How to Deal With Unpredictable Nature of Stock Market Trading

Stock market trading is speculative and so it is unpredictable. You ought to know what it takes to invest in a stock trading. Investors whoa re least informed or less informed about the stocks market behavior have little idea what risk they are venturing until they lose most part of their income. There are certain indispensable ways that you should follow when you make the investment and trade out there in the stocks. The first effective way in which you judge the unpredictable nature of stock market trading is to go for the options. Experienced investors and stock market experts clearly point out that options trading is the way to minimize the risks involved in stocks trading.

The very concept and practice of options trading if mastered by a new or even an experienced trader will give him the advantage. Options trading is versatile in nature and the trader can effectively use the versatility of options trading to earn rich benefits from stock marketing trading. Once the trader is pretty comfortable with options trading, he or she can easily adapt to the market behavior in a comfortable way, and can invest in the stocks trading with all the knowledge and confidence.

In addition, a stock trader who is aware about the options trading can easily manage the unpredictable movements of short-term and long-term averages as well as the prices of the stocks as represented in the Moving Average Convergence and the Divergence. You can also deal with the unpredictable nature of stock market trading if you educate yourself about the trends and other technical aspects involved in trading. If the trader educated himself completely, then he or she can invest in the stock trading with completely fresh zeal, and the best part is trader knows how to calculate the trends, which is very essential.

If you make use of invest trading program then nothing like. Keep in your mind that you have a user-friendly and effective program working beside you that can perform all the technical analysis accurately and with correct precision.

By its very nature, the stock market trading will remain unpredictable and trader has to play with the unpredicted nature of the stocks. And this can only happen if stock trader is experienced and aware about all the subtleties involved out there. If you are really looking for the stock market trading, the best thing that you should be doing in the very first go is to go ahead and study all the aspects of stocks. Closely watch and analyze which type of stock trades well and at what time.

If you are trading in the stock market do not trade with your heart, but trade suing your brain and circumspect. Keep in mind that stock trading is a business oriented activity, and every business is unpredictable. And last of all follow sound trading strategies as these will help you in gaining the best returns for ever in your life. Of course, you will automatically be minimizing the risks involved in the trading.

Forex Market – Trading With Conviction

Trading in foreign currency has been a viable business option for decades, almost since the emergence of cross boarder trade and currency exchange markets. The real fact is that this market was restricted from most of the wider public as brokers ran the floor while financial institutions were the main traders.

So far, the market is still being dominated by the large Investment banks and related institutions. The introduction of online trading interface that are easy to use and accessible to the wider public has brought millions across the world into the Foreign Exchange (FOREX) trading platform.

With the varying background of traders, ranging from Bankers and investment Managers handling portfolios in the Millions of dollars, to the stay at home mum trying to make an extra income from the financial speculative market. The new dynamic floor has brought the “Yes, I can!” Feeling of attainability.

In the developing south, millions who feel denied from the reward of their full potential have started trooping into the FOREX market. All around me I see consultancies and workshops offering training and mentorship for the bold hearted willing to stake their bet on a successful trading career. They make promises of as much as a 1000% margin in the first month of trading and even point out one or two clients ready to testify of the fortune they made trading within a relatively short period.

The crux of this write-up is focused towards the trading pattern beginners in the FOREX trade adopt without much understanding of the market environment they operate. A lot of the trading content focuses on:

• Use of Fundamentals (trading strategy based on latest news update relevant to market trade).
• Understanding the Technical (which deals with using statistical projections to predict trend patterns).

The fact worth mentioning is that majority of traders in developing economies have relatively small investments ranging from a few hundred dollars to a couple of thousands. Their tutoring and online trading platform have induced into their pattern of trading a predictable decision trend. This poses a high vulnerability, and I will state why.

The large banks, assets/portfolio managers and volume investors who operate in this same market have had track records spanning years or decades, or have so much invested in data collection and analysis on a scale that would rate to the efficiency of state intelligence gathering agencies. These traders work with advance customized software programs that are linked to the trading floors providing on-time indicators of margin prospects that can be harness within a slight shift in the market trend. They also have some of the fastest trading servers that give them an edge of entering a trade before anyone else. With their wealth of experience, expertise and assets, it is difficult they make the same mistake twice.

If you are a small time trader basing your trade on the news you receive from your bulletin, know this; that news may be stale by the time you get access to it. The market movers may have gotten wind of those information hours or even a few seconds before you, and that is more than enough to outflank you in any major trade.

Or imagine living in a nation with a relatively slow internet connection, consider the seconds lost while your trade order is being processed and what others across the world may have achieved in that window.

I do come across a lot of guys frustrated about their trading profile, they feel they are chasing shadows and feel more like being at the bottom of the food chain, while they watch some reap good money from their trade. Now if those making money are not just lucky as some are; using a gambler’s probability, then they are doing something right. What is it?

Trading FOREX involves developing a trading pattern that works for you, and you have to be bold enough to create one. If you chose scalping, you must be sure you try as many strategies as possible and stick to the one that works, if you decide to sit through a trade, make sure that your risk exposure does not take you beyond a given percentage. In all cases use a stop loss and take profit as you may not be able to guarantee your server connection or may fall victim to high shifts. The fact is you must work on you psyche to take losses and close trade, take a break, then go back in when different conditions are at play. Do not believe that the market will swing back and clear your losses even if it once worked for you. Remember the law of probability and be discipline.

