Tag: Trading

Characteristics of a Successful Investor

Characteristics of a Successful Investor

Whenever we talk about someone who has successfully paved his way through investing in the stock market, it is never a matter of having a luck, but rather certain personal qualities or characteristics that determine how successful he/she is. Although, the best investors may seem have been born with the appropriate characteristics, it remains possible to discover and acquire them yourself. Believe it or not, most of what you need to know is just stock market investing basics.

Just remember that you can improve your chances of success. Below are some qualities of a successful investor that you need to know.

  1. They carry a well-thought-out investing strategy

Every successful investor has an over-time-developed-and-a-well-thought-out investing strategy that definitely works and they stick to this strategy. Some successful investors incorporate the portfolio diversification strategy and other follow the portfolio focus strategy. However, you are still entitled to have your own investing style. No matter what strategy you use, make sure that you fully know and understand what you are doing.

  1. They are dedicated

Successful investors are dedicated and concentrated on their investment vehicle. They take it one step at a time and one investment at a time.

  1. They make use of the trend to their advantage

Successful investors know how to use trend to their advantage. Average investors tend to panic over market instabilities, but professional investors welcome these instabilities because it is based on these instabilities that they can make their money. They use trends such as market sentiments, political instability and company’s crisis to their benefits.

  1. They are determined

Indeed, adhering to your investing strategy, whether you are winning or losing needs you to have a great determination. Average investors lack persistence and that’s the reason why they will always remain average. They hop from one strategy to another and are always looking for the next hot tip.

  1. They prosper on risk

It is true that investing is a risk, however, not knowing what you are executing is a lot greater risk. Every professional investor, whether experiencing a winning side or losing side still respect and consider the 50-50 chance of success or failure. The big difference between a professional investor and an average investor is that a professional investor will always invest with a strong risk management scheme in place.

  1. They are disciplined

Successful investors are rigorous with themselves when it comes to investing. Aside from their investing rules and principles, they are also guided and driven by a strong self-imposed standard. Professional investors understand that it takes a huge deal of discipline to stand with you investing strategies, in spite of distractions from self-proclaimed specialists or financial experts.

  1. They know their strengths

Everyone possesses their own strengths and weaknesses. Successful investors understand that it is essential to invest inside their circle of competence. There is no quick way to lose money than investing in something you don’t completely understand. If you couldn’t determine what a company does or how it makes money, then it is often suggested to just stay away, no matter how profitable the opportunity might be.

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Risk Management Tips for Stock Traders

Risk Management Tips for Stock Traders

Risk management is very important, but often ranks very low on the priority list of most traders. They often overlook the importance of managing risk in their positions or trades. It is normally way behind finding a better indicator, more accurate signals or worrying about stop hunting and unfair algo-trading practices.

As a trader or investor, this is the only thing that can be managed or controlled. Traders can never control or dictate the directions of the markets. They can also never manipulate whether they will win or lose in any position they take. Indeed, the only thing they can take control of is the amount of loss they might incur.

A trader who has produced great profits over his or her lifetime can lose it all in just a single or two ruthless trade, if proper risk management is not applied. Many people can trade, but not all are capable of analyzing the risk and manage the risk in a way that secures and ensures their financial survival in the markets when things go bad.

Without proper knowledge about risk management, profitable trading is never possible. A trader needs to know how to manage his risk, size his positions, create a positive outlook for his performance, and set his orders correctly, if he wishes to have a profitable trading journey.

This article will suggest some tips for risk management in stock trading.

  1. Recognize your risk

Some of the factors that might cause a risk to your trading are: politics, interest rates, liquidity and even the prices of other assets. Know, recognize and learn all the probable risks connected with the asset you are about to trade, and you can begin to go on your way reducing them early.

  1. Prepare your risk limits

Prior setting the line of the profit you are aiming for, think and decide how much you can afford to lose. Your trading plan should composed of how much loss you can take in the whole, and on each individual trade.

  1. Know how to acquire losses

You can actually set stop losses accordingly, if you know your risk limits for each trade. Moving a stop loss on a losing trade, because you expect it might swing back into profit is rarely a nice idea. Leaving losses run on bad trades will make them even worse, never better.

  1. Evade emotional trading

According to a study in 2011, the negative impact of emotional trading can end up costing you 20% in returns over ten years. And it is not just responding badly to losses, as the complete happiness that comes with a progressive trade can be just as risky as the disappointment with a failed one.

