory says it is more likely it will end there than bounce back. Similarly the stock that meets the "cue ball condition" on Tuesday is more likely than not to open higher on Thursday and if we sell it there we are more likely than not to make money.

How do I know this? Well first of all I have tested this very basic idea extensively and have traded similar ideas thousands of times. In fact in one two year period, while trading around two and a half million dollars, I took about 10,000 trades and pushed millions and millions of dollars worth of trades through the marketplace while making about five million dollars in profits.

But what was interesting is that I did NOT have a trading system that was 95% accurate. Instead I used a simple system based on market momentum theory that won about 55% of the time and lost about 45% of the time. Because of the random nature of short term stock market price movement I knew that 55% was about the best ANYBODY could do and I settled for 55% accuracy. And by settling for 55% accuracy I made close to 100% annual returns on the money invested and I made nearly five million dollars in profits in two years.

BE HAPPY WITH A 5% "HOUSE ADVANTAGE"

So 55% accuracy is not really so bad. If you can trade consistently with 55% accuracy you have a "house advantage" of 5%. That means that for every $100 you push through the market you are going to make $5. It is like owning your own casino and YOU ARE THE HOUSE.

SOME ADDITIONAL RULES AND STRATEGIES

Now that I have given you a robust theory of market movement that can make a lot of money for us stock market idiots let me just add a few more important rules and strategies.

1) MECHANICAL TRADING SYSTEM: Now that you have a theory, you should develop a mechanical trading system, and resolve to follow it for at least one year.
2) GET YOUR SYSTEM PROGRAMMED: Put your system into a program that can be run on a computer. You are a stock market dummy so now let your computer do the thinking for you. You do not have to understand technical analysis; you just need to love and follow your computer. You do not even have to think about markets; you just need to place the orders your computer tells you to place.
3) DIVERSIFY: Spread your money out thin in many markets. We follow 96 markets and sometimes are in as many as 35 at a time. Market diversity can protect you from aberrant price movement and aberrant price movement is an occupational hazard of trading random markets.
4) IN AND OUT IN TWO TO THREE DAYS: Limit your trades to two or three days. The cue ball is struck and it goes forward and then stops. It is a short term move and so is stock market price movement based on momentum theory and probability. Momentum theory ends with day 3 and oftentimes sooner. But keep in mind that there is also great safety in limiting your trades to two or three days. You have certainly heard stories of people who have lost everything in the stock market. Let me assure you that the only people who lose everything in the stock market are people who let brokers do their trading for them and who marry stocks and refuse to sell them. By making it a rule that you will ALWAYS get out after two or three days you cannot lose all your money and become a stock market casualty.

STOCK MARKET IDIOTS UNITE
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So stock market idiots unite! Ignore the experts, trade simple ideas you can understand, and let your computer do the thinking for you. By following these rules for Stock Trading for Idiots we can easily take over Wall Street and put "the suits" out of business. Stock market idiots can be rich!

Robert Buran, StockBrain99 on Twitter, is the author of How I Quit My Job and Turned $6,000 Into a Half Million Trading. He has traded small accounts and traded accounts worth millions of dollars. His website [http://www.short-term-stocktrading.com]Short Term Stock Trading posts real time stock trades several times daily, [http://www.short-term-stocktrading.com/stock_market_trading_today.htm]Stock Market Trading Today, and is of great interest to day traders and short term stock traders alike.

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Monday, June 21, 2010

How to Triple Your Investments Overnight

By Jonathan Langley

Penny stocks are very popular amongst daytraders because of how quickly they trend and upswing. Being able to anticipate cheap market behavior is much more valuable than greater priced stocks given to greater volatility behind them. This article will explain a technique which you can use to triple your investments overnight and trade confidently ahead of the curve.

The method which I am referring to is employing the use of an analytical penny stock program. In other words, this is the program which uses algorithms to detect market behavior in cheap stocks and nothing else. These algorithms take the full range of the market into account and work to find overlaps in stock behavior from the past to the present. Stock behavior is very specific and unique to a stock, so when you do find these overlaps the more than likely know exactly what to expect from that current stock.

Be sure that the program which you are looking at exclusively targets cheap stocks. It's a completely different process anticipating penny stock behavior versus greater priced stocks because of the greater volatility associated with cheap stocks. It just makes sense that it takes a great deal less outside trading influence to directly affect the price of a penny stock.

These programs have been growing in popularity in recent years and are based on the same technology used by professional traders to anticipate behavioral overlaps each and every day. This is the most reliable way to anticipate market behavior. It just so happens that it's difficult to do manually, hence the reliance on this technology.
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Friday, June 18, 2010

3 Tips Towards Trading With Penny Stocks

By Igurvinderpal Singh
Investing in Penny stocks requires alertness, on a daily basis. Penny stocks can be referred as scrip's in the stock market which has a value below a dollar, on per cost per share basis. Since these stocks are traded in huge amounts, they tend to be highly volatile. You get the opportunity to invest in smaller amounts in these stocks. But the amount of risk involved can be high and the movement of this scrip's is likely to move in any direction. Hence, one needs to be very careful while dealing with them. There are certain tips that you need to take into consideration for buying Penny stocks. They are as follows:

1) Do your own research:
Due to lack of information and inaccurate pricing, penny shares are exposed to fraudulent activities. Hence, before investing get some feedback from various recommendation sources. For example, you could participate in stock related forums and interact with forums members in order to get the view about the concerned stock that is of your interest.

