Japon Bozmasi wrote:


Hello,

Can individuals do day trading in Nasdaq? What would be the best way to do it to minimize commission costs?

Thanks…

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I have often said that I could give everyone my trading systems and it would do them no good.

Let me give you an example, I can show you a trading system that picks the direction of the market correctly 60% of the time. On winning trades that system shows a profit twice as large as the average losing trade. Now in anybody’s books that is a great system.

If all this is a bit over your head, or you’re looking for a solid day trading strategy, I suggest you join me on one of my live webinars by visiting this site.

But wait, there’s more… That system gives traders an average of 13 trades a day. Again on average the system produces between $800 and $1000 (net after all costs) each week off a single contract.

WOW! That’s a great system!

I can hear you say “Gimme, Gimme, and Gimme!” Who wouldn’t?

Let me tell a couple of other things about the winning trading system. The system can produce a run of 7 losing trades in a row in any given month. Now let’s deal with this, that is 7 losing trades in a row, how do you think you are going to feel after 7 losing trades in a row?

It’s hard to take the next trade after 3 losing trades but this is systems trading, you must take every trade! If you don’t take all trades you will not be in line for the run of 10 winning trades; which also happens once a month. It is hard to keep trading during a run of losses and after each successive losing trade it gets harder.

One of the comforts of this trading system is that the losing trades are small and it is important to understand that keeping losing trades to a bare minimum is the most important step in becoming a profitable trader. When designing trading systems I always seek to limit the average losing trade over a large number of trades. If we can set a limit on the size of losing trades we don’t have to worry about losing trades anymore. We know what size our losing trade is going to be in advance so if our trade turns into a loser it will never be an unexpected amount. Certainty of return as determined by these rules helps to create confidence in the trader.

It helps to have a broad vision of time and activity. Smart traders know that they are not going to lose all their money in one trade, nor are they going to make a retirement fortune on one trade. It helps to think of the next trade as the first one of the next one-hundred trades.

Going back to our trading system, that system will produce an average of 13 trades a day or 65 trades a week. As the system picks the market direction correctly 60% of the time that is about 8 winning trades a day or 40 winning trades a week. Unfortunately they don’t all come at the same time. It also means that on average 5 losing trades a day or 25 losing trades a week.

Traders must understand that no matter how hard you try you cannot tell which trades are going to be winners before you take the trade. Trading is about taking a position and then managing your risk.

Taking a position means buy or selling according to your signal, if you buy into a market you expect the market to rise and if you sell into a market you expect the market to fall, pretty simple really. Opening a position is the easy part. Exiting a position is a little more complicated not that we worry about a trade turning bad because if it does we get out very quickly. It is the profit-taking that complicates matters. The question is always “Where will I take my profit?”

Keep in mind that you must keep your losing trades limited to the pre-set value and never take a loss greater than that which is set. Having preset loss limits enables us to look at ways of maximising our profitable trades. I recommend clients have a minimum profit expectation of twice the average loss value before taking in a trade.

Trading a system requires a trader to take all trades. It is easier when you know in advance that any loss will be limited to a known amount so that there is no ‘surprise’ factor. It is a matter of taking a position and then managing the correct exit.

If you would like to learn more about this trading system, and more importantly the mindset and conviction to follow it through, then visit us at http://www.EliteTradersWebinars.com.au and sign up for our free webinar.



By: Andrew Baxter

About the Author:

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guitarman wrote:


What % of trades are done automatically on a computer now? It seems as if the stock market can’t fall completely because these computer programs keep boosting it back up. Is a market correction even possible in the day and age of computer programmed trading?

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Markus Heitkoetter wrote:


Defin ing your goals and making a plan is probably the most important task a trader can undertake.

Many traders refer to their daytrading plan as a trading system. That’s absolutely ok; since a trading system is nothing else than a structured day trading plan.

Let’s take a look at the elements of a good day trading plan:

• Financial Goals

How much money do you want to make?

How much money do you need to get started?

What can you expect when trading a system?

In this chapter you’ll learn the answers to these questions. Defining your financial goals is extremely important, since the outcome of the next steps all depend on YOUR goals.

• Selecting a market

You need to determine whether you want to trade Stocks, Options, Forex or Futures.

