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What Is Your Trading System by

Stock Trading Systems - The Lexicon

While there is no more a surefire method for picking stocks than there is for picking lottery numbers, there is a reason to have a system when doing stock trading. You need a plan, which gives you metrics and bellweathers for reading charts and trends and measuring how you're doing against complex goals. Charts are visual representations of stock prices over time, and you can familiarize yourself with them in the financial pages of your local news paper. Think back to algebra, and plotting curves ? the vertical axis is the price, and the horizontal axis is time, usually in days or weeks. Make sure, when comparing graphs, that the vertical axis is the same for multiple stocks. Sparkline graphs are a recent innovation and give you an instant visual impact on a wide range of numbers over time.

Charts can be made on an Excel spreadsheet or custom software. Day traders track the prices in hourly and 15 minute increments, focusing on several related stocks in a sector. Long term investors look for patterns and trends on price charts over months and years, looking for cyclical trends, new product rollouts and new information about the management or prospect of the company. Charts that show prices going up show positive momentum, charts with prices declining show negative momentum, and the trick is trying to get the information to understand the trend and make informed decisions.

Stocks have a trading range ? the amount of daily or weekly fluctuation a stock's price undergoes. Stocks moving below their trading range may be good targets for acquisition, while stocks that are rising above their trading range may be a fad purchase. It takes careful consideration of a lot of variables in a chaotic system to figure this out.

Trends are identified when three peaks or three troughs are plotted on the line and linked with a straight line; this can be used to assess the cumulative impact of a lot of factors in the stock trade. There's money to be made in both upwards and downward trends, and some stock systems look for breaks in the trends for buy and sell targets. Trends are easier to spot and adapt to in long term holding, and require more skill and finesse for day traders. Catching the trend can be an exhilarating ride ? and quite lucrative if you're early on it and know when to bail out.

Analyzing these trends takes a lot of mathematical knowledge, and most of that's been codified into plotting and trend spotting software, most of which is accessible to investors who aren't mathematicians with the instincts of sharks. Investors can spend hundreds or thousand on software to develop their stock trading system. Using custom software saves time integrating information to produce charts and archive tracking information.

Smart traders know that a stock trading system is fluid not static. No matter how much they believe in their system, they always look for tweaks and try to catch themselves before investing due to emotional interplay, ego or blind spots. Never buy a stock you haven't researched or plotted, and always be consistent in applying your system ? it's the only way to realistically tell what's working and what isn't, and adjust to the dynamic needs of the market.. All traders have losses ? they learn from them. Never trash your stock trading system because of the first loss.

Mark Crisp: My account is up over 1,000% in the past 5 years alone trading a simple weekly momentum trading method. Free time and no stress. Get your free book 'The 7 Habits of a Highly Successful Trader' here: http://www.stressfreetrading.com

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Financial Spread Betting - 10 Steps To Help Create Success by Jamie Forston-Merrel

Financial spread betting is easier to understand than many believe. This simple ten point guide offers you the tools to enter the financial spread betting market with more understanding.

1. Practice makes perfect


If you are a novice then the world of financial spread betting is full of dangers. I would suggest opening up a ?demo? account. There are plenty of companies that will allow you to do this. They usually give you up to ?10,000 to play trade with. Get comfortable and then go to real money.

2. When opening up a real account


Companies will let you set up for as little as ?200. I would suggest setting up your first account with a minimum of ?1,000. This will allow you to absorb more losses than with ?200 or ?500, keep your betting size to small fraction. I suggest that 2% is an ideal maximum risk but with a small account 5% is generally figure used.

3. Start Slow

The UK FTSE 100 is a good place to begin. The blue chip stocks are even better as they are more liquid. The US stock market and Forex (Foreign Exchange) is generally too volatile for a beginner.

4. Increasing your profits


The best time to bet is when you believe the market is going to move sharply either up or down. This is done only by studying the market and noticing trends and practicing also helps. There is software to buy that can help you predict the market.

5. Never Average Down


This means simply never increase you position when the market moves against you. Although if you are up then increasing you position can be advisable; a good example would be when you open at ?1 a point on the FTSE at 6000, stop loss at 5900. The market moves to 6100. That means a profit of ?100. In this example you buy another 50p and moving your stop to 6000. Should the market move against you, you will break even on the ?1 point per trade but be ?50 up on the 50p per point trade. (If this doesn?t seem to make sense just read again slowly and it will become clearer).

6. Daily Bets


If you decide to bet daily make sure that you have access to the all information constantly. For the beginner it is easy to spot general trends that take place over days rather than hours. Daily betting can lead to small losses accumulating into large sums. The desire to cover you losses becomes greater.

7. When betting


To make sure that you are covered always use firms that give firm quotes on the screen. Use proper regulated firms. There are unscrupulous people out there who will not think twice about taking your money.

8. Telephone betting


If you close a deal by phone then state your requirements firmly and accurately (ask them to repeat back to make sure). Check you contract note carefully and never ever expect advice as it is against the law.

9. Minimising your losses


When placing your bet always use a stop loss (maybe even a guaranteed stop loss) and perhaps a limit order. This will then protect you if the market suddenly turns against you.

10. Profits


In the first six months don?t expect to make a profit. You will be refining your technique in the real world environment. Please be strict with yourself and bank even small profits rather than betting them again for bigger gain. It will take a long time before you know technical analysis very well. The first six months will also be about finding out about yourself and if you can deal with losing money. If you can?t handle the fear of losing money then step away.

Financial betting can be confusing and scary. If you feel overwhelmed then just sit back watch the markets and wait until you feel safe to stick your toe back in the water. When you start to master the intricacies of financial spread betting then it can be a rewarding and even fun experience.

The financial spread betting review website offers an simple guide to financial spread betting The website is owned by Jamie Forston-Merrel a financial broker from London.

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