Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Recommended Posts

Good Morning All:

 

For the next three weeks, I will be looking at things that beginning traders should know as they start this business. Don't be surprised however, if some of you moderately experienced to very experienced traders don't find a few interesting tidbits; Even if they serve as nothing more that review.

 

A Beginner's Handbook Part 1 of 3

 

Welcome to trading. Are you new to this field? Or is it called online stock buying? Or is it day trading? Or is it investing? Well let's get a few terms straight. This will be the first of a three part series, "A Beginners Handbook".

First, at Pristine, we consider 'buy and hold' something that is no longer a term that should be applied to the stock market. Do this if you like in real estate, bonds, gold, but not stocks. It implies a long-term buy and hold with your eyes closed approach that should no longer be used in the stock market. The term 'investing' is fine as long as it does not mean 'buy and hold'. There is nothing wrong with long term holds. We believe in swing trades and core trades that could last for months or years in some cases. However, they are 'managed'. As traders, we do not close our eyes hoping all will be all right. Traders are educated in technical strategies and discipline. They become self-sufficient

Most of today's large cap companies are in the technology area. These companies are subject to having their main product replaced by a new technology very easily. Long ago, it required many years for any company to start up a new car company and over take General Motors. Today, anyone can create software in their garage that can revolutionize how something is done and put a competitor out of business. Look at the company Iomega, for example. They are the makers of the infamous zip drives that appeared on computers years back. The current technology at the time was storing information on 1.44 meg disks. They came out with a system to store 100 megs on a disk, and got contracts to put their drive on every major computer. Sounds like a company you can buy and hold forever, doesn't it? It is, until someone discovers that the same information can go on a CD and have it cost much less. At that very moment in time, literally overnight, Iomega is out of business; unless it has other products to sell. The rule is 'change or become extinct'. This example is found over and over again in everything from video sales to computer chips.

When practicing 'buy and hold' (as opposed to long term trading), you are relying on news and announcements and fundamental data. Many of you have probably already discovered how worthless this process is. To the extent it has a valid use; it is never to take the news or information at face value. Take a look at Amazon's recent earnings. You can look wherever you want, the comments were the same. "Results from Amazon (AMZN) ... also disappointed the Street".

 

 

 

If you are relying on news to make decisions, it must be time to get short AMZN, right?. However, take a look at what happened after the dismal report was out. There was no other news. Those of you that already know this see this happens all the time.

 

GetChart.aspx?PlayID=66879

 

So if 'buy and hold' is out, what do we do? You hear stories all the time about all of the 'day traders'. You look around you and you don't see many. You may not even know any besides yourself and those you met at a seminar. Unfortunately, the term 'day trading' is often misused by the media. There is a large group of people that we call 'online investors'. These are the folks that use their computer in place of their telephone to call places like E-Trade, Schwab, etc. and place their orders. They are typically managing their savings or IRA money, and are typically untrained. They were plentiful during the bull run of the 90's, and often were wrongly called 'day traders'. They did not need to be trained because they made money buying stocks in the late 90s no matter what they did.

 

Most of them are all gone now.

 

We consider our selves 'traders', but this does not include the much larger group of 'online traders' mentioned above. Traders use technical analysis to find, enter, and manage trades. That applies to long or short term trades. Those that are focused on trading and exiting by the end of the day with that account are called day traders. We consider traders people who spend a good part of the day with the market. Those who are trained to manage positions that may last from several minutes to several months. While we believe that 'buy and hold' is a dead term, we do use many time frames to hold stocks, the longest of which is a 'core' position. While a core positions may last for months (or years), it differs from investing because there is an exact exit strategy planned for a core position. We also use a 'swing' time frame. This is one that may last from 2-5 days. We also use tactics that would have us holding a stock overnight one time, or exiting the same day. Sometimes exiting part of a position only minutes after entry.

 

So if you are going to trade, how do you buy stocks? If you are trading only a few trades a week, and limiting yourself to swing and core trades, using on of the 'online brokers' is fine. The time it takes to have your order filled is not very fast, but for occasional long-term trades it is acceptable. If you are going to be trading more often, or trading in and out the same day, you will want to use a 'direct access' broker. This is a broker that lets you see all of the market participants, where they are buying and where they are selling. You then place your own order on your computer screen and many of these orders will have instant executions. By instant I mean instant, usually within a fraction of a second. If you need a broker, or not happy with your current broker, consider Mastertrader.com. It has the best rates and service, a variety of platforms, and you earn points to use at Pristine for services and seminars.

 

So, you know what you want to do, and you have selected a broker. Now you need a computer and an Internet connection. Again, for occasional swing and core trading, any machine that can access the Internet will do. If you are going to be active intraday, you will need to have something better. You will need a computer that is competitive with the current top of the line computer, or is at least current with the technology within the last 12-24 months. You will want a fast Internet connection. You need to be looking at Cable, FIOS, Satellite, or T1-3. Depending on where you trade, you will have to evaluate which of these is available and most effective for your money. You will need to have a working knowledge of computers, as your time with the computer will be extensive whether you want it to be or not.

 

So now you are ready to trade, right? Well, no not really. The biggest distinction I made earlier was that 'day traders' are educated in trading strategies and disciplines. This will be the focus of the next Lesson, how to start out trading when you have no education or experience in trading. I will discuss how to build that education as you go, without using up all of your capital.

 

Closing Comments

 

There is perhaps no greater occupation to have than that of a professional trader. Yet, few achieve that title. Few achieve, even thought thresh hold is not that high. In terms of cost and education, most anyone is capable. You have to set yourself apart, and be different. That is part of what we will talk about next week. Until next week, good trading.

