If you’re interested in trading options, then it’s a good idea to always look for options that are highly liquid. What does this mean? Basically, it simply means that there are lots of people all trading the same options as you. That’s important, because it means there’s plenty of supply and demand. If you need to exit a trade, you want to be reasonably confident there will be someone out there wanting to buy into it – and that’s what liquidity gives you.

There are plenty of options that only trade at low levels, and these are generally referred to as “illiquid” options. If you trade in illiquid options, and the market moves against you, it can be very difficult to exit your open positions. You might have to accept an even bigger loss, simply because you had to drop your price so much further before finding a buyer. It’s no fun, with a trade going against you, to sit and watch your profit being eroded away minute by minute, because you can’t find a market for your position. Unfortunately it can happen far too easily with an illiquid option.

The best way to avoid getting stuck in a losing position is to only trade in liquid options and strike prices. That takes some discipline, because it’s very easy to be tempted by the opportunities that regularly present themselves in the illiquid portion of the market. But don’t be fooled – restrict your focus and you’ll be a more profitable options trader as a result.

It’s often a good idea to pick a handful of stocks that have very liquid options, and focus on those. Becoming extremely familiar with just a few stocks and their charts makes it much easier to see the patterns of the stock’s price and take advantage of them. Remember, though, to periodically confirm that the options for that stock are still very liquid. Over time the liquidity of individual options can vary enormously, so do an occasional review, just to be on the safe side.

If you want to be even more careful, it can be worth working out the average liquidity for a stock’s options, and only trading those that are above average. To do this, add up the open interest levels available for each stock, and divide by the number of options available. That will give you an average.

I find the stories about the California Gold Rush era fascinating because at few other times across the course of human history, could a person of modest means potentially achieve great wealth. Though the quest for gold was not always easy for the 49ers, and not all of them achieved wealth, once they literally “staked their claims,” each person had the same opportunity to achieve instant riches as the next. The Gold Rush was the great equalizer.

Finding great stock trading opportunities is, in a way, like the 49ers’ quest for gold, in that anybody— whether young or old, rich or of modest means, male or female— has a chance to create wealth for him or herself. But finding a shinny nugget at the bottom of your pan is one thing, while finding those select stocks that have the most explosive upside potential is quite another.

Today, I know why trading a stock just as it breaks out can lead to explosive gains, and I know the thrill of watching a quality stock quickly swell my portfolio, but this was not always the case. In fact, I tried out just about every other stock trading strategy first, because I found studying stock charts tedious and confusing. Which stocks should I concentrate on? What should a stock’s chart look like? What moving averages should I use? Which oscillators are the best?

You would think that as an executive at a financial television channel, I’d have the inside track on slick ways to trade the market, wouldn’t you? After all, I regularly rubbed elbows with some of the most influential stock market gurus on the financial seminar circuit. There was only one thing. Each individual was busy selling his or her own unique stock trading strategy. As I bounced from trying one trading strategy to the next, I began to realize that many of these techniques did not work as predictably as I had expected.

At one point, I even turned to penny stocks thinking they were the way to make big money in the market. After all, 5,000 shares of a stock made you feel like a pretty big investor. But in the end, even a $1.50 stock could become a .75 stock overnight, on some little ripple in the company’s game plan, and poof! Half your grubstake…gone! And, since penny stocks are usually so thinly traded, it took a “month of Sundays” just to execute a sell order. Meanwhile you watched as your sell order single-handedly brought the stock’s value down far below what you were hoping to get for it.

The shortcomings of many of the stock trading strategies I tried only made me more determined to find a more predictable way to make money in the stock market. My epiphany came while turning the first few pages of a book on stock charts that had been sent to our television station by the publisher. The book had been sitting on a bookshelf in a corner of my office for some time collecting dust. The book? Analyzing Bar Charts For Profit by John Magee.

Magee was talking about how the field of technical analysis developed, beginning with the early moving averages developed by Charles Dow dating all the way back in 1884. As I read, three things occurred to me:

1. First, some very smart people had been hot on the trail of finding a system of using charts to anticipate stocks’ movements for a very long time.

2. Second, charts represented the only visual, factual record of a stock’s movement that was not filtered through some financial news analyst or stock market guru.

3. Third, and most important, it actually seemed plausible to make reasonable assumptions, based upon certain charts, as to when a stock was nearing its greatest potential. Could I have finally found the “holy grail” to stock profits I had been searching for?

Of course, nothing is ever as simple as it seems at the outset, and quite frankly, the study of charts took me far deeper into technical analysis than I ever had intended to go. Yet somehow the quest for a more definitive way of knowing when to buy high-potential stocks had grabbed hold of me, and wouldn’t let go until I had some hard and fast answers.

