Tuesday, 22 December 2015

Unfortunatley this article on the Australian Financial Review pretty much sums it up for us here in Australia and probably many others around the world.

Hopefully this year things level out a bit and the markets are a bit more predictable....



A DECADE TO WRITE OFF

Friday, 11 December 2015

CAPITALISING ON YOUR SUCCESS

Ok, things are starting to go good and you're making money consistently, everything is looking good.... What to do now?


SEPERATE YOUR MONEY

Diversify your money maybe put a set amount from your earnings into another place  like pay off debts, especially if you have mortgage - maybe start another account (IG markets lets you have multiple accounts) and maybe trade something different like gold or an FX using the same strategies....

MINIMISE YOUR RISK

If you started (like I advised) on 1 x ASX200 contract on $2000 and you want to increase your earnings you can play 2 x ASX200 on each trade. I like to see my risk reduce each time I up the bet so maybe i wouldn't start trading on 2 contracts until I hit $5000  (and hopefully have taken back my initial investment in payments)  and 3x contracts till I hit $9000 this means that If I was to get to an account balance of $9000 I'm probably making $150 per day (thats my average anyway) on trading 3 x contracts and this is where I find it becomes a very real and valuable addition to my income. $3000 per contract would give me an approximate trading range of 450-500 points  which gives me a greater safety range than trading one contract per $2000 (which would give a 300-350 point range) the further along things progress  I would maybe to to 4 x contracts on $16000 and 5 x contracts on say $25000 which would give you  saftey margin of 650 points (approx) which is a fair trading range and will allow you to sleep at night without constant fear of being sold off in the event of a sudden dip or whatnot.

I view trading on 1 x contract on $2000 bit of a risk and in the last 2 months there's been two events where I would have been sold out. But unfortunately we all have to start somewhere, some start on less than but at the end of the day $2000 is not a lot of money but once you get past $5000 and then $9000 this is serious money to most people and its a good idea to minimise the risk (even though by now its not really your money your playing with) its a valuable lump sum and and even more invaluable tool to make a regular income out of NOT something to be taken lightly. It is better to have this amount coming in regularly Ideally i want to have this coming in as an income for the rest of my life, the actual dollar amount for me is not as important than the security of having something come in like clockwork every day or week but thats just me, you may make more money by upping your bets and taking a risk but you may also get sold out and have to start all over again

I'm now trading over $3000 per contract and it is this that managed to get me through the turbulence of the last couple of months hopefully soon i'll be trading on $4000 or more and believe me its much better for your heart and sleeping patterns :)




Thursday, 3 December 2015

SAFTEY RULES ON LEVERAGED TRADING

SAFETY RULES ON LEVERAGED TRADING

Here are some "Mental Health" and "Safety" ideas I have learned from the last 5-6 years playing on CFD markets. Read them, they are important and will quite probably save you heaps of grief and stress



Here's some safety rules and general advice for anyone using CFDs:

Don't use borrowed money to play on a Margin or CFD Platform - The events of huge market swings have become all to common now and there is no point loosing money and still having to pay off a loan

Only play with money that you can afford to loose - And chances are you WILL loose initially. I did, everyone I know who plays on the CFD platforms has lost their money on the first few ventures into this world. The trading environment is tricky right now, it has been for a couple of years and shows no sign of easing up. It takes a while before people have grasp the real concepts of highly leveraged trading instruments and how badly they can be affected by leveraged markets

CFD trading and to a lesser extent Margin lending is stressful - If you don't have the head for it better to find out now than after you've invested a large lump sum into it. You WILL have sleepless nights - it will pre-occupy many of your thoughts and take up a lot of your waking hours. Be warned. CFD trading is a much different head space to just a slow buy and hold strategy and is not for everyone. It is risky and if you are naturally adverse to risk this is NOT for you 
Take out winnings regularly. Eventually you will start to make money, I take out 50% of what I earn on an almost daily basis so if a huge market swing comes along and wipes out my trading fund I can say to myself at least I had that income coming in , and hopefully I have made back my initial investement (which for me usually takes a 2-3 months) 
Keep an Emergency Fund  Put a little aside to start trading again from scratch in the event of a market swing going against you and wiping out your trading fund. then you can start again and keep the cash flow coming in. 
DIVERSIFY - if you find that you're making a lot of money dump it back in a non leveraged portfolio or use it to pay down loans mortgages etc.... use some common sense,,,, don't go spending it all on hookers and crack!






TIMING IS EVERYTHING

Ok, we've reached a situation where Gold is at its lowest point in 5 years... (Dec 3, 2015)

UPDATE: Ok, I made a prediction a couple of days ago that gold will go up, as it took a beating and was poised to go up. 2 days later it went up by $30.00 per ounce (approx) which means I made a nice little bit of extra cash and did it quick. I don't usually trade gold so now I'll get out (runs off down the pub) and withdraw my recommendation. I still think Gold will go up in the long term from where it is now, but for my interests and strategies I'd rather sit on on the sidelines for a while and wait till it cops another hammering and make a decision then.

Do you think it will go up or down? (I think it will recover from here in the short term, but thats just my opinion) so what do we do? If you DO think it will go up consider buying some gold, or the shares that have taken an almighty beating because of the gold price drop, if you have access to the australian markets BHP, Newcrest Mining NCM and Fortescue Mining FMG have taken some huge hits.

