Tuesday, February 27, 2007

Affordable Charting Software

We use and trial a lot of charting platforms on the markets and rate them on our Invest2Success.com site. I remember back when I was just starting out investing in the markets, I used Worden's Telechart back in the early 1990's. For me then, it was very adequate and most importantly at that time, affordable. Today Telechart provides more advanced and robust features rivaling top rated platforms such as eSignal and Tradestation.

If your just starting out in the markets, try Telechart to start off with as I did. Once you become more experienced in the markets and the different charting platforms available, you can then decide to change to a different one or possibly stay with Telechart. No risk 30 day free trial is provided.

Try as many charting programs as possible to compare their features and benefits. Doing so will provide you a charting program that you are comfortable and successfull with and most importantly with your investing and trading style.

Good day and good charting!

Worden Brothers Telechart
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Sunday, February 25, 2007

Weekly Stock Market Outlook

NASDAQ Outlook

Friday's 0.39% loss for the NASDAQ Composite left it at 2515.10 for the week...9.84 points lower that day, though it was still up by 0.75% for the week (+18.79 points). The composite was the only index to actually stay in the black last week, which has 'bigger picture' bullish implications especially now that the NASDAQ has managed to finally hit new multi-year highs after taking a month off.

We'll go ahead and warn you now that our NASDAQ view sounds a little different than our take on the S&P 500 or the Dow. We'll look at both angles, as clearly the market can't be bullish or bearish at the same time (for any length of time anyway). We just want to point out the most important thing we see on all the major charts.

Thursday's high of 2531.42 was a new annual high, and relieves a lot of concern that the NASDAQ wouldn't be able to complete the feat. Now that it has - and done a decent job at holding onto those gains - the bulls have a very justified reason to think optimistically. The index seems like it's broken out of its rut, and is working on restarting its prior bullish move.

For the NASDAQ, we think the key is the 10 and 20- day lines (red and blue, respectively). As long as they hold up as support, then we have to think this renewed bullishness can persist. No upside target though, and no bearish line in the sand if the NASDAQ is just giving us a fakeout. We'll use the other two indices (below) to determine if stocks are likely to get into some real bearish trouble.

NASDAQ Chart - Daily

Click For Larger Chart

S&P 500 Outlook

The S&P 500 pulled back by 5.20 points on Friday, closing lower by 0.36%, ending the sessions at 1451.20. On a weekly basis, the large cap index suffered a 4.35 point loss, ending Friday 0.3% under the prior week's close. Where we last left off, we seem like we're on track for just a little more downside...if the recent pattern repeats itself. Not a big deal though.

According to the alignment of all the stars, the S&P 500 is set to pull back. The problem is, the stars have aligned like this several times in the last few weeks, and the worst that has ever come of it is about a 25 point dip.

Where'd that 25 point estimate come from? The SPX's recent range, framed by the dashed lines. It's a lot of ebb and flow, but each downward ebb has been met with a little more flow in return. So, to see the index fall for most of last week - at the same time the MACD lines and stochastic lines turned bearish - doesn't really mean a lot this time around.

The line in the sand is still the lower dashed line, and then the 50 day moving average (purple) at 1431. (You'll see we have a similar view of the Dow's chart below.)

In the meantime, we do indeed expect to see a little weakness. The S&P has rolled over, and could slip all the way back to those support levels around 1434. The fact that the VIX seems to be pushing off of an important support area around 9.8 lends itself to the same idea.

However, if the VIX manages to break above 12.5 at the same time the SPX's support lines fail to hold the index up, then the index is likely to be in some serious trouble. Unless we see that though, we suspect any dip will be mild, and countered.

S&P 500 Chart - Daily

Click For Larger Chart

Dow Jones Industrial Average Outlook

After losing 39 points on Friday (-0.31%), the Dow closed at 12,647. That was a 0.95% loss for the week (-121 points)...the worst showing for all the indices. Not only was the Dow the biggest loser, but its chart is also the closest to the start of some serious technical trouble.

It's no news that the market has been in mildly bullish and very narrow range since late last year. On our chart of the Dow, that zone is framed in blue lines. As of Friday, the daily low of 12,579 brushed that lower edge of the zone. So far we have no reason to think it won't be support, as it has been the last three major (relatively) dips. But, the very fact that it's being tested at all isn't exactly a screaming 'buy' signal. If we continue to fall, it will be clear by Tuesday or so whether or not the intermediate-term trend is likely to be broken in a bearish way.