I read every book on charting techniques I could lay my hands on. At night, armed with my charting software, I’d download a list of stocks and stare at their charts trying to discern what they were telling me. William O’Neil’s “How To Make Money In Stocks” helped me to better understand the relationship between a stock’s daily price action and its volume. Slowly, after what seemed an eternity, I began to spot the chart patterns.

Of course gaining knowledge about technical analysis is one thing, and putting this knowledge into practice is quite another. Here again, there was no shortcut. No abbreviated course. No quick cure. I had to rigorously trade stocks based upon my assumptions about a stock’s chart. I’d hear seasoned traders say this is a process that takes about four years of frustration, elation and often, disillusionment. They weren’t kidding. Once I emerged from this “birth of fire,” I had a newfound respect for the market forces. Gone was any pretense of cockiness or self-pride. I felt almost as if I had achieved a kind of “warrior status.”

In the end, I learned that trading stocks just as they broke out was simply the most dependable way to make money I had ever been exposed to. There wasn’t any guarantee, there were still surprises, and not everything worked out exactly as planned, but when a stock’s time had come to break out, there just was no quicker way to make money.

These days, I usually begin my search for stock market gold by scrutinizing a company’s fundamentals and choosing the best of the best. Why? Because a leading company has an established track record for executing a successful game plan, and is less likely to surprise you with negative news. Believe me, with all the varying factors that you have to contend with in trading stocks, you at least want to have your best players on the field. Why would you want anything less than your top quarterback in the Superbowl? The same thing applies to stocks. Does the company have successive quarters of earnings increases? How does the company stack up to others in terms of its “relative strength,” or price stability? Is the company in a strong industry group? Is the stock under accumulation by mutual fund companies?

Then I look at the stock’s chart. Here’s where things start to get exciting, because breakout stocks form certain time-tested patterns just before breaking out. “Time-tested” does not mean foolproof, but from a cup-with-handle, double-bottom, flat base, or other types of chart patterns, you can begin to discern the telltale signs of pent up demand. The stock may drift sideways, or slightly downward as if it is disinterested in going any higher. Meanwhile, it’s daily volume drops to a whisper. It’s almost as if the stock is sleepwalking. A lot of traders take this to mean there is no interest in the stock. Nothing could be further from the truth.

One day, the stock seems to turn on the afterburners, and you see this explosive burst of volume that exceeds anything the stock recently seemed capable of. You silently watch in awe as this stock breaks through its resistance/buy point and then heads skyward. Then, as you watch your profits mount, you sit back in your chair and allow yourself a brief moment to reflect on the thrill that the 49ers must have felt, because in your own way, you’ve just hit paydirt. To learn more, visit http://www.stockconfidential.com

Paul Johnson’s Bio:

Paul Johnson’s knowledge of technical analysis has been honed through thousands of hours of studying stock chart patterns, rigorous daily trading, and by poring over the books of the experts in the field of technical analysis, including John Magee, John Murphy, William O’Neil, Steve Nison and others. On any given day, Paul analyzes the stock charts of well over 200 of the world’s top-rated companies.

In addition to being the publisher of Stock Confidential, Paul has written a number of stock trading e-books.

Between 1993 and 2000, Paul was an account executive at the popular TV station KWHY-TV/The Business Channel in Los Angeles, where he worked with the top personalities in the world of stock investing and finance.

Paul is a graduate of Syracuse University, with a Bachelor of Science in Public Communications/Broadcast Journalism and a Bachelor of Arts in English.

Paul currently is a resident of Los Angeles, California.

W.D. Gann is one of the most famous traders of all time, and has a huge devoted following – however the fact is, Gann never made the huge profits many of his disciples claim.

He did not have a success rate of 90%, as is often claimed – the logic his methods are based upon are unsound, and his predictive methods don’t predict – they leave everything to subjective opinion!

Let’s examine his theories of investment in more detail and see.

Let’s look at some common myths about how great a trader Gann actually was:

Many sources quote Gann’s trading profits at $50 million dollars, however this is not true.

An interview that Alexander Elder had with his son tells the truth.

Firstly, his son confirmed that when his father died in the 1950s his estate was valued at just $100,000 – and that included his house.

Secondly, his son confirmed that Gann was unable to make enough money from trading, and therefore supplemented his income by writing and selling courses.

W.D. Gann’s Predictions

Many sources quote he had a success rate in all his trades of over 90% – again not true. We can easily deduce this from the value of his estate.

If he could make money trading and had a 90% success rate, he would have made hundreds of millions in his trading career – and he clearly did not – that’s why he had to sell books and courses.

The only evidence of a 90% success rate came from a small number of trades – and was not representative of them all.

Gann’s Methods are Predictive

Gann came to the conclusion that all natural phenomena are cyclical – including financial markets. This is true, but this is an obvious statement – we all know we’re going to die but when exactly?