It really doesn’t matter WHAT you trade, as long as you’re successful. Each market has advantages and disadvantages which we will discuss here. This will make it easy to find the right market for YOU.

• Selecting a timeframe

In this section you will learn the differences between daytrading, short-term trading and long-term trading and how to find the best approach for YOU.

• Selecting a trading style

Trend-following, Swing-trading or Trend-fading? In this section you’ll learn which trading style is the best for YOU.

• Detailing the daytrading plan

By now you know how much money you want to make, how much you are willing to risk, what market you are going to trade in which timeframe, and what trading style you’ll use. In this section you will learn how to detail your plan by adding specific rules for entries and exits. But don’t worry: It’s easier than you think, and I already have two ready-to-use trading systems for you.

Let’s get started.

Financial Goals

The most frequently asked question of aspiring traders is “How much money can I make?”

Unfortunately there’s no easy answer, because it depends how much you are willing to risk.

Day Trading is a function of risk and reward: The more you risk, the more you can make. Here’s an easy example: Let’s say you start with a $5,000 account and you’re willing to risk $1,000. Now you could place a trade to go long at the opening, set a profit goal of $1,000 and a stop loss of $1,000. Let’s say you investigated the market behavior in the past couple of months and realized that your chances of achieving your profit goal are 60%.

Unfortunately the trade you just placed is a loser, and you lose the whole $1,000. Since this was the amount you were wiling to risk, you close your account, transfer the remaining $4,000 back in to your checking account and that’s it for you.

Now let’s assume you wanted to risk only $100 per trade and you adjusted your profit goal to $100, too. Now you can make at least 10 trades, because only if all 10 trades are losers you’ll lose the $1,000 you are willing to risk. I don’t want to become too mathematical, but statistics says that the probability of having 10 losing trades in a row is less than 1%. Therefore it’s highly likely that you will have a couple of winners within the 10 trades. If your trading system shows the same performance as it did in the past (60% winning percentage), you should make $200: 4 losing trades * $100 = -$400 + 6 winning trades * $100 = $600. Make sense?

Compare these two options:

• The risk of losing your money in scenario 1 is 40%. But if you won, you would have made $1,000.

• In scenario 2 the risk of losing your money after 10 trades is less than 1%, but you have a fair chance of making $200.

Therefore you need to define first how much you are willing to risk, since the amount you can make is a function of that risk. Make sense? I’ll give you more specific examples later in this chapter.

Keep in mind that there’s a difference between the amount you need to trade and the amount you’re willing to risk. Your broker is always asking your for a “margin”, and you need to fund your account with that margin requirement + your risk. In our previous example you funded your account with $5,000, but you only risked $1,000. More on that later.

What to expect when trading a system.

There’s a common misconception about what to expect when trading a system:

Trading a system does NOT mean having an ATM in your front yard.

There will be months when your trading system is over performing, making more money than your expected, and there are months when your trading system is underperforming. Don’t assume you’ll get a check at the end of each month!

Here’s an example:

The performance report of our e-mini S&P Trading System Coin Collector shows an average profit per trade of $36 over the past 733 trades:

In between March 14-21, 2005 the system was over performing and we realized $963 in profits with 17 trades. These yields to an average profit per trade of $57, way above the “expected” average profit of $36 (see below):

When daytrading system you have to keep in mind that you are working with averages:

If your back testing shows an average profit per trade of $36 then you can be almost sure that the system will not suddenly jump to $57 average profit per trade.

In trading we have good weeks and bad weeks. Losses are part of our business. After a slow week there might be an extraordinary week. After a winning streak we will realize a loss.

Looking at the performance of that week a correction was inevitable. And it happened: Tuesday, March 22nd, we realized a loss of $712.50.

Such a loss hurts. You quickly forget all the nice profits of the past week and focus on the loss. You may start questioning your system and think that it stopped working, and so you stop trading. You start looking around for the next system. You don’t give the system a chance to come back to “normal”. You see an extraordinary week like the week from March 14 - 21, 2005 and think that you will continue making profits like this forever.

When reality hits you, you stop believing. But take a look what happened after the loss.

Here’s the performance report of the 2 weeks combined: The “good” week and the “bad” week with the loss of $712.50:

Now take a look at the first graphic with the performance the system is supposed to make.