Also Oil, and Iron Ore, Silver and many minerals have copped what we Australians' call a 'flogging' . Here's some home work for you, check out the share prices companies that mine/distribute/resell oil, gold, ore etc... and look at how they are doing in the sense of where they are for the year, last few months and last few years.


In my opinion there are some bargains going begging. Go have a look!!!


This is the gold chart from today , covering 2007-2015 where it finished on around 1050 per ounce. In all honesty it could go lower but I don't think the downside risk is much bigger than the upside gain, but thats a choice for each individual investor, i'll be taking a short term position on gold ;)

Saturday, 28 November 2015

WHY DO SHARES MOVE UP AND DOWN IN VALUE?

Basically it comes down to supply and demand.

If more people want a particular share than already own it, it will drive the market price of that share up if people don't want it and more people are motivated to sell it it will drive the price down.

There are a lot of reasons why people may want to hold or sell off a particular commodity these may include:

Company performance a good or poor performance at reporting time or any time news or data is released can move the price of a share around, especially around the time of dividend payouts and announcements

An extraordinary event like a disaster - like a mining collapse, senior  management being indicted for fraud... or takeover bid,

Market sentiment - which can include random fear or optimism for a range of reasons, like threat of war, fear or expectations of interest rates moving up and down, or even a reaction to fears like the Greek and Chinese issues of late, environmental disasters and lots more.

Institutional trading- while the average investor probably isn't going to move the price of a share around by simply buying or selling if a hedge fund or bank decides to offload or buy a bunch of shares for whatever reason it may have nothing to do with the performance of the company itself this can move the price around in a big way

Triggered Selling - this is a hard one to gauge but a sharp movement in price of any commodity share or index may trigger off a bunch of sell or buy orders that people have previously put in the market and move the price of that commodity around as well.  Since much trading is done online and executed by computers this can really come into play in what I call 'flash crashes'




Thursday, 26 November 2015

COPING WITH MARKET VOLATILITY

Holy crap the markets have been volatile of late! At the time of writing this my chosen index the ASX200 has taken a huge beating over the last couple of weeks. Peaking at 5410 in late October to dropping like a ton of bricks to 4976 a couple of weeks later ... Then rallying for 5 days and making 300 of those points back and then flailing around around like a dying fish for the next week. That equates to a range of 434 points from top to bottom, It also equates to a few headaches for me and a LOT of beers consumed to help calm the nerves. What is going on? Who the hell knows? Bloombergs doesn't .... no other stock site I subscribe to has any idea whats going on...... and quite frankly neither do I. Unfortunately fear is ruling the market as I write this and how the f--k do we cope with these trading conditions? Here's my thoughts, ideas and practices on the matter:

My trading strategy (with the amount of money I had in there at the time)  really only allowed me to trade with a range of 350 points. Obviously this creates a problem and means I would have gotten sold out if I had not employed a range of strategies to counteract this fall.

TOP OF THE MARKET:
Looking at the graph at the peak, you'll notice the huge gains the market made on the right before the drop began. I felt this was unusually high. Lets say I was trading 3 x lots of ASX200 with each position I took out, but i had a feeling that high was an artifical high and stripped my trades back to 1 x position for the first few trades , then up to 2 x positions and the 3 x positions so that if/when the markets fell over I would not be trailing losses on x2 or x3  positions all the way down to the bottom of the market. This provided some very useful padding

SELL POSITIONS:
I took out sell positions against my buys so I was making money on market fluctuations in both directions my idea was to take out 1 sell every 20 points apart at the top of the market and 1 buy 20 points apart and later 2 x buys  when the market dropped a little this meant I was making money a little faster and added to my trading fund a little faster and gave me yet more padding to ride the wave down. This works well in normal market conditions and serves to help buffer your trading fund with a little extra cash in case  a big sell off occurs, but realistically it does  it NOT prepare you for a really big sell off, but it is still useful.



When it became painfully obvious that the big sell off was imminent (this is partly gut feeling / experience / news reports showing fear in the market) I took out more sell positions to counteract my buy positions. Not too many more so that if the sell off didn't occur I would be in a lot of trouble but enough that I could profit off the falling markets and keep my own positions secure. I then let the markets sell off that next day and closed off some profitable positions to boost my own cash reserves and hedge the bets in case it did go back up and put profitable sell orders on others in case of a reversal meaning i wouldn't get caught with a bunch of sells at the wrong end of the market in the event of a sudden reversal

Read: HEDGING YOUR BETS FOR MORE INFORMATION ON THIS

IMPORTANT:

With IG markets if you are trading both ways it is of the utmost importance to press the "force trade:" box on the trade screen right before you execute the trade otherwise your trade will cancel out an existing trade and invariably this will result in a  postion being closed at a loss (usually a big loss)  Ring your provider whether you are with IG markets or someone else about this and make sure you know how trading both ways works, IT IS ONE OF THE MOST IMPORTANT THING YOU NEED TO KNOW

Again, this does not mean you will survive a big fall but it does increase the odds of you surviving such a fall. Employing these strategies is how I survived he last fall. I WOULD have been closed out for sure.

