Good Investing Lessons

Day Traders typically uses technical analysis to identify their entry and exit points. This is applicable for trading of stocks, commodities, indices and other financial instruments. Below is a great video about a simple 2-bar setup for day trading to identify entry point. Enjoy.

Here is the truth about stock price trends: it tends to follow something called continuation pattern. Price trends once established, will tend to continue in it direction. This is similar to the law of physics. Taking at look at the current market, you will notice that indexes like the S&P 500, Dow Jone or Nasdaq Composite are in down trends. Depending on the type of investor or trader you are, you many want to remember this law by heart and constantly reminding yourself about this law. Some people don't like to use the terms bull market or bear market because they think that they are versatile traders and they can make money in either up trend or down trend. For, me, there is no harm in using any terms you want to describe the market as long as you have great discipline in your investing or trading strategies. I tend to use the words investing and trading interchangeably because in both cases, they are all about speculation. The difference is probably in the time horizon that ...

Never Turn Trades into Investment When the market move against you, cut loss. If you are hoping for the trade to turn good, you know you are done. What is the probability of a bad trade turn good? How long will you wait? Your First Loss Is Your Best Loss When you trade turn awry, cut loss fast. The subsequent loss is likely to be more severe. When a stock is down, its momentum tends to move it down further. The only hope you have is when there is a knee jerk reaction where the sell down comes with spike in volume. Chances are you will get quick reversal. Other than that, just cut off and move on. It Is OK To Take Loss When You Already Have One Losses, realized or unrealized, are actual losses. Unrealized losses if not taken, may lead to bigger losses. Don't let you capital sit there even if the capital is depleted. Move them to a better place. Never Turn a Trade Gain Into Investment Do not be too greedy. Know when to get out. Market can turn anytime. When it comes, it may be...

Jim Cramer: Even at the height of my firm, Cramer Berkowirtz, I managed only about $450 million for a bunch of wealthy families, a pittance compared to the major mutual funds arid some large hedge funds that control the marginal dollar that determines stock prices at the end of' the day. I mention this to drill into your head the importance considering supply and demand of the stock at all times. That's because way too many people get confused; they think we are trading the actual companies themselves, that the pieces of paper we are trading, investing, owning, are sort of redemptive right, a coupon that will give you certain cents off, or an ownership right that will allow You to have a chunk of the brick and. mortar if not the cash in the treasury of' the joint, Untrue. These are, in the end, simply pieces of paper, to be bought, sold, or manipulated up and down by those with more capital than others. All other investment books stress the linkage between the stock and the...

As a long term investor, you do not need to flee the market unless you are near to the retirement age (meaning, you are no longer "long term" in your investment). For many long term investor, they would say that the fundamental is unchanged. So, their stock valuation should not change. However, we must not be complacent about it. Fundamental do change when the market condition changes. That is the fact. How your stock will be affected depends on a few factors. The number one factor is whether the stock that you purchase is directly involved in the sub-prime loans. If they are, then the fundamentals of that company is changed immediately. The profit will be affected directly. So, if you are holding banking stocks, you may suffer loses. That amount will depend on what level of involvement your banking stock participates. However, if you are holding stocks of MacDonalds or Coca-cola, the impact to your stock will be minimal. You may see immediate price down but the prices will c...

Assuming that you have decided to become a long term investor. You have done your homework and started to purchase some stocks. The Dow Jone Industrial Average down by 281.42 (2.09%) last Friday. Are you concerned about how your stock portfolios are affected? Should you be even concerned at all? The truth about long term investment is that you do not need to have sleepless nights. You do not need to be checking your stock prices everyday. You do not have to be concerned about price fluctuations on daily basis. You only need to be concerned about price movements over a larger time horizon. Remember, all the stocks has been picked based on good fundamentals. Currently, the over market is still good. The long term trend for stocks remains positive. What does that mean to you? Your stock prices should be heading upwards in the long term. In the short term, there may be some days where the prices are down. Eventually, the price would go up. The truth is that if you are worried about the d...