Tips For Beginner Day Traders

Beginners are often anxious with what and what not to do since they don't have much experience in stock market. If you're still a beginner, getting tips from more experienced people will be extremely helpful. Below are some tips on day trading which experienced day traders impart to beginners.
First of all, a beginner must only focus on one or two day trading techniques. Even though there are countless ways with which you can approach trading situations, it is best that you stick with just one or two first if you're a beginner. One key to becoming a successful day trader is not to master all day trading techniques. A successful trader is a master of only a few techniques and if you're still a beginner, start with just one or two.
Another tip that expert day traders will give you is to control your emotions. Some day traders tend to act on their emotions during day trading, causing them to become impulsive with their decisions. Even though impulsivity can be good sometimes, it usually turns out for the worst because it lacks careful thought and evaluation. In every situation, it is important that you be able to control emotions and analyze it so that you can come up with a good judgment.
Even during the early stages of a person';s career, you must be able to develop skills at managing money. A day trader will not be successful if he or she doesn't make a good money manager early on. With each trading day, risk no more than 2% of your position so that if ever you suffer from losses, you still have enough money to regain losses for the next couple of days.
Beginners tend to sulk over losses but expert day traders get over it easily. In fact, it motivates them to do better next time. And so, another tip for beginner is to get over shortfalls as quickly as possible. Instead of crying over spilled milk, rethink your strategies and see if you did anything wrong. Learn from your mistakes as quickly as possible and get back on your feet as soon as possible. That way, you can recover from losses in the shortest time.
Over time, a beginner will develop the skills to be gain the title of experts. For the meantime, just stick with the above tips for beginner day traders so you can make your way to the top.

Options Vs Stocks - What's More Profitable?

1 - Leverage
As an options buyer, for a fraction of the cost, you can control at least 100 shares of a stock on the American stock market. For example let's say XYZ stock is currently trading at $545 per share. To buy 100 shares of XYZ stock, you would need to fork over $54,500 ($545 x 100) plus commission. To buy 1 call contract [two months before expiration] at the $550 strike price, it might cost you a premium of $27.4 per share or $2,740. To purchase the $550 call contract one month out would cost you $19.2 per share or $1920. This my friend, is the power of leverage.
2 - Profit in terms of percentage 600% verse 3% on the same stock
Using the example above, let's say you purchased 1 XYZ call contract with the strike price of $550. If XYZ stock had an upward price movement of $20 (which is very common for a volatile stock like Google) your call option would increase in value by at least $20 per share or $2000. If you had purchased the closer $550 call option, your profit would be 102%. If you purchased the two month call option your profit would be around 79%. Now, if you had bought XYZ stock outright your profit would have been 3.6%. So, in terms of big percentage profits, stocks vs options, options are more profitable.
Let's try applying the same strategy to a less volatile stock such as stock ABC which is trading at $27. The two month call option on ABC would cost around $0.4 per share or $40 per contract. Using $400 you could control as many as 1000 shares of stock ABC. If ABC stock moved up by as little as $2, your position (10 call contracts) would be worth $2,400 for a profit of 600%. If you had bought ABC stock you would have made $2,000 on an investment of $27,000, which is the current price of ABC x 1000 shares of stock. Buying the stock would have given you a profit of around 7%. So once again, in the game of stocks vs options, options are more profitable.
Note: XYZ options would be more expensive than ABC stock, because XYZ stock is very volatile and could easily swing as much as $15 in a matter of minutes.Volatile stocks are good for options buyers.
3 - Losses will not be as great if you are an options buyer
To keep things simple, let's expand on the same position and concepts from above. Let's say you had bought 100 shares of XYZ stock ($54,500) or 1000 shares of ABC stock ($27,000) instead of buying the call options at $2,740 and $400 respectively. If XYZ and ABC stock prices both drop to $0 per share, you will have lost $54,500 and $27,000 respectively... a whole lot of money!!! If you had purchased the call option, your losses would have ONLY been $2,740 and $400 respectively. So with options you are looking at HUGE profits and SMALL losses.
4 - Rules that apply to stocks don't apply to options - example short selling
Short selling basically means you borrow money from your broker and sell a stock at some high price and hope to buy it back at a lower price later. To prevent people from artificially driving stock prices down via short selling, there are certain rules in place. One rule says that you cannot short-sell a stock after a down day. So, if XYZ stock price closed down on Monday, you cannot short sell the stock on Tuesday. However, if XYZ closed up on Monday, then you can short-sell on Tuesday. This "down-day" rule, does not apply to options. If you missed out on the first down day on a stock and you think it has a long way to go, simply by some put options at any time and you can profit from any further moves downward on the stock. Also,by buying put options you are not using borrowed money, so you won't need to worry about annoying calls from your broker.
5 - Easier to make money with options trading strategies
A stock price can move in three basic directions, UP, SIDEWAYS, or DOWN.
The typical stock strategy involves either going long on a stock or short selling the stock. By buying or shorting a stock you can only make money if the stock goes up if you bought it, or down if you did a short sale on the stock. With the right options strategy you can make money if the stock goes up, sideways, or down. Yes, you read that correctly. With the RIGHT options strategy you can make money if the stock goes up, stays flat, or goes down. You can guarantee your profits in two of the three directions, while your chances of success in the third direction will be determined by your strike price. So, with stocks you profit in only one direction, while with options you can guarantee profits in two of the three directions and the third direction is determined by your option strike price.
6 - Options strategies can be more conservative that stock strategies
You can use options as insurance on stocks you already own to protect you from unexpected price moves. You can also use options strategies to get paid to buy stocks. This latter strategy of getting paid to buy a stock is referred to as Naked Put selling. By owning stocks without the use of options, you are very vulnerable to unexpected market events such as... a recession. If you don't believe me, ask the former millionaires of the DOTCOM boom and the current recession that saw their 401k's wiped out.
So, there you have it, 6 reasons why I think options are a better choice than stocks. If you have any questions or additional ideas, feel free to leave me a comment, thanks.

