Category — The Basics

If you want to become a successful, profitable share trader in the stock market, you need to implement a few basic guidelines.

Listed below are a few ideas you might find invaluable in your future trading.

1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend, the amount you can afford to lose if things go the wrong way (2 -5%% of the total value is a good guideline)

The % profit you want to make, after allowing for brokerage etc.

.The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?

The number of shares you want. (This depends also on your capital constraints)

 Diversify don’t invest just in one area. Spread your risk over different types of companies. [Read more →]

A good example of long term astute trading is Warren Buffet who is now around 80 years young. He is currently worth an estimated cool $52 billion give or take a million or two.

And he has achieved that by essentially looking for quality, well-managed companies that are undervalued by the market. And he is prepared to wait for the right moment.

Probably one of his most ignored mantras is: “Don’t get rich quick.”Hence the name of this article.

What lessons can we learn from this Master Trader? [Read more →]

I bet you are wondering what criteria I use to pick my potential money making shares? Ok I will list them for you very briefly.

1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend.

Have a stop loss in place (This is the amount you can afford to lose if things go the wrong way. 2% of the total value of your portfolio is a good guideline)

The % profit you want to make after allowing for brokerage etc.

The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term? [Read more →]

The very first thing you have to learn is that you have to buy very low and sell very high like the robber barons did way back in the old history books.

Next you have to stop chasing daydreams. Ignore all the get rich schemes like multilevel marketing, derivatives and the like.

What you have to do next is learn to take your financial future in your own two hands and make the stock market pay you. You have to learn to be responsible and accountable for all your trading actions. Don’t blame the market,the economic climate or whatever for your mistakes which you are bound to make. Learn from them and move on. Don’t be like all the other Sheep always bleating how it’s not their fault that this or that has happened.

So how will you accomplish this?   [Read more →]

It is inevitable that in your trading career numerous downturns in the share market will occur from time to time. Exactly what we are experiencing  today.

Now you have a few choices available to you but this also depends on what sort of trader you are as to the effect it will have on you at this time. “There are basically four types of trader which we will discuss below.

I. If you are a long term trader you won’t be too concerned about selling your stocks currently held in your portfolio as you know from past experience that the market will regain its equilibrium and eventually return back to normal.

2. If you are a medium to short term trader then of course you see your immediate profit going down the drain. But if you have learnt from past experiences (hopefully) you would have had a stop loss set in place to lock in those profits or to cover you against substantial losses. So therefore your losses are minimal. You can then buy back those same stocks at bargain basement prices.

3. But if you are like the average trader who did not employ a stop loss and was not prepared for any downturn then you have two choices. [Read more →]

There are Six basic Behavioral  steps and some irrefutable laws that pertain to the marketplace that every Trader must know to guarantee not only their trading success but their continuing profits in the stock market.

It would surprise you how often this behaviour applies to the stocks that are traded every single day in the stock market. In saying that, please bear in mind that the time factors will vary differently with each and every stock.

Step 1:

A  Typical stock price’s move usually begins with the smart traders who have acquired insider knowledge that relates to a particular stock in the market. This information will move the stock price either up or down depending on the insiders’ information. These traders are very smart and they have learned to recognize trading opportunities very early on in the stock’s trading cycle.

Step 2:

It can be hours, days, weeks, or even months after a price move has started,  that there may be a brief mention in the electronic media or on one of the internet chat boards that a stock has moved. The public on hearing this news for the very first time begins to get interested, but this does not necessarily mean that they will be buying into the stock as yet. [Read more →]

There are numerous ways that you can employ when you are calculating the fair value of a company. But before before you start to do that, it is important to first know how the company actually earns its profits. For instance  does it do that by selling a product or service to its customers  or is it mining natural resources for sale to other companies?

The wisest way to go about it is by firstly reading the company’s annual report before you start anything else.

So what is an annual report?

The annual report is a yearly publication by public companies to better inform traders or investors about the company’s line of business. This report gives traders a glimpse of the company’s line of business, its financial health as well as what the management’s strategies are for doing business with its customers.

So reading an annual report is the first basic step we take towards investing in a potential company.

How can we obtain a annual report? Firstly there is the companies own website.

Or alternatively you can go to some websites like the ASX that has complete annual reports for a number of different companies available in alphabetical order. Bear one thing in mind that while having hundreds of annual reports in one place can be very convenient, it is not always as thorough as what the company’s own website has to say.

So there you have it ,you very first step to finding future potential profitable companies. Happy hunting.

Just for something different instead of talking about trading basics we will go into some other avenues for the more experienced traders amongst you.

For the more experienced  traders, using margin trading, selling short, moving into  IPOs, and more advanced trading techniques and other strategies can open up a completely new world of stimulating trading experiences  for you, and ultimately could achieve you greater potential profits.

So saying that, let us tackle one subject at a time.

Firstly understanding IPOs

IPOs or initial public offerings as they are called, is when a company changes over from a privately owned organization to a publicly held firm.

Almost every incorporated business issues common shares, although at the start this is usually to a few select stockholders. Usually this is for a company to raise the necessary capital required, without having to incur any debt. The most commonly method used  is to sell stock to the general public, thereby they then become a publicly traded company. [Read more →]

I have been taking a closer look at timing particularly when entering the stock market and also on leaving, but more on that later.

Timing very much depends on what sort of trader you are. For a day trader timing is crucial as there are only the hours available that the market is open today. They very rarely hold any stock positions overnight.

Usually the day traders enter the market around 45 minutes after the initial flurry of orders has gone through. The majority of these trades have been set prior to opening or from the night before by less experienced traders “who must get in at all costs”.

Once the direction of the particular stock has been set, Day traders move in. Usually profits are taken on very little movements. The speculative stocks are very popular for as just a 1 cent movement can mean a quick 10 to 20% profit. [Read more →]

I see any correction as wonderful event, like Christmas arriving early. Getting a correction into the right perspective,it is after all just simply the opposite side of a rally whether its big or small.

In theory all that corrections do is adjust share prices to their literal value or recent “support levels”. In fact, it’s much easier than that. Stock prices go downwards depending on a traders reactions to unrealistic expectations of news or speculative reactions to actual news. Plus stocks also decline when there is either profit taking or panic selling.

Here’s a list of ten things you can do and/or might want to think about doing during any corrections that will no doubt again occur in the future. [Read more →]