1) A solid, back-tested Methodology that the trader has confidence will provide an Edge
2) A customized trading Plan that is objective and in alignment with the Edge (and not the guitarist)
3) An Positive, Realistic, and Fearless Mental Approach

All 3 are critical. If you just have one, or two, you will not gain the consistency you are looking for. The key point is that all 3 are not on the same ‘level’, if you will, for lack of a better term. Let me explain.

The metaphor I came up with to describe this is that of a bicycle. Picture the front tire as the Edge…the back tire as the Plan. Now, you have a wonderful looking bike! However, the 3rd piece, your Mental Approach, is the actual movement or motion of the bike going forward – that is, it is YOU on that bike and providing the energy to propel it forward.

Let me clarify. You can have a beautiful, shiny new bike sitting in your garage, but it does no good unless you get on it and ride it…which is the purpose of a bike. So there is an inter-dependency here. You can have a bike (Method and Plan) but that doesn’t mean you are going anywhere. All that means is you own a bike.

However, for you to get on and ride that bike (Mental Approach) means that the bike must exist (Method and Plan). So, if you have a Positive, Realistic and Fearless Mental Approach it follows that you must have a Method that is sound and a Plan that is sound, otherwise you wouldn’t have the right Mental Approach! It’s impossible to have the right mental approach without the other 2.

Because any moron with a detrimental mental approach can get on a deathtrap for a bike and will most certainly be riding off to financial catastrophe in this game we call trading and investing.

Therefore, it is absolutely imperative that building the right Mental Approach is on your ‘to do’ list. In fact, it should be FRONT AND CENTER. You can work on that in parallel with your Method and Plan, and as you gain experience in the market.

Without a winning attitude and the right Mental Approach one can use the soundest of all methods and still lose money. Why? Because if your Mental Approach is off, you will find a way to mess up even the soundest of investing strategies and plans! Trust me… In fact, I’d be willing to bet that 99% of you reading this who have traded for any length of time before have done it!

Monitor the attitude of a winner and you will find a level of confidence and certainty that is rock solid. Most people assume that winners are confident and certain because they win. That’s not true.

Winners win consistently because they ARE confident and certain. No method, however sound or special, will work for any trader who mentally pictures themselves losing. We must CHOOSE a winner’s mindset.

You can never fail without your permission. You can’t feel like a loser or failure without your permission. No one or no trade can make you feel anything. No market maker, talking head, politician, spouse, enemy, friend can make you feel any way. You decide…although most of the time subconsciously…but you DO DECIDE.

With each day, all you are experiencing is experience itself and you can choose to call it a loss, a failure, an error, a lucky win, a screw-up…but let me offer something else…

Why don’t you call it a ’stepping stone to trading mastery’? Or another ’step to your goals’? Realize that attaining any goal is simply taking action, monitoring results, then making corrective actions to get you closer to your target.

Copyright (c) 2011 RevolutionaryTrading,LLC

http://www.tomwillardtrading.com – Tom is an avid day trader and investor. Over the past many years, Tom has been a leading educator, coach, mentor and live trading room moderator for traders and investors. He has authored DVD material and many articles about trading psychology and investing techniques. He has also had the privilege of instructing 100’s of traders and investors in live seminars.

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It is been rightly personified as- just a click away!

Gone are the days when trading in stock or mutual fund was done by physically placing an order. With internet, investing has become so lucid and at the same time easy and simple. By way of online investment, it has become possible to do away with the need to pay a visit to your stock broker.
So, the next question arises.

How is investment done online?

Online investment is very easy to perform but the initial step is the most critical of them all, to choose a trustworthy online brokerage firm. These online brokers have also been christened as discount brokers as they are a tad cheaper than the traditional stock brokers. It is essential to do a detailed examination before selecting an online broker. The stockbroker that you have chosen after deliberating thoroughly must have a valid license.

