Trading for a Living Blog

Many brokerage firms make it easy to sell short. When you place the order to sell a stock, the brokerage asks you whether you are selling shares you own or selling short. In case of short selling, the brokerage firm goes about borrowing the shares for you to sell. It loans the shares to your account and executes the sell order.

In some cases,a stock gets so much shorted that there are no more shares of that stock left for you or your broker to borrow anymore. Now, you cannot always short a stock instantly. Most of the investors work on rumors. In that case, you simple will have to cross your fingers and see how the other short sellers do on that stock while you search for another stock to short!

Now, day traders are not fundamental traders. Day traders are simply interested in the daily volatility in the stock. Most even don’t do any financial or fundamental analysis of the companies whose stocks they are trading. Almost all are technicians or what you call technical analysis experts. Now, shorting is one of the favorite strategies employed by day traders. A day trader may short stock on the mundane reason like its price had been going up for three days and it’s time to come down!

Now, you cannot straight away short a stock as there are mechanisms in place employed by msot of the stock exchanges that don’t want a massive shorting attack on a stock. There is the famous Uptick Rule that has been put in place to prevent that from happening. What the Uptick Rule means is that you cannot short a stock unless it moves up on the last trade. This rule has been placed to prevent a stock from being driven down to almost zero by short sellers. In simple words, once the stock starts to move down, you cannot short it. You will have to wait for its price to move up on the last trade, before your short selling order can be executed by the broker.

If you are wrong in your short selling decision, your loss can be catastrophic.How much risky short selling can be? Well, in theory there is no stopping a stock price to reach the sky. But don’t worry, short sellers also use stop loss so if the price starts to move up, your position will get closed automatically by the stop loss order.

Now, don’t get caught in the market with short selling when good news spreads about the stock that you had shorted driving its price up. This is known as Short Squeeze. Once that happens, almost all short sellers get desperate to dump their stocks and exit but when they try to buy back the stock, they get more hurt as the prices go even higher and higher on rising demand for the stock in the market.

As said before, companies, investors and many brokers hate short sellers. They think that short sellers had intentionally driven down the stock prices. So sometimes, they will spread rumors of good news to create a momentary short squeeze. Sometimes, a campaign will be started by the owners of a particular stock instructing their brokers not to loan out their stocks to short sellers. So if you have already shorted that stock, you might get a call from your broker to return that stock immediately. In such a case, you will have to immediately return the stock even if it doesn’t make any sense to you!

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If you scan the internet, you will find out that a new trading robot gets released almost every month.

With a market that is essentially flooded with these programs, it becomes such a task to find just the right one. I have found out that a few of these programs are quite similar except for a few others.

Forex Autopilot is an automated forex trading program that works in Metatrader platform.

This trading bot was created by a professional day trader by the name of Marcus Leary. The program claims that it can make inexperienced traders filthy rich just by doing nothing.

What person could resist the thought of essentially becoming a millionaire just by doing nothing but a few simple clicks? This can be really tempting but before you purchase Forex Autopilot, you must be aware of a few basic things first.

Before you commit yourself to one single product, you have to always know what you’re getting into.

First, Forex Autopilot is an automated currency trading robot that will do trades using the fund that you set up without any necessary supervision which means that you can leave the program to run on its own.

However, it doesn’t work that easy. Before you can get the program to work independently, you need to set the parameters which require knowledge on the foreign exchange.

But what if you are a newbie then? You may opt to go through their demonstration mode which includes being able to use a dummy account that you can practice with for a few days or even weeks until you become fully confident enough to use real money and doing real trades.

As advertised, I have found out that Forex Autopilot is an accurate trading bot and that losses do not usually happen. However, when they do, the loss is usually a significant amount which can damage your profits.

To prevent this from happening, one should never bet more than 50% of one’s capital so that you cut your losses even if the gains may not be that high.

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There are many candlstick patterns that you can master. Candlestick patterns can be highly profitable trading signals. However, some patterns appear frequently and can be easily spotted. Hanging Man and the Hammer are the two among them. Both are different. Hanging Man is bearish while the Hammer is bullish.