I don't think things are going to quieten down anytime soon either.













Thursday, 19 November 2015

MY MAIN TRADING STRATEGY

HERES A SIMPLE  EXAMPLE OF MY MAIN TRADING STRATEGY:

IT IS A BASIC RUN DOWN OF HOW I DO THINGS BUT BY NO MEANS MY COMPLETE STRATEGY I WILL BE PUTTING THIS UP HERE IN SECTIONS BIT BY BIT,  AS TIME ALLOWS. IM STARTING TO GET SOME TRAFFIC TO THIS SITE NOW, SO IF YOU WANT THE INFORMATION TO APPEAR FASTER KEEP SHARING THIS SITE AND MAKE ME FEEL WANTED   :P

REMEMER: No strategy on the stock market is bullet proof or guaranteed to make you money. All we can do is stack the odds in our favour and hope it works out (which if you do the right thing it generally does work out well) Again .... Don't bet money you can't afford to loose, Capeesh?

First up: I use the http://www.igmarkets.com appication to trade on. Sign up with them and get yourself familiar with the platform. its fairly easy to use but if you want to use another platform thats up to you, i get nothing out of this and its more important you feel comfortable on what you use. The figures however may change dramatically on other platforms so be careful to take that into account when using this method.


I jump into the market with $2000 of my own money which means YOU have to deposit money in to your account. I generally feel that $2000 is a safe number in normal market conditions but if you're willing to take a punt on less money thats your choice.

I buy positions in the asx200 to go up and / or  down (depending on where the market is at the time) This would be one contract (which at time of writing this uses  around $26 of your equity)  If you can't find this search ASX200 $1 mirco contract in the search section and add it to your watchlist

Lets say for this example and for the purposes of keeping shit simple the market is low on my entry point into the market. I would buy one position to go up.

Then i wait to see what happens. It will either go up or down.

EXAMPLE 1:  IF IT GOES UP: lets say it goes up 10 points ..... I usually close off the position and take my money. In this example we are trading on 1 x ASX200 and each point it goes up makes me $1 so that would be a total of $10 (remember I use Australian money) 

This means if you put in $2000  you would have used $26 equity to buy the position and a small amount of brokerage it it showed a gain of $10 and you sold it then you would be left with $2010 in your account and nothing in your open postions screen. You can choose how much profit you want to take per trade but when trading on one contract I'm usually happy to take anything over $5

Then i would buy the same position back at the current market price and wait again.



EXAMPLE 2:  IF IT GOES DOWN: Don't panic let it ride out ... if it goes down more than 20 points (which will work out to $20 AUD) buy another position.

This will work out to $26 you have spent on the first position and $26 you have spent on the second position and a $20 loss of equity you have sustained on the first position. your account will therefore show $200 minus $56 (equity) and a loss of $20

Then again we sit back and wait.

It will either go up or down and (as in the previous example)  and you either take some profit as shown in example 1,  or wait and buy again if it goes down another 20 points. Then you sit back and wait again. Lets say the markets bounce back a little and your second position showed a gain of 10 points you would sell it and you would be left with your original position showing a loss of around $10 and your total would be $2010 with a loss of $10 with an available to trade balance of $1974 which is $2010- $26 (for the first postion) and $10 loss + $10 which you made on the last trade

YOUR SAFETY MARGIN

Basically if it goes down 20 or more points buy it again if it goes up sell it. This pattern works with a fair range so if you started at a certain point, lets say 5400 on the ASX200 this pattern will allow you to keep the pattern going for 15 or so positions going the wrong way with a range of 350-400 points  so around 5000 points. Basically if the market goes down more than that you stand to loose your money. Generally speaking I find it a safe trading range to start out and of course the more trades you make and the more equity you build up the safety margin increases. This also assumes that you buy them every 20 points apart. Obviously you can't watch the markets 24 hours a day so there will be many postions you buy say 35 or 30 or 40 points apart which will only increase the trading range you have.

Obviously the more money you have in your account the greater your trading range will be. The more of those little trades you close off at a profit builds up equity in your trading stash. I would generally make around $50 per day off trading on contract like this so if you trade for more than a month you might find you have $3000 equity and can track the market down a lot further, increasing your trading to range to around 500 points.

Generally speaking a 400-500 point range will be fairly safe in normal market conditions. However if you get caught up in a market crash you will most likely lose your deposit. But of course, I will show you other ways to safe guard your trading fund in future articles :)

This by no means is my entire strategy but it's the major part of it. It's shit simple and easy and has worked for me for many years now.

I will post more articles soon on:


  • How to safeguard your trading fund
  • Coping with market volatility
  • How to withdraw money
  • How to increase your gains
  • How to hedge your bets in falling and rising marketts
  • What to do in a crash
Stay tuned!

Monday, 16 November 2015

MORE ON MARKET VOLATILITY




Here's a great article on Bloombergs recently about the strange and highly volatile times we have been trading through of late.

http://www.bloomberg.com/news/articles/2015-11-12/five-strange-things-that-have-been-happening-in-financial-markets

Defs worth a read. Like I said before I've been trading a long time and I've never seen the markets swing around so violently and unpredictably. But at least I know I'm not the only one!