A few Examples of investing online,

A stockbroker will arrange for an online trading platform that will act as a trading floor, albeit virtually. Your requirements, whether to sell or buy, are placed on the given platform. After choosing the stockbroker and ensuring the readiness of the trading platform, it is essential to carry out an examination of the sections in which you propose to trade. A comprehensive study of the share market fundamentals and portfolio analysis are essential to articulate an active approach to reach a thorough investment choice. After that orders can be positioned online as these are channeled through the stockbroker to the stock exchange. Routing your orders via a stockbroker is always prudent as it simplifies order, brings transparency and integrity in the trade.

Online investment can be done in various financial instruments. For instance, Forex, Mutual Fund, options, securities etc. Online, one may find many techniques and tools at the disposal of the investor with regards to tracking of the securities, indices and portfolios. Majority of online trading platform providers also offer options like telephonic placing of orders or by fax. These facilities are provided for those customers who do not have internet connection or are on the go and want to buy/sell stock.

It’s true that one can do online investment in a matter of minutes but a word of caution is warranted, be absolutely sure and clear about your investment objectives and also be well aware of the risk element involved while doing so.

Nisha Dixit is an expert writer of finance sector and here providing information about online investment. DSP BlackRock is one of the leading and award winning fund houses in India provides facility to invest online in mutual fund

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What is a Covered Call?

In it simplest terms, it is where you own some stock and sell an option to someone else to buy that stock at a specified strike price to generate some income.

What is Buy-Write?

Buy-Write is another name for Covered Call. The transaction is slightly different in that you are buying the stock at the same time you are selling an option to sell the stock.

How Does it Work?

To make it easy to explain in the following let’s say that you already own 1000 shares of company ABC stock and its current price is $25.76 per share, you have no plans to sell the stock, but I am not overly concerned if it does get sold out from under me.

You will look at the options chain for a strike price above the current stock price, usually in the next month and sell the option.

I prefer to look at the next $5 increment to see if it will generate enough income somewhere in the range of .75 – 1.25. Here’s a bit of caution. The closer the strike price you pick to the current stock price, the greater the chance of the stock getting sold out from under you if the stock price starts moving upward very fast.

For arguments sake; say we found a September 30 that is paying .75 per contract. We own 1000 shares of ABC stock so we can sell up to 10 contracts against it.

How do I Make Money

If you sold 10 contracts of ABC stock for 75 cents, you would generate an income of $750 within the time frame of the option you sold. Usually 1-2 months. This is approximately a 3% return on investment. Ex: $750 / (1000 shares x $25.76) = .03 or 3%.

On expiration Friday, you do nothing, just let the expiration expire. This way you keep the entire $750 (excluding any commissions and fees).

Providing the stock price never exceeded the strike sold, or the option was not exercised, you can now repeat this same trade for the next month and so on.

What Happens If the Stock Price Rises Above the Strike Price Sold?

The option will be exercised (stock sold) at the strike price of the option sold and you will keep the amount gained from the option sale plus the difference between stock entry and exercise. Here is an example:

* Bought 1000 shares of ABC for $21.62 ($21,620)
* Sold 10 option contracts of Sept/$30 for $750
* 1000 shares of ABC exercised at $30.00 per share ($30,000)
* Your gain: $30,000-$21.620 + $750 = $9,130

Remember at this point, you no longer own the stock.

What Happens If the Stock Price Starts Dropping?

You do nothing, let the option expire and keep your premium from the option sold. Now you have decision to make, do you still want to keep the stock?

Over the years I have traded covered calls many times and use this as one method to generate income. If you own stock you might as well make some money from it, particularly if you are not married to it. (Don’t want to risk selling it.)

Happy trading…

Chuck Ainsworth
http://articlesbychuckytrader.com

For more information on a great product to help you with online options trading visit my website at http://www.chuckytrader.com/wizetrade/. With Wizetrade Options you will have the charts and manual control to support all your trading needs.