  1. Don’t go along with the mob

Every individual trader has their own risk tolerance, and just because other traders are suggesting a trade doesn’t necessarily mean that it is a good fit or appropriate for you. This is actually right for stop losses and strategies as well. Just remember that you should know your own risk, and plan accordingly.

Good trading isn’t always referred to having the right stocks or the right prices. It is much connected to your ability and knowledge of managing your risk, and assimilating a strong risk management philosophy into your trading strategy.

Learn the Different Types of Trading Style

Learn the Different Types of Trading Style

A lot of people who get interested in trading are primarily acquainted with the financial markets through investing. The purpose of investing is to grow wealth slowly over time, and this has normally been done through  a buy-and-hold approach, making investments and allowing price to alter over time. Investors endure the unavoidable downturns with the anticipation that prices will, in the long run, rebound and rise over the long-term.

Selecting the trading style that best fits your personality can be a difficult undertaking, especially if you are a beginner trader, but it is certainly essential to your long-term success as a professional trader. When you finally found the style of trading that best suits you, a light often turns on and you may never look back. If you are not comfortable with your style or have not found a home in a specific trading style, you are prone to committing the biggest sins of trading.

The difference between the styles is based on the length of time that trades are held for.  Below are the different types of trading style you should learn about to help pave your way to becoming a profitable trader.

  • Scalping

This type of trading style requires trading within just a few seconds of each other, and often goes in opposite directions, as it is a very quick type of trading style. This style is very appropriate for active traders who can decide quickly and act on his decisions without reluctance. Impatient people often are the best scalpers, because they always anticipate their trades to get profitable promptly, and will exit the trade quickly if it is going against their trading whims. To become a successful scalper, you have to have focus and concentration. So, if you are a type of trader who easily get distracted, then scalping is not for you.

  • Day Trading

This type of trading style is more appropriate for traders who like beginning and accomplishing a task within just the same day. A lot of day traders would not think of making swing trade or position trade because if they do, it will cause them to stay awake at night knowing that they had an active trade that could be affected by price movements during the night.

  • Swing Trading

This type of trading style is well-matched with people who have patience for a trade, but once they have started a trade they want it to be profitable quite quick. Traders of this style almost always hold their trades overnight, therefore, those people, who get nervous holding a trade while they are away from their computer, are not fit for this style. Generally, this trading needs a larger stop loss than day trading, so it is necessary to have the ability to get calm when a trade goes against you.

  • Position Trading

This type of trading style is the longest term trading of all the styles and often possess trades that last for years. That means, position trading is very compatible for people who have more patience and least excitement. This style requires the ability to disregard popular opinion because a single position trade will often hold through both bull and bear markets. So, if you easily get persuaded by other people, then position trading is going to intricate on your part.

Aside from the reason that picking a trading style needs the flexibility to perceive if a certain trading style is not working for you, it also needs the consistency to stay with the right trading style even when it is not performing optimally.

Some Ways to Improve Your Investment Skills

Some Ways to Improve Your Investment Skills

Investing is a skill that anyone can learn and acquire if only they want to. Some follow the advice and suggestions of analysts and a financial adviser, but they actually can only take you a little far. Yes, they can give you recommendations, but the most appropriate for you will come from making your own choices and decisions for what is essential at what time in your life.

Investors who assess a company can better judge the value of its stock and profit from buying and selling it. Your biggest asset in stock investing is your knowledge. Whether you are a beginner trader or a  seasoned veteran, there are few things you can do to improve your investing skills. Others are making the best of a bad situation by learning about how things went wrong.

To succeed in the world of stock investing, here are some ways to improve your investing skills.

  • Do some research

Some people simply get tips and advice from others when making some of their most important choices in regards to investments. It is very vital that you improve and add your knowledge base and practically learn about the companies you are thinking about investing your money with. Learn everything as much as you can, so you can make informed decisions.

  • Assess your financial goals

Probably something happened in your life that suddenly changed your financial perspectives, and maybe now you have thought of making more wealth for yourself. Perhaps retirement is fast approaching and you would like to adjust your portfolio and eradicate those riskier investments. Whatever the case may be, you must think about where you are and where you want to be. Only then can you make the right action plan that will come across with your needs.

  • Don’t rush things

Some experienced trader will tell you that there are times to bail out and times to weather the storm. You should always make sure that you know what the right strategy is for some of your investments. Take a look back on the past data and see what you can learn from it before you go changing everything in your portfolio.

