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The Recession Doesn’t Affect Everyone

Just a short note today. If you think investments are off because of the recession, then think again. The United States and Europe, including the UK, may offer restricted scope for investing, but there are other parts of the world not so severely affected by the recession.

Among these are South America and South Africa. South America, especially Brazil and Argentina, has a lot going for it if you know which kinds of company to invest in. South Africa is different altogether, with its infrastructure, since the end of White rule, going to pieces, but with the award of the 2010 Football World Cup there are bound to be opportunities – and there are.

So look around and see what you can find, but be prepared to find the most promising trades in the furthest flung corners of the world.

More soon.

Philip Gegan

The Discount Futures Broker and the Regular Futures Broker

The discount futures broker is a relative newcomer to the financial trading scene. He came along in the early 1990s, when computers were on the march into more and more homes and offices, and were beginning to be linked together through the internet. Information technology was in the ascendant, and everyone had access to as much information as they wanted at the click of a mouse button, so it was going to be easy for us to use that development to trade successfully on the futures markets. Or was it?

Could the discount futures broker really help the average newcomer to financial trading make money on the stock market – something that the regular futures broker had been doing for many years? Let’s see . . .

The typical level of service provided by a discount broker is the old “execution only” advice, which was the cheapest option provided by regular brokers to clients who could not or would not pay the price of their higher level services.

With all the information easily available through the internet, and access to the stock market through the broker’s trading platform, the ordinary person could take a position on the future trend of the price in any stock or commodity, and trade accordingly.

This development, though giving us the freedom to try and increase our wealth through financial trading, invited people who could not afford to lose money, to place themselves in a position where they were in grave danger of doing just that. And in too many cases, lose money they did.

Contrast that with the situation before discount brokers came along. Regular brokers offered a range of services, depending on what the client could afford. At the top end the client’s portfolio was traded direct by the broker as if it were his own. At the bottom end the broker provided advice only when asked for it by the client.

Whatever level of service the client chose, the broker was always there with advice and information. Standards of service were generally high, and as a result clients enjoyed a much higher level of success than, generally speaking, they do now.

It was always treated strictly as a business, where the typical objectives were security of the client’s money in non-risky investments that would yield a reasonable return, with perhaps sometimes a small part of the portfolio placed in a higher-risk market with the potential for greater returns.

Now, with thousands of self-styled financial traders having come onto the scene (and frequently left it before long, poorer rather than richer) with a get-rich-quick mentality, risks are commonly taken that never would have been if the broker had been there to guide the way with a stock market trading strategy.

The truth is that the higher the level of service the client gets from his broker, the more likely he is to survive in the marketplace, and in most cases obtain steady, if not spectacular, returns on his capital. The regular futures broker comes in way ahead of the discount futures broker. The fees that have to be paid for this higher level of success are well worth it. If the newcomer to financial trading cannot afford to pay fees for advice from his futures broker, or for guidance from a recognised successful financial trader, then he really should wait until he can, and not throw his money away.

You can find your recognised successful financial trader on our home page. Just  complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading.

Philip Gegan

A Stock Market Trading Strategy That Actually Works

A stock market trading strategy is something you need above all else if you are to make it in financial trading. And what better one to use than the very strategy that’s used by successful financial traders.

But before you think about learning it, you may have to “unlearn” some of the things you’ve been taught about financial trading. This is especially true if you’ve been influenced by the “technical analysis” or “fundamental analysis” schools. Proponents of “fundamentalism” tend to be antagonistic towards the technical analysis school, and vice versa. But I believe this attitude is wrong.

Neither of these systems can claim to be wholly right, and neither is completely wrong. The successful traders take the best from each and distill it into a strategy that works.

Let’s take technical analysis first. The main trouble with it is the sheer number of indicators that you can refer to. You have moving averages, Bollinger bands, MACD, fibonacci, oscillators, volume, stochastics, relative strength index (rsi), and momentum, to name just a few. If you consulted all of them on each trade entry and exit then you’d find it hard to make any trades at all.

Whilst each indicator no doubt has value, as well as avid followers, you’ll find that the most successful traders only use the simple moving average. The settings may vary, but the principle is always to use a long moving average, say 200 days, for example, coupled with a short moving average of, perhaps, around 15 days. This tends to work best with longer term trades (which are easier to forecast correctly, anyway) rather than with short term or day trades.

Successful traders use charts and simple moving average indicators more as checks and balances rather than anything else. Their primary tool is market news and information, and simple observation of what is going on in markets, commodities and currencies.

It does take time for an online stock trader to develop the art of knowing when a particular market has reached its limit, whether on the upside or the downside (though there is a shortcut which I’ll come to in a moment), but when you see a price that is too high or too low for the market to bear much longer then you should check the graphs.

If you’re spread betting then set your stop loss level comfortably outside the limits of the price range over the last trading cycle, and bear that in mind when setting how much you bet on each point. You should risk no more than around 5 per cent of your betting bank, which, as you can see, should be substantial even for small bets.

If you’re dealing in options, warrants or exchange traded funds, then the same principles apply but you won’t have to worry about stop loss levels.

