Your Questions About Successful Trading Plans

Linda asks…

What Are the Best Ways to Be Successful at Day Trading?

What are some information and effective ideas, concepts, strategies, etc. to make lots of money and become a success at day trading?

John answers:

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.

All my traders, both equity and option traders all had the same belief, you must be nimble at all times. You follow the crowd, you take what the market is giving you and you never go in there to be a hero by trying to set new trends. You don’t have to make a profit on every trade, sometimes it’s more important to trade in order to protect what you have.

Most of the time traders look at situations not so much as how much they can make but rather what’s it going to cost them and how much could they loose. There are many days where traders have to walk away from the markets since they do not want to “force” themselves to take positions.

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.

Goiod luck, if you don’t understand the markets you’ll need it

Donald asks…

How can I make my Stock Investing strategy work?

Hi guys. I have currently been messing around with a stock market simulator run by MarketWatch by the Wall Street Journal. I have been making a killing day-trading using this simulator, but upon using real money with a real broker, I found that MarketWatch is not an accurate representation. This is because Marketwatch does not include bid and ask prices, like a real broker does. Marketwatch buys and sells based off of the Nasdaq Last Sale price (NSL), and the rules of supply and demand don’t apply. So this has proved detrimental to my strategy so far. My strategy on MarketWatch was to find a stock that was cheap and only fluctuated up and a down a penny several times a day according to the NSL. But when I tried this with a real broker, I was confronted with the reality of bid and ask prices and realized that sales through a real broker are not made based off of the NSL, but rather the bid/ask prices. Is there a way I can adapt my Marketwatch strategy to a real life scenario with bid/ask prices? I’m a bit confused. Thanks for the help!
Meh, someone else helped me and showed me it all matters on how you set up your limits buying and selling. In other words, it works. Thanks anyways.

John answers:

Welcome to reality Trading on a simulator can not and does not equip you to be a trader in the real world. You have not learned anything about being a trader, you don’t understand the markets and how they work. To be sucessful as either a trader or an investor you first must know what you’re doing, why you’re doing it. How to do it, and the rules that govern what you’re doing. You’re not there yet.

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

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

Carol asks…

Why is trading always associated with gambling?

I know in gambling there is the essence of making money quickly especially if you hit the jackpot
and you just bet on it
but you wont make money as quickly in trading and you analyze first before you dip in the market

So why are those two always associated?

John answers:

There are various forms of “gambling”…it depends on the level of skill required to play the game.

Some games are pure luck. Roulette, slots, Craps, Red Dog, Crowns & Anchors, Horse racing (the carnival game) have little or no skill required to play…you just place your money on a square and and hope lady luck smiles on you.

A step up in skill would be say Black Jack where you must learn how to play your two dealt cards properly and if you have a card counter skill (and are successful at concealing it from the house) you can be more successful

Another step up is playing poker where the best hand is not necessarily the winning hand. I doubt that really top notch poker players consider that luck is a major part of their game, the ability to “read” their opponent and the psychology of knowing when to pressure an opponent and when to back off. There is luck involved as well but it does not dominate their play.

Stock trading can be a gamble for players with few skills in analyzing stocks. The better the analysis the less the luck involved. Fundamental analysis to identify companies of value and TA skills to help in market timing…immeasurably increase your chances of success.

In all cases mentioned here, MONEY MANAGEMENT is another key skill to learn. In simple gambling it is learning when to ride a lucky streak and when to quit. At higher levels it is learning when to back off a losing situation to conserve your capital and search for a better opportunity.

People who want to make money quickly in the market are basically gambling…often they take on unacceptable risk because they do not have the tools for analyzing that risk. Luck is not the same as taking a risk. Luck implies no control…risk implies a study of possibilities and choosing the most favourable plan.

Thomas asks…

How to become an actress in Canada from Australia?

I am in my second last year of high school in Australia and I am planning on moving to Canada (either Toronto or Niagara Falls) to do an acting course and try to make it in the acting world in Canada/USA. I know that you can get a student visa, and a work permit to work off campus while having a student visa does this include paid acting work? And can I get an agent while have a student work permit, or do I have to wait until I’m finished the course to get a 3 year post graduate work permit to get an agent?
Are there any other hints and tricks to becoming an actress in Canada that is different to Australia?Thanks:)

John answers:

Actors and actresses, in general, cannot live on their earnings in Canada. They mostly work as waiters or waitresses while looking for the next “gig”.

The title “actor” or “actress” is the most common of all among people seeking welfare.

Thinking of coming to Canada and be able to get work or make a career as an actress is totally delusional. Our unemployment for under-educated and poorly skilled young people is above 25 %. Nobody wants another aspiring actress who may end up on welfare.

The grass is not greener… If you think it is tough where you live and have family and friends to support you – you have no idea of how “cold and lonely” a new place can be.

Niagara Falls? It is a small city of about 83,000, living primarily off the tourist trade around The Niagara Falls. Not exactly a place for any one to start an acting career.

Http://en.wikipedia.org/wiki/Niagara_Falls,_Ontario

Sure, you can apply to any of the over 80 universities in Canada. You have to have better grades than most Canadians to be accepted. The course fees, including housing, vary from $ 25,000 to $ 50,000 per year, depending on what you study.

Http://www.aucc.ca/canadian-universities/our-universities/

Your university will arrange for your student visa after you have been accepted and proven that you, or your parents have enough money in the bank to pay for the first two years of your studies. (Count on having an absolute minimum $ 50,000 in the bank when you apply.)

As a student you will ONLY be allowed to work 20 h/week and only at campus. Those jobs pay minimum wage and are very hard to get. You will not be allowed to take any other work while you study.

Yes, you can stay in Canada after graduation, but ONLY after a full three year graduate course. Anything less and you have to go home and start your 5 – 7 years immigration from there.

To study “a little” is not a back door to immigrate to Canada. Spend some time reading this site. It spells out the immigration law and work rules.

Http://www.cic.gc.ca/english/index-can.asp

You are welcome to immigrate, but do it the right way. We love young and bright immigrants. (And the ones with a good, solid and sellable education – not with a degree in acting.)

I sincerely apologize if I have rained on your parade or thrown tough rules in your face, but facts are facts. The smart people use fact to better themselves and become successful in society.
.

William asks…

How do college students look for internships?

I’m currently a junior in college, and I’m hoping to find an internship for the summer and/or the fall semester. I’m currently majoring in architectural technology. I have a list of local architecture firms in my area, and I’m planning on simply calling each place asking if they are need of interns or are offering any internships. Is this a good way to begin the search for an internship?

John answers:

Cold-calling is going to be the least successful way of finding an internship. It might work, but it’s unlikely.

Your best bet is your college’s career services office and your professors. Certainly there are alumni from your school who recruit for internships there. Your professors and career services advisers will be able to put you in touch with available opportunities.

If you are part of a trade association or major-specific honor society, there may be openings posted on their websites as well.

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