2) Use stock choice robot:
You can make use of a stock choice robot in order to help you to find the accurate stock for purchase. However, this method has got some short comings. Hence, this concept is not popular enough to use.

3) Hire a stock guide:
You can seek assistance for your investment activity by hiring a trained professional or an expert trader. Stock brokers and advisers, does charge a fee but they can do a lot for your investments. Hence, whenever you are investing in Penny stock trade, you can consider getting a broker who possess the stock market intelligence and can also uplift your confidence level.

The shares that are sold I the stock market keep on rising and falling on a daily basis. Also, Penny stocks are a difficult to accurately price and they are usually hyped. Although it is difficult to sell these stocks, yet investors continue to invest in trading such shares because of its huge potential ability. Some investors own Penny stocks in various small companies, in order to increase the chances of profit. They could lose in one deal but they may gain good income from another set of purchased stock. I now conclude this article by saying that in stock market you cannot guarantee success all the time. So, you need to be careful while investing in Penny stock trading and also be positive towards hoping for financial independence.
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Author is a stock market expert and runs [http://www.stockgoodies.com]penny stock chat rooms where visitors can chat with the experts and can learn how to invest in stock market. His website can be found at http://stockgoodies.com

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Wednesday, June 16, 2010

Penny Stocks Can Make You Money If You Know Where and How

By DJ Willie

So, how do you find the stocks that are going to go up substantially making it worth your time and effort to invest into them?

This article is all about answering this elusive quest that many of us are on these days in the stock market.

One of the biggest problems that we ALL face is trying to search through all the stocks out there. Heck, just to do all the research on say twenty stocks is enough to keep you up late at night for a month straight. And, there are tens of thousands of stocks out there!

It's like trying to find a needle in the haystack right? There are better ways. And, I've tried all of them. Yes, there are programs out there to help you perform these necessary research routines faster and better. But, really all that does is make it where instead of researching 20 per month now you can research 200 per month. A far cry from checking out all the hot stocks, basically you'd be lucky to run upon a HOT stock before it jumped up.

OK, that's what the Wall Street Journal is suppose to help you with, Barron's, and all the other investment tip news letters and subscriptions that you get are suppose to help you with right? You're suppose to browse through all of this writing, words and paper to find that HOT stock that they know about but YOU don't right?

C'mon, I had to wake up and smell the coffee. Listen by the time the editor of any of these publications puts to print these so called HOT stocks and it gets to you vi snail mail, it's kind of lost it's sizzle, some of them are even burned out!

A waste of my time. So, I started searching for a way that I could comb some section of the stock market and come out with proven winners. Mind you, I've tried a lot of programs out there. Day Trading, Robot spot trading, Signal trading, yada, yada, yada! I did find some winners but I had to chalk it up to luck rather than what the programs were giving me. And, sometimes luck is what a guy needs. In a way I feel like a program tester more than a stock investor. That's until I ran into a program that uses a mathematical anomaly that figures out what stock is about to go crazy. This is the only program I recommend now to all my friends, family and readers. If you want to make money in the stock market this is how you do it.

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Basically, all you do is plug in different stocks into the program and within seconds you get an answer to invest or not. In the time it takes to research 20 stocks you can find out about 2000 stocks or more. So, your coverage is a whole lot better, not to mention the success ratio with this program is 95%. You can afford to take a loss here and there. And, the average gain per trade is 22%. Anyhow, I just wanted to share some of this knowledge with all of you.

Thanks,

DJ http://www.bestpennystockforum.blogspot.com/

Click onto the link and do what you must and then continue reading from there. You will be shaking your head saying I knew that trade was there, but I didn't understand it like I do now!

Cheers,

DJ Willie

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Monday, June 14, 2010

Swing Trading Tutorial

By Matt Corsi
Swing trading stocks can be very profitable if you do it right. In my opinion swing trading is the safest and most profitable way to trade stocks for two reasons. First of all your market exposure, which is essentially risk is lower than usual. Let me explain, the longer you are in the market, the more risk to your capitol. You can't lose money in a market crash if you're not in the market right? Therefore less time in the market is actually less risk of losing money. The second is that swing trading can be done in any market, and very often. Lets say a stock goes up $30 over the period of one month. Well the stock may have gone up $20, down $10, up $30 and so on before reaching its current price. Someone who traded the stock up could have made double the money as someone who simple help on the entire time by getting a better price at the pullbacks.

