My trading Rules

> Be patient—wait for the opportunity.
> Trade on your own ideas and style.
> Never trade impulsively, especially on other people's advice.
>Don't risk too much on one event or company.
> Stay focused, especially when the markets are moving.
> Anticipate, don't react.
> Listen to the market, not outside opinions.
> Think trades through, including profit/loss exit points, before you
put them on.
> If you are unsure about a position, just get out.
> Force yourself to trade against the consensus.
> Trade pattern recognition.
> Look past tomorrow; develop a six-month and one-year outlook.
> Prices move before fundamentals.
> It is a warning flag if the market is not responding to data correctly.
> Be totally flexible; be able to admit when you are wrong.
> You will be wrong often; recognize winners and losers fast.
> Start each day from last night's close, not your original cost.
> Adding to losers is easy but usually wrong.
>Force yourself to buy on extreme weakness and sell on extreme
strength.
> Get rid of all distractions.
> Remain confident — the opportunities never stop.

Happy Trading :)

teejay...

Investing in Stocks is not Gambling

• Gambling transfers wealth from a winner to a loser because it produces nothing. Investing increases overall wealth because the capital invested in stocks provides the initial funding for firms which exist for the purpose to producing goods and services.
• The value of stocks trends steadily upward over time. They do not seesaw back and forth in the same range forever. In the aggregate, stock investors demand and receive a return that is substantial and permanent.
• In gambling that longer duration you stay more the chances of you loosing whereas in Investing the longer you stay invested more you will earn. :)
  

Five Golden Rules For Traders

1. Invest in the direction of the Trend!
The fastest and most risk free way to make money in the markets is to identify a change of trend in the market as early as possible, take your position, ride the trend and close your position shortly after the trend reverses.
Any market professional will tell you that it is impossible to buy at the lows and sell at the highs (or sell at the highs and buy at the lows) consistently, but it is very possible to catch 60 to 80% of much intermediate term and long term market movements.

2. Cut Losses Quickly.
In order to keep investing, you must preserve your capital. It is therefore important to keep the individual losses small in relation to the overall size of your investment. Always put Strict Stop Loss.

3. Let Profits Grow…
Stay with profitable trends as long as possible because the trend is likely to continue and make your profits even larger.

Let profits run while still guarding against the possibility that prices will turn around and take away much of your accumulated profits before the trend actually reverses. It is called a "trailing stop loss". This "Trailing Stop Loss" level is always some distance behind your trade. As long as the trend keeps moving in your favor, you stay in the trade. If the market reverses direction by the amount of the "Stop Loss', you exit the trade at that point.
Thus the "Trailing Stop Loss" will always protect your profits by insuring that you keep 80% to 90% of the accumulated profit.

4. Diversify.
Spreading your risk between different securities across different sectors reduces your odds of losing your entire capital on a single stock or industry sector.

Diversifying across different sectors is important because when the economy is digging itself out of recession, certain sectors whose profits are particularly enhanced by falling interest rates put in their best price performance. Then as the economy moves into the terminal recovery phase, the outperforming issues start to decline, but the market averages are buoyed by previous under performing issues, which thrive in this kind of environment.

5. Manage Risk.
Risk Management Strategy covers the most important element of managing risk by keeping your losses as small 1% of your trading capital.

Risk management Strategy ensures that you as an investor can continue to invest in the markets even after a couple of incorrect decisions. In fact if you follow "risk management strategy" you can continue investing in the markets for as long as you live. You will never ever have to worry about losing your entire trading capital.

Happy Trading!!! :)

Undersanding Charts: Profitable Pattern #1

The Symmetrical Triangle: A Reliable Workhorse

You'll recognize the symmetrical triangle pattern when you see a stock’s price vacillating up and down and converging towards a single point. Its back and forth oscillations will become smaller and smaller until the stock reaches a critical price, breaks out of the pattern, and moves drastically up or down.

The symmetrical triangle pattern is formed when investors are unsure of a stock’s value. Once the pattern is broken, investors jump on the bandwagon, shooting the stock price north or south.

To form your symmetrical triangle pattern, draw two converging trendlines that bound the high and low prices. Your trendlines should form (you guessed it) a symmetrical triangle, lying on its side.

How to Profit from Symmetrical Triangles

Symmetrical triangles are very reliable. You can profit from upwards or downwards breakouts. You’ll learn more about how to earn from downtrends when we talk about maximizing profits.

If you see a symmetrical triangle forming, watch it closely. The sooner you catch the breakout, the more money you stand to make.

Watch For:

• Sideways movement, a period of rest, before the breakout.
• Price of the asset traveling between two converging trendlines.
• Breakout ¾ of the way to the apex.

Set Your Target Price:

As with all patterns, knowing when to get out is as important as knowing when to get in. Your target price is the safest time to sell, even if it looks like the trend may be continuing.

For symmetrical triangles, sell your stock at a target price of:

• Entry price plus the pattern’s height for an upward breakout.
• Entry price minus the pattern’s height for a downward breakout.

to be continued.... :)

Stock Market...

If you let the ups and downs of the stock market run your life, you should not be an investor. The number one control you must have to be an investor is control over yourself. If you cannot control yourself, the highs and lows of the market will run you and you will lose during one of those ups or downs. The number one reason people are not good investors is that they lack control over themselves and their emotions. Their desire for security and comfort takes control of their heart, their soul, their mind, their view of the world, and their actions. As I said, a true investor does not care which direction the market goes. A true investor will make money in either direction. So ‘control over yourself’ is the first and most important control. Got it?”

Investing..

When it comes to investing, most investors never read the financial statements of the company they are investing in. Most investors would rather invest on a hot tip or a low price or high price, depending upon the momentum of the market. Most people get their cars tuned up and check out annually, or have an annual health physical, but most people have never had their financial statements analyzed for flaws or potential future problems. The reason is that most people leave school unaware of the importance of a financial statement, much less how to control one. Small wonder why so many people say investing is risky. Investing is not risky. But not being financially literate is.

“Many investors are like a family taking a drive in the country. Suddenly, on the road ahead of them appear several large deer with massive horns. The driver, usually the male of the household, shouts, ‘Look at the big bucks.’ The bucks instinctively bolt from the road and onto the farmland alongside the road. The driver veers the car off the road and begins chasing the big bucks across the farm and into the trees. The ride is rough and bumpy. The family is screaming for the driver to stop. Suddenly, the car goes over a stream embankment and crashes into the water below. The moral of the story is that this is what happens when you stop following your simple plan and begin chasing the big bucks.”