In the same light, the 50 day line (purple, currently at 12,540) may also be under attack as support. It flattened a bit in November, reflective of the slowdown in the overall upward momentum, yet it's managed to keep the index afloat recently. If that line fails as well, then we would strongly recommend rethinking your bullish/bearish posture...it would be the first time we've been under the 50 day line since late July, when this rally really started.

We've also added a MACD chart today, simply to illustrate how the indicator isn't infallible. It's been mixed (ok, confusing) for weeks, though the Dow has managed to mostly work its way higher.

Alternative possibility...could the NASDAQ's strength and the SPX's and Dow's weakness be rotation out of the large cap and blue chip names and into the more aggressive and smaller stocks that trade on the NASDAQ exchange? If so, the conflicting dynamics actually could be bullish. That may become more apparent this coming week, if it is indeed the case.

Dow Jones Industrial Average Chart - Daily

Click For Larger Chart

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Friday, February 23, 2007

Stock Broker Career

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Thursday, February 22, 2007

Trading Systems

Trading systems from the Traders Coach, Dr. Van Tharp of the International Institute of Trading Mastery.

So What Is a Trading System?

What most people think of as a trading system, Van would call a trading strategy that consists of seven parts:

1. Set up conditions.
2. An entry signal.
3. A worst case stop loss.
4. Re-entry when appropriate.
5. Profit-taking exits.
6. A position sizing algorithm.
7. Multiple systems for different market conditions (if needed).

The set up conditions amount to your screening criteria; For example, if you trade stocks, there are 7,000 plus stocks that you might decide to invest in at any time. As a result, most people employ a series of screening criteria to reduce that number down to 50 stocks or less. For example, you might want to find stocks that are great “value” or stocks that are making new all time highs or stocks that pay high dividends.

The entry signal would be a unique signal that you’d use that meets your initial screen to determine when you might enter a position—either long or short. There are all sorts of signals one might use for entry, but it typically involves some sort of move in your direction that occurs after a particular set-up occurs.

The protective stop is the worst-case loss you would want to experience. Your stop might be some value that will keep you in the trade for a long time (i.e., a 25% drop in the price of the stock) or something that will get you out quickly if the market turns against you. Protective stops are absolutely essential. Markets don’t go up forever and they don’t go down forever. You need stops to protect yourself.

A re-entry strategy. Quite often when you get stopped out of a position, the stock will turn around in the direction that favors your old position. When this happens, you might have a perfect chance for profits that was not covered by your original set-up and entry conditions. As a result, you also need to think about re-entry criteria. When might you want to get back into a closed out position.

The exit strategy could be very simple. It is one factor in your trading of which you have total control. It is your exits that control whether or not you make money in the market or have small losses. You should spend a great deal of time and thought on your exit strategies. This is an important shift in thinking that you will benefit from right now. You don't make money when you enter the market you make your money upon your exit of the market. Far too many people focus only on market entry, or what to buy, rather than when to sell.

Position sizing is that part of your system that controls how much you trade. It determines how many shares of stock you should buy or “how much” you should invest in any given trade. It is through position sizing that you will meet your objectives.

Finally, depending upon how robust your trading system is, you might need multiple trading systems for each type of market. At minimum, you might need one system for trending markets and another system for flat markets. Many professional traders have multiple systems that operate in multiple time frames over many markets to help offset the enormous portfolio dependence of a single trend following system.

Your system should reflect your beliefs ) i.e., who you are as a trader and as a person). Many people are just looking for “any system that works,” but if your trading system doesn’t match your beliefs about the markets, you will eventually find a way to sabotage your trading.

In addition, most people have never really taken the time to think through what they truly want from their trading. They don’t have specific objectives in mind. They think they do, but they really don’t. They just have a vague concept in their heads of “I want to make a lot of money.” Yet, objectives are 50% of designing a system that fits you.

Examples of possible objectives:

1. I want to become a full time trader making 30% per year for my clients with potential losses no bigger than half of that.

2. I want to spend less than three hours a week on trading and get the maximum yield out of my system. While I’d like to minimize my downside, I’m willing to risk whatever it takes to get maximum returns, including losing it all.

3. I want to limit my draw downs to no more than 20% at all cost. With that in mind, I’d like to make whatever I can, but minimizing the draw downs is my primary objective.

