Fail to Understand These Trading Tips at Your Peril

One of the best trading tips I could ever give you is to avoid the notion that trading is investing. Another trading tip is never enter into the many subtle traps of trading like this notion. Because many people discover trading through the stock market or other traditional investing channels, and hear trading called things like "high-yield investing," trading is firmly associated with the investing world, especially in the mind of the newcomer.

Trading is investing in the sense that it involves putting money at risk with the anticipation of return. All investments involve a certain amount of risk. But just putting money at risk with anticipation of a return doesn't make it investing.

Trading is often likened to gambling and there are many parallels. For example:

• There's action
• Things move fast
• Probability plays a part (what gamblers call odds)
• There are numerous uncertainties like weather, governments, news, and related markets;(gambling's uncertainties are other players, the cards, dice, or the roulette wheel).
• High risk trades (high stakes games) require emotional control
• Clouded thinking from emotions (and alcohol) results in big losses
• Everyone wants to beat the markets (or the house)
• There's big money involved
• Most traders (and gamblers) lose most of their money
• Wagers are placed in every transaction

You think that trading isn't wagering? It sure is.

Remember the movie "Trading Places" with Dan Akroyd and Eddie Murphy? The Duke brothers, a couple of wealthy brokerage owners take Eddie Murphy's character off the street and have him run their commodity brokerage. When they explain how the commodities markets work and what the firm does, Eddie pipes up, "You're bookies!"

Immediately after that he starts giving good trading advice, not because he absorbed everything about the commodities markets, but because he understood betting. And the essence of trading is betting. Acknowledge this tip of trading and you'll be in the right mindset.

And you thought you were getting into some high-yield investments. You're getting into a betting game. Whenever you buy or sell a contract or option, you're betting that the market will do one thing, and the person on the other side of the trade is betting that it will do another.

Now, one of the differences between Las Vegas and the markets is that in Vegas, if you make a bad bet (trade) you're stuck with it. In trading, you can get out of a bad bet by making a different one. There are so many traders playing the game, that no matter how ridiculous the wager, there is usually someone who will take the bet! Seasoned veterans know to avoid sucker bets. It's the newbies who take risky wagers hoping for big payoffs.

Getting an order filled means someone is taking the opposite bet. (In "thinly traded" markets you may not get "get out" because there is no other trader to take your bet.) Trading is a game of emotional control and discipline. Placing trades is easy. Keeping your head on straight and sticking to a proven system are the hard parts.

A subtle trap in trading is that it is seen as a form of investing with all the safe connotations of long-term investing. The truth is that it is a betting game in a room of a thousand bettors. The actual nature of the activity is completely ignored in the hype.

Few people are naïve enough to think that they can make a living gambling. But too many people think they can jump into trading without any preparation and make money. A simple trading tip is use your head,it doesn't work that way. Just as in Las Vegas there are professionals and gamblers, in trading too, there are professional traders and gamblers.

Some dictionary definitions of gamble are:

1. To engage in reckless or hazardous behavior.
2. To expose to hazard; risk.
3. An act or undertaking of uncertain outcome.

And the word calculated:

1. Determined by mathematical calculation.
2. Undertaken after careful estimation of the likely outcome.
3. Made to accomplish a certain purpose; deliberate.

And risk:

1. The possibility of suffering harm or loss; danger.
2. A course of action involving uncertain danger.
3. The variability of returns from an investment.

4. The chance of nonpayment of a debt.

Real traders have rules for their occupation, they have a system. They take calculated risks and manage that risk diligently. They manage their money, play to their strengths, and have a purpose: the intent to be ahead at the end of the month.

The bottom line is that professional traders don't gamble. They deal with the many uncertainties of the markets like everyone else, but their outcomes are not uncertain. They know how every market move will turn out for them, because they have a system and a plan for every trade. They know that if they don't go into each trade prepared, the odds are against them.