  • Deliberate your risk

This comes together with your evaluation of goals. Maybe some of your holdings are just becoming too volatile, which could unfavorably affect your assets for years to come. For others, this time of low prices may seem like the appropriate time to buy up affordable shares and wait for the upswing. In either case, you are still going to need to analyze or evaluate the situation and create an informed decision that is right and best for you.

  • Just invest persistently

One of the most important things a trader can learn from these kinds of economic situations is that things come and go or decline or grow in the market. There will always be good and bad times. The primary thing is, don’t

Stop investing your money. Yes, you will have to think of the right place for your money, but don’t just settle on it. Things will get back to normal, soon and you will wish you had kept at it when things are good again.

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

HOW TO START TRADING WITH SMALL AMOUNT OF MONEY?

To start investing, you don’t necessarily have to be the world’s richest person living. Many people refuse investing because they think they need to have a great amount of money, as in thousands of dollars, to begin investing. This is totally untrue. In fact you can invest in stocks regularly by saving loose change. Interestingly, you can start investing with an amount at hand as little as $50 per month.

There are several ways to begin investing with a small amount of money, with many online and application-based platforms making it faster and easier than ever. All you need to do is to begin somewhere. The moment you do, it will get convenient eventually.

The key to growing wealth is building good habits, like placing your money away monthly. If you let investing as part of your habit, you will be in a much more robust financial situation down on your way.

Below are some simple ways to start investing with a small amount of cash.

  1. Try the piggy bank method

Investing money and saving money are relatively connected. Basically, you have to save some cash up, for you to invest money. And you can actually do that in very small steps. If you are not used to saving money, you can begin by keeping at least $10 per week. Over the course of the year, it can get to over $500.

You may find piggy bank some silly method, but to tell you, it is often an important first move. Practice the habit of spending a little bit less than you earn and put your saving away in a safe place. Piggy bank’s electronic counterpart is an online savings account. You can withdraw money if you need  it.

  1. Place your money in mutual funds with low initial investment

Mutual funds are investment securities that lets you invest in a portfolio of stocks and bonds with a single transaction, making them the best for beginners.

But the problem is, many mutual fund companies require initial minimum investments ranging between $500 and $5,000. Those minimum amount might be out of your reach, especially if it is your first time to invest with a small amount of money at hand. However, some mutual fund firms will ignore the account minimums if you agree to automatic monthly investments ranging between $50 to $100.

An automatic investment agreement is actually convenient if you can do it through payroll savings. Just ask your human resources department how to set it up.

  1. Paying your debt

There are two reasons for suggesting to pay your debt: firstly, you should not be investing a small amount of money if you have an existing debt, especially debt that is unsecured; secondly, paying your debt is one of the perfect ways to lock in an above average and a definite rate of yield on your money. This is particularly true if the interest charge on your credit card balance is in double digits.

For instance, you have a balance in your credit card of $1,000 with an interest rate of 15.99% every year. By paying your credit card off, you will lock in a nearly 16% amount of return on your money. By surfing the balance to one of the many credit cards with 0% interest, you can make that card go away faster. Through this, each of your payment goes directly to the balance on the card and not to interest, however, this kind of offer may last a limited time so better pay your debt off quickly.

  1. Engage in your employer’s retirement plan

There is a way that you can start investing in an employer-sponsored retirement plan with amounts that are so small you would not even feel them. This is especially a good way, if you are currently experiencing tightening of budgets.

For instance, you plan to invest only 1% of your salary in the employer plan. What makes the investment easier is that the tax deduction that you would get for investing will make the contribution even smaller. The moment you engage to a 1% contribution, you can increase it steadily yearly. If you get a 2% increase in pay, it will effectively be dividing the increase between your retirement plan and your checking account. But, if your employer gives a matching contribution, the arrangement will get even better.

Investing despite the initial small amount of money can grow big rewards. Start with a small amount, afterwards increase as you get more used to the process.

Day Trading Strategies for Beginners

Day Trading Strategies for Beginners

Day trading is like starting a special career, there are a lot of things to put in mind, especially when you are new to it. Day trading is the process of buying and selling a financial instrument within a single trading day. It can also occur multiple times and in any marketplace, but most commonly in the foreign-exchange market, over the course of the day. It takes the benefits of small price moves, thus, making it a profitable game. However, like any other game, it can also be so risky for novice and for those who don’t follow a well-plotted method.

