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365/7/24
What does it take to be a stock trader? It takes a total mental commitment to the task. It becomes a complete way of life. You cannot be a part timer. You cannot work at a regular job and trade stocks successfully. When you decide to make your living this way you must be willing to work 365 days a year, 7 days each week, 24 hours every day with no time off. I know. How do I know? As an exchange member for 17 years and a floor trader I can personally tell you there is no time off. Never. Almost every waking moment is given to thinking about your current positions. Where should I sell? Should I move my stop up a little more? There are 3 more trades I'd like to make, but I need to save some extra cash in case I need it for a margin call. It is hard to pass up a trade that looks as good as XYZ, but I have to maintain my trading discipline. And so much more. These are just a few of the thoughts that run through your head. You are constantly being torn by the natural enemies of fear and greed, yet you must hold your equilibrium to try to make dispassionate decisions. The first law of trading is to protect your capital so that any single trade will not have you going home broke. If you are working a regular job or you own a business you cannot be a trader. One or the other or both of these pursuits will suffer. When I owned my brokerage company I did not make one single trade for 8 years because I understood the commitment necessary to be a successful trader. Why am I telling you all this? Because I don't want you to lose your money in the market as so many people do and I especially don't want you to think you can be a day trader. You can still make money in the market and beat 90% of the Wall Street experts. Here's how. First you must learn that you CAN time the market even though your broker and all those "experts" will tell you that you can't. There are several good timing advisory services that you may subscribe to or you can develop you own method. Second, don't believe all that horsewash about research. That is Wall Street smoke and mirrors. Don't try to pick individual stocks. Stick to no-load mutual funds with a discount broker and buy only the best performing funds during the past 6 and 12 months. When they quit being in the top 1% sell them and find new ones that are going up. There isn't enough space here to give you the details, but I want you to realize that you can safely make plenty of money in the market without devoting 365/7/24. 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 www.mutualfundmagic.com">http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2005
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Different Ways of Buying Stocks Let's say you are interested in this one company. You read its annual report, like what you see and your calculation indicates that the stock is trading way below its fair value. Dollar Cost Averaging Dollar cost averaging is one of the most popular ideas in the investment community. Everyone seems to like it and it has become a watchword among stock and mutual fund brokers. Some Good News for A Change Before we get into all the good news out there, let us first take a look at what the term "news" really means. By definition, the term "news" means the exception to the norm. Historical Briefing: Stocks, Finance and Money The World Bank claims that some two billion of the world's citizens live on $1 per day or less! That fact absolutely shocked me. With this statistic in mind it becomes important to focus on all of the things that have served as money over the history of civilization. Small-Cap Stocks: The Beginning of the Journey When an individual investor wants to roll up his sleeves and do some research in the pursuit of the next big winner in the stock market, the place many start is in the small cap sector.As with the other capitulation sizes (capitalization is a stock's market value), no one can completely agree on a precise definition, but corporations under $2 billion are often considered small caps. Dont Ask Your Broker Unfortunately, most of you who are reading my column are suffering some substantial losses in the stock market. Whether it is mutual funds or individual stocks everything with mighty few exceptions is going down. The Seven Mistakes All Novice Traders Make and How to Correct Them We learnt the following the hard way! If any of these things applies to you, don't worry - there is an easy solution!MISTAKE ONELack of Knowledge and No PlanIt amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course. How To Make, And Keep, Money Trading Stocks If you are serious about making and keeping money by trading stocks, then there are three things you need to do, and do well.Money managementOrdersTrading systemMoney managementMoney management comes first. Bottoms Ups If you have talked to a stock broker or financial planner in the last few days I will bet they all agree that there are some great bargains out there and now is the time to start buying in anticipation that the market will go back up. You will also find agreement from the talking heads on CNBC and those talk radio station stock mavens. What Are You Waiting For? Do you own any mutual funds? In an IRA or 401K or wherever. Privately or at work. Downdraft For the year 2000 we have seen hundreds of mutual funds lose 40%, 50% and more of their value. This does not seem right since the fund is supposed to be managed by a professional. The Stock Market Investor's Worst Enemy Every stock market investor faces one primal enemy. An enemy so perverse, it will drive thousands of investors from the stock market through its ability to defeat even the most practiced investment strategy. Whitewater Stock Market Ever done any whitewater rafting or canoeing? Long periods of tranquil river followed by short periods of terror. Suddenly the water grips your vessel and you are pushed and shoved by massive currents over which you have no control. Investment Attorneys and Garbage Stocks How is it possible that trash Companies are posting less than expected results? Trash Companies are thought of by prudish investors as some of the safest stocks to own. Ask Warren in his Buffet of Essays on Corporate America. Trade Stocks for Real I read a comment by a forum member on another site earlier today that suggested that every investor should back test their system for at least twenty years. I disagree and will now tell you why. Market Psychology Today we are inundated with tons of information about the economy, stocks, government agencies and foreign governments. They show us charts and graphs of the increase/decrease in oil production over the last 5 years, the amount of maple syrup produced in Vermont for the past century, the time it takes to bounce a signal off the moon and all kinds of other nonsense that we can live without. Emotional Maturity If you are going to be a winner in the stock market you must have emotional maturity. I did not say you had to be smart or know how to pick stocks and mutual funds. Dont Buy Stocks based on P/E Ratio alone I use the P/E ratio as a secondary indicator for buying and selling stocks but I don't use the ratio in the same a manner as many value investors teach. I will explain the difference in my methodology for using the P/E ratio to your advantage. Jack and Jill Jack and Jill went up the hill to fetch a bucket of ?money. Money? They are continuing to fill their bucket with stocks without any consideration to the value of these equities. The Surgeon General The Surgeon General of the United States says that smoking cigarettes is harmful to your health. It is printed on every pack of smokes you buy.
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