The first question. How do you identify whether this is a Hanging Man or a Hammer? Hammer and the Hanging Man both have a very small candle body accompanied by a long wick either on the bottom. If this type of pattern appears at the top of an uptrend with the long wick at the bottom, it is a Hanging Man. And if it appears at the bottom of an downtrend it is a Hammer.

Now, in most of the cases, you will also find a small wick on the top of the candle body. Now suppose, you find the Hammer or the Hanging Man. What you need is to look for the confirmation the next day!

If you think that you have spotted a Hanging Man appear on the top of an uptrend, wait for the next day’s opening price. If the opening day is lower than the last day’s close, you have spotted a true Hanging Man.

A Hammer should have a very small candle body with a long wick at the bottom. Similarly suppose, you think that you have correctly spotted the Hammer in a downtrend. You should confirm this with the opening price on the next day. If the opening price is higher than the closing price the previous day, you have a true Hammer. If the opening price is not higher than the closing price the last day, it is not a true Hammer!

When you trade candlestick patterns, you need to look for the confirmation on the following day to confirm that the candlestick pattern formed was indeed true. Once you have the confirmation signal, you can safely trade on that candlestick pattern. If you cannot get the confirmation, you should ignore that pattern considering it to be false. Most of these candlestick patterns are ideally suited for the daily charts.

Spinning Top is just like the Hanging Man and the Hammer. Spinning Top is a signal that the battle between the bulls and the bears ended in a draw. It will start next day again with ony side giving in. What this means is that an explosive move in the price action can take place the following day.

Spinning tops appear much more frequently and are very easy to spot with a very small body in the middle of the candlestick and almost equal wicks on the two sides. A spinning top is a nice indication that the trend is about to change direction. Knowing about a trend change early is a highly profitable trading signal.

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For many currencytraders, automated currency trading systems are the perfect solution to their problems. In fact, many would testify to the fact that using automated currency trading systems allow them to attain big profits in the Forex market – more so than if they were to trade manually. Those who are successful in using automatic currency trading software will tell you that not only do they earn a lot of money, but they continue to make it constantly.

Unfortunately, good things are not always easy. There are other traders that say that using automated Forex trading software did not help them at all. Some will even say that they lost out on many transactions. In all actuality, any time failure is achieved using automated currency trading software, it depends on how the system is configured for your needs, and how you take advantage of opportunities. Most of the times, many dealers make stupid/common mistakes which could have been avoided.

So, what are these things that you shouldremember, and what are some of the common errors that are made when using automatic Forex trading software systems?

Broadly Speaking, mistakes occur when you are just starting out selecting your Forex trading software. Naturally, you should consider the reviews of other customers, but do not just depend on these, as they could be false testimonials. It is probably best to check Internet forums where there are not only opinions, but also facts which detail what problems a customer had with a particular software and how they were solved.

One big mistake that traders make selecting automated Forex trading software, is in picking a piece of software that has good ratings and good customer feedback. They erroneously trust that the software program is perfect. However, this is not the case, as many problems can occur. Always insure that the software you choose has enough customer service, whether by web or telephone.

Another big mistake that many currency dealers make is in believing that because they have automatic Forex trading software it is not possible for them to lose in a transaction. It doesn’t matter how good a program is, or how expensive it is, mistakes still happen, and you can lose a lot of your profits if you’re not careful. Achieving success in the currency market is not something that happens overnight. You could make bigger profits and fewer transactions – the amount of transactions you make does not determine how much cash you make. In order for you to accumulate the most profits, it is best for you to have a number of good transactions under your belt, before expecting your higher aspirations to come true.

Some dealers mistakenly believe that they could win at least one trade per day. This is not the case all the time. It takes a lot of patience in order for you to win big in the Forex market. Overtrading will not make you successful in the Forex industry.

All too often, many traders depend too much on their automatic trading software and neglect becoming more involved in the trades. If you are lackadaisical in learning the currency market, this is a huge stumbling block for you. Just because you have automatic software working in your place, this does not mean that you should not learn more about the ins and outs of the Forex market.

This cannot be stressed enough – just because you have the best mentors or talk to the best experts in the Forex market does not mean that you will be guaranteed success either. It takes a lot of knowledge to formulate the right strategy and trading system for you to apply it to your automated software.

It is also important to note that just because you may have used software in the past that did not work properly, this does not mean that all automated Forex trading system software is justas bad. Keep pressing towards the goal, and do not be pessimistic – just have patience and keep looking.