A predictive theory is not a predictive theory if it can’t predict.

If Gann’s theory really is predictive, then there would be no market – as we would all know the price in advance!

Gann’s theory is subjective – and he really had no way of predicting the future with accuracy. It’s all subjective analysis and this is NOT a predictive theory.

Gann’s Logic

The basis of Gann’s theory is the principle that price and time must balance.

His methods are based on the squaring of price with time – this occurs when a unit of price equals a unit of time.

Gann for example would take a prominent high in the market, convert that dollar unit into a specified period of time and project it forward. When that time is reached, price and time are squared – and a market turn is due.

What? – How can one unit of price equal one unit of time? If you think about and answer this question for yourself, you will see how absurd the connection is.

This isn’t the only inconsistency used in his analysis – we also have the legendary Fibonacci numbers which are supposed to work with stunning accuracy – but they don’t, and neither do all sorts of astrology and geometry, that appeals to the far out investment crowd.

As we have seen, Gann was a trader who had modest success, and claimed to have discovered a predictive theory – which predicts nothing with accuracy.

Finally, we have so many subjective indicators cobbled together, that the theory can prove anything in hindsight, but if you want a tool to trade the markets look elsewhere.

For those of you still not convinced – I recently saw on the Internet, Gann’s trading methods selling for under $1,000!

Sounds like a bargain to get trades with 90% accuracy – I wonder how many serious money managers have it on their bookshelf.

Enough said.

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Modern monetary systems are far superior to the barter system people used in the old days. Inefficiency and lengthy negotiation were the main reason the barter system became obsolete. Later, bronze, silver and gold came to be used as mediums of exchange in trade.

Globally, currency trading is a major business, and it is estimated that over US$2 trillion is traded everyday. The system of currency trading is also referred to as foreign exchange, Forex, or FX for short. The currencies traded have a relative value to other currencies. The trading uses the purchase and sale of large quantities of currency to leverage the shift in order to earn profit.

Fluctuation in the relative value of a currency is caused by two reasons. The first reason being the “real” market, i.e. in case a foreigner wants to buy a commodity, he is forced to convert his domestic currency into the currency of the visiting place, the currency also fluctuates as it leaves a state.

Speculation is another factor on which the currency fluctuates. The heavy buying and selling in the market can drastically impact the value of the currency. This speculation has been responsible for drastic consequences on the national currency, consequently hampering the growth of a country’s economy.

Analysts also consider online currency trading a very “fast market” which is highly volatile. An individual has to take into account technical and fundamental data and make an informed decision based on his perception of forex futures trading market sentiments and market expectations to become a successful trader. One of the variables that is most important in currency trading is timing. The trader has to be aware of the happenings in the market, and also has to understand the nuances of the market to play safely.

Banking conglomerates and large multinationals were the movers and shakers in trading before small investors entered into the market and changed the face of the industry. Although professional help is usually needed before individuals or companies start currency trading, an individual with good understanding of business can also try his luck in the practice.

Online Currency Trading provides detailed information on Online Currency Trading, Foreign Currency Trading, Currency Day Trading, Currency Trading Seminars and more. Online Currency Trading is affiliated with Online Currency Trading.

“Everyone experiences tough times, it is a measure of your determination and dedication how you deal with them and how you can come through them.” -Lakshmi Mittal

Treasury options in the form of bonds, bills, and notes, are way for the United States government to borrow money from investor to pay down the national debt. When you purchase a treasury security you are basically loaning money to the federal government. The government guarantees that it will pay you, your money back with a bit of interest included. There is actually a great deal of treasury securities but the most popular types of treasury bonds, bills, and notes.

Treasury Bonds – This type of investment can be made for various lengths of time, all under 10 years. There is also another type of bond called the ‘long bond’ that has a maturity period of 30 years.

Treasury Notes – This term usually refers to short term investments that mature between 1 and 5 years.

Treasury Bills – Treasury bills are often called T-Bills. Their maturity period is between 13 weeks, and 52 weeks. However, the average T-Bill is usually kept for 26 weeks or half a year. Unlike treasury bonds, and notes, treasury bills are offered to the investor at a discount.

If a treasury bill has a face value of $20,000 dollars, and the investors bought it for $19,000 dollars, when it matures the investor will get a return of $1000 dollars instead of the minor interest that would have accumulated. This is an incentive for the general public to become active and invest in the nation’s economy. This is not a bad rate of return for a mere 6 months.

Most people would love to invest in T-Bills however the initial is so steep that only the rich really have the luxury of this type investment.

There are other types of Treasury options. These include I Bonds, and Inflation Protected Securities. Both protect investments against increases in inflation. The I Bond interest rate is variable and adjusts with the national interest rate. This is done to keep up with the increasing prices of commodities and services.