Saturday, 14 November 2015

KEEP IT SIMPLE - BUY AND HOLD STRATEGIES (Cont...)

Some more info on the "BUY AND HOLD" strategy.

I'm  a big believer in keeping things simple.

Stock markets through history have basically always travelled on an upward trajectory. Historically at a rate of 7-12% per year, depending on what index you're looking at. This sits true for most first world markets (US, UK, Australia, Germany etc...)

Long story short, look at a bunch of shares in your country that sit in the top 50 shares. Most Experts will say that you should spread your purchases over at least 10 companies in a few different asset classes. They'll mostly go up at some point and you'll be bound to make some money off either the share price increase or the dividend payouts. Its not that hard is it?

For more information buy local financial magazines and check out stock market websites for recommendations on what to buy in your country, look at company reports for dividends/earnings/forecasts etc.... you might be able to give your capital gains a good shot in the arm by picking the right shares set to rise

High dividend stocks are usually a winner too.... look at the dividend history of the company you are investing in, consistent high dividend yeilds will usually hold value better in turbulent markets and rise faster in strong markets

Of course there are some exceptions to this rule. What if you bought right before the 2008 GFC? Yes fair call there are some shares which are still lagging and feeling the effects of that doozy as I write this at the tail end of 2015. Even in that worst case scenario you would still be receiving dividend payouts from your investments.

Of course if you were putting in regular contributions to your share fund, anything you bought after that (like say in the latter half of 2008-2010) you would have gotten a lot cheaper than the pre 2008 prices so time would have equalized much of that out anyway.

Not everything you will be a winner, you'll have some purchases that really pay off for you in a big way and some that flounder around doing nothing and some that die a horrible death. But that's really just life isn't it?

In regards to buying and selling ..... just look at the graphs for that particular stock... check it out over the course of a year and and see where it sits in relation to the rest of the year. Is it down ? Buy it. Is it up? Either don't buy it, or if you do own it sell it.

You don't need any huge amounts of financial knowledge to play the markets like this.  I think its a great way to get started and a relaxed way to learn more about the financial world while your building your share portfolio.  Yes there is some risk but if you do the right thing and keep it consistent you'll come out ahead, and usually a long way ahead of someone that just kept their money in the bank.  If you're adverse to risk then really you shouldn't be involved in the markets to begin with or even reading this site. Anything worth achieving will have SOME risk component to it.

Basically find a pattern you feel comfortable with and stick to it.











Saturday, 7 November 2015

SWINGING MARKETS


As you get more exposure to the world of stock trading (and it is its own little world) you'll have a better understanding of what's going on around you and how certain things can affect the markets. I've been involved in varying degrees in the markets for almost 20 years now and things still suprise me. Lately I've seen a lot of movements that really seem counter intuitive, confounding me and many of the so called experts.  I have to say since the GFC many of the logical rules of trading have gone right out the window, never more so than the last couple of years where I've seen some massive swings in the market for virtually no reason (except maybe for market manipulation and computer generated trades)

Infact I will say I've NEVER seen the market so constantly swing around like this. this makes it really hard for anyone on borrowed money (either margin lending or CFDs) to hold their positions without getting sold out.

If you're buying shares outright you really don't have too much to worry about in this situation.... just keep holding on to your shares till they bounce back to a point where you can sell them (hopefully at a tidy profit). With the huge swings we've been having you might find there are plenty more profit taking/buying  opportunities if your timing is good

If you're on borrowed money you really NEED to do the calculations and figure out how big the swings in your particular feild have been and whether or not you can hang on to them if (and when)  those swings occur again. Again because I trade on the Australian market I look at the ASX200 as my purchase of choice and need to either be able to loose the positions I have in the even of a big swing going against me or hold on them (this year the ASX200 which is what I buy and sell routinely swung by 1300 points from top to bottom of the cycle. Outside of the major crash which sparked off the GFC I've never seen that happen. I would have to ask myself "Is it worth trading to a 1300 point (20%) swing?" The capital requirements for that would be exponentially larger than trading to  say a 600 point swing.

For the most part there's no real right or wrong answer for this but as long as you're aware of the risks and capital requirements for each scenario and most importantly you're not playing with money you can't afford to loose, I would say its always worth the effort and time


NOW FOLKS STAY TUNED VERY SHORTLY I'LL BE DETAILING MY TRADING STRATEGY WHICH ALLOWS ME TO LIVE OFF THE SHARE MARKET :)

Friday, 9 October 2015

BINARY OPTIONS

IQ optioin



I have to admit, I have never mastered the art of binary trading. I do intend to put some more time into these things and get a more in depth understanding of whats going on.

Basically what you're doing is taking a position on wether an asset will rise or fall in a set time period. It can be 1 minute, 2 minute and stretch out to hours or days depending on what options you choose.

There is a lot of "noise" about binary options on the net, saying you'll make $300 a day or $5000 a day or whatever. It has become flavour of the month with scammers and spammers everywhere. Its not to say you CANT make money out of these things but don't expect the miracles these guys promise. All I can say is ignore the hype. If you're trading shares (and doing it right) there's every chance you'll make this in due course anyway.