My first piece of advice, don't be intimidated by short term trading. Sounds complicated but you don't have to be a financial expert to swing trade. Trading is all about taking advantage of certain properties of how all stock will behave. We can predict these movements, and trade them when the time comes. Simple as that, so don't make it any more complicated.

This is important and will drastically help you make trading a profitable endeavor. When starting out I would recommend getting comfortable to 1, or at the most 2, setups at a time. When you become profitable and comfortable with that trade, then you can add more setups.

So what are these properties that we can take advantage of to make money swing trading? There are literally hundreds, but I'm going to share with you my favorite and most profitable setups.
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Friday, June 11, 2010

Penny Stocks on the Rise - How to Find Winners and Eliminate the Losers

By Michael Pergrem

Everyone wants to know which penny stocks are on the rise. Well, you can do two things. You can trust somebody's advice on which stock will be a winner, or you can do one thing that 90% of investors skip and find out for yourself.

When you trust other people, they can be wrong. This means you are throwing money to chance when investing bases on someone else's word.

We want to reduce the risk as much as possible.
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The key to know yourself if a stock has a good chance of making you money or causing you to go broke is research. Research scare many people because they think it is impossible to do unless you have tons of knowledge and years of experience.

That cannot be father from the truth! Research is not very hard and anybody can do it!

Here are the Three Things You Must Research

- Who is the CEO of the company? Have they worked for any other companies? If so, how good did they do?

- What are the long term and short term goals of the company?

- How is the overall industry that the company is involved in doing? Is it on an upward turn.

If all of these factors are favorable, then you know for a fact that the company you are looking at has a great chance to go up in price. So before you simply trust your money in the word of another person, take a little time to make sure your stock will be a winner yourself!

If you find research to be a little confusing, you can find some awesome tools and resources here:   Stock Research Tools

What a Difference it Can Make
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Just taking a little time can make a huge difference in your investing success! So start researching and I know you will be very please with your portfolio in the coming months! http://www.pennystocksmadeeasy.com

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Wednesday, June 9, 2010

Hot Stock Picks - How to See Through the Hype

By Aaron Livingston

If you're a new investor looking to expand your portfolio with some new securities, you might be wondering what all the fuss is about these hot stocks that are all over the internet. These days, everyone from televisions personalities to internet investors is claiming that they have the inside track on the hot stock picks that you've just got to purchase, but it's important not to get caught up in all the hype. While hot stocks do have the potential to make you some money in just a short period of time, they also carry an increased risk.

Just like their name implies, hot stock picks are usually those that are fairly new to the market, very volatile, and poised to make a big increase in price. For investors that are looking to "buy low and sell high," the hot stocks have an allure that is particularly hard to ignore, as they as the stocks that are most likely to make a big jump in value, generating big profits for those that were first in line to buy them. The only problem with these stocks is that their companies are usually untested in the marketplace, meaning that it's not uncommon for them to flop without earning a penny.

Even though you might be caught up in the excitement of hot stock picks, it's important that you don't abandon the principles of both fundamental and technical analysis that have been applied to the other stocks in your portfolio. Technical analysis demands that you spend time analyzing the way that a stock's price has moved up and down in the market over the past few years, noting any patterns or trends that would indicate that it is growing or declining. If a stock is too new for you to be able to analyze it in the charts, it's probably too risky.

Fundamental analysis demands that you spend time analyzing the way that the company has performed in the past, both financially and politically. Are there signs that this company might be getting new leadership, or that it might merge with another company? These things affect the value of hot stock picks, and can mean that the stock takes a nosedive instead of making you an overnight millionaire. No matter how excited you might get about a certain stock pick, it's important never to abandon common sense and your knowledge of how far you're willing to go for a potential profit.


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Thursday, June 3, 2010

Best Ways to Buy and Sell Stocks

By Kum Martin

While working for money you should also make your money work for you. Money sitting in a bank account may provide a good sense of security but it is not giving you any benefits. Investing in stocks makes the money work for you and you could see considerable profits. If you are new to the stock market, then start by investing small amounts until you get a hang of the way the market functions. Also, invest in low risk investments so that you do not lose a lot of money.

Investing in stock market is not like gambling as most people think. There are no chances that you will completely lose your money. You will still get a part of your investment back even if you sell your stocks at a loss. Investing in a stock market is a continuous process and buying and selling is a part of it. You should concentrate on buying a stock when the price falls and sell when the price increases.

Start by investing in five or six types of stocks. Then sell them for profits after a short while and then invest in a few more. It is likely that the prices of the stocks may fall. So, in order to cut your losses, sell them before the price becomes too low. Do not expect that it will increase the next day. If the stock has been in the market for a long time, then it will have a specific cycle and the stock price when it falls will take time to get back into track.

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About Author:
Kum Martin is an online leading expert in finance industry. He also offers top quality articles like: [http://www.cyberinvestmentguide.com]Stock Market Watch, [http://www.cyberinvestmentguide.com/alternative-investment/index.html]Private Equity Investment

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