Inflation Protected Security does not adjust interest rate but does adjust the principle, again to compensate for inflation. You can also invest in U.S. Savings bonds, and Patriot Bonds also known a s STRIPS.

All treasury securities share the same two attributes. The interest that is received on the originally investment is never taxed by the federal government, state, or local government. They are also the safest investments because they have little to risk.

With so many stock market scandals and the daily fluctuations of various securities, it might seem as though there is no simple method of investment that allows you to avoid the major risks of the market. Luckily, things are not always as they seem… some stocks, dubbed “safety stocks” by some investors, are stable enough that they tend to hold their value even when the rest of the market is in shambles. While these stocks aren’t immune to the changes and fluctuations in the stock market, they usually weather the changes well and are much less prone to sudden drops in value.

If you’ve never heard of safety stocks or would like to know more, the information below is designed to give you some information on these relatively stable investments.

Safety in a turbulent market

Though no stocks are completely immune to the daily changes in the stock market, some manage to do better than others. Some of these companies have been around for a long time and that produce everyday items that are known around the world (such as the first aid and baby care manufacturer Johnson & Johnson), and aren’t likely to encounter major scandals to bring down their prices. While these stocks aren’t known for major increases in value, they don’t perform poorly… instead, they offer a slow-but-steady increase that’s much more stable than many other investment opportunities.

Safety stocks and diversification

Because of their general consistency, safety stocks are considered a must-have by many serious investors. They are great tools for diversification, allowing investors to use their stability to offset some of their more volatile investments. This effect can be increased even further by making investments in precious metals or the diamond market, both of which tend to offer a similar stability that works well with that of the safety stocks. A diverse investment portfolio with a strong base of safety stocks and precious metal and diamond investments is likely to weather even the most turbulent market with minimal long-term losses.

Safety stocks and high-risk investments

Even without using safety stocks for true diversification, it’s possible to use these stocks to offset higher-risk investments. When investing in high-risk stocks, a smart investor might buffer their investment with a secondary investment in one or more safety stocks which will help to minimize any losses that might occur. If the higher-risk stock performs well and is sold at a good price, then the safety stocks may either be sold or kept since they’re not likely to drop significantly in value. Should the higher-risk stock not perform well and ends up being sold low, then the value of the safety stocks as they slowly but surely show an increase will help to offset any losses.

Safety stocks and long-term investment

Obviously, safety stocks are great for long-term investments. Purchasing safety stocks over the course of several years is much more likely to show a definite improvement than other stocks that aren’t nearly as stable. When combined with precious metals or the diamond market as mentioned above, the effects can be even more noticeable due to the similar nature of the two types of investments.

Safety stocks can also be combined with bonds or other types of investments that do well in the long term, either using the stocks in smaller amounts to accentuate the earnings of the other investments or as simply another long-term investment among many. This can make safety stocks ideal for retirement plans or any other long-term financial planning.

You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

People usually fear what they do not know. You cannot judge or label something until you get to know it.

First impressions are a perfect example. One person may have preconceived notions about somebody who they don’t know much about. Once they get to know that person, they realize that their first impressions were invariably false.

The same thing applies with penny stocks. Penny stocks get a bad first impression. They are quickly written off. The purpose of this article is to get past that first impression, to really dig deep and see if these bad impressions are warranted or not.

Below are some of the myths that always seem to shadow penny stocks.

Myth #1
“You’ll lose all your money if you trade penny stocks.”

This stems from the belief that trading penny stocks is risky. Actually, any form of investing in stocks will always invariably involve risk. The only way you will lose all your money trading penny stocks is if you don’t bother trying to minimize the risk. The key is to look to minimize that risk! It’s as simple as that.

For example, starting your own business incurs high risk. Does that stop people from doing it? No. And you know what? The people who succeed in starting their own business are the ones who minimize the risk. They do that by researching on how to successfully start their own business by reading, talking with people and taking action. The same thing applies to penny stocks.

You will not lose all your money by trading penny stocks provided that you minimize your risk by researching, learning, and practicing trading before starting.

Myth #2
“There’s not enough liquidity in penny stocks.”

What do people mean by liquidity? Liquidity simply means having enough volume to easily buy and sell your shares. For example, if a penny stock only has two trades, its liquidity is said to be low. There are not enough traders to buy and sell.

However, if a stock is experiencing huge amounts of trades, thereby indicating the presence of a large number of traders, its liquidity is said to be high because you can easily buy and sell shares.

Looking at an after market report recap of penny stocks will reflect that there is more than enough liquidity in penny stocks.

Myth #3
“It’s easy to make money in penny stocks.”

When it comes to penny stocks, the math looks very appealing. Buy shares at a penny and sell them for two cents. There, you just doubled your money. If it were that easy, people would be millionaires.