But lets focus on the Binaries. Here's an example of how these binary options work:

Lets say The asx200 is trading at 5250
I think it will go up in next hour so I put a $100 option on the asx to go up in one hour.

Lets say it ends at 5265 and I win the bet i'll get my $100 back and a return of (usually) $82 so a $182 goes back into my account after betting $100

Lets say it ends at 5235 i loose my $100 bet and get no return

Simple as that.

There are some good points with Binaries:

You only risk the amount you have specified in your initial bet

If you are good at them it is probably the fastest way to make money on the markets (I believe you can get good at them ... It's just that I haven't acheived any real level of success with them yet)

When you make an ill timed decision with any other type of shares you can loose much more than the initial deposit, it could loose money for months or years and drag  your portfolio down or even bury your portfolio in time,  whereas once you loose a binary trade its all over and you can move on to the next trade or reassess your own thinking on the movements of the market without letting it push your whole portfolio out of whack


There are also some not so good aspects with Binaries:

If you take out a short term bet all it takes is one guy to drop a whole of stock or buy a whole bunch of stocks on the market and alter the price and your choice (no matter how well thought out) can become a loosing or winning bet

If you have CFDs or long term choice if your purchase "jags" in the wrong direction you don't loose it,  you just have to wait until it comes good

My Personal View on Binaries:

I view binary trading a bit like gambling. You place a bet on a position to either go up or down and at the end of the binary term you either win or loose. All it takes to loose (or fluke a win) is for some key data to change the direction of the markets or some hedge fund to sell a huge batch of your chosen position to jag in in another direction and it can alter the course of your trade. Like Gambling the house takes a cut usually from 8-25%

I have pissed around with these things for a little while and I seemed to be getting better so I will let you know how i go, but from past experience it seems a way to tread water financially and personally I don't like leaving my trades in the hands of the "financial gods" so to speak

I have said before don't put any more money into the markets than you can afford to loose and that is never as true as it here: Most binary sites are regarded for tax purposes as "gambling" sites and this should hit home with you

Can you get good at these? Im not sure, i'll try again at some point and let you know how i go, next time i have money and time to waste and report back, int he mean time find a site where you can get in cheap and have some fun.

Also another point I want to stress is, I have found these things mentally very stressful as you tend to watch the graphs moving up and down and follow the trade too closely. I found it very draining personally (but this maybe different with you)

IF you're going to try this system out (and its a big thing on the internet, I hear heaps of people are making money on this) maybe try it on a site like http://www.iqoption.com where you can buy in for as little as $10 and place bets of $1  at least you can find out if this is for you or not on the cheap! I have signed up to IQ option an they seem alright so far with an easy to understand trading platform and a good range of assets

My favourate platform IG markets does binaries too (they call them 'sprint options') but you need to place minimum bets of $40 which I'm not really prepared to when Im trying to build an asset base, its cool when you've got a good foundation of money in there tho.

Friday, 2 October 2015

TRADEO - try it with their money!

Here's a great site I signed up to a while back they give you $25 to start your account. While $25 is never going to make you rich, its a great way to get your feet wet, you can place a trade or two and see if its something you want to look into further.

One important thing I really do like about this platform is that you can 'follow' successful traders and copy their trades, or use it gauge what others are doing.... it's like facebook for stock brokers!



SIGN UP TO TRADEO HERE

Tradeo social Trading



I'm still fairly new to this site, but so far it looks (and has been) fairly easy to use with a great range of assets to trade. I will definately be sticking with this site for a while to come and post in some more detail what I think about this site.

You might find that you don't want to trade, or maybe the stress of it is too much, but at least this way you haven't put out any of your own money



HOW TO GET STARTED


First up decide what you want to achieve, and what your goals (risk v return) are. How much you are willing to invest and how much you can add to your investment stash every month / year whatever. This is YOUR decision and no answer is right or wrong but obviously the more you put into it in both time and money, the more you will stand to get in return.

Be realistic, you have to live and function as an adult while you are doing this so there is no point putting your grocery or petrol money into this and not being able to show up to work, pay the rent or do what you need to do. put money in that you can afford to kiss goodbye for a while (or in worst case scenario permantly)

I recognise that most people can't just throw in huge amounts of money so maybe put in a monthly payment that fits in with your budget or something and keep adding to your share portfolio, over time it will grow. REMEMBER: Even if you only throw in $200 per month you're still $200 a month ahead of someone who isn't doing anything for their future

Remember with no sacrifice comes no gain. I know friends who routinely blow $300 on a night out at the club, taking drugs, drinking or gambling but will claim they have no money whatsoever to put into doing something that could change their whole reality. Again I'm not your financial advisor and I'm not here to tell you what to do, but if you're serious about changing your life you have to do something and its never easy.

If you're interested in trading shares (either a fully funded share account or margin lending) the quickest way to get started is to go to your bank and ask them if they have a trading platform. Most major banks should have one and for the time being its all the same.
For money transfer processes it probably works best if you open an account with the guys you bank with . Just go in and ask they will be more than happy to help you out with getting started

If you are trading in CFDs (the highly leveraged option) I would recommend you sign up with a site called http://www.igmarkets.com they have a great site and you can get started with a minimum amount of money which I believe is $500 (but don't quote me) however with CFDs I recommend you DON'T put in too much money in first up, because you will most likely loose it a few times before you get better at trading it... this is a more complex and risky platform for trading but of course holds the highest rewards for those willing to learn how to do it.
NOTE: I use IG Markets and believe to be an excellent platform. I have tried a few others and this one comes out best for me. It doesn't mean it IS the best, but it means its the best that I have used.