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It is not difficult for a novice to get valuable tips and advice on the internet. There are many e books, articles in ezines, expert articles and on financial websites like ‘investopedia.’ These articles are written by trading experts. Online trading is about gaining and losing money and learning is the key to mitigate one’s losses.

Considerations to keep in mind before trading online are that the internet is a vast resource of knowledge. However, the internet is also a place where anyone can upload any information. Double checking the tips and advice with two or three websites will ensure that the tips are followed by more than one expert. All tips that are followed must be well considered and reasoned.

Attempting to trade with real money and absolutely no experience is a mistake. There are many websites that simulate trading platforms where novices can trade without using real money. This is the best way to learn online trading without risking money. This will help to clearly understand strategies and methods of trading safely when investing real money.

While exploring tips and advice, a beginner can learn the finer points of trading. These finer points include how to identify trends, understand indicators and simple moving averages, the trends of the stock over a period of time, and how to time the entry and exit while trading.

There are great potential profits in online trading for the prudent and the patient. Investing small and learning as you earn is the best advice for online trading. Keeping a budget at all times and refusing to budge from the budget is another valuable tip. Experimenting with different strategies and working with the strategy that offers the best profits is another valuable tip to follow while trading online.

Experts believe that while tips and advice on online trading available on the internet promise great profits to potential online traders, a trader will have to learn by trial and error. Following tips and advice are not a shield from risks and the consequences of possible loss of money however; they are a sword which arms the trader with prudence and diligence to withdraw before making a huge loss. Experts advise potential online traders to use simulators to the best advantage. Traders should start trading using real money only after at least ten successful simulated trades. The first account should be with a discount broker who will charge low fees and have less hidden charges.

Tips and advice e for online trading are valuable to novice traders who are learning the trading ropes. Following tips and advice from reputed websites helps traders to make intelligent and often profitable choices while trading online.

Additional Resources: TradeKing Broker Review and Comparison | Personal Finance Blog

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With international stock trading, you can easily invest or sell your shares of a business without worrying about any political or national boundaries. They are though some restrictions on international trade, but they are not usually a problem for an average investor. Many big companies or governments are trying to encourage foreigners to invest in their stocks. Sometimes, the market of investors is too small for a certain region so if a business wants to expand or thrive, they have to rely on outside money and funding.

There are some drawbacks of international investing such as higher brokerage fees and international earnings taxation. However, by using an online brokerage account and hiring a good accountant these problems are easily solved. Many new international investors also struggle with the time differences around the world, but it doesn’t take too long to adjust to the difference!

International stock trading permits people from all over the world to exchange and purchase share of a company across continents and boundaries. Without it, several corporations could go bankrupt or be in jeopardy. Although very present in society, international stock trading will continue to expand until, most likely, you can freely trade without any restrictions if you are an individual investor.

Find and compare the BEST international stock trading services at the authors stocks website by clicking here

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The Bullish View

Abby Joseph Cohen, the Goldman Sachs senior market strategist, said yesterday that “We do think the new bull market has begun.” The Wall Street Journal says she is calling for the S&P 500 to reach 1050 to 1100, based on an improving economy and corporate profits.

The Bearish View

On the other hand, Paul Tudor Jones, celebrated hedge fund manager, has a decisively different outlook. He categorizes the rally off the March 6th lows as a “bear market rally.” As reported in the CNBC Stock Blog, the Tudor Investment Corp. sent a letter to clients saying, “The bottom line is that we are not inclined to aggressively chase the market here. ”

The Dilemma

How does the average trader reconcile two fundamentally divergent predictions from two recognized experts in the industry?

The best answer to this dilemma is to accept neither expert prediction, but to rely on your assessment of the markets.

Expert Predictions are Usually Wrong

We know from numerous studies that expert predictions – particularly predictions about the future behavior of financial markets – are usually quite inaccurate. Enlightening studies from behavioral finance have had expert panels give forecasts of a wide array of financial metrics and economic indicators. In most instances, the expert panels were off by a significant margin. In one study, the expert panel actually did worse than students.

