Monday, August 31st, 2009 55 views
Unleashed on the individual trader for the first time…if you keep getting sniped by false breakouts in the stock market and are losing money, this article could change your stock trading forever…
I am going to tell you a stock trading secret that is so powerful, it will save you thousands of dollars. I should know, that is how much it saved me.
Institutional traders use dirty tactics in the stock market that are so bad, they should be illegal.
It might get you angry.
You may even want to forget you ever read this…
Read this entire article…
And you will be very thankful you did in the long run.
Because you will learn an entirely new way of looking at the stock market and in particular false breakouts…
We must define support and resistance and then look at in more depth what false breakouts really are.
Learning the how and why resistance lines and support lines form will help protect you against false breakouts.
When traders buy and sell a stock, they commit emotion to the trade. It is their emotions that will keep a market trending higher or send it into a reversal.
When a stock falls, some traders jump out and book profits, some traders jump out and take losses, and some traders hold on.
Everything you see on a chart is the result of emotions coming from the crowd of people trading that stock.
The Main Reason Support And Resistance Lines Form Is From Pain
If a trader is still holding on to the stock when the price claws back to his cost basis, he’s likely going to sell. He has painful memories of being in this stock and wants to get out as quickly as possible. This selling will temporarily stop a rally. These painful memories are the reason why areas of support and resistance form.
For example, suppose a stocks falls from $30 down to $25 where it trades for a couple of weeks. The longer the $25 level holds, the more that believe $25 is support. Suddenly, after a couple of weeks of trading at $25, the stock falls down to $20. Smart traders will sell quickly and get out at $24 or $23. Amateur traders will hold on and sit through the entire painful decline. Some amateur traders will get out at $20. Other amateur traders who haven′t given up at $20 will be the first to sell when the stock gets back up to $25. They will happily jump at the chance to “get out even.” Their selling will temporarily stop a rally and form a resistance level.
Support and Resistance Lines Are Caused By Regret
Traders whose stock screener has alerted them to a stock that has spiked up will feel regret because they missed the move. If the stock retraces, they will quickly buy the stock for a chance at a second move up. This regret then excitement causes buying which forms a support level.
When you study a chart, draw support lines and resistance lines at recent bottoms and tops. You should expect the trend to slow down at these levels. Use support and resistance lines to enter positions or to book profits.
Warning: False Breakouts Are Caused By Institutional Traders
When the market rises about resistance and pulls in new buyers and then suddenly reverses and falls back below that resistance, this is called a false breakout.
A false downside breakout occurs when prices fall below support, attracting more bears just before a rally.
Stocks that have a high percentage of institutional ownership often form false breakouts.
False breakouts provide institutional traders with most of their best trading opportunities which is why institutional traders most often are the ones who cause these patterns to form in charts.
All limit orders are displayed on the screens of Institutional traders. They have the exact number of buy orders above a given resistance level.
Institutional traders have a secret practice they call “running the stops”. A false breakout happens when institutions engage in hunting expeditions to run stops.
I will use an example so you can better understand what “running the stops” is. Let us say that a stock is below its resistance level at $10, the buy limit orders come flowing in near $8.50. Institutional traders can see these buy limit orders. They figure a calculation called the liquidity ratio which reveals how much a given stock will go up if all buy limit orders are executed at $8.50. They figure out that the stock will run to $11 if all the buy limit orders at $8.50 are executed. They then short the stock at $10 to force it down to $8.50 (they can do this because they have most of the money and can manipulate a market with their buying or selling power). At $8.50 they cover their short position and go long as the wave of buy orders are automatically executed pushing the stock up to $11. If greedy traders start piling in, the institutional trader will stay long the trade. As soon as the buy orders start drying up, they sell short and the price falls back below $10. That’s when your chart shows a false upside breakout.
False breakouts will knock you out of a trade. But don′t do what most amateur traders do which is to take a single run at a stock and once stopped out, go bipolar and say the stock is bad and never return. Obviously there was something you fundamentally liked about the stock in the first place and that has not changed. Professional traders will take several runs at a stock until finally nailing down the trade they want.
By Steve Wyzeck. To turn your stock trading around go to stock market
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Monday, August 31st, 2009 57 views
Are you looking for a forex trading broker? When trying to find one it can be difficult, but not impossible. First you need to know what a broker is. A forex trading broker is a company or one person that will hold onto your money to buy and sell based on decisions you make. Now, you need to know how to find a good, reliable broker.
You should also understand how to identify a knowledgeable, honest broker,but before you make a choice of the forex broker you want to work with, perform your due diligence as well as review the following 3 tips.
One: The first thing you need to know is if the forex trading broker is regulated. If the forex broker you are using is based in the U.S., then they need to be registered as a Futures Commission Merchant for the Commodity Futures Trading Commission; plus, the need to be a member of National Futures Association.
Second : You need to find out if they provide a reliable and quality , 24/7 customer support? Try to find out what whether their operating hours align with the global forex market’s hour of operations.
Three: You need to make sure you know what services they offer. Do they offer the currencies that are the most important, (AUD, CAD, CHF, EUR, GBP, JPY AND USD)? Find out what whether their operating hours align with the Global Forex market’s hour of operations.
