Your Questions About Successful Trading

Carol asks…

Does anyone happen to know how to get your trading card game publish by a company?

I wanna make a Trading card game and i jst wanna know how these things are done.

John answers:

Step one – make a working model
step two – make up a set of playing rules
step three – protect both, get them patented
step four – send a letter to companies looking for new game ideas to market
step five – make an appointment to demonstrate your game
step six – repeat steps four and five until successful.

Ken asks…

how do most successful investors trade?

do most do covered calls? options? shorting? mutual funds? i dont even know how many their are… do most do daily trades? weekly trades? long term?

John answers:

Let’s start with some definitions. (I will be limiting my comments to financial instruments, aka securities, even though it is perfectly possible to invest in other things like rare paintings, rare coins or rare bear cans.)

Investor: a person who buys securities based primarily upon fundamentals, such as company management, product and financials. When an investor buys securities he normally plans to hold the security for a long time (years or decades), only selling when there is a change in the fundamentals or when he finds a better use for the money..

Trader: a person who buys and sells securities based primarily on technical analysis of the previous price changes in the security. Traders normally close positions minutes, hours, days, weeks or sometimes months after opeining them.

Successful: consistently making profits averaging more than the rate of inflation without taking excessive risks of major losses.

I believe most successful investors buy stock of quality companies or other financial instruments (such as ETFs or mutual funds) that are based on stock prices. I say that because (1) stock prices go up over any extended period of time and (2) it is possible for everyone who owns a stock to make money when the stock price goes up without someone else losing money.

Many other ways of investing money, such as options, futures or the forex, require another person to lose a dollar for every dollar made. They are called “zero sum games” because, prior to expenses, the average profit is always zero.

The average successful investor may sell a covered call, hedge with an options position or short a stock sometimes, but not regularly.

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Most people who try trading instead of investing lose money, but those who are very good can be very successful. That makes a lot of sense if you think about it. For example, since options are a zero sum game and most people who try trading options lose money, the few who make money share the money lost by the much larger number of people who lost money.

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I don’t have any data to support this statement, but I am confident the majority of long term investors are successfull while the majority of traders are not, but the biggest profits are usually made by traders instead of investors.

Sandra asks…

Question about stock trading?

I recently became interested in stock trading and I may want to get into that after I graduate. I have a question for people with experience as stock traders, especially independent stock traders. How successful is it? How much profit do you make? Are stop losses and stop limits effective methods to avoid huge losses? I just want the best advise out there.

John answers:

There are many people who are very successful with trading.

The amount of profit one makes is not the most important factor in trading. Many trader are more concerned with how they protect what they have rather than the dollars of profit they make.
For the average trader, not all trades are profitable, but with a sound money management program you can accumulate great wealth

Yes stop orders are very effective depending on the securities you are trading and the markets you are trading in.
Traders NEVER get involved with “hugh” losses, once again this is because they have a sound money management and trading program in place

To be a trader you must first learn how to invest. You must know the products and the markets in which they trade, how security transactions are cleared and more importantly you must know the rules that govern those products and markets. So you must know what you’re doing, why you’re doing it, and how to do it. You should start by reading “Investing for Dummies” by Eric Tyson.

Here’s a list of books you should consider, at least read half of them
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas

And when you think you want to trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/

Before you enter your first order you need to address four major policies and have very strong discipline to follow them
1 – You need a written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself. Always use stops either to protect you on the down side or to lock in profits on the up side. Never trade on emotions, when emotions get involved walk away. Don’t try to out-smart the market, you’ll loose but if you always take what the market is willing to give you, you’ll be successful. Other words, you don’t trade against the trend since the market is always right. And NEVER trade on emotions, once you let emotions in your trades you will loose
2 – A written money management program is essential. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested. Never go into a trade without knowing when and where you are going to get out of it. Never let a loss on a trade get greater than 8%-10%, always take you loss and walk away – don’t loose more than you need to and don’t be afraid to take the loss. Remember you never can get hurt taking a profit. Never average down, but you can average up.
3 – You must have sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you can trade and/or invest. Margin can be used but only with restraints, never let the account wall below 45% equity. Unless you fully understand margins you should not use it.
4 – A full and complete understanding of the rules & regulations of the industry. If your going to play in the game be sure you know the rules of the game and always follow them.

Unless you are willing to study and follow the above you will never make it as a trader. To be successful as a trader it takes work and constant study of the markets and the products traded in those markets, there is no easy way.

Helen asks…

what are some important components for successful trade?

what were some necessary factors for ancient trade other than weather and the basic supplies (people, ships, product to trade, food/water, etc)?

John answers:

Exchanging one item for another .local groups were best for that . On commerce well an essential component was imprisoning people who though public funds should be allocated to the community and the workers should own and make the goods for themselves . That public books be made hence teerm public not for profit. Like the way the u.s. Works and world bank .people who disagree are arrested and beaten by the police .no beaten first and then arrested for protesting.
Though erlecting members of banks for accountability helps trade.

Lisa asks…

Has the U.S. trade embargo on Cuba been successful? Why or why not?

John answers:

The trade embargo with Cuba is not successful because there are plenty of other countries that wish to trade with them. It was only the United States that had a problem with Cuba’s regime change and subsequent romance with Communism. The Russians have had a healthy trade with Cuba since the early 1960s.

Basically, trade embargos can only work if they are universally adhered to. This one is not. In fact, some countries around the world believe that the trade embargo with Cuba is unjust (possibly illegal) and only serves to hurt the common people of the country.

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