You’ll see from this that financial trading isn’t about getting rich quick (though successful traders do become rich before too long). It takes time for results, especially in the early days. And you should never trade just for the sake of it or because you feel you ought to. Watch the market patiently, and be prepared to swoop in like a bird of prey once you see an opportunity.

And the shortcut I mentioned just now? Find a successful trader who is prepared to teach you how to trade in this way. It may cost some money but it will repay you many times over.

Just go to our home page and complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading.

Philip Gegan

Online Stock Trading Software – How To Use It For Maximum Profits

Online stock trading software – it had to come, and it’s well and truly arrived now. You can even get “robots” that do all your trading for you – at least, that’s what it says on the box. But, whichever one you select to help you make trades, how exactly do you use it, and how much can you rely on it? Can you stop having to keep abreast of news and developments in the market?

Before we get into that, let’s check our priorities. And number one there must be to select one that is right for you. As someone seeking to be a successful financial trader, or investor, you should select one that gives you the information you need, without burdening you with masses of data that you’ll never get through. So, should it be one that is a “robot” or makes recommendations, or a simpler one that merely provides raw data, charts  and a few indicators?

I believe a simple program that nevertheless covers a large range of financial markets and instruments is ideal. Whether it comes from your broker or not isn’t so important, though probably a program independent of your broker is preferable. “Robots” and other programs that “suggest” trades are too unreliable for the serious trader. They are for games, not for putting your real, hard-earned money on the line.

The key point is this. All the successful financial traders use online stock trading software strictly as a supplemental aid to making trading decisions. Their actual trades reflect the information they obtain, not from this software, but from simply keeping abreast of developments and news in the particular market or markets that they specialise in.

And this is what I suggest you do as well. Copy the successful traders, and specialise in just a few markets. Get to know the company and its stock before you put money down on its expected price movements. Get to know the commodity, if you’re in commodities, and any production problems, what the likely demand is likely to be in a few months’ time, and so on. If you prefer international currency trading, study the currency pairings you plan to specialise in, get to know the state of the economy of both countries concerned, their prospects, their problems, and the way they intend to deal with them.

You can easily obtain this information from newspapers and magazines, and on the internet, from specialist web sites and forums. Once you start doing that, the charts and indicators you study relating to the same market will start to make sense. The wise beginner will resist the temptation to trade with real money at this stage, but will use a demo account or simply trade on paper until he is confident he has mastered that market and can predict what is most likely to happen.

Too many people trading for the first time make the mistake of thinking the software program they use can give them all the information they need to make profitable trades. Probably it can’t. There’s something else, and it’s not just research of the market that I mentioned above. But it is something your financial trading mentor can tell you.

You’ll find a strong clue in your free copy of my mp3 interview with Vince Stanzione, Secrets of Successful Trading. Get yours from OnlineFinancialTrading now.

Philip Gegan

What The Online Stock Trader Has To Watch Out For

Your career as an online stock trader is fraught with danger that is easy to avoid once you know how. Apart from the risk associated with every trade, you have to guard against a few hazards that crop up every week, and I’m not referring to reading the data or charts wrongly.

There are the little matters of your broker and your trading platform, and the tendency of traders to take them for granted. If you’re new to trading then to you these are usually simply “brokerage services”, i.e. the means by which you exercise your skills to make profits. They’re represented by nothing more than an inter-active web site you use to make and amend your trades, and perhaps to have access to reports, charts, and other information to help you make trading decisions.

Remember, though, that your broker is often on the opposite side of the equation to you as a trader. A regular broker, as opposed to a spread betting or fixed odds bookmaker, makes his money by charging commissions on your trades. These are frequently on a fixed price basis per trade. For example, when you purchase a covered warrant, it will be a contract that expires at some point in the future , usually the next few months. A commission will be payable when you first buy it, and also later on if you wish to “roll it over”, i.e. renew it for another period.

These warrants are issued at regular intervals on a huge range of stocks, indices, foreign exchange pairings and commodities. If it’s September and you consider, for example, that soy beans are set to increase sharply in price by March then you might want to purchase a call warrant that expires in March or April. Societe Generale, or some such finance house, may well have issued such a warrant, but your broker may not necessarily be offering it.

When you check your broker’s site, or even telephone him, he may offer you a contract that expires in, say, December. If you take that then in December he’ll give you the option to roll it over to March, giving rise to another commission charge that you have to pay him. So be prepared in such a case to ask specifically for the expiry date you want so as to avoid unnecessary charges.

The trading platform provided by most online brokers is invariably a minor miracle of technology and should normally present no problems for you as a trader. You should be able to see the prices in real time and to make your trade in just a few clicks of the mouse. The distinction between buying and selling should be clear, and you should be able to see your cash balance and portfolio value on the same screen, or at most with just one click.

As to the stock trading charts and indicators provided by brokers, these are usually basic and not sufficiently adaptable or wide-ranging for the serious trader. An independent program such as the renowned Sharescope is a must.

In summary, don’t necessarily rely on everything your broker offers you, whether by way of available contracts and prices, or services and facilities. And until you’re experienced enough to stand on your own two feet, always have a mentor such as Vince Stanzione to guide you through the maze.

Just go to our home page and complete the form for your free mp3 interview with Vince, containing a few of his Secrets of Successful Trading.

Philip Gegan