Friday, 25 September 2015

HOW CAN I PREDICT MARKETS?

Simple answer is there are are no definates

This is my opinion, so take it how you will, many people will try to sell you courses and video's totalling $1000's of dollars but really it comes down to a few key factors I do use graphs and fundamentals as well and keep these in mind but events over the last few years have shown there are some much higher factors at play than simply reading a graph

Are the markets sitting on a high or low?

Look at the graphs. Generally if the markets are low they will go up, maybe not that day but soon you don't need a $10000 course to tell you that. Not at this point anyway. These things have value don't get me wrong but for someone just starting up I don't think you need to do this. But thats your decision.

The most important questions you can ask yourself are:

Are they high or low on a short term basis?
Are they high or low on long term basis?

and then make your decisions accordingly


Is there something in the world that is causing a lot of fear? 

ie Greek Crisis, China Slowdown and the gold and oil sell offs late have proved that while fundamentals may look good you can't control everything that happens around you

There are certain things which are out of our control. The Gold crash of late july 2015 was fuelled by someone selling off 5 tonnes of gold which flooded the market causing the price to drop. You can't predict these things and neither can I.
The only advice i can give is to sit it out if you are not on borrowed money or hopefully you've left yourself with enough margin to cover short falls if you are.

Also another thing you can't control is institutional sell offs or buy ins. Some of the bigger firms which trade billions of dollars a day can single handedly spark a mass sell off or gain from one big transaction.

Triggered selling

This has been another thorn in my side over the last few years with computerized trading becoming really popular amongst virtually everyone who trades. many people who have "sell orders" attached to their holdings to automatically sell once their prices fall through to a certain point can get sold out on a sharp market drop, this can result in a cascading effect and push the market down even further as highlighted in the GFC of 2007/8.  Much of the trading now is automatically done with 'triggers' and unfortunatley it means that you have to trade with a much safter margin if you are on borrowed money than you did before the GFC hit.

Basically the rules of "saftey first" apply here, if you go in too hard you will eventually get stung. you might have a few success but you will get caught out in the long run




Sunday, 20 September 2015

STRATEGIES - CFD TRADING

Now this is where it gets tricky!

CFD trading is not for the faint of heart or those adverse to risk.

CFD (Contracts For Difference) trading is basically like margin trading on steroids. profits and losses are accelerated and you need to have a good understanding of how this works.

I have traded in CFDs for a while now and they are my instrument of choice but when I teach people on how to get started I always say only throw in what you can afford to loose, especially for the first couple of attempts you make at this, as you most likely will loose it while you get your  head around the concept of trading shares in a 100:1 lending ratio.

a 100:1 lending ratio is a big thing to comprehend as well. say you started up a CFD account on $1000 you would already have enough leverage to buy up to $100,000 worth of your chosen asset.  Essentially this means if your assett goes up 1% you stand to make $1000 but if it goes down 1% you loose your entire trading base. IG markets will generally sell you out before you go into negative balance but again check this with your provider before you put your hard earned money in. The last thing you want to do is loose your deposit AND have a debt to your service provider

As mentioned before I use a program called IG markets (I don't have any affiliation with them) which I whole heartedly recommend, I have tried a few others but this comes out on top for me. Great range of stocks, indexes, binaries, commodities and just about everything else you can ask for.

There are many tricks to using trading software this powerful and I will cover a few of them in more detail in upcoming articles


Friday, 11 September 2015

STRATEGIES - MARGIN LOAN

Ok this is a big step for a trader to trade on borrowed money.

Essentally the idea of a margin loan is to magnify your wins by the factor of how much leverage you can get against your original amount of money.

It is important to note that you can also magnify the losses you can make against these as well and depending on how your platform operates you may also accrue losses over and above the deposit you borrowed against. Best to check with your platform help team how they operate things like margin calls and sell offs. Some sites may give you a day to top up funds and others may just sell you out as soon as you hit a certain point and others might have inbuilt protection to stop your account going into negative territory whereby you owe the credit provider money for shares you don't even have.

This sounds scary but you need to know the effects of what a run of bad luck or bad stock pics and do to your account. if you are borrowing on a factor of 4:1 its not out of the question for a stock to fall below acceptable security levels and you will either have to put more of your own money in or loose the stock

One other factor you have to watch out for is that you are paying interest for your positions it is important to know how the bank or service provider you are with bills your interest and how much of it you will be paying vs. stock you will be holding. Some providers might charge interest daily some might charge it monthly.

Remember: in the event of a downturn you are still paying interest even though you may be holding on to stock for a long time until the stock recovers to the point where you can sell it off again.

