Your Questions About Successful Traders Make

Jenny asks…

What kind of career would you need to buy a bugatti?

I know its realy expensive and I was wondering what career you will need to buy a expensive exotic car like that. Also how much does it cost per month and stuff like that.

John answers:

Learn to be a successful foreign currency trader…

You can drive the car of your dreams.

You would have to have more money than brains to be driving around in a million dollar + car?!

Does this help any?

William asks…

How has belgium impacted the culture of the United States?

This is something that I have to answer for my history project and I have no idea how belgium has affected the U.S. other than belgium waffles.

John answers:

Benelux (Belgium, Netherlands and Luxemberg) or the Lowland Countries were countries in which the European banking/trading had oriented. These for centuries had been successful traders and commercial pioneers.

So many of the early immigrants from there into US had brought with them years of experience in shipping, trading and banking. This were important foundations for US to rise as a world power.

If you are not aware, New York was actually called New Amsterdam before later the name changed to New York to increase the British influence.

Susan asks…

What is/ are the best guide/s to understanding stocks?

From the basics to advanced, everything. A comprehensive guide which will allow me to invest without fear and perhaps an edge. Thank you for any suggestions.

John answers:

Great question. Getting to the point where you can invest without fear is a process. The process includes books, research and a real passion for trading/investing.

I would recommend the book How to Make Money in Stocks by William J. O’Neil because it’s a pretty well-rounded resource. It describes what kind of fundamentals to look for in a stock, a bit about how to look for patterns in stock charts and how to protect your capital. It’s the first book I read when I started my stock trading and a very good start for stock investing or trading.

The really successful traders all talk about having an edge. As someone who has been doing this a long time, I can say that it just takes time to first understand what an edge is and then finding it. I say it that way because there are many aspects to trading and each will resonate at different levels for different people.

There’s also the factor that certain aspects of stock patterns change so the edge can be different at different stages of the market as well.

For me, an edge can be found in disciplined money/risk management for starters, knowing when to scale into a strong position and finding a way to confirm what you think is a strong price movement. That can be done by developing a variation on a theme (taking a common strategy and applying additional information). You can do this after you understand enough about what makes a stock price trend. It really just takes time. I wish there was an easy answer, but that’s the best answer I can come up with.

I’ve created a website that attempts to be a guide to understanding how to trade successfully. It has no ads, nor am I trying to sell anything. I just want folks to be successful in the stock market.

Again, great question.

Betty asks…

Is there an easy way to find out the true earnings of companies?

Many companies nowadays exclude the so called non-recurring expenses from the earnings they report. Which makes their earnings seem better than they actually are, especially if these companies keep having some non-recurring expenses every quarter and every year.

It’s like I don’t buy a TV every quarter or a car every year. But if I keep buying something different every quarter, then my expenses can easily exceed my earnings every year. And eventually I can end up deeply in debt and bankrupt as a result of all of these non-recurring expenses.

I’d like to know what the real net earnings of companies are with everything included. But that kind of information seems to be awfully hard to find. And it’s hard to trust the numbers at various websites because sometimes companies include everything in their earnings reports and sometimes they don’t include everything.

John answers:

One answer is to look at the income statement on yahoo finance and recalculate yourself.

Remember, sometimes non-recurring items are income and not expenses.

The other choice is to do what most successful traders do: follow the trend. Buy it if it’s going up and short it if it’s going down. All the numbers can be cooked by management. Look at Enron and CWTR.

Chris asks…

Do you have a step by step process for analzying a stock? Is there a step by step process available online?

I have been reading a lot about fundamentals and technical information. The problem is organizing myself so I know where to start. What’s the first thing you do when you look at a stock? Financial statements? EPS? P/E? I wish I could organize the process until I get better at it.

John answers:

A short term trader generally only use Technical Analysis. Looking at financial statements, P/E etc is a waste of time because the price action in a short period of time is generally not reflected in these numbers.

So… The question really is… What type of trader/investor do you want to be.

Both Technical and Fundamental approaches are more of an art than a science. Two successful traders/investors can look at the same info and come to totally opposite conclusions. The key to their success is how they manage their trades. Risk control. Knowing when to get out of a losing trade. Knowing when to get out of a winning trade.

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