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Most novice traders choose to try short term trading and scalp regular profits to make a great long term income and its a common way for Forex robots and Expert Advisors to be programmed as well – let’s take a look at how to succeed at Forex day trading.
In the days before the internet, floor traders made huge gains because they had the price in advance of the bulk of traders and used this time window to get their trades in first, today its a level playing field and all traders can get up to date prices at the click of a mouse – so can you still make money at Forex day trading?
The answer is no and if want to know why simply look at daily volatility – its random, you cannot key off support and resistance levels and if you can’t do that, you can’t get the odds in your favor and you will lose.
You will see a lot of vendors selling day trading systems and software and they say they make money but never produce a real time verified track records of gains, just simulations going back over closing prices but anyone can make money knowing this key data!
Day trading appeals to novice traders, because they see it as low risk but in reality, its the most high risk way of trading you can do, because your destined to lose sooner or later.
If you want to make money at Forex trading, you need to get the odds on your side and that means trading longer time frames, so swing trade overbought and oversold levels or follow the big long term trends and leave day trading alone, becuase you will simply make a lot of effort and get a wipe out of equity for your work!.
I thought I might begin a series of articles on some of the indicators I find helpful in my trading, so the Commodity Channel Index (CCI) seemed a logical place to start. The CCI can be a little tricky to use, but there are countless systems in which the CCI is an integral component. A simple search on Google will turn up a plethora of CCI related trading systems.
A little history first:
The CCI is an indicator developed in 1980 by Donald Lambert and was used as a momentum indicator for use in commodities trading. It can be utilized as an oscilllator or trend indicator depending upon your inclination, which makes the CCI among the most versatile indicators in use. Based on a simple moving average, the CCI incorporates a standard deviation equation and smoothing factor to arrive at the CCI line product. Usually the +100 and -100 lines, along with the zero line are plotted when using the indicator.
How to use the CCI:
As a trader interested in chaos theory, it is my belief that investors love to “jump on the ship” whenever a market move of any significant move begins to develop, and will continue to pile buy or sell short well past the overbought and oversold thresholds the CCI plots, which are the previously mentioned +100 and -100 lines. In my world of thinking, I love to take advantage of this overbuying and overselling and find very nice trades as the CCI line pierces the 100 lines, either up or down, and end up taking advantage of this tendency to overbuy and oversell.
On the other hand, I also use the CCI as a trend indicator and will sell when the CCI passes down through the +100 and buy when the CCI passed upward through the -100 line. I consider most of the action between the 100 lines as market noise and tend to ignore most trade indicators in those areas. I am looking for the overbought and oversold conditions, and initial trend indications.
Like most traders I use a cross checking system to validate my CCI entries and the MACD is an excellent choice for this job, as well the as the commercially sold software system Decision Bar. I am one who likes agreement in trade entries and never rely on a single indicator to enter or exit any of my trades.
One caveat I always make known to traders regarding the CCI is angle at which the CCI pierces the 100 lines. I am always very wary of entries when the CCI lines has been hanging around the 100 lines for several bars, or approaches the 100 lines and repeatedly stops. Which is not to say that when it eventually pierces the line, which it may, you can’t have a good trade, but my experience has told me that these types of entries are often unproductive unless accompanied by strong support indicators. I like a nice clean entry past the 100 line. I would imagine many traders might not agree with this “angled” view on trade entry, but my experience has not been good when the CCI line dilly-dallies around the 100 lines for any period of time without piercing them.
In summary, the CCI is a versatile indicator that can be used on far more than it’s original commodity based origin. It works well with financial indexes, to say the least.
I write mainly about financial topics, specifically daytrading the emini contract, and many of my more technical techniques can be found at my blog, The Fractal Futures Trader.
I also write an ongoing commentary, which is a bit more opinionated, at The Fractal Traders Commentary
I encourage all to read the blogs and learn how to trade, as you can add $500-1000 dollars a day to your pocket book. Best of trading to all.