It reminds me of the WSJ article that surfaces periodically comparing expert stock managers against dart throws. Guess who usually wins!

Listening to expert opinion runs contrary to good trading and good trading psychology. Based on the evidence, the odds of winning with expert opinion is low, perhaps exceedingly low.

How it Affects our Trading Psychology

Although we all like to be right and may believe that others must know more than we do, when it comes to the markets, this is just not true. When we listen to others we are affecting our own trading psychology in negative ways. We are relying on others to make decisions for us, rather than on our own knowledge, skills, and abilities. Trading is a game of independence; listening to expert predictions leads us into an unhealthy dependency that keeps us from developing sound trading skills.

What you can do

Expert predictions are just more of the noise of Wall Street. It’s really best not to listen. Instead, ask yourself what would it look like for the market to begin falling back into a bear market? What would it look like for the market to continue the current rally? Develop your own understanding of bear and bull moves and then put yourself into the position of being able to anticipate (rather than predict) both. If you spend time anticipating what both would look like, you will be in a position to act appropriately when you see one or the other occur. This, and not following an expert, will help you develop a true psychological edge for trading the markets.

Keeping current with advances in the field of trading psychology will help your trading. You are invited to visit Dr. Gary’s blog where cutting edge research and techniques to develop your skills are discussed: http://www.tradingpsychologyedge.com/blog

When it comes to trading, the technical side is only part of the picture. The mental side is just as important. For a free, seven-part e-course on developing your trading psychology skills, you are invited to visit http://www.tradingpsychologyedge.com

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Mark: I remember there was a friend of mine who wanted to get into trading, and he wanted to know if it was hard or difficult, and I said to him, “I’m actually psychic. I’ll prove it to you, I’ll show you how easy this market is.” It was the first Friday of the month, and it was 8:30, New York time, and I put him down on the market and said, “In thirty seconds, this market is going to shoot up — or down, but it is definitely going to go one way”, and he said “I don’t believe you.”

And he’s watching this and the market leaped like 200 points in 30 seconds, and he goes “Wow! Can you do this every time?” Yes, that was actually before news trading became so popular. You can’t predict what is going to happen to your money management, and staying in the game is the most important part.

David: Okay. This leads me to a question I do want to ask, because it is one thing that crops up all the time. People always like to know, if you are so successful trading the markets, why is that you are out there teaching others how to do it? Wouldn’t you be better off trading the markets and sitting on the beach somewhere just counting your dollars?

Mark: That’s an easy answer – to make money. I mean, that’s why I teach people how to check the markets. It doesn’t matter how philanthropic you would like to be, your first objective is to make money for whatever you are going to do with it. But there are lots of different parts of the business of trading, and if you think of learning trading, you probably couldn’t learn how to count, unless somebody read a book to you some time. Somebody has to teach somebody. Now here I am. I’m in Australia, in Melbourne, and I’m not trading.

So even though a large part of your trading — you really have to be active in trading if you are going to be active, even if you use daily charts, you have to monitor it on a regular basis. So when I can’t, on occasions like this, the royalties, or the money that I make from selling books and courses, or I don’t teach people anymore, but the little money that I make from the other interests in trading is what helps support me.

It takes out the fluctuations if you like, because trading, regardless of how well you do, has ups and downs. So the teaching part, or the educational part, brings in enough income to take the pressure off when I’m not trading, and affords me the luxury of doing things like this, coming over here and seeing you guys. So why do I teach if I’m so successful trading? To make money.

David: I think that’s a good answer. What are your thoughts on how much money do you need to actually make trading your full-time gig. Should other people look at other things as well, like yourself? You’ve got courses and things like that that you do. Is that something that other people should aspire to, or what are your thoughts on that?

