To become a successful trader you must have some kind of method or system to follow that will keep you on track. You may be buying and selling on tips, the weather or phases of the moon (there is a system like that).
The two basic methods are based either on fundamental or technicals. In stock the fundamentals take into account sales, gross profit margins, net profit margins, industry growth, management capabilities, price/earning ratios, etc. In technical analysis you would be computing various moving averages (such as 200-day, 50-day 10-day) of the stock price, trend lines, Fibonacci retracement, support and resistance levels, Elliott Waves, stochastics and many others.
There are scores of systems for sale and you can pick and choose among them to see which one suits your bank account and personality. Your choices will range from long-term to day trading. One thing for sure ? don't buy any system that does not have a good exit strategy. Understand that many systems will trade frequently with small losses, but any method must have a won/lost ratio of 3 to 1 to be profitable. That means over the period of one year you must win $3 for every $1 trading loss. You will learn early in the game to love small losses. Never buy any system that allows big losses.
There is a magazine published every other month called Futures Truth that prints the trading record for about 200 commodity systems. A great way to find the best systems without losing your money.
Most of the systems you find will be based upon some kind of strict mechanical entry and exit computation and will need computer software that you will receive when you purchase it. The software vendor may even provide you with a broker who specializes in trading their method.
The reason many of these mechanical systems do not have a better ROI (return on investment) better called ROS (return on speculation) is computer systems adhere to a strict formula for their BUY/SELL signals. They cannot give you a "maybe" because computers don't understand maybe. There is no subjective influence at all. The latter will have both positive and negative results on your returns. Most people don't want any subjectivity and prefer to follow what the computer spits out whether right or wrong; it relieves the trader of the responsibility of the decisions.
There are many professional traders I knew when I was an exchange member who traded strictly on "feel" and I know many who made six figure incomes doing it.
Many people start with a professional system and will tweak it to better fit their personality. This is very common, but requires personal discipline to remain with those alterations. You can't be changing all the time.
Whether for stocks, funds, commodities or whatever you invest you must have an organized trading system that has a good exit strategy. Whatever you buy it is the exit method that will help you keep the profits you make. To be a successful investor you must have a system.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
shuttle from Midway Glen Ellyn ..For years I have been saying you must have a... Read More
There is nothing more exciting than finding an undervalued stock... Read More
To begin, you might look at playing the stock market... Read More
Four blind men were asked to give a description of... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
We need a rabbit!This was a pretty horrible week for... Read More
People are always asking me when should I sell my... Read More
Every year I go to the Money Show in Orlando,... Read More
After some forty years of banking and investments, I retired... Read More
Alfred Winslow Jones started hedge funds in 1949. He was... Read More
After finding the price of a particular stock, usually the... Read More
One of the big advertising kicks today from mutual funds... Read More
Question: How does it get better when it gets worse?Last... Read More
Most advisors will tell you they can beat the market.... Read More
Suppose your position has made a big move and you... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
With the internet such a huge part of our daily... Read More
One of the greatest challenges of investing in stocks is... Read More
The trash business in its efforts to cook their books... Read More
Did you run out to buy that duct tape yet?... Read More
Both the stock market and oil prices rallied recently, which... Read More
When it comes to stock market trading it PAYS to... Read More
Time to look back2004 is over, now we are in... Read More
Everyone who invests in the stock market wants to be... Read More
For the year 2000 we have seen hundreds of mutual... Read More
shuttle from O'Hare North Chicago ..I love roller coasters. The steeper the better. High and... Read More
In my opinion, due to the volatility of stock market... Read More
I don't know what kind it is, but I saw... Read More
We all know that emotions control every decision that an... Read More
Money management starts with protecting your capital, realizing profits and... Read More
A recent cartoon in my daily newspaper showed two guys... Read More
If you haven't heard of the technical indicator with the... Read More
One of the great "secrets" of successful people is discipline... Read More
The bear market that showed up at the end of... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Stock trading remains a very competitive field and the stock... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
Everything you invest in has risk so you want to... Read More
We need a rabbit!This was a pretty horrible week for... Read More
Because you don't feel too sure about which stock or... Read More
A Guide to Using Stop Loss Orders Stop losses are... Read More
If you are serious about making and keeping money by... Read More
Last time we looked at the real performance of the... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
Should the market turn against you, it is important that... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
Humpty Dumpty had a great fall and all the King's... Read More
As the man said, "I've got some good news and... Read More
First let's see what protectionism is. According to Mr. Webster... Read More
Mutual funds were moderately successful in creating a presence in... Read More
Stocks & Mutual Fund |