Your Questions About Successful Traders Make

Donna asks…

How do day traders predict price movements?

This is more of an interest than anything else, I do not have the money or patience to day trade 🙂

But I would like to know how daytraders predict price movements and there methods of “madness” to make a profit and guess the market.

The more info and methods the better.. Looking to learn as much as I can about the market from any standpoint.

I appreciate your time!

John answers:

Most day traders use “Technical Analysis” to help guide their trades.

We do not “predict” what’s going to happen (predicting what’s going to happen the next minute or hour is a fools game). Things like guessing, hoping, expecting etc are not in the vocabulary of the successful day trader.

A day trader looks for an “edge”…… Information that gives them an indication of the trend, for usually a very short period of time. I use 5 minute charts as my guide (many day traders do this also). We look for direction, strength in the momentum & support and resistance to decide when to get out of a trade (to make a profit or cut our loss). Being proficient in Technical Analysis can take 2-5 years.

Being profitable 50% of the time is considered very good. The key is to have your winners be at least 2-3 times greater (or better) than your losses….. So…. My average “win” may be $150 while my average loss will be $50.

In effect, trading money management and trading psychology are just as important as “technical analysis”.

95% of the people that try day trading quit in a few months. Many of them lose significant amounts of money.

Hard work & lots of time in learning and studying market action & patterns is required. I attend many webinars…. I’m always reading trade periodicals and books. The books vary from how to read charts to learning about yourself and the markets psychology… Plus managing your trades.

I hope this helps.

Jenny asks…

What is required to be an independent contractor in Australia?

I’ve registered my business with and the Queensland Government. I’ve received my A.B.N. and certificate. I’m in the process of registering my business bank account and researching my workplace insurance cover. What else is required to be an independent contractor in Australia or the state of Queensland? In other words, when a recruitment agency tells me I’m successful for a contract and asks me if I’m going through my own business, what am I to present to them in order to get to the contract signed and the money coming in via invoices???

John answers:

You have to comply with your taxation obligations as an independent contractor in Australia. Aside from ABN, there are other things you have to ensure:

Tax File Number (TFN)

A TFN is a unique number issued by the ATO, used to administer tax. If you are operating as a sole trader you must use your individual TFN. If you are part of a partnership or a registered company you will need to apply for a separate TFN.

Australian Business Number (ABN)

Independent contractors need to have an ABN to use when dealing with other businesses. If you do not have an ABN before undertaking work, your hirer may legally withhold the top rate of tax, plus the Medicare levy, from your payment.

Goods and Services Tax (GST)

As an independent contractor you will probably need to register for GST. It’s applied to most goods and services sold or consumed in Australia, so it’s likely your service will be subject to GST.

Personal Services Income (PSI)

If you operate as a sole trader, you are entitled to claim certain expenses as tax deductions necessary to earn your income. The PSI rules may affect the deductions you can claim. If you operate as a partnership, the partnership is entitled to claim certain expenses as tax deductions that are necessary to earn the partnership income. Each partner must pay tax based on net income. The PSI rules may affect the allocation of income and expenses between partners. If you operate as a company or trust, the PSI rules may particularly affect you. The rules cover such issues as retaining income in the company, splitting income and some deductions. The ATO website tells you how to determine whether your income is classed as PSI.

Voluntary withholding tax arrangements with your hirer

You may be eligible to enter into a voluntary agreement with the hirer that will enable the hirer to withhold tax for you. This may simplify the administration of your taxation. Further information on this option is available from the ATO.

Pay-roll tax

Pay-roll tax is a state tax on the wages paid by employers. Many state and territory pay-roll tax laws define wages to include payments to independent contractors. Hirers should check with state/territory revenue office to determine whether payments are considered wages subject to pay-roll tax.

Robert asks…

What are the best Brokerage houses! I am a new trader, currently trading with Fidelity.?

I am only 19, yet I began trading a few months ago. I have been pretty successful, I mainly buy blue chip companies on 52 week lows, and try to sell them as high as possible. All and all I have made money, maybe it was luck and timing, or maybe I actually did something right, any advice on that would be appreciated too. Anyway I currently use Fidelity for the Credit card that they offer, I receive 2% cash back on all purchases which goes into my brokerage account, so its a great deal. Thats what attracted me to them. I have been looking into TD Banks trading, as-well as options house, what looks so appealing about options-house are that trades cost only $4, vs. $8 that Fidelity charges. Any input, advice, or experience would be greatly appreciated. Thank you for your time!

John answers:

Go with TD Ameritrade. In addition to low cost, they have excellent option modeling tools and will provide person-to-person RIA advice. Beware of options trading, because you can lose more than your investment amount due to leverage.

For your situation, I recommend high divided multinational US-based companies with emerging market exposure (e.g., Monsanto, Caterpillar… CAT).

Joseph asks…

How do traders execute trades?

How do traders determine the right entry point in stocks and when to get out? Is it trading the volatitily of the market, right?

John answers:

Well that’s the holy grail isnt it? There is no one answer to this question. Each successful trader has their own trading system that matches their investment goals up with their risk tolerance strategies. So, my advice to you is take the time to develop a trading plan that fits your desired trading style.

Most effective trading plans are a marriage between technical analysis and chart patterns. There way too many technical indicators too list. Again, find one or two that you like pair those up with candlestick chart patterns. The key is to be consistent. Use the same rules over and over again. A good trade is one entered and exited based upon rules regardless of the outcome.

The final piece of a good trading plan is developing the right mind-set – a trader’s mentality. Their a desired psychology that one needs to develop for trading. Learn how to be disciplined and how to trade without emotions and you’ll be down the right path.

Donald asks…

why are democrats against successful businesses?

somehow when a business does good and becomes successful all of a sudden they are an evil corporation. do you realize that the american dream is to come to america and be successful? thats why capitalism works and it is why we are the most powerful country in the world. so democrats how is success evil?

John answers:

Point to a case of a democrat criticizing a business that was or is successful on its own merits – I.e no cheating.

If you are referring to companies like Bain, which prey on other companies, yes democrats critize that. If you are referring to companies like Enron which swindled a whole state for personal gain, again dems are not on your team. If you mean solid ethical companies like Costco and Trader Joe, we are all for them.

Learn the difference.

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