Mark: I think you should do it. As long as it is morally acceptable to you, there is nothing wrong with doing anything inside the business of trading or any other business that you want to do.

Who Else Wants A Step-by-step, Blueprint Anyone Can Follow To Design Profitable Trading Systems?

Visit: http://www.ultimate-trading-systems.com/

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And the Art of Scalping could be the most under rated form of day trading discipline.

The day trader who scalps for no more than 10% and then sells regardless will never go broke, he or she won’t ride the big waves of course, but think of it this way

Your Canadian $5,000 TFSA, when traded and scalped for 10% profits could look like this

Day 1 – $5,000 invested, a $500 profit earned
Day 2 – $5,000 re-invested, a $500 profit earned
Day 3 – $5,000 re-invested, a $500 profit earned
Day 4 – $5,000 re-invested, a $500 profit earned
Day 5 – $5,000 re-invested, a $500 profit earned

At the end of week 1, no big profit days, but at week’s end you are up 50%. Now repeat that in week two, still only investing your original $5,000 TFSA and your original $5,000 is now worth $10,000.00 by the end of week two.

And further, if you did that for 50 weeks, your $5,000.00 TFSA would be worth $130,000.00

Don’t be tempted to invest more than your original $5,000.00 for at least a few months, for safety sake.

If you buy 25,000 shares of a Canadian .20 stock on the pullback, the stock only has to move up 2 cents and you’ve earned 10% .. let me give you two great examples:

If you caught the Canadian drilling news at Stock Research Portal on Friday August 14, 2009 for Aura Silver Resources you could have scalped likely a lot more than 10%. As the stock did run on the news from .15 at the open to over .50 during the day on 9 million shares traded.

And just two days prior to the Aura news release, Lydian International had news of their own. News that lifted the stock from the open of .55 to a high that day of .88 on 1.8 million shares traded. So clearly the news matters, but it matters most, when the volume is there to support it. In the case of these two Canadian companies, the trading volume increased immediately after the news was released.

But as a disciplined process oriented day trader, you take your 10% and say “thank you very much”.

So what if you left money on the table, you had a profitable day and in the end, that’s the discipline, void of any fear or greed. Discipline is not easy I admit, we’re all human, but it’s that discipline that keeps you from making emotional trading decisions. Emotional trading is death to a day trader!

My strategy is pretty simple, I check the Stock Research Portal site (just sign up for a free membership) for Canadian drilling news releases regularly, then see if higher than usual volume comes in. If it does, I will always wait for a pullback in the share price, never EVER chase it. On the pullback you are ready for some disciplined stock scalping.

So there you go, “the art of scalping” scenario, and how it can keep you focused, disciplined and in the money.

Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn’t advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

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The definition in it’s most basic form is:

“Investing is the attempt to make money over a LONG period of time”

“Trading is the attempt to make money over a SHORT period of time”

Now the question is: “How long is a LONG period of time, and how short is a SHORT period of time?” The answer is: “It’s up to you!”

What does this mean? It means that you might consider 6 months to be a long period to hold on to one stock, so you’ll call it Investing, and someone else might consider 6 months a very short period of time and they’ll call it Trading.

But for the sake of uniformity we’ll adopt the following rule:

“If the duration between opening and closing a transaction (i.e. buying and selling a security) can be measured in days or weeks then this is Trading, and if the duration can be measured in months or years then this is Investing”.

Trading:

Usually Traders are only interested in looking at the price chart of a specific security or currency (usually Candlestick Chart), they look for identifiable patterns, or for areas of supply and demand to determine their entry point, and they do the same thing to determine their exit, they stay in one transaction for any duration between a day (or less) and a few weeks, they take a closer look at the market on a daily basis, to check whether their trade is still valid or if it’s time to close it.

To be a trader you need to be very familiar with technical analysis, as well as updated on market conditions, and upcoming events that might alter these conditions.

