How to Leverage Market Forces By Trading the News
So, what is a market force? Simply, it is a force that moves a market. Volume could be a force, or news could be a force. There are many forces that could move a market. This year we have had several different forces moving the market. tarting out, all thought the market and economy would continue to boom and the month of January was a bull. Then the fear of inflation took over and the market dropped, only to have relief of that fear, and then the fear of a trade war emerged and down it went again. But earnings are on the horizon and the expectation is that they will be good, and up the market went. Trade war, inflation, and earnings are all basically news. So let's talk about trading news.Read More
How to Enhance Your Returns and Minimize Your Risk with Options
Hedging Your Long Term Portfolio with Put Options
Would you drive a car without insurance? Would you even think of owning a home without insurance? Most people buy insurance to protect their investments from loss. One never wants to collect on a policy, but buying insurance is prudent, regardless. Options, like insurance policies, can be used to limit risk.
Professionals believe that the only way one can safely be in the market for the long haul is by being hedged. Put options can be used as an insurance policy to protect stock or mutual fund holdings. As a good rule-of-thumb, when you buy stock or mutual funds, you should buy puts. Buying puts to hedge a stock position is referred to by the professionals as “married puts.” You will learn at TheoTrade how to hedge a mutual fund by using index options. A mutual fund is a basket of stocks, as is an index. You should buy enough puts to cover your long stock position. (Remember, one put contract gives the holder the right to sell 100 shares of the underlying stock, at the strike price, before the expiration date.) By purchasing puts, you minimize the potential loss on a stock or mutual fund, should it decline in price.Read More
Dr. Barry Burns
The Tried, True and Tested Over Time Technique for Minimizing Risk While Maximizing Reward
There are 2 ratios that dominate professional traders’ thinking:
- The win/loss ratio of their trades.
- The risk/reward ratio of their trades.
Notice that I intentionally worded each bullet point above with the words “of their trades.” It may seem practical and objective to back test a trading system to determine these ratios, but what’s more realistic is to trade a method yourself over a significant, statistically significant number of trades, record your actual real-world results, and use these numbers as your own win/loss and risk/reward ratios.
I know traders who play one game or the other.Read More
Kenneth Reid, Ph.D.
The Psychology of the Zero-Sum Game
Electronic trading platforms are designed to theoretically level the playing field, but they actually give new advantages to the larger participants, and to those capable of building trading bots that can identify and exploit certain very short-term advantages in price action.
If you come to these specialized, professional markets from equities, as most aspiring traders do, you will inadvertently bring attitudes, rules, techniques and behavior that are maladaptive within this ecosystem and make you vulnerable to exploitation.
In zero-sum markets, the more you try to be the good and responsible trader you have been trained to be, the more punishment you will likely receive.Read More
THE ART OF TRADING EXCELLENCE
Knowledge is Power! Never forget that simple unobtrusive statement. Knowledge gives you the power to achieve whatever you want to achieve. Knowledge increases your abilities and capabilities.
Most people approach Forex on the assumption that finding a “system” is all that is needed to become profitable. “Enter here when this happens, exit there when that happens.” They are so very wrong in that assumption. All systems are worthless in the hands of people who lack knowledge, understanding, skill, and experience.Read More
Ten Principles of Trading That Made Me a World Cup Champion Trader
I have managed to make my living as a trader for more than 20 years in an industry where most traders only last a few years and where most people lose. Looking back, the journey has had a lot of good lessons. What I have learned over that time that really works can be reduced to some basic principles. Over this period, I have continued to learn and refine these principals. In this article I am going to share some key points that can help you in your successful journey over and over again, particularly as it applies to the intra-day action in fast-moving commodity markets.Read More
A Better Way to Find and Trade Stocks
Did you know that 69% of the new millionaires created last year are a result of the stock market? It’s true. This is an opportunity that stands right before of you. Every day stocks go up and down and someone makes a profit. The question is, how can you win in the stock market? I have been working on this question for over twenty-five years and have finally developed the magic formula (algorithm) that will help anyone become a winner on Wall Street. In fact I have made my trade technology available for anyone to use at WallStreetWinning.com.Read More