For the knowledgeable, active investor who wants to participate in big picture trends, the Exchange Traded Fund or ETF Trading has many advantages over the traditional Mutual Fund. ETFs are far more transparent, efficient and economical.
Using ETF’s is an excellent choice when utilizing a trend trading method.
Be A Control Freak.
You know it’s true: the only person who really cares about the health of your portfolio is you. Using Mutual Funds to increase your net worth is like depending on the school cafeteria to improve your kids’ diet. They act in their own self interests which are influenced by a lot of political elements you’ll never be privy to.
Sector specific Mutual Funds are usually managed by younger, inexperienced staff. They’re looking to prove their worth to the fund family and your well-being may or may not serve that goal. Larger funds are managed by experienced managers who have alliances and interests unknown to their companies. In addition, your buy and sell orders can only be filled at the daily open price. Intraday fluctuations do not show up in the fund’s price.
A sector specific ETF is influenced by the securities included in its holdings. You don’t have to worry about a manager’s motivations for trading or diversions. Barring any unusual events like a bankruptcy, merger or de-listing, your ETF basket remains the same. You may even chose during the day to buy or sell an exchange traded fund – they trade anytime the market is open. Want in or out during breaking news effecting the markets? No problem with an ETF.
Knowledge is Power.
As an active trading investor, you follow the markets and keep abreast of the political and economic trends. . Why would you want to turn over the power to act on that information to a third party Mutual Fund manager?
Fund managers, in order to protect their turf, restrict the information they share with fund share holders to the legal requirements. During the lag time between reporting periods, they may move in and out of positions, even change the fund’s primary focus, without your knowledge. Additionally, “window dressing” to create the illusion of a fund holding this quarter’s winning stocks, is a time honored tradition that results in selling low and buying high, never a good way to make money.
Transparency is built into ETFs. They establish their holdings and are committed to retaining them. You know at all times what you own and you can clearly see the results of your decisions to buy or sell the fund. There’s no reason to dress-up a statement for reporting.
Taxing Issues.
Mutual Funds buy and sell positions unrelated to the tax implications for individual share holders. They may sell to meet redemptions and buy to put new deposits to work. This often results in short-term gains that increase your tax burden. The famous end of year capital gains distribution can cause you to be “credited” with fathom gains you’ll pay taxes on. An unexpected capital gain distribution is fair less likely from an exchange traded fund.
The timing of your ETF trades is strictly up to you. If waiting a few days or weeks to sell will shift your earnings into a lower tax bracket, you can choose to take the risk and wait. You put new or recycled money to work when it’s best for you, not because you have limit on the amount of cash you can hold. And you don’t have to wait to find out what your taxable earnings are; you can see what your portfolio has generated at any time of the year. This will make tax planning that much easier.
Lower Fees and More Options.
No options exist for traditional Mutual Funds. The opportunity to control assets without owning them only exists for individual securities and the ETFs that own baskets of stocks. And, just because that Mutual Fund bills itself as “no-load” do not think you’re not paying the management’s salary and bonuses. 12b-1 fees are just the ones that you see. Transaction and management expenses are deducted from earnings before they ever get to your account, further reducing your gains.
ETFs have extremely low fees because no manager needs to be making adjustments to the fund’s holdings – and no wondering what went out the back end. For active traders who want to look at the big picture instead of betting on individual company’s ability to produce returns, the ETF is far superior to the old fashioned Mutual Fund in just about every way.
For those who still think they can set it and forget it, letting a professional fund manager decide what to put their money into, they’re going to pay for that privileged with their hard-earned money; working years longer than the investor taking control of their own accounts with EFTs and a proven trading system.
Often people ask if is possible to become a day trader, and trade for a living.. The answer:: “Absolutely yes you can!” However, you must receive professional training to become skilled in online day trading.
There are many really good websites about Day Trading that offer great information about training. Just type day trading training into the Google search engine.
What amount,exactly, must to earn weekly to start to day trade for a living? How much would you need to replace what you make from your current job?
Most people, tend to not to quantify exactly what they need to earn in order to day trade full time.You need to know what you need to make each week and plan accordingly.
Let’s use an example and say you need to make 100,000 dollars a year to leave your current occupation. Let’s look at whatit would take to earn this six figure trading.
100,000 dollars a year is about 8,000 dollars per month, or 2,000 dollars each. We are considering that you take two weeks off,of course.
It takes is knowing what you are doing. You learn this by getting trained by a professional that is successful.
Have you not heard that before? Is this not the case in becoming successful in any field?
Once you learn a professional method, you must practice. Practice on a simulated account until you have complete confidence in your chosen trading strategy, and more importantly in yourself.
Assuming you choose to trade the S&P 500 Emini and your goal is to make just a single point each day. It would be required to trade 10 contracts on every trade. Margin requirement is around 1000 dollars a contract. If you do this you can reach your objective.