The fact of the matter is that trading penny stocks can be very rewarding. However, that reward goes to those who educate themselves and paper trade (practice trading with fake money to gain experience), in other words, goes to those who are willing to pay the price to learn.

That’s precisely the reason why some people are very negative toward penny stocks. They have been attracted to the potential of making money, only to rush in without any sort of training or education and become disillusioned and embittered.

Despite all the stereotypes that seem to follow penny stocks, there’s one aspect that everyone agrees on. Penny stocks involve high risk and high reward. There’s no doubt about that. The key to getting that high reward is to learn how to minimize the high risk. It’s as simple as that. It’s as simple as that.

Jason Brook is the author of The Ultimate Step-by-Step Guide to Day Trading Penny Stocks. His website can be found at http://www.daytradepennystocks.com.

I am amazed at how many investors have no idea about what Options really are. Many continue to provide the argument on how Options Trading is very risky…I would have to disagree as Options Trading is safer than just trading stocks. Now hold on a minute and let me explain. You are correct in that Options Trading does have risks. But, so does any strategy used in the Stock Market as no one knows what the stock will be in the future. So, let’s say you purchase stock in DELL so you are looking for an increase in value so that your investment increases. Now, what happens if DELL drops in price? Your portfolio value drops along with DELL. A $5.00 drop in stock price and you will be down $500 on your investment in DELL.

What would I have done differently? Let’s say I match your investment in DELL and purchase 100 shares as you have done. I however would sell a call again DELL ( in other words, sell someone the option to purchase my shares from me at a fixed price above what I paid for the stock) other wise know as a Covered Call. For selling these calls I would immediately receive $100 (or $1 per share for such a call sale).

Time to compare situations…your account value would be down $500 but mine would only be down $400. Therefore, I have effectively provided some downside protection while also reducing my per share cost in DELL. I would be able to do this every month to generate income and at some point I could exit DELL with a profit even though it never gained a penny in value while you on the other had would still be down $500. Now…does Options Trading seem as risky as you first thought?

Covered Calls are just one of the many option trading strategies I use in trading the Stock Market. Although Options Trading does involve risk there are ways in which they greatly help to reduce the risks of trading. Therefore, make sure you have a good understanding of any trading strategy before you invest your money

FOREX is beneficial to a number of people. FOREX investment is simple and this investment can be done either over a long period of time or just as part time activity. Investors make a lot of money by FOREX trading. Investors who choose to invest in FOREX are mostly well familiar with the market and notice the current situations in countries of the world. There are some strategies which give investors more advantages and help investors to realize even greater profits in the short-term gains.

One of the most useful of FOREX trading strategies is a known as leverage. This FOREX trading strategies are designed to take advantage of more funds that are deposited and through this FOREX trading strategies you can maximize the FOREX trading benefits. The leverage of FOREX trading strategy is suitable for a regular basis and it allows investors to take advantage of short term flow in the FOREX market. Stop loss order is another common used FOREX trading strategy. It is used to protect investors and it creates a predetermined point at which the investor will not trade. This helps investors to minimize losses. However, this strategy can backfire and the investor can stop their FOREX trading which can actually go higher but increase the risk. Opportunity is given to the individual trader whether or not to use this FOREX trading strategy. An automatic entry order is another FOREX trading strategy which is commonly used and also allow investors to involve into FOREX trading when the price is suitable for them. The price is predetermined and once it reached the investor,it will automatically invest into the trading. It is vital for FOREX investors mentioned earlier knowledge of these FOREX trading strategies if you wish to be successful in FOREX trading. Besides that, advanced charting programs are the major tool among many different tools that can help to trade out FOREX. With global interactive training program with live video and the daily World Bank FOREX report helps investors to gain a lot of the trading expertise.

Business trade is happening everyday among all countries. Currency trading volume is relatively 24 hours a day. From analysis report, there are substantial peaks trading activity when British, European, US markets are open simultaneously, which is from 1pm GMT to 4 pm GMT . By overlapping in the times when these markets are open, overall foreign currency trading volume is decided which markets are open. Obviously the foreign exchange market is considerably volatile and random. Trade in the famous currency pair at the same time every day will give trader a surprise on similarity of trend. By trading within the time frame, traders may be able to observe either minimize or maximize the level of risk. To be more secure on currency trading, technical analysis tool like Bollinger bands should be used to quantify volatility. The main advantages are to compare volatility and relative price levels at certain time limit. Another analysis skill which is good to know is the trading pivot system.

To learn more forex secret, visit Learn Forex Trading here

Stocks that are breaking out are usually very good profit-makers. That’s why you’ll often see us report that “XYZ could break out.”

A breakout occurs when a stock penetrates a previously formed resistance level and shoots ahead with no overhead resistance in the way. These moves can go for many points in a few days.

But you must understand resistance levels.