Article Source:http://www.articlesbase.com/day-trading-articles/commodity-channel-indicator-oscillator-or-trend-indicator-1164192.html
Get Started With Trading Stocks?
If you know nothing about stock exchange, here is a quick start kit for you to acquire the basic knowledge that all beginners should comprehend before trading on any stock market.
Indexes
First of all, you need to know the various indexes. There are Dow Jones Industrial Average which is a price-weighted average of 30 significant stocks traded on the New York Exchange and the Nasdaq. America is doubtlessly considered one of the most influential countries that can cause great impact on the overall world economy; hence, the US markets’ performance is largely watched by all investors and traders worldwide.
Next, we have the 3 major European Markets which are France (CAC), Germany (DAX) and London (FTSE).
Finally, we have the Asian major markets which are Hong Kong (Hang Seng), Shanghai (SSE), India (SENSEX), Korea (KRX) and Japan (Nikkei).
Basic Terms That Investors Should Know
- Bull Market refers to stock market is undergoing an upward movement and prices are going UP.
- Bear Market refers to stock market is undergoing a downward movement and prices are going DOWN.
- Long refers to the action of buying a stock.
- Short refers to the action of selling a stock naked or to sell out existing shares’ holdings.
- Beta stocks refer to stocks that trade in a wide range and movement can be erratic.
- Volatile refers to stock prices changes up and down in an random movement which can be difficult to read or predict.
- Liquidity refers to the degree to which an asset or security can be bought or sold in the market without affecting the asset’s price
- Bid prices refers to the best buying prices that investors are willing to pay for a particular stock
- Offer prices refer to the best selling prices that investors are willing to sell for a particular stock.
- Spreads refers to the smallest price change that a given stock can make.
[These are the general terms for you to kick start with. We will add on more financial terms from time to time.]
In this article, we are focusing on Singapore stock market.
How To Get Started With Singapore Stock Market?
You have to know what are (1) Blue Chips, (2) Mid Caps, (3) Small Caps and (4) China-related stocks.
- Blue chips are nationally recognized, well-established and financially sound companies. They are known to weather downturns and operate profitably even in face of adverse economic conditions. Their strong business structure and well diversification help to contribute to their long record of stable and reliable growth. Some classic examples include Singtel, UOB, DBS and OCBC. Most blue chips are also one of the constituents of the STI index.
- Mid Caps are companies with a market capitalization between $2 and $10 billion. Some examples are Yanlord, IndoAgriculture and Ascendas Reit.
- Small Caps are stocks with a relatively small market capitalization. Some examples are ECS and Ban Joo.
- China-related stocks refer to companies that operate most of their business in the Mainland, China.
Next, you need to know the constituents that made up the STI index. Constituents may vary with time when there are new stocks included or existing stocks excluded. This is to give the best accuracy of the overall Singapore Stock Market. Currently, we have 30 stocks that made up the STI Index.
STRAITS TIMES INDEX CONSTITUENTS (30 CONSTITUENTS)
- CAPITALAND
- CAPITAMALL TRUST
- CITY DEVELOPMENTS
- COMFORTDELGRO CORPORATION
- COSCO CORPORATION (S)
- DBS GROUP HOLDINGS
- FRASER AND NEAVE
- GENTING INT’L PLC
- GOLDEN AGRI-RESOURCES
- HONGKONG LAND HOLDINGS
- JARDINE CYCLE & CARRIAGE
- JARDINE MATHESON HOLDINGS
- JARDINE STRATEGIC HOLDINGS
- KEPPEL CORPORATION
- NEPTUNE ORIENT LINES
- NOBLE GROUP
- OLAM INTERNATIONAL
- OVERSEA-CHINESE BANKING CORP
- SEMBCORP INDUSTRIES
- SEMBCORP MARINE
- SIA ENGINEERING CO
- SINGAPORE AIRLINES
- SINGAPORE EXCHANGE
- SINGAPORE PRESS HOLDINGS
- SINGAPORE TECHNOLOGIES ENGINEERING
- SINGAPORE TELECOMMUNICATIONS
- SMRT CORPORATION
- STARHUB
- UNITED OVERSEAS BANK
- WILMAR INTERNATIONAL
Different stocks are assigned with different percentage weight, meaning that these 30 stocks movement will directly affect the STI index performance. Certainly, the bigger the percentage weight, the greater the impact it has on the index. To know the percentage weights of individual stock and the price range of stocks, please refer to our blog.