For instance if a company has it’s “quarterly earnings report” coming out in a couple of days, you might want to keep a close eye on that, either as an opportunity to enter a trade or maybe to close one that is already open.

Traders, can be either “Scalpers”, “Day Traders”, or “Swing Traders”.

Scalpers open and close a transaction very quickly, in a matter of seconds or max a few minutes, looking for small profits, but they execute dozens if not hundreds of such trades a day.

Day Traders hold on to their positions longer than Scalpers but they never keep any open trades for the next day, they close everything before the end of the day.

Swing Traders hold on to their positions for days or weeks.

Figuring out the type of trader you are is very important to your success. It’s very important to be honest with yourself, there is no good or bad style, it all depends on your personality, the style of trading you adopt must match with the type of personality you have, otherwise you’ll be living in conflict, and this can only be damaging to your trading account.

Investing:

On the other hand Investors rely heavily on the fundamentals to decide to buy or not, and while Traders can make money in an UP or DOWN market, Investors can only make money when the price is going up, because an investor’s decision on whether to invest or not in company XYZ is based on the fact whether he believes that this company will grow and expand in the coming months or years. If so then he will buy shares in it.

So how do Investors decide on what company to buy shares in?

Like I previously mentioned, they rely on the fundamentals. What does this mean?

It means they read the financial statements that are released by this company (Quarterly and Yearly), and they try to find out as much as they can about the inside operations of this company, about it’s management, about their future plans, about their competitors. Basically they try to see how healthy the company is and if there’s room for growth. This is called Value Investing.

These are the kind of fundamentals that investors are interested in to assess a potential investment.

Investors don’t really care about the small daily fluctuations of the price, they believe that if a company has a high intrinsic value, then it’s share price will follow over the long run, so they try to buy the companies that have high value and selling at a bargain price.

I hope that this article clarified the difference between Investing and Trading.

On a personal note, I believe that every Wana-be-Trader or Investor should do a very thorough self assessment to find out exactly what kind he is, and what are his strong suites that will be critical in choosing his style.

For more information about Investing and Trading you can visit http://www.investment-education-diary.com

Feel free to publish this article on your website, as long as you post a link back to my website “Investment Education Diary”.

My name is Bachir Chaaya, and I’m currently working in the Oil and Gas business, but my goal in life is to get out of what is called the “Rat Race” and learn how to be able to generate my own income. For that I have chosen Stocks Trading and Investing to be my source of income.

In order for me to learn trading and investing I decided to build a website where I will publish everything that I learn as soon as I learn it, I will do that in the form of articles.

To visit my website and learn what I have learned so far, please visit: http://www.investment-education-diary.com

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What exactly are they trading? Future commodity trading is not like the stock market where people buy shares of a stock. You do not actual own anything. You are just speculating on what the price will be of a commodity in the future.

When you want to put on a futures trade, you must first put up margin money. This is in case the market moves against you; you will have enough capital to pay the loss to the brokerage firm.

Although speculators make up the bulk of futures traders, the markets were intended to protect farmers from losing everything. A farmer can hedge in the futures and protect any loss he will have in the cash market. A farmer can sell the futures in wheat. He can do this if he thinks the wheat market will fall before harvest. A bread manufacturer might buy the futures if he thinks the price will rise before harvest. Whatever happens to the wheat market, both will guarantee their price.

A speculator is interested only in trading to make a profit. If he thinks the market will rise, he will purchase the futures. If he thinks the market will fall, he will sell the futures. You do not have to own the contract first to sell it. You can first sell the futures contract.

There is risk in any type of trading. That is why some traders only buy futures options, so they know their risk is limited to what they paid for the option. Others who trade futures contracts use technical analysis like Fibonacci trading. They will only enter trades that have criteria from the chart analysis.

David has traded futures & options for one of the largest cash trading firms in the world. He currently owns and runs the following websites:

Gann Trading

Future Option Trading

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