Articles

Making investments can be a fun way to pass the time on a rainy day, but it can just as quickly destroy one's livelihood. Financial markets are cold and unfeeling; they do not forgive easily and are not to be trifled with. The line between "hobby" and "addiction" is a thin one. Compulsive trading will ratchet up your transaction costs, stress level and time spent away from the important things in life. An Online Brokerage Account Prior to the advent of the online brokerage, prospective investors had to go through financial intermediaries with access to stock exchanges, otherwise known as brokerage firms. The process, being arduous and costly, was a textbook opportunity for middlemen to step in and lower the transaction costs. In 1969...

Movement in price is based simply on supply, demand and the human behavior relationship that exists in any market. And, clearly, opportunity always arises when this equation is out of balance. Whether trading the S&P, buying a house, a car or a Michael Jordan rookie card, how we make money buying and selling never changes. My Path Let me begin by saying that I have never read a trading book from cover to cover. Also, I started my career on the floor of the Chicago Mercantile Exchange (CME), not looking at a screen-based chart for the first year. On top of that, from an early age I was always taught not to accept something as true just because someone says so. What I do is apply simple logic to everything that presents a challenge, and...

While traders constantly search for new and improved methods on their quest for the "holy grail" trading system, they often overlook the most significant element that dictates their success. This inherent element is pacing. Proper pacing means you flow with the market. When the market is running fast out of the gate, so should you. When the market slows to a crawl, so should you. In a nutshell, have you ever made nice profits in the first hour of the trading day only to give it all back gradually throughout the day? Uh huh. Before I delve too far into this, let's first start off understanding why pacing is overlooked. Traders tend to believe that a method should be working in all market conditions at all times. When the method doesn't...

Is trading just a game of cat and mouse? Do we smaller traders - the mice - get noticed nibbling the cheese (profits) on the mouse traps set by the cats (the major player)? A Game of Cat and Mouse In my decades of trading, I've learned many lessons about the market. The chief of these lessons is that I don't know anything about the market; at least, in comparison to the market makers on Wall Street. Think about it. The traders at firms like Goldman Sachs, Merrill Lynch and the like pull down salaries of several million dollars each year. I refuse to believe that they are so richly compensated because they don't know anything. They know a lot! It's their job! As a result, like many individual investors, I engage daily in a game...

So you want to be a day trader huh?, really???, hmmm, well isn’t that special!!!! Think you have what it takes to make a living trading the Markets??? Do ya Bunkie???? I wouldn’t quit my day job pal. In fact unless you’ve done your homework first and foremost, don’t do this until you’ve at least tried it on a part time basis. Otherwise if you try to dive into the abyss without a net, you're doomed right from the get go! Doing it on a part time basis just for the feel of it is fine. Never would work otherwise. Oh and pardon me for asking, but what makes YOU think you're smart enough, stable enough, and mechanical enough to do this? You read about it in a book right? Seemed kinda easy to ya? Did it? You figured heck this doesn’t seem so...

Numerous discussions of paper trading, and its value as a learning tool, usually see participants divided into two camps. One claims total uselessness of paper trading, another vows never to start without it. The scoffing camp points out the obvious limitations of paper trading: It doesn't allow you to estimate slippage during your execution. It leaves unanswered the question of whether your order has a chance to be executed at all. It keeps you in a relatively relaxed state of mind as there is no pressure of endangering real money. It also doesn't allow you to master your order routing tools in full. Finally, it's very easy to cheat oneself, changing one's decision after the fact and booking corrected results. Is this all true...