Suppose that you are watching XYZ every day and notice that it is moving ahead a little by the end of every session. By the end of the week it is up four points and you decide to buy if it is up at the beginning of the next day’s session.

Sure enough, XYZ is up the next morning and you buy at 50. Murphy’s Law then takes effect, and the stock falls five points the next day. Naturally, you aren’t happy and, more important, so are the 10,000 other people who bought the stock on the same day you did. Most of you are thinking the same thing: “If this thing gets anywhere near the price I paid for it, I’m out!”

So after a few days of consolidation XYZ starts to head back up. What do you suppose most of the owners of XYZ who bought it at 50 are going to do the second it gets to 49-1/2? Sell! And XYZ falls like a rock back to 45. The 50 price has become resistance.

Two things have happened. Another wave of people bought XYZ at 49.50, and they can’t wait for it to get up there again so they can get their money back. Also, traders noticed what took place. This is a dream come true for them because they highlight stocks that have formed a buy-sell “range” and start to trade it. They buy XYZ at, say, 45.00 and let it run to 49 and then short it so they can make money on the way back down to 45. This pattern–running up, whacking head at 50, falling back, regrouping, running up, whacking head–can be repeated many times.

But what happens when the XYZ finally releases some great earnings news, or its sector heats up so much that the stock finally punches through that 50 resistance line? Well, for one thing, a “short squeeze” is created. That just means all the traders that shorted XYZ figuring it was going to fall back to 45 now have to actually buy those shares as soon as possible to cover their short.

All that rapid buying along with the “new” money that is coming into XYZ because of the news release creates a fantastic supply-demand situation. All buyers and no sellers means that the stock price must go up to get people to sell it to the people that want it. When it finally does break out, it can go for a bunch real quick.

If you find a chart of a company that has rolled up to a resistance level and then fallen back three or more times, watch it closely every time it gets near that high again. If it finally breaks through its resistance and holds, chances are good that it will really fly from there. The key word is “holds.” You have to be patient and make sure it doesn’t pull back again. In general, if it holds above that resistance level for a full day, it is moving higher.

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Commodity Exchanges offer the facilities for the organized marketing of most commodities. These include grain, wheat, cocoa, sugar, soya beans, wool and livestock. It also includes metals and minerals, such as gold, silver, copper and tin.

The rationale behind this marketplace is to allow commodity producers to sell their produce in advance of delivering them. By doing this they are able to ‘hedge’, i.e. ensure a minimum price which they will receive, and hence secure financing from their bank.

The process of commodity trading, also known as futures trading, is where Commodity buyers and sellers are hedging risk, or speculating. You do not actually buy anything or own anything. A speculator risks capital for a spectacular gain – buying commodity futures when the price is presumed low and selling when high! Prices vary due to both internal and external influences eg weather conditions, and political change or unrest.

The participation of these speculators increases the likelihood that a sale can be made, i.e. that a current market price exists. It also injects into the market an additional party willing to accept risk in return for an expected margin. Relatively risk-averse producers are complemented by specialists whose livelihood is made by managing risk.

With stock trading and share trading, traders only sell securities which they already possess – ‘short-selling’ is generally prohibited. In futures trading there is no such limitation, and therefore speculators can enter the market as buyers or as sellers.

In addition to speculators, both the commodity’s commercial producers and commercial consumers also participate. The principal economic purpose of the futures markets is for these commercial participants to eliminate their risk from changing prices.

To enable you to make informed decisions about when to trade commodity futures, it is important to have a source of price data. Many daily newspapers carry some commodity prices in their financial sections. The Wall Street Journal has comprehensive commodity price listings. Investor’s Business Daily has both price tables and numerous price charts.

Experienced commodity traders prefer to look at price activity on a chart rather than trying to interpret tables of numbers. In financial analysis, charts are imperative for quickly understanding the historical and recent price action.

Remember how professional trader and money manager Russell Sands describes the makeup of a successful trader: “Intelligence alone does not make a great trader. Success is equal parts of intellect, applied psychology, practice, discipline, bankroll, self-understanding and emotional control.”

So – learning to trade is a mixture of being exposed to ideas plus studying the markets on a day-to-day basis. Beware – this is not something that happens overnight – it does take time – so – do not become impatient. AND bear in mind that the Commodity Market is described as profitable, risky and complex!

Gay Redmile is the webmaster of several finance and investment sites. Having been trading for most of her adult life – she understands the importance of undertaking research and fully understanding the market. For further invaluable commodity trading information visit her site at http://www.commoditytradinghome.com or visit one of her other investment sites at http://www.futurestradinghome.com or http://www.forextradingsite.com

Bearish investors have two common strategies at their disposal: short selling and put options.

Short selling is the most aggressive bearish strategy characterized by the highest degree of risk. Used by hedge funds, institutions and retail investors, it has developed into a popular strategy for profiting from market declines. Another strategy for bearish investors entails the use of options.