We are right on target!

The average profit is back to normal, and so are the winning percentage and the profit factor.

Within two weeks the daytrading system normalized itself. That’s exactly what you should expect from a robust trading system.

The next step is finding a market that’s suitable for you.

Selecting a market

You can trade stocks, forex and futures.

Depending on your account size “stocks” might not be an option for you, since you need at least $25,000 in your account to daytrade stocks.

Forex trading is very popular, but if you are new to trading I must warn you:

The Forex markets are extremely volatile, and you can easily make (or lose) thousands of dollars in a day. Many Forex brokers offer “free quotes and charts” and “no commissions”, but keep in mind that nothing is for free: You are paying a spread, i.e. you can NOT buy a currency and immediately sell it for the same amount. It’s like at the exchange booths that you know from your holidays: You exchange $100 into 80 Euro, but when you change the 80 Euro back into dollars, you only receive $96.

Same when trading Forex: You are paying at least 2 “pips”. This amounts approx. $20, depending on the currency pair you’re trading. Another disadvantage of Forex trading is that you are NOT trading at an exchange: There is no “Foreign Exchange”. You are trading against your broker: If you are selling, then your broker is buying from you and vice versa. And that’s why your broker is giving you the quotes for free: He can basically give you *any* quote since there are no regulations. Scary, isn’t it?

Let’s take a look at futures trading:

Futures markets are regulated and you pay very low commissions. They are highly leveraged, since you can trade the whole index worth $66,500 with an account as small as $500. So you can achieve an enormous leverage of 130:1. There are many advantages, especially if you’re trading the index futures:

• Index Futures are traded electronically and you can enter the orders through your computer, without ever calling a broker.

• You are getting very low commissions. That’s important to keep your costs down and increase your bottom line.

• You have a high leverage of up to 130:1.

• You are trading some of the most liquid and popular markets in the world, hence you will experience little or no slippage.

• Depending on your broker you might get quotes and charts for free.

My recommendation:

If you’re new to trading I strongly recommend starting with the futures markets. It’s way easier than you might think, and if you follow this guide then you’ll have no problem getting started in futures trading.

Selecting a timeframe

Let me be brief on selecting a timeframe, since you’ll figure this out very soon:

When you select a smaller timeframe (less than 60min) your average profit per trade is usually relatively low. On the other hand you get more trading opportunities. When trading on a larger timeframe your profit per trade will be bigger, but you will have fewer trading opportunities.

Smaller timeframes mean smaller profits, but usually smaller risk, too. When you are starting with a small trading account, then you might want to select a small timeframe to make sure that you are not overleveraging your account.

Most profitable trading systems use larger timeframes like daily and weekly. These systems work, too, but be prepared for less trading action and bigger draw downs.

My recommendation:

Therefore I strongly recommend that you stick to smaller timeframes like 60min and below. In addition you shouldn’t hold any positions overnight in your first couple of weeks of trading, so stick to daytrading.

Selecting a trading style

Basically there are 2 different trading styles:

• Trend-following

When prices are moving up, you buy, and when prices are going down, you sell.

• Trend-fading (or counter-trend-trading)

When prices are trading at an extreme (e.g. upper band of a channel), you sell, and you try to catch the small move while prices are moving back into normalcy. The same applies for selling.

Most indicators that you will find in your charting software belong to one of these two categories: You have either indicator for identifying trends (e.g. Moving Averages) or indicators that define overbought or oversold situations and therefore offer you a trade setup for a short term swing trade.

So don’t become confused by all the indicators and trading approaches that are out there. Make sure you understand what the indicator is measuring and what category it belongs to.

Here are some examples of popular trading approaches:

• Trend-following

o Crossover of Moving Averages

o Turtle Trading

o Parabolics (e.g. SAR)

.

• Trend-fading

o Overbought/Oversold Oscillators

o Bollinger Bands and Channels

o Turtle-Soup Trading

My recommendation:

In my opinion trend-fading is actually one of the best trading styles for the beginning trader to get his or her feet wet. By contrast, trend trading offers greater profit potential if a trader is able to catch a major market trend of weeks or months, but few are the traders with sufficient discipline to hold a position for that period of time without getting distracted.