Attaining your goal is the key to day trading success. Most importantly, you must have a sound trading method, and it must be one that works effectively in the market or markets you trade.
It is a must that you master your trading system and follow your money management rules.There are no secrets. Becoming a professional day trader requires dedication to your education as a trader, and commitment to sharpening your skills.
Tackling every market situation with proven tactics and decisive actions are the first steps in a trading career. Itís time to take the next move. Below I will list a few of the core principles and strategies that have proven steadfast and central to my trading profession. After you have taken them into your own repertoire of trading techniques, I am positive that you will have similar feelings.
Do you believe that the more you trade the more money you will make? On the surface this rings true, however experienced traders will reveal that the best strategy when looking to make serious money is to understand one market inside and out.
When it comes down to it, the best trading system is simply that, simple. After all, how great can a trading system be if it paralyses your decision making and leaves you second guessing? Too many indicators and over optimization are the number one culprits of an over-complicated trading strategy. There are times when an over optimized plan will perform well; such as in historical data. However, it said system performs poorly in real time than it isnít much of a system, is it?
Do you have your stock trading systems documented and penned? If not, then you will only get so far as a trader. Every single long-term successful trader that I have ever met documents their winning trade systems. Take the time to write the entire methodology that led to your success. Why do you need to bother? In order to trade you must have a perception about the market. Commit to that perception by writing down your thoughts and strategies. By taking that perception and claiming it as yours you risk the opposite outcome of being incorrect. There will be no bones about it since it is written in black and white, and that is the point. Hold yourself accountable, and a revived sense of dedication will arise to better your trading system in similar future market conditions.
One of the most over-looked, yet valuable market strategies is back testing. It may feel like research drudgery, but this is precisely why every trader needs it. Make time to test the trading systems against historical data with similar conditions. Obviously, this is not a crystal ball as exact conditions are impossible to repeat, but there will be striking similarities. After all, as you gain experience trading you form current market perceptions based on past market conditions and systems. Back testing is the same thing, only you didnít lose any of the trades, hopefully.
Letís face it, trading confidence is invaluable. But how is one to gain this confidence when trading experience is slim? Back testing. Various trading systems help to read the market, but they only add confidence once acted upon. Whether you employ the candle sticks, moving averages, Fibonacci retracements, volatility breakouts or other trading systems is up to you. However, gaining trading confidence is also your job, and with back testing this confidence grows by leaps and bounds compared to those who choose to skip the method.
If I told you that not just most, but almost all traders and investors have deplorable trading money management skills, would you believe me? Unfortunately, it is true. Time and time again, it is said that proper money management is the key to becoming a top trader, and yet, so many fail. If appropriate money management is not innate, learn it.
Can I tell you a secret? I call it a ìsecretî since there is so little correct information available about this subject. And this includes authorís who have written books about the matter! Some circles call it ìdiversification,î other ìrisk control.î It is commonly known as ìwisely investing your money.î Whatever you call trading money management,î know that its power is not in its name, but in its simple algorithm.
Running a business and trading have key similarities. All successful businesses keep statistics. How many people visited? How many sales and the average dollar amount per sale? Multiple factors are taken account of depending on the needs of the business. In order to improve the business, one must first know where the business stands. Trading is precisely this exact way.
Trading is a business. It may not appear as a traditional brick and mortar, but in order to improve you must keep statistics about your trading system. R multiples, win to loss rations, expectancy and other statistics area must to track. You can guess all day long where to tweak, but until you implement consistent statistic taking your trading will not improve. One solid place to learn about trading statistics is to read Trade your Way to Financial Freedom by Dr. Van Tharp.
Are you ready to enjoy easy success? This is how it will appear to all the other traders; you will just seem to know what the market will do. But we both know that it is the hard work and time you took to back test and get a strong trading system in place. You also have mastered money management and understand the market. After working hard to maximize your potential Iíd say that you deserve success, donít you
There are two cardinal successful stock market trading rules that I am sure you are quite familiar with by now.
The first of the two most common stock market trading rules are to cut short your losses. The second of the two most common successful stock market trading rules are to let your profits run. However, you can take it one-step further by fine-tuning your trailing stop losses, and becoming more risk seeking once your stock is in profit. Increasing your risks, at the right time, can allow you to get all the profit you possibly can out of your system. You may wish to test the effects of these successful stock market trading rules by having a wider trailing stop loss than your initial stop, and see how this is reflected in your system. Let’s say, you could set your initial stop loss at two ATR but set your trailing stop loss as three ATR. This allows the stock, once it`s in profit, a little bit more room to move. You`re still limiting your risk at the beginning of the trade by keeping a tight stop loss; however you`re going to become risk seeking in a profitable situation. That is to say you`ll be willing to risk more once you`re already in profit.