There is, however, a third and lesser-known bearish strategy that combines stocks and options. Known as a “Hedged Short Sale” or “Synthetic Put,” this strategy simply involves the shorting of a stock and the simultaneous buying of “Protective” call options. In this strategy, you artificially create a security with put-like characteristics and limited risk.

As discussed in the previous article, short selling implies that the investor borrows a specific stock that he or she does not own and sells it in the market at the prevailing price.

Profits arise when the shorted stock declines to a level that covers the transaction fees paid to initiate the strategy. Once at the preferred level, the short seller would buy back the stock and return it to the registered holder.

But as you may recall, the maximum risk of a short selling strategy is unlimited in theory since the stock price has no upper bounds. In reality, however, losses are generally limited by the short seller’s inability to maintain the adequate margin required as the stock rises in price.

In a put option strategy, the maximum risk is limited to the premium paid for establishing the position.

The most significant difference between short selling and put options is the time element involved for the strategy to pan out. Bearish investors often favor short selling because there are no time limits, other than a possible situation when the registered holder calls in the borrowed stock. Short selling has time on its side whereas put options have a limited life.

Given this, for investors favoring short selling, risk can be minimized by initiating a Synthetic Put. This short-term strategy allows the bearish investor to profit when the stock declines to the downside, but at the same time, protects the short position in case the position goes against the short seller.

A Synthetic Put is also desired when a specific put option may not be available.

The use of a call option in a short selling strategy helps to minimize the risk of substantial losses that can arise.

In addition, be aware that should the call option expire prior to the stock moving down to where you want it, you could simply buy another call option to maintain the hedge.

Warning: Due to the higher risk inherent in options, I recommend you speak with an
investment professional before deciding to employ any strategy involving options.

See you soon!

Money creation in the stock market is made from CONCENTRATION. That’s right. Trading the very best stocks at the right time with enough capital to make a big difference.

You must go from wealth CREATION to wealth maintenance in this game. Unless you plan on “investing” for the next 25+ years and building wealth slowly.. this is my plan of how you can make millions in the stock market:

In Darvas’s book “How I Made $2 Million…”

How many looked at his position sizing? In his early trades Darvas only trade 1 or 2 stocks at any one time on MARGIN! Only when he got up to over $500,000 did he start diversifying a little. Most people overlook these facts.

MY Momentum Stock PLAN:

CONCENTRATION BUILDS WEALTH
DIVERSIFICATION MAINTAINS WEALTH

END GOAL:

$2 MILLION+ ACCOUNT MAKING 20-30% P.A

Start with:
$50,000
Trade 2 stocks with half capital in each.

RISK Per TRADE = 5%

When at $100,000 Trade 3 stocks with 1/3
capital in each.

Risk Per Trade = 3%

When at:

$500,000 Trade 5 stocks with 1/5 capital:

Risk Per Trade = 2%

When at $2 Million Trade 8 stocks with 1/8 capital:

Risk Per Trade = 1.25%

You first have to create wealth in order to maintain it. Whilst trading only two stocks at a time may be deemed to “risky” by the “professionals” you must be very selective on the stocks you trade. Quality beats quantity. Especially when you concentrate so much.

This is the only way a small account can break into the big time. You must not only focus your efforts in the early stages but you must also only trade the top 0.1% of stocks in the market and get your timing SPOT ON.

Mark Crisp

A Successful Momentum Stock Trader of Over 10 Years.

When it comes to giving people the hope of becoming a millionaire overnight, the stock market excels. Every day we see evidence of stocks that have flown upwards as if they had wings, providing investors with a windfall of profits. It’s inevitable that catching one of those stocks just before it takes off is an exciting possibility, inspiring the beginning trader to take the plunge. When you trade options, the stakes are raised, making those massive profits even more attainable, but the basics that underlie successful trading in the stock market are the same as those for trading options.

Once you start to look at trading stocks, you find yourself plunged into a confusing nightmare where hundreds if not thousands of people are pushing “their” system that is supposedly infallible. For a beginner, it’s easy to get drawn into the complex net, believing that there must be a simple solution that will hand you the keys to stock market success. These keys will see you finding winner after winner, and making your fortune.

The reality, however, is that there are no keys that will find a winner every time. After all, if that was possible, how could anyone ever lose any money in the market? And if nobody loses, then how can someone else gain? The whole stock market would collapse.

Having said that, there are a number of very successful trading systems that work well over the long term. It’s important to realize that a winning system is one that consistently delivers profit over a longer time frame – and part of the equation is that a percentage of trades will be losers. Once you learn to look at the bigger picture, rather than focusing on the individual trades, you’ll be a lot more successful in the market.