Gamblers in either arena will fail to practice and build skill, fail to plan adequately, fail to manage money or calculate and manage risk. They will go outside their rules (if they have rules), deviate from their system, take impulsive risks, and fail to focus on the process. They get caught up in the excitement

Another tip for trading is that whilst gamblers play a game of chance and behave recklessly for a thrill a trader integrates their intention into their actions. They take calculated risks with the purpose of consistently making a profit.

Is Day Trading Better Than Investing?

In the current financial crisis people are getting more and more concerned with their investments. For years all investment advisors kept telling us: 'Just buy stocks for the long-term and you'll be fine' - 'Stocks and real estate always goes up in the long run'. The investment environment has changed. No longer do investors have the trust needed to throw money at a company that they think 'has a great story' or that maybe in 3 years might be profitable.

The sad fact is that we are seeing a bear market that is likely to dominate the financial environment for many years to come. Let's look at the last big bear market many people might still remember: The bear market of the 70's. To be exact: The bear market from 1972 through 1980. Nobody was talking about investing for the long term. Everybody was trading. Market timing was the art people wanted to master - not stock picking.

Every time has its own strategies: Stock picking is for bull markets - market timing for bear markets.

The reason for this is simply that in uncertain economic times we just don't have the sufficient trust in the future. We don't think stocks will rise higher and higher. Whenever prices surge we think: It is better to sell now: It will fall soon because it has risen so fast. This is the mentality of a bear market: Investor psychology is tuned into trading and market timing. We have to adapt to the current times if we want to be successful and make money.

Skepticism and fear are the predominant feelings in uncertain times. These feelings make us worry, they make us doubt - and eventually sell!

So if you have been taught to buy and hold it is time to rethink your investment strategy. There will come a time when buy and hold will be profitable again. However in the uncertain times we are in you should focus on your short term trading abilities again and try to time the markets. Timing is much more difficult that stock picking - you need to be able to predict market moves and act fast. In this market only the agile and smart trader will survive.

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Day Trading Robot Scam

The newest trends of money making methods is with day trading robots. I'll show the Day Trading Robot Scam here. There are couple of the latest products that use these trends Fapturbo(2008) and Day Trading Robot(2009). The real question is do you really believe that a robot can make you money?

The main function of these products allow people to make trades on the forex exchange based on tips given from the software that automatically identify and record trends and use their instinct to make decisions based on those trades. Therefore, if the instinct detects a growing trend, it will either make the trade automatically for you (money stream instinct) or you will be advised of a trade from the advice of a guy who got their info from the robot instinct.

Now, remember with any money making scheme there is always risk involved, whether it be your money or your time. However with these types of schemes, you would be more than likely investing and risking your money as it doesn't take a lot of time to place trades. This method is essentially giving you the money, and not really teaching you how to make money. But if it was this simple, then we'd all be extremely rich already, wouldn't we?

One advantage of these programs ( the refund system ), I guess, is that you have a full 60 days to try and use them and if they doesn't go in your favour you can always ask for refund (your money back). If you may want to take the easy way to making money online, this is probably the easiest way to establish in the day trading robot scam for yourself, by trying it yourself.

Get more information on the http://daytradingrobotsbestreview.blogspot.com/

Day Trading Money

The day trading money is sometimes called "the greatest casino in the world." The day trading is not the same as a gambling unless you turn it into poker room. The trading of currency or stocks whereby you or someone else buys and sells them daily,weekly,monthly or even yearly, sometimes buying and selling the same items once or more during a day, is known as "day trading." Stock market day trading will turn the stock market into a poker room for anyone who does it. What the ramifications are from gambling in a casino? Your turning the stock market into a poker means losing money. Sooner or later all in and out, buy fast and sell fast, stock market day traders will lose their day trading money, usually a tons of money and eventually all of their day trading money. Money is not made in the stock market by day trading.