No system is a money making machine that you turn on and have it print cash forever. Systems must be evaluated and revised to adapt to changing market conditions. And while there are ways to measure the quality of the system, you will never trade a system properly that you don’t feel comfortable trading. In the same way, you might have trouble following the advice of newsletters because you don’t feel comfortable taking certain trades that they recommend.

Improving your trading performance will not come from some indicator that better predicts the market. It comes from learning the art of trading and understanding how to create a trading system that fits your wants, needs, desires and lifestyle.

So ask yourself, how much time and money am I willing to lose trying to trade other people’s systems?

Good day and good trading.

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Monday, February 19, 2007

USDJPY 6.3 Reward/Risk Ratio

Good monday. Below is a chart of the USDJPY, and what low risk high reward trading is, as executed using MTPredictor Trading Software. Identify, then take trades in low risk high reward price chart setups. Stay out of the market on high risk low reward trades. Doing this, along with proper position sizing, and money management, being a winning trader is a virtual certainty.

The traders coach, Van Tharp, teaches traders to “trade within themselves” by learning about their trading beliefs first, then developing them for the successful trading mindset. He is asked the question many times, “What is the Holy Grail in the market?” Is there such a thing? Van Tharp asks the biggest and most important question, “how can I” be a successful trader and investor in the markets. The keyword is I, and as Van Tharp explains, its within the grasp of every trader.

Based on that, I keep working on improving my trading and investing mindset that Van Tharp teaches me, along with using high quality trading tools. One of those main tools is the MTPredictor Trading Software that address’s the main things I need and want as a trader. Identification, and management of low risk high reward trades, by identifying the trade setups, identifying entry price, stop-loss price, and take profit range, along with proper position sizing and money management. MTPredictor does this all automatically with on screen visuals to make my trading life more simpler.

Discovering and adopting what makes a trader a winning trader, identifying low risk high reward price chart setups, and managing reward to risk in your trades will make you a winning trader. Having this mind set along with using quality analysis tools creates winning trades.

Van Tharp Quotes:

"Trading and investing are very simple processes and we human beings try to make it into something much more complex. Unfortunately, we have a lot of biases that enter into trading decisions.”

"I believe people get exactly what they want out of the markets and most people are afraid of success or failure. As a result, they tend to resist change and continue to follow their natural biases and lose in the markets. When you get rid of the fear, you tend to get rid of the biases.”

"As for risk, most people don't understand it, including a lot of professionals, and what's really interesting is that once you understand risk and portfolio management, you can design a trading system with almost any level of performance." —Van K. Tharp

USDJPY Chart

This a 240 minute timeframe chart of the US Dollar and Japanese Yen. MTPredictor identified the potential low risk high reward price chart trade setup. It shows the entry, stop-loss, and take profit range, along with the reward risk ratio.

For new traders, 2:1 reward risk should be about the minimum any trader should take. 3:1 reward risk is very good, and above that is all the more exponential. I guess that’s why George Soros is successful in the markets. He takes quantum returns from the markets. Anyway his fund is called the Quantum Fund.



Click the MTPredictor image to learn more about it and receive a 30 day free trial.

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Thursday, February 15, 2007

Championship Traders

There's more than one way to trade the markets. Letting champion traders trade for you is one option to earn money from the markets instead of doing it yourself. As the expression goes, don't put all your eggs in one basket, any investor or trader can use another trader manage their money, along with their own money management to earn nice returns from the markets.

WorldCupAdvisor.com is home to nationally recognized professional futures, forex and stock traders. They display their live trading accounts in real time and allow subscribers to attempt to replicate their activity. Many subscribers use World Cup AutoTrade™ service to follow trade activity automatically.

The basic WorldCupAdvisor membership, priced at $20 per month, allows you to navigate throughout all sections of the site except the Live Update trading accounts. Subscriptions are sold separately for each Live Update account and are available only to basic WorldCupAdvisor members.

What are the Live Update accounts?

These are live futures, forex and stock-trading accounts whose activity is relayed to and displayed on the World Cup site. Many of the Live Update accounts are personal trading accounts funded and traded by the designated advisor, and some are entered in the World Cup Trading Championships®. Others are live model accounts traded on behalf of customers according to signals provided by the designated advisor. Every trade you see on the World Cup site is a live trade in a funded account.

What do you get with a subscription?

You get access to a real-time visual display of the Live Update account(s) to which you are subscribed. WorldCupAdvisors has created separate screens for orders entered, open positions, closed positions, and advisor commentary.