There are a couple of approaches to the market that are popular across many systems. One is to take small losses when they happen, and let your winners run. So you might take six little losses, which are more than compensated for by one huge gain. This type of approach takes a lot of confidence and self-discipline, as it’s very easy to give up if those six little losses all happen in a row, without a winner in sight.

Another approach is to take your profits after a certain percentage of gain, and occasionally put up with a medium sized loss. This system is nice if you like to see profits, because you don’t run the risk of a stock that’s risen suddenly dropping again and wiping out your profit – you took your profit early. However you also run the risk that the stock will continue to fly upwards and you miss out on that profit. This system can be risky, because you need a number of small profitable trades to cover one of the losses.

If you can’t make up your mind which approach suits you, why not try more than one? You can always split your capital over a couple of portfolios, and use a different strategy for each portfolio. This can be time consuming, but at least you can then make a logical comparison of the choices and decide which one has worked best for you.

It’s also important not to abandon your system the second you see a trade making a loss. Far too many traders think that they’re only successful if every trade is a winner, which is ridiculous. Then the trader switches to another system, messes around with that for a while, sees a loss, and switches again. You need to find a system that gives you a good overall return, and stick to it. The more you chop and change, the higher your chances of losing more.

Most of the success that comes with trading comes from one source – and it’s not the perfect trading system. It’s all about you. Trading is more about psychology than watching the charts. You need to have the right character to be a successful trader. Self discipline, confidence, the ability to see the bigger picture, accepting losses as part of the game, controlling your fear and greed – all of these elements work together to make you a successful trader.

If you can identify a system that delivers a consistent profit, and have the discipline to stick with it even when an individual trade loses, then your chances of success are high. And remember – it’s always good to start with pretend trades to get the hang on things, before you commit your life savings to the market.

Successful currency trading looks deceptively simple, yet few traders succeed – despite the fact that there is plenty of material around to show them how. So why is this? – The fact is, much of the conventional wisdom given about successful currency trading, actually leads to the opposite – it actually causes traders to fail.

So, let’s look at the conventional wisdom most traders follow, and why it actually causes them to fail – and how if you ignore the conventional wisdom, you can actually make big profits!

1. It’s Easy to Make Money!

Most currency traders are led to believe, that successful currency trading is easy – and there are plenty of vendors and brokers, who perpetrate this myth – as they make money from this myth.

As we all know in life making money in any area is not easy.

If you think successful currency trading is easy, you’re in for a reality check – successful trading isn’t easy.

2. Responsibility

This leads on from the above – if you want to make big profits, then you are responsible, and no one else.

The fact is, the majority of people in life can’t accept responsibility – and this means they will fail. They think someone else can give them success – and of course, they can’t. Many people rely on guru’s – who, if they could make money themselves, wouldn’t be selling their advice.

3. Methods Doomed to Failure

There are plenty of methods out there that are doomed to failure.

Let’s take day trading – as the biggest doomed method of all! How can you make profits in day, which are big enough to cover the losses on your losing days, cover large commission and slippage costs? You can’t – but brokers will tell you that you can, as they are making more commission!

There are many more examples – but this is the perfect example of how not to be successful in currency trading.

4. Money Management

We all know that money management is one of the keys to successful currency trading – but on small accounts, conventional wisdom states the risking of about 2% per trade! Well your risk on a 10,000 account is just $200. So what happens? – You take small risks and get stopped out most of the time – and never make any money.

If you aren’t going to take a risk – don’t trade currencies.

5. Market Timing is the Key to Success

No, it isn’t – this involves predicting the market. Many traders like to follow predictive theories such as Gann and Elliot Wave – that try to predict where you should enter the market in advance. These predictive theories don’t work.

You simply need to follow market action – and wait for confirmation. You may miss part of the trade, but your odds of making money are far higher.

Some Positive Advice

Successful currency trading depends on the following character traits:

1. Individual Responsibility – You and you alone are responsible – and you can’t follow, or blame anyone else.

People generally like to think other people can give them success, but life is simply not like that – it’s all down to you.

2. Confidence – To acquire this trait you need to do your own research, and come up with a trading method you are happy to follow.

3. Discipline – This follows on from confidence – if you have confidence, you can apply your method with the rigid discipline necessary, and achieve currency-trading success.

4. Method – Your method needs to be long term based and not predictive – simply follow market confirmations.

5. Risk – You need the courage to take calculated risks. If you have a small account forget 2% – 10% to 20% is a more realistic figure – which means you have to trade sparingly – and have the courage to hit the big trades hard.

The Big Secret

We can’t cover all the aspects of successful currency trading in a single article.

However, 90% of traders follow conventional wisdom – and 90% of traders lose money – which tells you, the biggest secret of currency trading success is not to follow conventional wisdom.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and currency trading info. Visit our web site now and grab your CD http://www.tradercurrencies.com.