But please if you are trading small, don’t stick to the fundamental as your main determinant.

Olukunle O. Ogundiran

Run Your Stock Market Trading Strategy Through This 3 Question Filter for Greater Success

Any stock market trading strategy much be looked at critically and objectively before it is employed in the market. A seemingly perfect trading strategy often fails because the traders does adequately understand the strategy or them self. By asking the following three questions in regards to our trading strategy we are more likely find a strategy that works for us personally, not wasting our time and money on something which stands little chance of bringing in profits.

These questions can actually be employed for any situation, not just trading. These questions focus us, and make sure we are constructing a proper plan for action whether it be in relationships, business or negotiation. It is recommended that you write down your thoughts on each question so you reach a sense of finality, truth and self-awareness.

After you have devised a stock market trading strategy, make sure you run the plan through these three questions. You can also go through these questions before you create a trading strategy, but make sure you do it after as well.

1. What outcome do I want to achieve in (or through) the stock market?

Simple enough, but not so fast. This is actually a more complex question than most people realize. Do not say”Make more money” or “Be able to quit my job to trade stocks.” These are vague and mean nothing-you must get precise in what you want to achieve. The results must also be tangible and measurable-“get rich” is not measurable (how much is rich and how will you get there?).

You must also consider the short-term and long-term and how the two need to work together for the same ultimate goal. For instance, if your goal is simple to make money as quickly as possible you will likely try for home-run trades, usually risking too much on each trade. While you may get lucky and have some short-term success over the long-term you will lose everything you have with such reckless action. In other words, this short-term goal is likely at odds with a long-term goal of sustained capital growth into retirement (which is also vague, get specific!).

Take a phrase like “I want to get rich” and widdle it down to a specific target outcome which is measurable and achievable. Write all your thoughts and considerations down, and then take the final result, and put it next to your trading computer so you will be constantly reminded of the outcome you want to achieve.

Your final question related to outcome is: Does my trading plan get me to the outcome I want in the short-term and the long-term? If it does, proceed to the next question. If the trading strategy falls short, go back and rework the trading strategy so it is in line with your desired outcome.

2. What are the consequences of my trading strategy?

You now have an outcome you want to achieve, and everything looks great on paper. Yet, most of us like to indulge our fantasies especially when it comes to our trading strategies. We assume we are smarter than others, and our sheer brilliance will make us money. Wrong. Therefore, write down everything that could go wrong with your trading strategy. Be brutally honest and specifically critique what could blow your strategy to bits.

After you have your list, go over it and ask yourself once again if the outcome you desire is still achievable given the potential consequences of the strategy? Given the realities of the market (no delusions here) can your plan make money? If your trading strategy meets your desired outcome and you can handle the consequences then proceed to the next question. If you can’t handle the consequences your strategy may dish out, then re-work your plan till it is within your personal risk tolerance given the harsh reality of the market.

In this step also consider other consequences outside of the markets. For instance, will the time required to execute the trading strategy take away from family time or beers with the buddies? Can you deal with those consequences? Can your family and friends deal with it? We don’t live in a bubble; our actions affect others, and their actions affect us. Consider the consequences of what you are doing and the effect it will have on yourself and others. Make sure you can handle such consequences.

3. Is my trading strategy consistent with who I am?

This is by far the most important question, as it is where most people fail to account for their individuality. Your trading strategy may look good on paper; it meets your objectives, you can handle the consequences/losses which may result from it, but if it is inconsistent with who you are it is all for not. If you do not like stress and constantly having to watch the market, no matter how much you want to be a day trader it is not going to work–your plans will fail because it is at odds with who are. Alternatively, someone who can’t sleep while they have an open position in the stock market (or any market) is unlikely to achieve long-term success as a swing trader.

Look at your plan and then take inventory of you who you are. Do you and the trading strategy mesh? If not, re-work the strategy. If you feel you will constantly need to fight internal urges and aspects of yourself, then your strategy will likely fail. Or you may need to set physical barriers to keep you from your tendencies, such as turning off monitors after entries, stops and profit targets have been set. This will help you to avoid exiting positions too early if this is one of your tendencies. It may mean having to leave the house or trading office during lunch if you continually violate your rules during this sedate part of the day.

Know yourself, and then build your trading strategy so it factors you and your tendencies into the equation. If you and your trading strategy do mesh, make sure you are not lying to yourself, and then proceed with executing your plan in the stock market. If the plan has passed through these questions in an honest fashion, you will be well on your way to achieving your stock market and financial objectives.

Summary

If you are struggling in life in or in trading, run your decisions and trading strategies through these three questions. The questions, if fully and honestly answered, will clarify your objectives, make you aware of potential risk and ultimately determine if the strategy you have chosen is right for who you are. Trading is more than just plunking a plan on paper or striking the buy and sell keys, you must make sure your trading strategies align with your life and your personality. Stop losing money in the stock market (any market) and get honest with yourself. Trading strategies that do not align with who you are will result in let-down after let-down. Trading strategies that have passed through the three question filter honestly and completely, are more likely to bring you success.