Generally speaking if you are on say a 4:1 margin rate it would take a fairly huge downturn in the market to land you in trouble but these seem to be appearing once a year at the time of writing this you either have to be prepared to loose some stock holdings at a cost to your portfolio or be prepared to top it up with cash if need be

Friday, 4 September 2015

STRATEGIES - TRADING

As the name suggests you are actively trading shares if you choose to adopt this method. Which ever site you use should have news or information on whats going on in the world of finance and reasonable graphing software.


Markets usually crash or have a "correction" at least once (usually twice) a year. If you're a little more tuned into the market you'll be able to follow the news and have a fair idea if the market is down or up.

Your timing in this area is crucial. If you buy at a market low you have a much better chance of making a good profit on the upswing. best way to do this in my opinion is to keep saving your money and wait till a drop in the market occurs, at least 5% of the peak maybe even wait till a 10% drop and jump in. Again I would say choose solid stocks with a good return, as they are less likely to collapse in a market downswing. Many times if you time the buy in right you can make 10% on them in a matter of a few months.


Here's a favorate example of mine, It's an Australian share, Commonwealth Bank of Australia (CBA) graphed out using my platform of choice over the course of the last year or so (mid 2014-mid 2015) Looking closely you look at it you can find a few great opportunities both at the bottom of the graph where the shares took a hit (due to share market corrections and dividend distribution) if you were to buy in at the lows there was a 20% climb to where it peaked. Nobody expects you to get in right at the bottom and sell right at the top but even a 7-10% gain in the matter of months (and maybe a dividend cheque on top of that) is not at all unreasonable to expect. Many share traders will be able to buy and sell the same shares multiple times in a year and and make 20% per share using the market highs and lows.

Again same rules as "BUY AND HOLD" apply. try and spread your investments over a few shares, ideally at least 10 so that hopefully you'll be buying and selling and constantly generating money every cycle and if one share doesn't do what you expect it to at least most of the others should.

Most shares will follow the market and rise and fall according unless some major news within that company alters the share price.

Whether you hold out for a 1 percent rise and keep buying and selling more regularly or just move them around when the market moves in opposite ends of the cycle you should make money faster using this method rather than just buying and holding.

There is no right and wrong with this when you choose to get in and out .... if you make a small 1% profit it is still more than you had before and if you make 5-10 percent thats also good too..... 1% rises are easy to get and may occur a lot more often than 10 percent rises. you might make 10 1% trades or one 10% trade. either way you are making money you didn't have before.

This idea will work with most of the bigger shares on the market in either Australia, USA or UK indexes

There are more ideas i'll cover later but this is probably the main concept to get your head around





Wednesday, 26 August 2015

STRATEGIES - BUY AND HOLD

"Buy and Hold" is the most basic way to amass wealth via shares, as the name suggests you buy and hold them, not much more to it than that.

Having said that, do some research buy into solid companies that you are sure will be around years from now. Since you are basically using the dividend payments as income choose stocks with high and solid dividends.

Your trading platforms will all be different to what I use but most should have info on how much the dividends are and industry expectations on growth etc.... Since I live in Australia if I was to use this method I would by a good mix of banks, and a couple of big miners as I know they pay out solid dividends. But it may be different in your country

Also take note on how much your brokerage costs are. If you are paying $20 to buy a package of shares it can be a bit counter productive to buy them in $200 lots as you would be wasting 10% on brokerage maybe wait till you have a larger amount saved before you go in.  $20 on a $1000 package doesn't seem as bad does it?

Also it makes sense to buy across a few different industries and companies. Most experts would suggest you keep a portfolio of at least 10 different stocks as typically 6 might increase in value, one or might stagnate and one or two might decrease or worse still dissolve. Id hate to see you put all your money into one basket and loose it.

"Buy and Hold" is a great way to get started and while you're building your portfolio maybe subscribe to a magazine like "smart investor" I have found a few good ideas in that mag or bloombergs online any information you can start absorbing is good! You will start to get an idea if markets are high or low and if you want to accellerate your earnings a little you can move into the the next category of share trading

KEEP READING:





Saturday, 22 August 2015

UP AND RUNNING!!!!


Ok, we got the domain name How2tradeshares.com so now you can access this blog with the URL

http://www.how2tradeshares.com  - so bookmark it or remember it!~

I've posted some articles already focusing in on how to get started with share trading.... they are basic in nature and designed to get you started. I'm busy writing heaps more articles which will be appearing shortly so keep checking back and tell any friends you might have that are interested in share trading.

Before you start acting on anything in here, make sure you read the "ABOUT" section in this site... and then then start reading the "ARTICLES" page the posts most relevant to getting started will be listed there in the order they should be read. It will make much more sense that way than sifting through posts on the blog page... Got me?

Enjoy the page!

We'll set up a facebook / twitter and youtube pages in the near future as well!



Friday, 21 August 2015

TYPES OF TRADING

Ok, there are a number of types of share trading - you need to be familiar with these and choose a strategy which suits yourself, your lifestyle and your appetite for risk


SHARES - BUY AND HOLD
This is probably the safest, consistent and passive way to make money , you don't do much just buy the shares when you have money and collect the dividends as they pay out. Not much risk as you you are not on borrowed money but requires massive amounts of capital to get started. Probably has the lowest return, but hey... it's still cool. Its more of a long term strategy but at least you won't be having heart attacks on a regular basis if fluctuating markets are something that bothers you. To anyone doing this I would hope you have researched stocks that pay at least 5% or its probably not worth doing, just leave your money in the bank.