The majority of succesful winners in the day trading market are the officers and employees who receive free or reduced cost stock shares as part of their salary packages (free day trading money). The company presidents and other officers can get wealthy by exercising stock options when they have done a great job for the corporation. A great job for the company is done by making the sales and profits increase thereby the stock price goes up. Employees can also get wealth with smart long-term buying of offered stock benefits if they happen to stay working for a growing, prosperous company. Non-employee stockholders purchase the stock of companies that are traded on the open markets. These open markets where stocks are traded include the New York Stock Exchange, American Stock Exchange, NASDAQ and others. The stock is usually bought through stock brokerage firms. These non-employees can smartly buy the stock of growing, prosperous companies for the long-term and then watch the value of the stock grow over the years. So these non-employee stockholders can also accumulate wealth. All of these various ways is how good day trading money is made in the stock market.

The house edge in stock market day trading is not only from the stock brokerage firm that charges for the trades, but also in the stock market trading system. Brokerage fees, even perceived small fees such as $10 per trade, will erode away your capital. If you do enough day trades throughout the year, that seemingly small fee per trade really does add up to a large amount of money. Multiply that by a few years of day trading, then depending on the frequency of the trading, that amount can eventually add up to more than your entire capital. So even if you break even trading wise, you can still get wiped out by the stock brokerage fees. This is a guarantee with day trading. These brokerage fees are not even the worst element of day trading.

The worst element of stock market day trading is the stock market trading system itself. The stock market is almost supply and demand but carefully notice that word "almost." A small day trader, buying and selling stocks valued at approximately $100,000 and less, does not always get the best buying and selling price. Sometimes and many times you will buy a particular stock for example at $10.65 when it was really only worth $10.50 at the time. Sometimes and many times you will sell a particular stock for example at $10.50 when it was really actually worth $10.65 at the time. This $.15 difference in each buy transaction and $.15 difference in each sell transaction amounts to $30 total for each buy and sell transaction for every 100 shares of stock. So if you trade 1,000 shares of a $10.65 stock, this means that you are immediately in the hole for $300 on a buy and sell stock trade. The friendly stockbroker from the stock brokerage firm trying to get you interested in day trading, probably never quite explained this fact of immediately losing money. This difference is only for an example and not an average, but some difference is usually there either lesser or greater. This difference will be the eventual financial ruin of a day trader. This price transaction differential is known as the bid/ask. An honest stockbroker can further explain this price transaction differential if you need more information.

Many books have been written about the stock market. Some of them are very interesting and highly informative. The books that pitch "get rich quick" systems through day trading, options trading, commodities trading, etc., are to be avoided. The goal of these chapters on the stock market is not to teach you the inner workings of the stock market but to teach you how to properly use the stock market. In a nutshell, this bid/ask price transaction differential plus the stock brokerage trading fees will always eventually grind out the capital of a stock market day trader.

If the stock market continuously went straight up or straight down then maybe you could make money day trading. Yes, you can actually gamble on a stock to go down, which is called "short selling." But you cannot possibly know ahead of time if a straight up or straight down situation will occur. If you do make money from the stock market going straight up or straight down, then you cannot possibly know when that trend will end. The stock market has always eventually risen in the long-run. But throughout history, the stock market always zigzags up or down, even as it is rising. These zigzags will annihilate a day trader. Especially a day trader who heavily uses margin.

Many folks believed that they were day trading geniuses during parts of the 1990s when the stock market for periods of time was going straight up. When the inevitable corrections occurred and these "geniuses" were heavily margined, they lost all of the profits from those times of a straight up stock market. Many long-term investors though still made money and some made a lot of money. The stock brokerage firms, especially those specializing in day trading, made lots of money compliments of the fees and commissions collected from their day trader customers.