Everyone is human, and everyone makes mistakes – even if you are using automatic Forex trading software. All you need to do is ensure that a particular software you choose is configured to agree with your particular trading system and strategies.

Before you start trading with real money, you must spend time to learn forex and move on only when you have a solid forex trading education

There are a number of platforms available for the Forex market to make your experience easier. To find currency trading software, use any online search engine and you will find lots of different options.

Some investment tools – or platforms – are more distinguishable from others. But finding just the right platform for your needs is not all that easy.

If you’ve never used currency trading software before, now is the time to start looking for one and see the difference for yourself. Of course, you won’t find one that’s one hundred percent accurate, but you can find one to suit your needs. Look for a platform that will increase you performance, proficiency and competence. Do your research and compare products. It may be time-consuming but in the long run it will be time well spent.

One valuable tip is to find a piece of trading software that is constantly being changed and updated by the developer. Remember that the Forex market is always evolving, so you want a trading platform that matches you and your personality.

Another important factor to consider is the program’s security and maintenance. You should know the software’s security level. You need to be able to use security encoding as well as back up your data in the event of a problem.

You should also stay away from platforms that do not offer support. Look for one with twenty-four hour customer support. It can be difficult to understand the programs. Many of them are very advanced and sophisticated; so you need one that offers a hotline, email service and follow-up services to make sure help is there if and when you need it.

Don’t waste time with software that does not come with a money back guarantee. If you have to return a product that doesn’t meet your needs, you could be left with a lemon in the absence of such a guarantee. After all, the purpose of a guarantee is to assure you, the customer, of the confidence the software developer has in its product.

Get reviews from satisfied customers. You don’t want glitches right from the start. If the manufacturer can’t give you that assurance, you might rightfully suspect that there have been a lot of complaints because the software is defective.

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There is a difference between trading and investing. Trading is always short term while investing is long term. The time horizon in trading can be as short as a few minutes to a few days to a few weeks. Whereas in investing, the time horizon can be months to years. Many people day trade or swing trade stocks, currencies, futures, options, ETFs, commodities or other markets. In day trading, a trader opens a position and closes it in the same day making a quick profit. In swing trading, a trader tries to ride a trend in the market as long as it lasts. On the other hand, an investor is least pushed about the short term swings in the market. He or she has a long term time horizon like a few months to even a few years. This long time horizon matches their investment and financial goals!

Investors in theory can wait for a long time to see their stock pick to play out. A company’s stock may be ridiculously cheap. But it may stay like that for a long time before it catches everyone else’s attention and the price is bid up. It might be good for investors to learn a few tricks from traders especially day trading that can help them make a few quick bucks.

Successful day trading requires an innate sense of discipline. Successful day trading requires the sense when to commit money to a trade and when to cut the losses and run. However, if you are an investor who has never day traded, you might have done so much research and committed so much time waiting for a position to work out that you might forget the cardinal rule of traders: The market doesn’t know you are in it.

When, there is momentum behind a security, it means that it’s price will continue to icnrease as long as it has got momentum. This way by investing in stocks having momentum behind them, you avoid the risk of getting stuck in stocks that might not move for months and months.

One of the tricks that you can learn from day traders is momentum investing. In momentum investing, you look for securities that are expected to go up in prices accompanied by the underlying momentum. When investing, you try to buy low and sell high. In momentum investing, you buy high and sell even higher!

Now most serious momentum investors are infact swing traders who hold positions for a few weeks or a few months. Most of them employ some sort of momentum indicators to help them identify when it is good time to buy a stock. Some of the indicators that can be used is the Relative Strength Index (RSI), Moving Average Convergence and Divergence (MACD) and the Stochastic Index.

Momentum investing can also lead to bubbles like that happened in the dot com bubble in the last few years of 1990s. It is always a good idea to do some fundamental research on the companies before doing momentum investing.

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Its easy to want to trade forex as soon as you comprehend the profitable potential. Quite a few would-be traders nevertheless have no clue how or exactly where to start. Currency trading tends to be time consuming to sit and learn and usually includes unknown perils along the way. A prosperous currency exchange investor more often than not possesses many months or possibly years of performance under their belt so as to obtain monetary victory.