In addition, there are many useful links that investors should frequent them to check for updates. You may check for any changes on the % weighting from www.ftse.com on a monthly basis as changes do not happen often but once in a long time.
Next, www.sgx.com is a good website to obtain latest updates on company’s announcements.
Company’s Dividends Payout
There are 2 terms that investors have to know about dividends. One is cum-dividend which has a short form of “CD”. The other one is Ex-dividend which has a short form of “XD”.
Cum-dividend means if you purchase this stock during the period when it is showing “CD”, you are entitled to the dividend payout that the company had declared.
Ex-dividend means if you purchase this stock during the period when it is showing “XD”, you are not entitled to the dividend payout that the company had declared.
To facilitate better understanding, we have drafted 3 different kinds of situations to illustrate on dividend payout. Please note that the mentioned examples herein are all hypothetical.
Stock A has just announced good earnings and decided to declare 5cents dividends on Monday. Stock A will start to trade “CD” on Tuesday and going Ex-dividend on Friday.
Case 1: You did a fundamental analysis and found that Stock A is a good investment. So you proceed to buy on Tuesday. In this case, you are entitled to the dividend payout.
Case 2: You are an active stock trader and concluded that the chart pattern of Stock A has fulfilled your criteria of a good buy. You buy on Tuesday, however, the share does not perform to your expectation and you went on to sell your shares on Thursday. In this case, you are NOT entitled to the dividend payout.
Case 3: You are an active stock trader and concluded that the chart pattern of Stock A has fulfilled your criteria of a good buy. You buy on Tuesday and after holding for several days, the stock underperformed but it has yet to reach your stop loss price. Eventually you decided to sell your stocks on Friday. In this case, you are entitled to the dividend payout.
In short, if you buy a stock on “CD” and sell on “XD”, you are entitled to dividends. But if you buy on “CD” and sell on “CD” before “XD”; and/or buy on “XD”, you are not entitled at all.
Things To Note During ED
Pay attention on the amount given as dividends by the company. Large dividends payout might affect the share price once it goes ex-dividend. But you need not worry about the sudden plunge in share prices. Follow the 1-2-3 steps and use the information to decide on your next course of action.
- You need to discount the dividend amount to get the exact trading price that the stocks should be trading for investors who are not entitled to the dividends.
- If the stock is trading above the discounted price, the stock is considered bullish.
- If the stock is trading below the discounted price, the stock is then considered bearish.
Example: Stock B is trading $2 and giving out dividend of 7cents. On ex-dividend, Stock B should be trading at $1.93 for investors that are not entitled to the dividends. If Stock B managed to trade above $1.93, this indicates that Stock B is bullish. However, if Stock B falls below $1.93, it is considered bearish.
Stock’s behaviour
Every stock has its own unique movement. Some are volatile while some are pretty stagnant. You need to spend some time observing the share price movement and ensure that you are comfortable with their price range movement before you begin your investment.
For instance, UOB and DBS are considered high beta stocks with high daily fluctuations of up to (but not limited to) 20cents.
ComfortDelgro and SMRT are considered defensive stocks and are stagnate in price movements. Hence, you do not expect much movement over a short period of time on such stocks.
Some stocks that have wide movements can be hard to trade if you are an active trader. For example, Jardine group stocks which include Jardine C&C, Jardine Matheson and Jardine Strategic. These stocks have erratic movement which can pose substantiate threats to intra-day trading.
