Day-Trading Money Management and How it Effects Your Psychology

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Day-Trading Money Management and How it Effects Your Psychology

Money management is very import in Day-Trading. Warren Buffet’s golden rule was to protect your capital and this must be followed in Day-Trading.

To protect your trading capital or trading bank in Day-Trading the use of a stop-loss is normally used.

It is important to have a profit target as well. This means that you have a pre-determined maximum loss as well as a preset profit level.

Dave a Professional E minis Day-Trader believes that it is vital to have at least a two to one profit to loss ratio. That is that your profit target is at least twice what your stop loss is.

This is important because if your profit target and stop loss are the same, it means that you need to be getting it right at least 70% of the time to be making any money. However if you have a two to one ratio, even if you are only getting it right 50% of the time you are still making heaps of money.

More importantly by having this two to one ratio it makes it very difficult to lose money. You need to be getting it wrong more than 70% of the time to start losing money.

Another important part of money management is to be able to start off Day-Trading with a small amount of money. When first learning it is likely that you will make mistakes, so it is better to make a mistake with a little bit of money rather than a lot. If you make a mistake with a small amount of money you are likely to continue, however if you make a mistake with a large amount of money typically you will feel a lot of pain and therefore stop trading, never learning from your mistake.

When I first started trading I was using a strategy called credit put spreads. I was doing very well for about a year, right until Hurricane Katrina. In the two days following Hurricane Katrina I lost $80,000 which was all of what I had made the previous year, and then some!

After this experience it took me over a year before I could place a trade again.

If I had learnt the same lesson by only losing a few thousand dollars I would have been able to get back into trading a lot faster.

Because, is losing a few thousand dollars the end of the world? Most people would say no. Is losing $80,000 the end of the world? Some people would say yes and some people would say no, I can tell you it is not the end of the world, but you can see it from there!

Also when you are first learning to Day-Trade or any trading, by starting with a small amount of money it takes the pressure of trading. The psychology or mindset is the most important part of trading.

If you start off with a large amount of money, an amount that will cause you a lot of … Read More

Living Too Close To The Bone

World Finance
Living Too Close To The Bone

In the western world, most of us choose to live close to the bone. Note that I stress “choose.”

In my early twenties, I achieved very rapid success in my career, being promoted several times in less than five years. I went from slightly more than minimum wage to a salary that would, in today’s dollars, be roughly $105,000 per year. My wife went from being a typical starving student to a registered nurse, earning (again, in today’s dollars) roughly $75,000. I also started a new business, determined to make my fortune quickly.

From living in a rooming house, I acquired a new home, new truck, new car, new RV and new furniture. Along with all of that, we also acquired new debt. For every raise in pay, we increased our debt load, always making just enough to maintain our lifestyle. When divorce hit, so did the financial crisis. Our incomes, together, were barely sufficient. Now that we had two households, our outflow greatly exceeded our income. In short, we had lived our lives too close to the bone, with no reserve or safety outlet.

This is the way many of us live. We spend what we have, acquire more than we need, and suffer the consequences. There is no doubt that the tremendous stress under which we found ourselves contributed to our failed marriage. There is also no doubt that it was the choice to spend more than we needed to spend that caused most of our stress.

I have a relative that recently purchased a house. Smart move? He also had recently purchased a new truck. He loves to enjoy his weekends, and takes numerous trips. He makes a good wage, and felt that he could afford these indulgences. Six months after purchasing the house, he was forced to sell his truck. He was, like us, living too close to the bone.

There is a simple solution. So simple, in fact, that it seems to be unacceptable for a lot of us. Want less. Need less. Spend less. Save a little. If we, or this relative, had set aside a small reserve fund each month, we would have survived.

The reserve is like your bottle of Aspirin in the medicine cabinet. It doesn’t have to be powerfully effective, or large. It needs to relieve some of the pressure.

Oddly, just knowing that you are not cutting your finances too closely alleviates almost all concerns.

Again, when I was in my twenties, I had begun experiencing tremendous chest pains, across the entire width of my chest. I was convinced that I was responding to stress. Nonetheless, I consulted my doctor, who prescribed nitro pills, to be held under the tongue if another attack occurred. This is the same medication used for heart patients, and I was only twenty-eight!

I purchased the pills. However, just having the pills available seemed to do the trick, and I never again had a chest pain. Stress remained, though, and within three months, I … Read More

Forex Trading and Its Intricacies

Financial News
Forex Trading and Its Intricacies

While everyone knows the stock market is constantly changing, sometimes it takes a huge turn. The Internet shocked the Wallstreet to its roots, flipping the world upside down as it seemed to brokers; allowing even Jane and Joe Public to join the bandwagon of traders. Now the biggest thing to hit stocks is the Forex market. Foreign Exchange, or FOREX trading allows anyone on earth to trade internationally 24 hours a day, and make a profit no matter what their nations economy looks like. While some consider the Forex market a safe investment option, one twist of the market can bring an entire portfolio crashing to its knees. The fact that Forex trading is live all day long makes it difficult for traders to keep from losing money overnight. For this purpose, software developers have launched Forex robots; software programs that expect and react to every market trend.

These automated online traders use advanced algorithms to make money on the stock market; competing at the same time with other bots as well as humans. Because they can orchestrate multiple trades at once, every second of the day, all a user needs to do is put in money to invest, turn on the robot, and let it earn money. In just a few days, investors can see a fruitful bounty in a diversified portfolio that literally makes money as they sleep. The Forex market is alive with entrepreneurs; with almost $4,000,000,000,000 switching hands everyday.