Detailing Your Trading Plan

By now you know how much money you want to make, how much you are willing to risk, what market you are going to trade in which timeframe, and what trading style you’ll use. In this section you will learn how to detail your plan by adding specific rules for entries and exits.

Entry Rules

Entering the market is easy. You have the following possibilities:

• You can enter the market based on certain conditions,

e.g. prices move above the previous day high or

prices cross the 100-day moving average.

• You can enter at a certain time,

e.g. you are ALWAYS entering the market at the open or

you are entering at noon.

• A combination of both,

e.g. you are entering if prices cross above the 100-day moving average, but only between 8:30am and 12:00pm.

There are dozens of books, magazines and websites that offer you countless entry techniques. But as a famous trader once said: “The exit is more important than the entry”. So let’s take a look at exit rules.

Exit Rules

Lets keep it simple here, too: There are two different exit rules you want to apply:

• Stop Loss Rules to protect your capital and

• Profit Taking Exits to realize your profits

Both exit rules can be expressed in four ways:

• A fixed dollar amount (e.g. $1,000)

• A percentage of the current price (e.g. 1% of the entry price)

• A percentage of the volatility (e.g. 50% of the average daily movement) or

• A time stop (e.g. exit after 3 days)

I usually don’t recommend using a fixed dollar amount, because markets are too different. For example, natural gas changes an average of a few thousand dollars per day per contract; however, Eurodollars change an average of a few hundred dollars a day per contract. You need to balance and normalize this difference when developing a trading system and testing it on different markets. That’s why you should always use percentages for stops and profit targets (e.g. 1% stop) or a volatility stop instead of a fixed dollar amount.

A time stop gets you out of a trade if it is not moving in any direction, therefore freeing your capital for other trades.

Other Elements

Entry and Exit Rules are the basic elements of your trading plan, and if you have a rather small account then that’s all you need to get started.

Later you want to add additional elements like

• Money Management

How much money are you going to risk per trade?

When do you increase the contract size?

• Diversification

How many contracts will you trade with ONE day trading strategy?

When will you add a second strategy? What kind of strategy?

In which markets will you diversify?

• Payouts

When will you start withdrawing money from your trading account?

How much?

All these elements are becoming important when your account size grows, but in the beginning you can omit these elements to make it easier.



Online Business

Markus Heitkoetter wrote:


Every minute more than 150 Million Dollars change hands in the electronic index futures markets like the e-mini S&P and e-mini NQ. You can win or lose thousands of dollars in a few minutes; the futures markets can make you rich in a few weeks or months or wipe out your account with no mercy. If you want to compete in the game of games and play against the best day traders in the world, then you need to get ready. Too many gamblers are entering the arena without any plan or strategy, completely unprepared, and that’s why they lose. Trading a system will dramatically increase your chances to succeed in trading, because it eliminates five of the top six reasons why unprepared traders fail.

Here are the top six reasons why traders fail,

and how a trading system eliminates them

Let’s take a look at the reasons why traders lose money:

1. Lack of a good Day Trading Plan

2. Lack of Discipline to Follow the Trading Plan

3. Failure to Control Emotions

4. Failure to Accept and Limit Losses

5. Lack of Commitment

6. Over-Trading

By all means you have to avoid these mistakes if you want to win. Here’s how a trading system eliminates 5 of the 6 top reasons why traders fail:

Solution #1: Having a trading plan

Having a trading system means having a pre-defined set of rules you have developed to guide your day trading. Therefore you HAVE a trading plan, eliminating the No.1 cause for failure.

Solution #2: Following the day trading plan

The easiest way to follow a day trading plan is to automate it. Almost every daytrading system can be automated, and you could let the computer trade online for you. You won’t have to worry about your discipline any longer, as the computer mechanically trades every setup for you.

Solution #3: Controlling emotions

Trading with a system removes emotions from trading. If you don’t have a day trading strategy and you try to make decisions when the market is moving, you are liable to become emotionally attached to positions. You may experience panic and indecision when the market does not move in your favor, as you do not have a prepared response. That’s when most traders lose their money. If you follow a system you will know what to do no matter what the market does.