By following these three rules, you can identify an excellent forex trading platform with no trouble.
The critical element is to research all of the various forex brokers that you are able to locate, then choose the one you will use.There’s nothing for you to lose but the time it takes to identify the broker and trading platform that suits you.
You got nothing to lose except little time to find the broker and trading platform You like best. And then simply start trading with your favorite broker.
You want some recommendations for forex brokers and online platforms? you can check Smart-Product-Reviews and compare different top rated products and chose the best one .Lukas Veselinov.
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Monday, August 31st, 2009 59 views
Can you control your emotions? Can you behave like a robot? Certainly not! Human beings are emotional creatures. Our mind is capable of playing emotional tricks on us. It is often said that we are our own worst enemy. In forex trading, this is the ultimate truth. Most of our trading decisions are guided more by emotional than logical thinking.
Emotions can work for us and against us. Your battles are won or lost in your mind first. We can get seduced into unfavorable situations by our emotions. A traders mindset is the most important ingredient of success.
You must understand this thing from the start that forex trading is not for everyone. You must ask yourself do you have a strong desire to succeed in forex trading. If you dont have the strong desire, you will end up like the majority who lose their money and never make a profit. Dont just try your luck or dabble in trading. Ask yourself do you have the passion for trading forex?
You must be highly self motivated in order to become a successful forex trader. Are you ready to devote a lot of time and effort into picking up the trading skills and knowledge? You must have a concrete plan of action and not be afraid of failure.
You cannot succeed without knowledge and skills. If you want to succeed at anything, you should immerse yourself in that thing. Learn every nitty gritty. This is the only way to succeed. So you need knowledge and skills in trading currencies in order to become a successful forex trader. To attain consistent success in forex trading, a huge amount of time, effort and money is required for a trader.
Losses are the inevitable part of lack of experience and knowledge. But even if you develop the experience and knowledge to successfully trade the currency market, you cannot avoid losses. There is an inherent risk in trading currencies. No one can overcome that risk. Are you willing to accept losses as part of trading? You are going to make mistakes while trading. Do you understand that you can suffer losses in trading? Are you willing to learn from your mistakes? Do you have a traders log that you use to reflect on each lost trade and learn from it?
Most of the new traders read some market analysis from an analyst and enter into the trade on his/her recommendation. If the trade turns out to be a loser, most of us tend to blame on the market analysis. It is easy to blame others.
When you are confident that you have done your analysis to confirm what others are saying only then pull the trigger. Dont be trigger happy! You must reflect on your decision before pulling the trigger. Is it fair to blame the other person when you could have done further market analysis on your own? When you could have planned your trade in a better way, it is foolish to blame others for your mistakes. So accept your responsibility if the trade goes wrong.
Fear and greed are the two most dominant emotions that affect not only the individual traders but also the currency markets. In fact, these two emotions are the main drivers of the forex markets.
Fear makes you over pessimistic about a currency pair. Similarly, greed is going to make you over optimistic in thinking that a currency is going to appreciate. In nutshell, fear and greed are behind the steering wheel of the currency market. When fear takes over, the market turns bearish. When greed takes over, the market becomes bullish.
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know Swing Trading. Learn Forex Trading!
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Thursday, August 20th, 2009 91 views
by James Oleander
Almost anyone can become a forex trader, because you dont need any highly specialized skills to succeed, and you definitely dont need a degree to be successful. As long as you have the basic aptitude for trading, you should be ready to begin.
It’s true that to work for a large financial company, you’d have to have some qualifications, degrees, or credentials, or at least know a lot of people in the world of finance. However, the nice thing is that you can begin trading on your own at any point. You do need an internet connected computer and some financial capital so that you can begin trading it.
In fact, there quite a few traders who make a living on the foreign exchange market trading on their own, from their own homes! In fact, although some do boast of degrees in finance and business, most will tell you that those degrees are not necessarily the reason for their “Forex” success. This further cements the point that trading in Forex markets does NOT require the specialized, formal training required for other areas of finance.
Still, you’re probably asking what skills you do need to begin this career. This is a very good question.
As for generalized knowledge, it’s always good to have at least a rudimentary understand of the math, arithmetic, perhaps also some statistics. Those skills will help you analyze things faster and save you valuable time you can spend analyzing other aspects of the market. Aside from those things, you are pretty much set to begin your foreign exchange trading.
You have to have a high level of motivation and be unwilling to fail. This mindset will help you get over the rocky parts of your path to forex trading success. Forex trading requires a time when you will be testing the waters, which includes dealing with inevitable losses. It will take you a while before you learn the game and can start making more money than you lose. Until you start making money, you will have to rely on your desire to succeed to keep you focused on your goal.
Another character trait you will need to make this work is discipline. You must be able to stick with your game plan even if you start losing money in the short term. You have to remember that the trading system will work in the long run and not lose your nerve or stop using the system. If you start putting down too much money and losing focus after you take a few hits, you shouldnt get involved with forex trading.
So fundamentally, everyone on paper can become a successful trader on the foreign exchange market, no matter what your background. But in practice, it will be those who have the ability to stay focus and disciplined in the face of volatility and uncertainly. It is only with this seriousness of mind that you can venture into the foreign exchange market and use these markets for their extensive opportunities for profit and revenue!
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