 

Paul Lange

Vice President of Services

Pristine Capital Holdings, Inc.

pristine-logo-small.jpg

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Similar Content

    • By Stocks4life
      $CDLX Cardlytics stock good buying at 29.29 support area https://stockconsultant.com/?CDLX

    • By jfw215
      Hi folks,
      I will be posting my stock setups that I will be taking from 1:30p to 4p EST M-F. My trading is heavily influenced by Thalestrader, who has left a treasure trove of knowledge here at TL. My stock setups will target gapped stocks (S&P 500 constituents priced over $20) that consolidate and continue in the direction of the gap in the afternoon. Entries will include 123s and pullbacks to the 5 min 21 EMA. Please note I am currently on demo mode.
      I believe the keys to success in trading are really just a few simple things:
      Embracing the probabilistic mindset, which includes taking every valid setup regardless of how I feel about the outcome and not changing strategy based on recent results. Cutting losers quick and letting winners run.  Unconditional self love and acceptance. This is probably the most important thing and the ONLY secret there is. By being ok with making mistakes, being wrong, taking losers, giving self money, one can finally learn to trade without fear. This is probably where most people take the most time to learn (10 years for me). Here we go. Blue line denotes entry, red line are my stops adjusted to as close to real time as possible. 
      Today: -41c, +13c, +0
       
      Best,
      J
       
       
       
       


    • By lebnooni
      Hello I am interested in starting day trading, I have been trading the last year in long term investing but lately I have been getting really interested in day trading. I am from Canada and would like some pointers on where to start and what softwares, screeners, platforms etc to use here in Canada. Thanks in advance!
    • By fuqs
      Let's assume I was able to imply dividends from liquid options for the next 3 years, but I want to price an option expiring in the 4rd year from now. How would practitioners normally extrapolate implied dividends? From what i've observed there is a significant risk premium in implied dividends far out (implied divs are sold at discount). Actually the dividend term structure is declining. Therefore probably it makes more sense to extrapolate implied dividend rather than historical growth
    • By ritika1124
      Want to explore world of stock and commodity market
  • Topics

  • Posts

    • Date: 29th March 2024. GBPUSD Analysis: The Pound Trades Higher But For How Long? The global Stocks Markets are closed due to Easter Friday (Good Friday). The NASDAQ continued to follow the sideways trend while other indices again rose. The SNP500 reaches an all-time high, but the NASDAQ remains under pressure from Tesla, Meta and Apple. The Euro continues to trade lower against all major currencies including the US Dollar, Euro and Japanese Yen. The British Pound is the best performing currency during this morning’s Asian session. However, investors are largely fixing their attention on this afternoon’s Core PCE Price Index. GBPUSD – The Pound Trades Higher but For How Long? The GBPUSD is slightly higher than the day’s open and is primary due to the Pound’s strong performance. At the moment, the British Pound is increasing in value against all major currencies. However, the US Dollar Index is also trading 0.10% higher and for this reason there is a slight conflict here. If investors wish to avoid this conflict, the EURUSD is a better option. This is because, the Euro depreciating against the whole currency market avoiding the “tug-of-war” scenario. The GBPUSD is trading slightly lower than the 2-month’s average price and is trading at 49.10 on the RSI. For this reason, the price of the exchange is at a “neutral” level and is signalling neither a buy nor a sell. The day’s price action and future signals are possibly likely to be triggered by this afternoon’s Core PCE Price Index. Analysts expect the Core PCE Price Index to read 0.3% which is slightly lower than the previous month but will result in the annual figure remaining at 2.85%. The PCE rate is different to the inflation rate and the Fed aims for a rate between 1.5% to 2.00%. Therefore, even if the annual rate remains at 2.85%, as analysts expect, it would be too high for the Fed. If the rate increases, even if only slightly, the US Dollar can again renew bullish momentum and the stock market can come under pressure. This includes the SNP500. Investors are focused on the publication of data on the UK’s gross domestic product (GDP) for the last quarter of 2023: the quarterly figures decreased by 0.3%, and 0.2% over the past 12-months. This confirms the state of a shallow recession and the need for stimulation. The data, combined with a cooling labor market and a steady decline in inflation, increase the likelihood that the Bank of England will soon begin interest rate cuts. In the latest meeting the Bank of England representatives did not see any members vote for a hike. USA500 – The SNP500 Rises to New Highs, But Cannot Hold Onto Gains! The price of the SNP500 rises to an all-time high, before correcting 0.33% and ending the day slightly lower than the open price. Nonetheless, the index performs better than the NASDAQ which came under pressure from Tesla, Meta and Apple which hold a higher weight compared to the SNP500. For the SNP500, these 3 stocks hold a weight of 9.25%, whereas the 3 stocks make up 14.63% of the NASDAQ. The SNP500 is also supported by ExxonMobil’s gains due to higher energy prices. The market will remain closed on Friday due to Easter. However, the market will reopen on Monday for the US and investors can expect high volatility. Investors will also need to take into consideration how the PCE Price Index and the changed value of the US Dollar is likely to affect the stock market next week. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • MT4 is good and will be good until their parent company keep updating the software, later mt4 users will have to switch to mt5.
    • $SOUN SoundHound AI stock at 5.91 support area , see https://stockconsultant.com/?SOUN
    • $ELEV Elevation Oncology stock bull flag breakout watch , see https://stockconsultant.com/?ELEV
    • $AVDX AvidXchange stock narrow range breakout watch above 13.32 , see https://stockconsultant.com/?AVDX
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.