The trick to trading Forex is finding the best robot. The ‘stand strong’ theory plays very well in this situation: the Forex robot with the superior algorithm trounces the others and brings in a hefty profit for its owner. While customer reviews can be a nice way to judge a Forex robot, many times over enthusiastic users will proudly write up five star testimonials without having tried other robots that might have generated twice the profit. We have carefully sifted through dozens of features and hands-on experience to bring you a tried and true standard for Forex robots.

Safety always comes first; and in the world of Forex, any robot can easily seem like “the one”, but unless you have experimented with dozens of bots, its hard to tell a treasure from a trashcan. Sometimes sellers will show the best few months of trades their robot made, while hiding the larger portion of track record from you; causing you to make poor judgment based on little data. To successfully choose between the good and the rubbish, at least a one year track record is needed, if not more so.

Another built-in must have feature to look for in a winning Forex robot is a dynamic function that shows you the amount of capital needed. Never guess with Forex, one mistake might lose all your gains. Only robots that provide you with exactly how much money to invest should be candidates for your choice. A good Forex robot should protect your investment and making it grow, not dash … Read More

Trading – What 4 Key Rules Will Ensure You Keep To Your Rules And Ensure Your Success?

Home Finance
Trading - What 4 Key Rules Will Ensure You Keep To Your Rules And Ensure Your Success?

I am a great proponent of utilizing your intuition, instinct and ‘gut’ feelings.

However, In trading – and day trading especially, your instincts can be wrong most of the time

 almost all the time when you are trading scared or under pressure.  Your instincts will be wrong when you are feeling emotional and you are ‘second guessing’ your rules or your plan.

When you look back over a period of time and ask yourself ‘If I had done the opposite of what I did do in the last 1-2 weeks, or if someone had tricked me into buying a put instead of a call or a call instead of a put – ‘my trading account would have done wonderfully!’

What does that tell you?

It does not tell you that you are stupid or don’t know what you are doing.

‘So, what does that tell me Karen?

It tells you that you are normal!

Almost all traders have felt like this at some stage in their trading life and it was telling them the same thing as it is telling you NOW.

Trading any market is about human emotion.  The markets driver is emotion.

You must have trading rules and a trading plan and most importantly, you must be able to stick to your rules and plan under ALL trading conditions.

Sounds easy huh?

Well, if you have been trading for any length of time, you know that it is easier said than done.  Particularly in the early stages of your trading journey.

Once you start trading scared or nervously – you will continue to make mistakes if you do not stick to your trading plan.

When you are trading under pressure – it will feel like you are doing the right thing by veering away from your plan and the rules that you have set down.

If you can look at your recent trading history and can really say that if you had have bought a put instead of a call or a call instead of a put – then you instincts are indeed probably wrong.

You can’t trade off gut feel you have to trade off rules – let you intuition be your back up guide but never trade on instinct, intuition or ‘gut’ alone.

Again, I stipulate.

Trade off rules!

Stick to your plan!

‘So, Karen, what are the keys to sticking to my plan and keeping to my rules?’

I hear you say.

Understanding yourself and how your mind works, is key.

Having processes in place to best manage your time and how you trade, is key.

Having faith and belief in what you are doing, is key.

Utilizing the power of your unconscious mind to ensure your beliefs are    aligned with your conscious desires, is key.

Are you sick and tired of the emotional roller coaster of trading and want to be able to stick to your rules?

Want to know more?… Read More

What Can a Cash Advance Online Offer You?

Investing Money
What Can a Cash Advance Online Offer You?
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By now we’ve all heard about the famous (or infamous) cash advance online. You’ve either come across a website offering a cash advance, or you’ve seen or read a news report about them. More often than not, a news report features cash advance online borrowers who have abused the system and gotten into more debt because of their poor financial habits. Thus, these loans have gained a bad reputation.

The short term loan, however, is not as bad as those news reporters will have you think. By focusing on stories of people who can’t manage their personal finances and use the cash advance online not as it was intended, the reporters have hyped up the downside of this type of short term loan. Of course you could focus on the bottom of the barrel in any situation, and make any product sound like the worst possible product ever to hit the market!

We want you to know the true story, how a payday loan can help just about anyone, given the right circumstance. The people they feature in the horror stories on TV, showing how bad a cash advance can be, are the low end of the typical user cash advances online. These people apply for cash advances online without knowing whether they will be able to pay back the loan in two weeks. They don’t save enough out of their next paycheck to cover the loan when it’s due, and they roll over the debt, accumulating fees and interest. Any payroll advance website will clearly warn potential borrowers: make sure you portion out enough of your next paycheck to cover the loan when it’s due, or you will begin to incur interest and fees.

The people on the dramatic tv reports who make the loan look bad, also take out the loans when they don’t really need to. Again, most loan sites will warn potential borrowers that a cash advance online is for emergency cash. Car repairs, sudden medical expenses, utility bills and so forth count as cash flow emergencies. Shoe shopping does not! If you take out a cash advance online for an impulse splurge purchase, you are not using the loan wisely.

Unlike what those tv reporters want you to think, most people who take out a short term loan are responsible, and turn into satisfied customers. They need emergency cash, they take out the short term loan, and pay it back on time. Satisfied. After all, our website is full of customer testimonials attesting to this fact. Thousands of happy customers who greatly appreciate the service provided by our cash advance online company.… Read More

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