You might currently have a lot of funds to get going. Holding capital that you can afford to jeopardize is definitely an beneficial element to trading having a strategy. Leaping in using both feet into the forex trading market just isn’t suggested, and may also commonly contribute to taking large losses which can often prevent you from coming back to the market later on. A reasonable strategy includes employing a test account, placing a system into place and discovering a quality mental technique to trading. A new trader to the forex marketplace might think things are moving along to gently with the reading and learning necessary before making a genuine trade.

A path around the delays that will get you directly into the forex marketplace right away is an item termed currency exchange managed accounts. You’re able to begin making capital right away using a competent forex broker who can set up trades to suit your needs.

Forex managed accounts consists of two versions and thus choosing the right system for yourself will always make a significant factor in your success.

Fx Managed Account: Typical Account

This type of account normally mandates a substantial outlay of funds from customers. The finances enter an account in which both you and your brokerage will be able to access, and your broker is going to trade your funds from this account. The money will be traded on a recurring basis, whilst your currency trading broker will get access to vital reports and trend info that will help make you plenty more money than you would using your personal account. This account incorporates a significant deposit obligation in the 1000s of dollars due to the broker service fees as well as commissions.

Even though your account is totally managed, it really is up to you to continue a watchful eye on the manner in which your currency broker earns his money from the account. Its smart to understand what percentage he is making from the account or what pips he is getting with the spread. Looking for a competent fx broker who is able to adequately supervise your account and hold costs to a the bare minimum is going to save you a lot of money in the long run.

Currency exchange Managed Account: Pooled Account

Much like a mutual fund or your 401k, a pooled account will allow for the investor to contribute a lower degree of cash since all funds are “pooled” as a group. There is far more faith required here, and your money is less available than with a typical fx managed account.

The pooled account is usually riskier, even less liquid, and could possess considerable penalties for pulling your cash out early. You will want to perform your due diligence and look for a dependable fx broker who has some kind of regulating body overseeing his decisions. The more facts you gather, the more reliable your investment would certainly be in this type of account.

The capital essential to start either a regular managed account or a pooled account is very distinct. If you don’t have 1000’s to set up a managed account, then your sole choice would be a pooled account. For those who have only a couple 100 bucks to invest, you can get yourself working right away with a pooled account.

Currency trading managed accounts enable somebody else with the help of many years of practical experience within the foreign exchange marketplace to trade for you, providing you with the precious time and independence to complete other things you may find more essential.

Forex trading via the internet is generally perilous unless you keep informed of vital details. Avoid the perils offorex trading by reading how a forex managed broker account may be just what the doctor ordered.

No matter whether your trading the stock market or Forex it is extremely annoying if you’re not obtaining the returns on your investment that you want. You look around at the forums, news, etc and everybody seems to be making money other than you !. So what are the main reasons people do not make money in forex trading.

Here’s my top 5 reasons

1. No matter what FX currency trading system you employ whether it be a manual or automatic one.

Whether it be day trading, swing trading, scalping trading or whatever you have to give it long enough to see results. It is easy to be distracted by what every one else is doing. Focus on what you are doing.

2. Keep a trading diary. Why you did what you did and when. Evaluate what you did well and what you did not so you can eliminate errors and duplicate successful trades.

3. Rome was not built in a day. Do not give up too quickly and do not be expecting to earn a fortune from day one.Set goals of course but keep them feasible.

4. If you have bought an FX currency trading system that is unprofitable cut your losses. The same obviously applies to your trades. For each trade you make you must determine a point where you will exit if it goes against you. Let your winners run and cut your losers quick. Don’t rely on prayers to accomplish your goals.

You have to be brutal when cutting losses. I know I have been there it is so easy to wait a little bit longer in the hope that the trade will start coming back. And also you might be tempted to average down. I would not recommend that unless you are 100% certain which you most likely never would be !.

5. Money management is absolutely vital. If you let too much ride on one trade you may come up trumps a few times but you will lose out long term and will more than likely lose everything if you persistently place risky trades like this. You should never risk more than 1-3% of your trading capital on one trade.