Solution #4: Controlling your losses

You probably have heard the saying Let your profits run. Unfortunately most traders let their losses run. A daytrading system will get you out of a position when the predefined stop is hit. Unless you override the system to give the trade a little bit more room it will stop the loss and therefore limit your losses.

Solution #5: Commitment

You won’t believe how many traders show a lack of commitment and therefore lose money. Lack of commitment means that they stop trading after the first loss, and don’t give their system a chance to make back the money they lost. Trading is not a one-way street, and losses are part of our business. If you can’t accept the fact that there will be losses, you shouldn’t trade. Fortunately a trading system can help you to overcome this problem; an automated daytrading system continues trading according to the rules, and therefore adds much more consistency to your trading.

As you can see, Five of the six top reasons why traders lose money in the markets are simply eliminated when you start trading with a system. Without any guarantee, your chances of making money rise incredibly when starting with a profitable trading system.



Credit Repair

BVCM wrote:


I thought once I saw hand held devices with the actual buy/sell buttons on it. If there isn’t anything like that, what is the best and most convenient/reliable hand held device for stock trading?

Thanks

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skahhh wrote:


Their options are different too, as I understand it, as some have european style options trading. I would think after hours would be different too…perhaps requiring an extra premium for that trading.

How to Save Energy

Leroy Rushing wrote:


There’s a wonderful quote that goes something like “Don’t learn the tricks of the trade. Learn the trade.” That rings especially true when it comes to trading. That’s simply because there are no tricks, or shortcuts, when it comes to trading. The trading environment is a very unforgiving one that does not discriminate. Each and every one of us can fall victim to the ways and unpredictability of the market, and the moment you think you beat the system, think again, because chances are you didn’t.

Fundamentally, successful trading requires very clear and easily identifiable skills and habits. They must be thoroughly established, constantly and consistently in place. Otherwise, your trading experience will be very short or painful, or both. First and foremost is controlling your emotions. Anybody who knows anything knows there are no shortcuts when it comes to controlling your emotions. You either control them or you don’t. Not being able to control your emotions - whether it’s fear, greed, frustration, confusion, elation, etc. - when trading may very well be the primary reason behind trader failure.

Detaching yourself emotionally from your trades is much easier said than done. Something that has helped me tremendously in removing emotion from my trades is gaining a high-level of confidence in my trading strategies and execution, and the only way to do that is NOT to take shortcuts! I’ve worked hard and become very logical with my trading because I had to. I had to develop a trading plan and have the discipline to follow that plan, trusting that all the research, strategies, risk and money management plans in the trading plan are right for me and my trading.

Not far behind controlling your emotions might be lack of preparation. Can you imagine not being prepared when it comes to taking off for the moon, cutting your first incision for major surgery, singing and dancing on Broadway, or going to court for your first criminal trial? Imagine it. Pretty frightful sight, yes? I can almost guarantee you that anyone in any of the above situations prepared themselves through many years of education, study sessions, rehearsals, and practice. My guess is that they did not take shortcuts!

That’s not to say that people don’t take shortcuts, because obviously they do. I say “obvious” because the standards of those who take shortcuts are usually pretty low, so the quality of their work and/or performances is subpar and pretty obvious. Therefore, it would follow that those who take shortcuts very quickly separate themselves from the pack - from those with potentially long, successful careers.

So, why should trading be any different? It shouldn’t. Taking shortcuts when it comes to trading will most certainly shorten your trading career. Take the steps to Trade Smart and develop a trading plan, incrementally add to your arsenal of trading strategies, utilize the proper hardware/software for charts and analytics, acquire the skills and tools to execute your trades, and record everything you do. That way, you will have taken the long road to learning how to trade, but it’ll be the right road to a long trading career.



Search Engine Placement

William M wrote:


I want to know if it is possible to still control more shares of stocks by trading options using no margin leverage? Please give a good understandable answer.

Foreign Exchange Trading

asuku t wrote:


This game always favors those in control of the stock rather than ordinary investors.
Today they decide the stock is up and tomorrow it is down.
These master gamblers are super rich while ordinary investors are loosing their money.
Is stock trading not a gambling affairs?
What exactly are we buying apart from the speculations of the stock traders?
Just lost 20 k and not sure to whom?
Should anyone still be buying these people’s speculations?

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