Trading Style
An important skill to learn is how to execute a trade with confidence with a trading checklist. One of the most common exercises of a retail day trader is to “pull the trigger” or entering a trade. You look at the days news, fundamentals and technicals and when you decide to open a position you simply call your broker or execute the trade online using your software or browser. Simple isn’t it? But have you has times when you got stuck between the decision making stage and the actual exercising your decision? Have you ever missed a trade because you hesitated, got cold feet or were simply indecisive at the time you needed to execute your planned trade?
You must be dreaming! Trading is inherently full of risks. There is no such thing as risk free trading. Or is there? If you start paper trading, or using a trading simulator you are effectively trading without risk. If you decide to go down that route remember to keep a trading journal to record your feelings and decisions. Trading on paper is not the same as trading with money on the line - even if you risk relatively small amounts of money.
So, you've decided to part with some of your cash and invest it into trading stocks. Share trading is like a business. Your primary purpose is to make a profit. You're not a charity freely giving money back into the markets. Like any successful business formulating a business plan, successful traders also need to have a well thought out trading plan. Remember the traditional goal setting maxims: Goals should be SMART: Specific, Measureable, Attainable, Realistic, Timely.
No one can go on trading at top speed all the time! Sometimes, you need to change gear and slightly push on the brake. Similarly, you cannot stare at the quote screen and focusing heavily on your trading all day. Take a breather and learn to relax. Learn to take time to relax from trading. You can learn to practice some yoga exercises that would prove to be beneficial to you. These would also help you to focus on your trading practices throughout the day. One of the most efficient techniques is take a long, deep breathe and hold it for 10 seconds.
Good trading is not enough to succeed in the markets. The secret to successful trading is in great money management. The skill of money management is required because the real business of trading is making money with money through controlling risk. And an integral part of great money management is a great risk management strategy. The heart of that strategy is the magic 2 percent. So why two percent?
There is a book out there about "Random Walk Theory". I haven’t read anything about it but I would presume that the book would shoot down any prospect of a predictable market theorem.
I've posted a new blog entry at Trading Critic. I look into the commonality between trading, religion and politics. Have a read of the preview:
If you aren't aware: there are stocks in the sharemarket that are very volatile and have their share prices double of halve in the short term.
There are stocks on the Australian Sharemarket that readily double or halve in value the short term. Better yet, there are traded financial instruments that are linked to the volatility of the larger valued stocks which also are highly volatile. The former are simply vanilla stocks. The latter example relates to derivatives, namely warrants and Exchange Traded Options (ETO's).
Yet another perspective on "risking a little or risking a lot": Quantity vs Quality trading...
Just a similar thought to last week's post with the forex trading case study discussing the issues of risking a little or risking the lot. Similar concept, just a different perspective or twist.
Are you a fundamental or technical trader? Which ever one you use for your share trading, I'm sure you've felt that the market has some sort of rhythm to it. Just as we know the cheapest days to buy petrol (here in Sydney) are Monday and Tuesday, can the markets reveal some sort of pattern?
- How to Trade Forex and Gold Options
- How to Trade the Gold Price and Profit!
- Forex Trading the EUR/USD Pair € EURO and $ US Dollar
- How to Trade Stock Market Indices S&P500
- How to Trade Crude Oil
- Forex Trading Psychology
- What Are Broker Recommendations?
- Free Tickets to Trading & Investing Seminar & Expo ($18) Brisbane 2013
- Stock Calc App
- All About Warrants
- Introduction to Exchange Traded Funds
- Introduction to Exchange Traded Funds: Features
- Introduction to Exchange Traded Funds: Domestic ETFs
- Introduction to Exchange Traded Funds: International ETFs
- Exchange Traded Commodities
- Australian Stock Scan
- Australian Online Share Trading
- List of Trading Books
- Interesting Thoughts about the Australian Dollar
- What's the Meaning of Hawkish?
- Do You Know How To Use the P/E Ratio
- Trading, Religion and Politics - Do They Have Anything in Common?
- Shares that are Volatile that Double and Half in the Short Term
- Telstra (TLS) T3
- Margin Call by E-mail
- The Cost of Holding a Position
- Lack of Disclosure: Compensation from ASX Listed Company
- Unrealistic Returns and Benchmarks
- CMC Markets Down
- Quality versus Quantity Forex Trading
- Woolworths 1H Sales $30.7bn up 3.2%
Date added 31-01-2013 - ASIC Fines CommBank's CommSec
Date added 25-09-2012 - Industry Super Network Calls to Ban High Frequency Trading (HFT)
Date added 22-09-2012 - NAB Launches Online Share Trading Platform
Date added 19-09-2012 - Reserve Bank of Australia Says 23 Countries Holding AUD
Date added 18-09-2012 - Australia Post Digital Mailbox
Date added 10-09-2012 - Winners and Losers of Trading for Week 2
Date added 16-01-2012 - 2012's First Week of the Best and Worst Traded Stocks
Date added 09-01-2012 - 2011's Last Best and Worst Traded Stocks
Date added 05-01-2012 - Best and Worst Pre-Christmas Traded Stocks
Date added 30-12-2011 - Trading Winners and Losers for Dec. 12-16
Date added 19-12-2011 - Best and Worst Traded Stocks for Dec. 5-9
Date added 13-12-2011 - Top 3 Best and Worst Traded Stocks
Date added 05-12-2011 - ASX Glitch Trading Halt
Date added 27-10-2011 - Worst Trade Stocks (and the Best)
Date added 06-08-2011
Top 150 Public Companies Listed on the Australian Stockmarket as at 29/05/2009
- BHP Billiton
- Westpac Banking Corporation (WBC)
- Commonwealth Bank of Australia (CBA)
- National Australia Bank (NAB)
- Telstra (TLS)
- ANZ
- News Corporation (NWS)
- Woolworths Limited(WOW)
- Woodside Petroleum Limited (WPL)
- Rio Tinto
- Westfield Group (WDC)
- Westfarmers Limited (WES)
- QBE Insurance
- CSL
- Newcrest Mining Limited (NCM)
- Origin Energy Limited (ORG)
- Santos Limited (STO)
- AMP Limited (AMP)
- Macquarie Group (MQG)
- Foster’s Group Limited (FGL)