I came across a funny version of stock market terminology. Thought I’d share.

STOCK – magical piece of paper that is worth Rs 1000 until the moment you buy it. It will be worth Rs 200.
BOND – What you had with your spouse until you invested in the stock market.
BROKER – The person you trust to help you make major financial decisions. Please note the first five letters of this word spell BROKE.
BEAR – What your trade account and wallet will be when you take a flyer on that hot stock tip your friend gave you.
BULL – What your broker uses to explain why your mutual funds tanked during the last quarter.
MARGIN – Where you scribble the latest quotes when you’re supposed to be listening to your manager’s presentation. Read the rest of this entry »

Three tips I use when buying dips:

1. You need to have a plan. Having a plan for each stock you enter is always wise. Find trades that can give you atleast triple what you’re planning to risk. Know when you want to sell your shares if the dip turns into a downturn. Once you reach your level, sell! Sell your entire position immediately.

2. Support. Seek support. You can see this on a chart when a stock pulls back to a price before trading range or its previous low, or a pullback to a key moving average within an uptrend. If in an area of recent support you see higher lows are in place, it means people are watching and the stock should stay afloat.

3. Enter and exit in pieces. You don’t need to go all the way in on a dip. Partial buys as a stock returns to support zone are best. This way if the pull back continues you won’t be ripping your hair out. If you see the stock with buying interest after a partial buy, you can start buying more. Once you see others have invested with you, take a chunk and sell off a little. Get out in pieces just the way you got in.

We all know what cash is, the stuff we have in our wallets and pockets.

But there is a different way to look at cash in the market.

This is when you invest in things like money market funds, treasury bills, and overnight government repurchase agreements.

Usually found in 401(k) plans there are stable value funds that can be a shorter term investment.

Here are three reasons to make a cash investment position a part of your plan:

One reason is flexibility.

You are able to benefit from opportunities if you have a percentage of your portfolio in cash. Read the rest of this entry »

Here are 2 simple rules to trading to keep your safe. 

Do not begin to explore the markets or even invest if you cannot follow a rule.
 
Using the following rules could help you in the market:
 
1. Invest your capital wisely.
 
Do not expect to get rich quick by investing all your money into one stock.
 
Enough knowledge and a small amount of capital can make you a lot of money in ten to twenty years.
 
Be conservative with your investments and don’t gamble like a wild man. There are so many opportunities in the market. You have to speculate and explore which opportunities are worth taking and to not plunge in completely.

If all your money is invested into one opportunity, what happens if that opportunity does not work out? You miss the next opportunity just around the corner. Read the rest of this entry »

First off here is a formal definition for a Stop Loss Order. An order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor’s loss on a security position.

So if you place a stop loss order 15% below the buy price that would limit your loss to 15%.

Using a stop loss is a little more complicated than just placing an order. Blindling placing a stop loss 5-10% your buying price is useful in some situation but could cause you to take uncessary losses at time.

The first thing you must determine is daily range the stock makes, if a stock usually has a tendency to drop .50 each day and come back up you will want to place your stop loss below this price so that you’re not prematurely stopped out.

Second you must look at the the resistance and support level on a stock. If a stock has bounced off a certain level 2 times it’s possible it will bounce off this level again. You will want to place your stop price slightly below this level, so that if the support level fails you will get out of the stop. Read the rest of this entry »

I’m always searching for great traders and to learn a little about their strategies. Recently I had the opportunity to do a short email interview with a trader from South America who had made $50k in just one month.

He considers himself a trend and basket trader. Here is how it went:

Q: Can you tell me alittle about your trading strategy?

A: I am scalper or sometimes position day trader so I like looking trend stock and add size (pyramid) but when I find a good trend day I am a basket trader.

For example, I will be buying a basket of serveral stock of 100 shares and if it goes good so i will buy other 100 …..

Q: Lets say you find a good trend and you buy a bunch and it goes up and you buy some more, when do you feel like you will take profits and if it drops where do you take losses at?

A: I like technical analysis so I look chart SPY or Dow and trade with them. Sometimes if its strong day I let it run till the close , or sometimes I look for target level of spy.

For Stop I use technical, sometimes I have an amount dollar of stop or level of spy or dia.

The last month some days I bought or sold baskets the last 10 minutes of market, strong or weak day.

For example a basket of 60 position of 600 shares.

I get hundreds of emails a day from members, and a common question is “I have 10k what stocks should I buy?”

This is an impossible question to answer and the people asking probably shouldn’t be investing. Let me explain why.

If you’re a new investor and you want to put money to work you need first need to answer a few questions.

What is my risk tolerance, this basically means how much are you willing to lose. More risk tolerant investors can make concentrated bets on more volatile stocks, and those conservative players will want to diversify their accounts into slow moving stocks.

What is my time horizon? This means how long do you want to be in a stock. When do you expect your investment to reach it’s objective. Long term investors will want to focus more on fundamentals while short term investors will look for momentum stocks.

What is my objective? Setting a profit target will determine the type of stocks you want to buy.

Once these questions are answered then I can give you my best opinion.