As previously noted, the stock market is almost but not entirely supply and demand. People on the floor of the stock exchanges called "specialists" dictate the intimate fractional prices of stocks. General rules are in place to dictate an orderly market on the transactions to give buyers and sellers of stock a fair shake. But a fair shake does not always happen. Sometimes there can be a 1% or 2% difference in a stock price than what that price really should be. Stocks can swing up and down seemingly disproportionate to the trading volume. If you are not on the inside of these deals then you are a sucker on the outside if day trading. Long-term investors do not care about 1% or 2% differentials in price because they are buying or selling usually only once or twice a year at the most. Those 1% or 2% differentials to a day trader turns the stock market into almost the exact same thing as a casino game with a 1% or 2% house edge. If thinking that you can overcome this house edge by analyzing charts, graphs and annual reports then you are sadly mistaken.

During the late 1970s there was a casino hotel boom in Atlantic City, New Jersey. Casino gambling had recently been legalized in Atlantic City. All of the casino stocks were skyrocketing almost straight up. There was witnessed a trade in Resorts International stock that jumped from $205 to $215 on a 100 shares trade. Specialists are not supposed to allow a 10 point jump on a 100 shares trade but it happened. The stock price actually fell right back down again to $205 on the next trade. It did not go above $205 the rest of the day. Some buyer with a market order for 100 shares paid $10 per share more than that stock was worth. The buying price was almost 5% higher than it should have been. Specialists are supposed to help maintain an orderly trading situation in the marketplace. Their selling a stock for $10 more or almost 5% higher than its last trade on a 100 share trade, sure seems like manipulation. The point is that day traders who are on the outside of the marketplace without any connections to anybody on Wall Street will eventually get stung by something of some kind, something unforeseen, maybe manipulation of some type, but it will be something. You will get stung by the unexpected events and by expected events such as the stock brokerage trading fees and the bid/ask price transaction differentials. Day trading is certain eventual financial death just like a casino. Buying stocks for the long-term is a sound investment and the only way for you to make good money in the stock market.

Again, the stock market is sometimes called "the greatest casino in the world" but that is not a perfect analogy. There is an excellent chance for you to win money by investing in stocks for the long-term. However, there is an excellent chance for you to lose money by day trading stocks. At some point, depending on the frequency of trading and the percentage of capital traded each time, the chances of losing money eventually becomes a certainty. You will lose all of your capital. You also could go into debt by using margin. These are absolute facts even in a rising stock market. There will always be the point whereby if trading too frequently, the brokerage fees and the bid/ask differentials will financially destroy you.

Your favorite "friendly" stockbroker may deny or try to put a negative spin on the Factual Laws of Gambling. A stockbroker or stock brokerage firm interested in churning your account for commissions and fees simply will not give you realistic advice on the certainty that day traders, depending on the trading frequency, will sooner or later lose all of their money and possibly go deep into debt. Certain types of stockbrokers and stock brokerage firms would not survive if people did not day trade with them. So do not look to them for sound financial advice of any kind. Simply avoid stock market day trading in its entirety. Commodities trading is even more of a casino-like gamble than the stock market as far as you are concerned. Avoid commodities trading for the short-term and for the long-term altogether.

Again, stock market day trading will turn the stock market into a casino as far as you are concerned. Many stock market day traders would never even consider other types of gambling. You day traders feel as though you are a classy cut above other types of gamblers. You believe that you are a smart, respectable investor attempting to brilliantly discover pockets of stock value out there during the day. You believe that you will strategically maneuver buy and sell orders in a most expeditious manner to magnificently achieve the maximum profit. You have been cleverly duped into this mode of thinking by stock brokerage firms and their stockbrokers, literature and advertising. A day trader is on the exact same level, as far as losing day trading money is concerned, with any casino gambler or any other type of gambler. You can believe that or not, but it is absolutely true. The only way that you will truly differentiate yourself from any other addicted gambler is to properly use the stock market for your benefit, not for the benefit of the stock brokerage industry.

There's a software that can help you get day trading money. But most of them are scams. I know a very good software, since i used it personally and it's work. But you should apply your knowledge too. Don't 100% depend on it except you want to. Read my other post about this software.