Erratic movement can be caused by a few factors such as liquidity issues. When you make a wrong judgment and share prices are moving against you, you would definitely want to exit the market with the least damage done. However, due to liquidity issue, you might be forced by circumstances to sell your positions at an undesired price which could result in heavy losses incurred.
In summary, active day traders should avoid trading erratic movement shares such as Jardine-related stocks or SIA. These shares are more suitable to investors with long term investment objectives.
SGX Warriors invites you to join us at our blog http://www.sgxwarriors.blogspot.com for daily updates on Singapore Stock Market. Learn how to trade singapore shares with us and know what are our trade entry signals with exact stop loss and take profit level in real time to aid you in your own investment. Subscribe to our blog and be our member today: Subscribe to SGX Warriors by Email
Article Source:http://www.articlesbase.com/day-trading-articles/basic-knowledge-on-trading-singapore-stocks-that-every-investor-should-know-1167544.html
ing and taking into consideration the psychology of the almost every human nature that very few people know about real investments as well as very few wants to know about them. As I also concluded in my last article ‘STOCK MARKETS:- NOT TO BE BLAMED FOR THE EROSIONS’ That stock markets are only meant to be for investments. But if we people do trading or speculation in market then the risk involved is entirely our responsibility. Stock market has nothing to do with those profits or losses occurs in trading in the market. Believing in it or not is entirely one’s responsibility.
In stock market if you do not have control on your emotions, greed, temptations, decisioning power, acting-reacting power, thinking power etc then there is only few percent chances to get success in trading because trading in a stock market is a mind game. In trading at any point of time if you loose control on any of these above natures then the result will be very devastating. Perhaps then you will not be able to get out of that trade. But as we all know that controlling the emotions are most difficult thing to achieve except only few. We people (most of us) are bound to drain in our emotions.
I have seen that for the fresher in the market, trading in stock market seems to be very easy. They say its only buy and sell nothing else to do. They say you buy low and sell high & vice versa. It is very easy. I want to ask all of you that Is it really so easy? You must be laughing on them and also feel pity on them but they will not listen to your experience unless they fallen once in market. Trading in stock market is the toughest business of all times. It’s a war of emotions. If you loose a little grip on your emotions then the results will never be thought of.
In my point of view it is for sure that stock markets are not meant for trading. Its only meant for investments. But as a normal greedy human beings 95% of us likes only to trade in the market whether we loose or win. They think that investments are only for fool wise businessmen of the world like WARREN EDWARD BUFFET etc. Intelligent greedy people will only wants to trade and make money in tons including me also. The reason for few of the smart traders for not investing in market is not they don’t want to invest in market rather they don’t know the meaning of investments. Those people who lost their capital in stock market are not unlucky people but the reason for loosing is not having any control on emotions. Stock market trading is definitely a war of emotions. If you loose from your emotions then you cannot win in stock market. As we all know that, “ Emotions have no place in business.”
There is also one rule in trading that don’t be get personal with any of the stock. Don’t you ever get attached to the stock. Don’t think that this is the best stock in market because it has given me lot of return in the past. And again I am going to buy this stock leaving aside other good opportunities in market. There has to be no emotional relation between the trade and the trader. On that prospect sharing my own experience I had earned lot of money in single stock i.e. Hotel Leela in Indian stock market & I use to believe that I am absolutely familiar with the movements of hotel leela but proved absolutely wrong and next time in that stock I had lost more than doubled the money I earned earlier. So, don’t you ever dare to think that you can rule the movements of stock markets.
In the end concluding my article I must say that although you have to have greed and temptations in life to achieve higher aspects in life but they should be in limit and in proper plan to be executed depending upon the extent of your level to bear & tolerate the risk involved. There should be proper ethics and plans to follow in trading part of the stock market. If you forget that ethics and plan which has been made before taking trading position, then your whole system of trading went absolutely disastrous.
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