Day traders are normally refined and financially well-off. They use high amounts of leverage and short-term strategies in trading to capitalize on small price movements in highly-liquid stocks or currencies. They look to take advantage of volatility every trading day, and lessen overnight risk brought by events, such as a bad earnings surprise, that might occur after the markets are closed.

Now, let’s take a look at some of the strategies that can guide in the right path as you start your journey in day trading. Learn how to day trade like a pro.

  1. Make sure to prepare a target price before diving in

If you are planning to purchase a long position, think in advance how much return is acceptable, also a stop-loss level, if the trade turns against you. Afterwards, stick with your decisions.  This helps you to restrict your potential loss and keeps you from being greedy if price hits to an untenable level.

  1. Be enduring

It may appear ironic, successful day traders often don’t trade every day. They may be in the market, at their computer, but if they don’t notice opportunities that hit their criteria, they will not trade that day. That is far better than going against your own best decision out of an impatient desire to just do something.

  1. Be self-controlled

Remember that you have to prepare a trading plan and stick to it. If you are trading on your own, impulsive behavior can be your worst nemesis. Greed can affect you for too long and fear can cause you to give up too soon. Keep in mind that you don’t get rich in a single trade.

  1. Use situations where demand and supply are extremely imbalanced as your entry points

If the supply is close to exhaustion and there remains investors who are willing to buy, the price is more likely to go higher. However, if there are still spare supply and no willing buyers, the price will decline.

  1. Don’t be frightened to click the “order” button

Beginner traders often get paralyzed by analysis, because they get enfolded in looking at the candles on their screen and can’t move and decide immediately when opportunity suddenly knocks before them. If you are disciplined enough and you always work your plan, placing the order should be automatic. If ever you are wrong, your stops will get you out without major loss.

Day trading can be a difficult skill to master, it requires time, skill and discipline. The strategies mentioned above can guide you in developing profitable plans. With adequate practice and persistent performance assessment, you can greatly increase your chances of trading success.

How Does the Federal Funds Rate Affect the Economy?

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Have you ever wondered how banks operate in the United States? What are the other factors that have an effect in the economy? In this article, you can read about the federal funds rate, how it affects the banking system and how it affects the whole economy.

The federal funds rate is being used by the Federal Reserve to manage the amount of money that banks can lend. The federal funds rate is said to be a key element in the operation of U.S. banks. It plainly means that banks must keep a minimum amount of funds around to cover funds withdrawals, or also known as reserve requirement. Yet, this reserve requirement must be retained by the bank at the end of every business day. With the aim of meeting this requirement, sometimes, banks need to borrow money from other banks. To put it simply, the federal funds rate is the interest rate being charged by commercial banks to other banks from borrowing money overnight, which is typically the general rule.

How does the fed funds rate affect the economy?

Commonly, people know that the trade happening between banks has no effect on the economy, yet it is totally the opposite. If the fed funds rate set is high, banks will barely borrow money to meet the reserve requirement. If they do loan money at a higher rate, it then makes mortgages and loans costlier. This setting is termed by economists as contractionary monetary policy since an increase in rates makes other loans and mortgages costly. In turn, it leads to the contraction of the economy.

On the other hand, if the fed funds rate is lower, lending becomes affordable since banks are more likely to loan money from each other. Loans are out at cheaper rates. In turn, mortgages become cheaper and more people will purchase homes leading to businesses to borrow funds to grow their money. This setting is termed as expansionary monetary policy.

 

How is the fed funds rate set?

The fed funds rate is the weighted interest rate average that banks charge from one another. The Fed has no absolute control over this rate but it can somehow influence it.

Monthly, the Federal Open Market Committee (FOMC) – known as the Federal Reserve monetary policymaking body announces the Federal funds target rate. It is the rate the Fed requests banks to charge one another.

How are the fed funds affecting the investor?

The fed funds rate is the major tool used by the Fed to keep under control both inflation (expansion) and deflation (recession) in the economy. If the FOMC perceives that there is fast growth in the economy, they can act on it by raising the fed fund target rate to make lending slow down and impede inflation.

This set-up is advantageous and helpful to the investor. If investors would pay attention to the monthly FOMC remarks, they can somehow have an idea to where the economy is going.

 

BWorld is here to help you reach your goal of becoming expert in the field of investing. We can help you learn, practice and master the art of investing. For further questions regarding online trading, commodities, stocks, technology, and economy – feel free to reach us here. We hope you will continue your trading journey with us. Let’s get started!