Personally, I think this is one of the many successful stock market trading rules you can use to take it a step further than most people are willing to go. With this strategy, I also mix and match my stop loss methods. For example, in one of my stock market trading rules, I set my initial stop loss at 2.5 ATR, but my trailing stop loss is measured using a completely different method. I use what`s known as the lowest low stop. The way this stop loss works is you find the lowest low in the last X number of periods, and base your trailing stop loss on it.
Now, for that trend following system, I actually find the lowest low in the last 40 days. I then position my stop one cent below this low. It`s almost as though it`s consulting the price action itself by identifying where the lowest low is, and this can be highly effective. Many times my stop has been set one cent below a support line. The way this trailing stop loss works is that on each day a new trading day is added to the chart, and one of the old days drop off. I then find the lowest low in the last 40 days, and reposition my stop at that point, if it needs to be repositioned. This stop has been extremely valuable for me, and it may be a stop loss that you may want to consider testing.
But, before you go looking for that perfect trailing stop loss, realize that in it`s own way, it`s very similar to the starting stop. There is no perfect stop that will guarantee to get you out of the stock at the perfect time, and save you the most profit. Sometimes it will work for you. Other times it sometimes won`t. The real key and secret of having a stop loss and an initial stop do their best for you is not how you calculate it, it`s just having them in place.
You need to find an initial and a trailing stop loss that you`re comfortable with. You also need to figure out how they work so that the actions they direct you to take makes sense to you. How do you find a stop that you`re comfortable with? Try them. Pick out a whole lot of charts of stocks that you`ve been looking to trade, and marking where you would receive an entry signal, set various initial stops and trailing stop losses. Progress through the trade, revaluing your trailing stop loss and see which one works the best.
Oftentimes successful stock market trading rules are designed with simple concepts that works best at this point. When you base your system on understanding, rather than optimization, you are more likely to stick with it. If you can come up with a good, straightforward set of your own stock market trading rules, you will be able to apply it across a number of markets on most trading instruments. Really, when designing any system around a set of stock market trading rules, all components should apply to this same principle. You want to keep things as simple as possible, that way it`s robust and can be applied to any market. As long as you follow this underlying principle, you`ll be on the right track.
When you are trying to rank a site, there are several levels to go through. First, when you have some content, you need to get the thing indexed and build up some initial links using social book marking and RSS submissions. You then move into leveraged link acquisition. I think Web 2.0 is the thing that you logically pursue probably shortly after that leveraged stuff. I wouldn’t call it level three, maybe level two and a half.
There is also level three, but there is no panacea for level three. Level three is just finding good quality places to get links back from. That’s when you or someone you’re paying is going out there and finding links manually, building rank links from high quality sites.
For me personally it doesn’t make a lot of sense. From a time perspective, I know there are companies out there that do it. I would much prefer to own my own assets and build them up over time and then point those assets at my own sites. The basics of business strategy is the word control. You need to be able to control your destiny and be able to influence things. To the degree that you are reliant on getting links from those other sources, in some way you have less control.
Consequently you should be trying to build up your own assets so that you can influence the results and get the results that you want. Level three is, what I tell people, is going to be manually getting links from people. Level four is really moving to the next level moving to build up your own assets. Level four would include building your own network.
There is no level five. I mean you becoming the platform that people are getting links from. You, being the next Wikipedia or something like that, you being the next Web 2.0 site, the next big thing, potentially.
There are numerous different strategies you use going from the initial, let’s get it indexed to some leveraged methods and then also we use Web 2.0 and the next level up, going out searching for those really good quality links through some sort of content exchange or providing articles to have published. The next level obviously, level four is building the network and really owning those links. For what it is that we do, there’s quite a bit of work there. Some of it we outsource and some we keep in house. We have our own network of blog sites. To be honest we don’t use them for ourselves. It’s our testing bed, our laboratory so that we can test strategies just for the development of our own SEO techniques and product. We know that whatever we’re doing is working, or when we hear of something, we can test that it works. The reality is that for our own business, we do very little SEO. It’s the cobbler’s son with no shoes sort of thing. It’s quite funny.
For us we do very little of that. What it boils down to is a discussion between SEO and business. I think the fundamental question to ask is, most people are asking what is the minimum I can do to get the biggest impact in my life, and while it’s a good question to ask from a technical perspective, it’s a bad mentality to have. It’s a much better mindset to say, how can I serve the most amount of people? What we say is, creating content should be part of every single business regardless of what your strategy is. Creating content, having conversation, creating great value, serving as many people as you can through the value that you’re delivering through blog posts, through videos, through audios, through whatever form it takes, through software, put as much value out there as possible.
Now you’re going to put that content out there anyway. So why not put that content out there in the most leveraged optimized way possible? If you just put that content out on your own website and you don’t link to it and no one ever finds it, you’re not creating value for people. Value is created when people see the stuff that you’re putting out there. Look at everything you do and make sure if you’re going to do the work once, with a little bit of extra work you can receive a hundred times the reward, particularly if you’re disciplined about doing it with every single piece of content that you put out there.