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Thanks to the continued growth of the world wide web and consequently the now massive widespread access of electronic trading networks, trading on the currency exchanges is today a great deal more accessible than ever before. the foreign exchange current market, or forex remains the the domain associated with government and banks, not to mention hedge funds as well as enormous international corporations. At first the presence of such heavyweights can appear rather challenging to the personal investor. However as you will observe it can work in your favour.

Forex offers trading 24-hours each day, 5 days a week the volumes (in the trillions !) make it the largest and most liquid market in the world..

Plenty Of Trading Opportunities

Due to the fact so many currencies are traded there can be a higher level of volatility on a day-to-day basis. There will forever be currencies that are moving rapidly up or down, offering Possibilities for profit to knowledgeable traders. Like the equity markets forex offers instruments to mitigate risk and permits you to profit in both rising and falling markets. forex also allows extremely leveraged trading using low margin requirements relative to its equity counterparts. and whats really good is that you’ll find zero dealing commissions!

For those who have traded the equity markets you’ll be well-versed in terms such as futures, options, spread betting, CFDs which all apply to forex. Since there are great minimum trade sizes the usage of margin is important to the trader.

Getting and Selling currencies

Regarding Buying and Selling on forex, it is important to note that currencies are always priced in pairs. all trades result in the simultaneous purchase of one currency and the selling of another.. You trade whenever you anticipate the currency you are Buying to increase in value relative towards the one you are Selling. If the currency you are Buying does increase in value, you have to sell the other currency back so that you can lock in the profit. An open trade (or open position), as a result, is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.

Quotes and base currency

Currencies are quoted as follows. The first currency in the pair is considered the base currency; as well as the second is the counter or quote currency. Most of the time, U.S. dollar is considered the base currency, and Quotes are expressed in units of US$1 per counter currency (for example, USD/JPY). Except for the euro, the pound sterling plus the Australian dollar – these three are quoted as dollars per foreign currency.

As with equities the forex Quotes always contain a bid and An ask price. the bid is the price at which market maker is willing to buy the base currency in exchange for the counter currency. the ask price is the price at which the market maker is willing to sell the base currency in exchange for the counter currency. the difference between the bid and the ask prices is called the spread.

The price of establishing a position is determined by the spread, and prices are always quoted with the final digit being referred to as a point|or a pip. for example, if USD/JPY was quoted with a bid of 124.55 and An ask of 124.60, the five-pip spread is the price for trading this position. From the very start therefore, the trader must recover the actual five-pip cost from his or her profits, necessitating a favorable move in the position in order simply to break even.

Margin

Margin on forex is a deposit within the trader’s account which will cover against any currency-trading losses in the future.. Currency trading systems will allow for a high degree of leverage in its margin requirements, up to 100:1. the system calculates the funds necessary for current positions and checks for the relevant level of margin prior to allowing the trade

With strong trends and lots of volatility there are endless Possibilities for large profits But definitely with such high levels of margin risk management is important.

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Forums could be a good location to go to get some fascinating info and advice from other folks who are dealing and working in the foreign currency market.

Forums are also a convenient spot to get a review of the most recent software application or book that’s offered on the market.

It can be exceedingly useful to hear other folks’s experiences with these products so you can make an excellent call as to whether they should be used in your own trading.

It’s also a good way to avoid the errors that others have made when forex trading. There’s not much mistaken with taking the suggestion of others, but you need to use your own common-sense too. Take the suggestion with a touch of suspicion and add in your own study and education with it to make the best calls about your trading business. You may pose your own questions to the forum to get a wide group of solutions and a healthy discussion which will eventually give you the information that you’re looking for. When you are getting guidance from these forums it is often a good idea to take a balance of viewpoints to make the very best decisions for your own business. There’s a danger of getting too involved in the currency trading forums, however.

Your time is a valuable asset in your business.

Keep in mind that you in reality do not know the people on the forum. You could have seen their answers often on the forum and they have developed a reputation for giving sensible advice on forex trading, but actually, they have nada to lose by giving advice. Keep this in consideration when you’re learning from the forums. The secret to success in foreign currency trading is education and experience. There’s a task to play for the forums where others who are doing a comparable thing as you meet up and debate the matters and successes that they had. Most of the people are content to help out and the forums are typically an amicable place to hook up with people who are going through the same as you.

Rather than jump in and start trading with real money right away, you must spend time to learn forex and move on only when you have a solid forex trading education