5 Tips to Start Trading CFD's

CFD trading can be a very competitive and high risk market, especially for new traders. With a few tricks up the sleeve, and by becoming better informed, one can close that risky gap just a bit more. Most of these tips can be easily understood and utilized prior to the first trade. This makes them ideal to anyone just starting, and they also apply to other aspects of trading too.
First and foremost is understanding how CFD works. If at all confused, try to find the answers before trading, or ask for help from a qualified CFD broker. Know the job of the seller, the buyer, and how to properly utilize all tools involved. Learn how to track, interpret, and foresee market trends. What sets a good trader apart from a great one is learning how the markets works from every possible angle. However, this can't be learned overnight nor can it all be learned by books or websites. No, most of it will come with experience through active trading.
Possibly most important is to create a master game plan before you start. CFD should be looked upon as a game of intense strategy, though not so intense that one can never win. Write it down, and no matter what arises, stick to your plan. Plan for any and all possible scenarios so there will never be any surprises. No one wants to have to make a decision while under fire, and some trading can be intense like that. If not properly prepared, one can make huge mistakes that cost them a lot of money.
Using a stop loss can and often times does save money from being lost. It is considered to be the most under utilized tool available to traders, though it is one of the most essential for long term success. However, this does not mean that one would never lose money by using it. Though, it can turn what would have been a substantial loss into a very minor one. When properly used, it will keep your money safer during power or internet outages, or if one had to step away for a moment. Plan on having it set prior to starting, and set it a comfortable level that will vary between each person. Plan to place both a buy and sell stop loss if partaking in both.
Trading funds should never, ever be money that is used for survival. If the account funding will take food off of a table, clothes off a back, or allow the roof to cave in, don't use it for funding a trading account. It is way too risky and one even minor mistake could lose it all. Instead save some money from each paycheck until you have enough to open a trading account. Using partial savings is of course another valid option, though one might want to put it back once money is made. While saving up to fund the account it is best to take this time to learn the ins, and outs of CFD. Use this time to write up a game plan, strategy, or even about how the earned money will be spent.
Finally, don't look to make trading a full time job right away. Instead look to it as a hobby. Sure it can be a costly hobby compared to some, but doing it out of enjoyment will reduce the stress in losses. And over time, it is possible to make it a great source of income. Remember, it's more of a game of strategy that everyone is playing together. When losses occur, it is alright to get upset, but don't let it get in the way of continuing to trade, and to learn. While it can make quite a bit of money, depending of course on the investment, it should not remain the only source of income for the beginner. Instead use it to fund a vacation, or even to fund an early retirement.
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