Blind Squirrel traders
Most of the people that post on our board regularly have been trading for quite a while. Most of us trade big board stocks, with the exception of Admiral. We would like to share a few trading tips to help people that are new to trading.
1. Nobody wins them all. If you study, you will find that most traders will lose about 50% of their trades, So, how do you stay in the game? Simple, let your winners run, and lose small. If you are in a losing trade, sell it an get out.
Dont be all proud and hang onto a losing trade. Cut your losers quickly, and when you get a winner, let it run until the chart or circumstances tell you that you are done.
2. Take profits, A profit is a profit. Most traders do not nail the bottom, or sell the exact top. Make your trade, make your profit, sell, move on to the next trade.
3. Most penny stocks are scams. If you are a good enough scammer to "scam the scammer", then have at it, but in general, the pinkie ceo knows more about the scam than you do, and can manipulate circumstances to end up with your money. So we recommend leaving the pennies alone. Big board stocks are more highly regulated, they are required to be more transparent. If you have a margin acct. you can use margin, or you can learn to trade options, (which we love).
4. Study.... Learn how to read a stock chart. Learn about full stochastics, Rsi, how volume affects a stock, learn about macd, Learn how to spot support and resistance levels. Learn how to use Bollinger bands. STockcharts.com has some free charts and a chart school that are excellent to learn and use.
5. Apply yourself.... You are competing with the best minds and technology in the world. If you do not prepare yourself and learn to be smarter than the other guy, you are going to give your money to the other guy. Make sure you get enough sleep, dont have a hangover etc. Don't fool yourself into thinking this is easy, or else you will give your money to someone else.
6. Learn to limit risk. when you win, you can always give your money back, If you lose, its gone. If you get in a risky trade, and lose 30% of your money, you have to get 50% on your next trade just to get back even. If you lose 50% of your money on a trade, you have to get 100% on your next trade, just to get back to even. Its better to get into a trade where your may possibly lose a max of 20% or less overnight, You may limit how much you can make on a trade, but in the long run you will do better.
A good strategy: A great trader named Jesse Livermore developed this strategy over many years starting in the early 1900's. He became one of the richest men on wall street. He was a trader, not an investor. This is not the only way to trade, but it is a proven method.
1. Trade the leaders: many people trade pennies, if you want to end up with pennies, trade pennies, if you want to make the big money, trade with the big boys. Trade the strongest stocks in a sector, like aapl, pot, gs, goog, bidu, wfc, bac, f, amzn, ma etc. You might think that your account is too small, or the percentages that you earn are too small to trade these stocks. If you learn to trade, you will learn to make money, you wont have to rely on finding that "life changing stock", that is probably a scam. If you can get a margin account, you will be able to increase your % that you make from the leverage of margin, also when you get good at trading, you can learn to trade options, and then you have huge leverage to make large gains even when a stock only moves a couple of percentage points.
2. Buy the breakouts to new highs. When a stock beaks out to a new high, over resistance on heavy volume, buy it. I like to get them at new 52 week highs, or new 6 month highs, or when they break out over a trendline on high volume, preferably 2 times the average 10 day volume.
3. Double bottom. Learn to look for a stock that is going down, and it makes a bottom, then goes up a bit, then heads back down to retest the low. It will reach a pivot point at the second time it hits that low. Many times if it bounces off from that low the second time, its a great buy signal, and the stock is going to rebound. If it breaks through it, and keeps going down, instead of bouncing, its a signal to short the stock, or buy puts if you can trade options, as its probably going to continue to drop for quite some time.
A MUST SEE video if You Never Played in this Pen Before:
Post your stock picks and have some fun.
YOU ARE SOLELY RESPONSIBLE FOR YOUR OWN BUYS AND SELLS. WE DO NOT MAKE ANY RECOMMENDATIONS OF ANY KIND, ANY WHERE, ANY HOW, OF ANYTHING AT ANY TIME.
SO, TRADE AT YOUR OWN RISK!
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