Important note: Warren Buffet made most of his fortune this way .... its slow, solid and long term but definatley has its upsides.


SHARES - TRADING
Still fairly safe, it is a bit more work but basically involves buying low (like say in a market dip) and selling on a market high. Other than requring a little work in reading graphs and having some idea how the market is doing (watching the news/internet etc...) its still fairly passive as an income strategy and doesn't require a lot of work but can increase your earnings from 5% to 10% maybe even 20% in a year.  This is where trading can become rater lucrative.

Only down side is that it still requires a lot of up front capital to invest before any reasonable income is achievable


MARGIN LENDING:
This is where shit starts to get serious. Essentially you take out a loan based on the value of the money you have to trade with. Example: I have $20,000 and I take out a margin lending account with my bank .... this will allow me magnify my share purchasing power.  of course this magnifies the risk too.

I opened up a margin lending acc with my bank.... (your bank probably has one... or talk to a bank that does if this interests you .... i think they're all the same from my experience) which could lend me a ratio of $4 to every $1 I had in there (4:1)

A quick example of how this works is that say I have  $10000 and I think a share is going to increase in the short to medium term (say 6 months to a year) I would use margin lending to buy up to $40000 shares.

 Lets say I was right and six months later the shares put on 10% i would make $4000 in equity evaluation  (plus any dividend hopefully 2.5% in 6 months minus any interest charges which might negate any dividend anyway but its worth noting when the dividends are due) you are left with a profit of upto 40%. this is not uncomon either and was typical of what I  was making when I traded on a margin.

Lets say I was wrong and the shares lost 10% I  would make a net loss of around 40% ($10000-$4000) which meant i would have to either hold on to the shares till they got closer to break even or made a profit or sell at a loss (remember interest is being charged the whole time you hold margin loaned shares)

Margin lending, I think is a great tool to start making money regularly if you have time to watch the markets and some appetite for risk but you need to be aware of the risks involved and not be playing with money that you can't afford to loose. This is a tool which makes it possible for average wage earners to transform their lives  and earn extra income from shares or even replace their income. without huge capital to start with

CFDS
This is similar to margin lending but for lack of a better word, is margin lending amplified. I frequently trade on these and get ratios of 10:1 upto 200:1

I watch the markets regularly and this gives me a chance to make great money without huge capital outlay. if we use the above example of buying a $10000 share package and it gains 10% with this i can make double my money on that 10% rise (minus any interest charges of course) or if it looses 10% i can loose the entire deposit.

I use this as my tool of choice but beware: CFDS's can giveth and take away in the blink of an eye!

Generally speaking I can make close to 1% a day when I'm trading on these things and provides a great income, until the markets fall apart and I have to start again







WHY SHARES?

SHORT ANSWER:

Basically because they tend to make more money than simply putting your money in the bank.

ADVANTAGES  OF SHARE TRADING:

Well picked shares should increase in value and pay out dividends generally speaking it shouldn't be too hard to find shares that yeild over 5% per annum and hold their value. Where at the time of writing this most bank accounts will struggle to yeild over 2%

Shares can increase or decrease in value as well so if you pick your stocks well, you can pull in your dividend and gain an increase in the value of your stock holdings as well.

So lets say you buy $10000 worth of shares in a company you might get a 5% dividend and the stock might also increase in value by 5% (not uncommon in shares) so if you sold your holdings  you could have made 10% in one year versus 2% by holding your money in the bank

DISADVANTAGES OF SHARE TRADING:

Shares can also decrease in value. You need to be aware of this.

Companies (just like any business) can have good and bad years or in some cases go broke. Shares are also subject to market sentiment, Which means that a company can be going well but fear, or panic in the market can artificially push the value of that company down. For example in a market crash or even the GFC which happened a few years back.


Either way with trading, time is your friend. If you buy in gradually (don't use money you need in the short term) most well thought out investments will pay out for you in the long term even if you suffer a short term drop. Generally speaking if you buy in a reasonable time (not at a market peak) and can hold out for a while the markets tend to go upwards.

WHAT ARE SHARES?

Some of you will know this already but some wont.

Generally speaking the most basic example I can give is that shares are  representation of your holding in a publicly listed and traded company. For example if you have 10000 shares in a company that issues 1,000,000 shares you control 1% of that company and are entitled to 1% of the profit distribution.

In the past shares were traded on an exchange floor (for example the New York Stock Exchange) and you would either have to be a trader or pay a broker to buy or sell shares on your behalf. Now with computer technology almost anyone can buy and sell online with a very minimal cost - this opens up the market like never before to the average person.

NEXT ARTICLES:

Why Shares?
Why do shares move up and down in value?





Welcome to my blog

Welcome to my blog on how to trade shares. I'll be posting a series of articles on this blog to help you out with your share trading ventures. This will include hints tips and strategies for staying alive in what has been a wild ride over the last few years and of course some wealth creation strategies.

First up I should say this blog DOES NOT contain financial advice as I'm not qualified to give you advice ~ but more a means to share strategies that have helped me acheive a level of self reliance from the share market and create a better future for myself.