How do you duplicate the trading in a Live Update account?

It’s up to you. Some subscribers place the orders themselves in online accounts or call their broker with instructions. Many elect to sign a Letter of Direction with the authorized brokers, who follow the signals on their behalf with World Cup AutoTrade service. Subscriptions to some accounts are available only to AutoTrade clients to ensure that a contract-size maximum is not exceeded.

How will you know when there is account activity?

When you’re logged into a Live Update program, an Instant Message will appear on your screen any time there is new activity in the account. If you keep your computer speakers on, a bell will ring to accompany the incoming message. An email notification also accompanies each new activity, and subscribers with text messaging service can receive text message notifications at no additional charge. Advisors utilize their Live Update Commentary screens to clarify trade activity and provide instructions.

Is there a guarantee of account profitability?

Unfortunately, no. However, WorldCupAdvisors go to great lengths to identify traders they believe are capable of sustaining profitable performance. Many of the advisors have posted top finishes during the 22-year history of the World Cup Trading Championships®. They also feature many accounts designed by noted system developers and respected educators.

Which account is best suited for your trading style?

You can view every round-turn trade made in every active account via the Trade History button on their home page. (Profit/loss is shown exclusive of commissions, fees, transaction and subscription costs.) Registration for this access is free. Review their website and what they can recommend as an account that is suitable for you and your investing and trading style.

Learn from the champion traders at WorldCupAdvisors in real-time. You never know, maybe you can learn from the best, then go beat the best. Now that's a goal with living for. Good day all.

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Tuesday, February 13, 2007

Cashflow 101 Board Game

Have you played Cashflow 101 board game by the famous author Robert Kiyosaki of "Rich Dad Poor Dad", "Cashflow Quadrant", and many other excellent books on obtaining financial freedom? If not, I highly recommend this game to learn and become a passive income investor. Basically money working for you, instead of you working for money.

It's true to life unlike Monopoly. The game starts out with you as a player having to choose a career path and the consequences of each path you may take. I personally choose to live a lifestyle and incorporate a career profession and income stream around my lifestyle instead of the other way around as some people do.

A career is just one part of a persons life. A lifestyle emcompasses everything in a persons life. What do you want? A career or a lifestyle? You can have either, its your choice with today's freedoms. Two ways to look at life. Financial security or financial opportunity. Financial security may just let you survive and pay the bills, but financial opportunity may let you live a lifestyle far beyond just surviving life but actually living and enjoying it to the fullest. There's a lot of financial opportunity around to benefit from, so play to win. Choose financial opportunity over financial security anyday would be my best suggestion.

Freedom today is about financial freedom. Having the time and money to do what you want when you want. What do you want? Play this game learn more about what I'm talking about here by purchasing the game or by playing game with the many clubs being setup where persons without the game can go play it with others. For the beginner and experienced career choosers and investors, you'll be glad you did, trust me. It just may change your life from financial security to financial opportunity.

Click the Cashflow 101 Board Game header link above or the game image link below to learn more about it.

Here's some information about Cashflow 101 from Wikipedia, the free online encyclopedia.

Cashflow 101 is an educational tool in board game format designed by Robert Kiyosaki (author of Rich Dad, Poor Dad), which aims to teach the players concepts of investing by having their money work for them in a risk free setting (play money) while simultaneously increasing their financial literacy and stressing the imperative nature of accountability.

There are two stages to the game. In the first, "the rat race", the player aims to raise his or her character's passive income level to where it exceeds the character's expenses. The winner is determined in the second stage, "the fast track". To win, a player must get his or her character to buy their "dream" or accumulate an additional $50,000 in monthly cash flow.

In place of “score cards”, there are financial statements. The game requires the players to fill out their own financial statements so that they can see more clearly what is happening with their money. It generally shows how assets generate income and demonstrates that liabilities and 'doodads' are expenses.

Robert Kiyosaki also designed two other Cashflow games: a children's version called Cashflow for Kids, and a follow-up game to Cashflow 101 for more advanced players, which he released as Cashflow 202.


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Good day and good gaming!

Sunday, February 11, 2007

Weekly Stock Market Outlook

One thing you'll notice by the time you get to the bottom today....the signals are still a little mixed. The NASDAQ still looks like it's struggling, being right back where it was on November 24th. The S&P 500 as well as the Dow, however, both still look relatively healthy. We have to prepare for both possibilities, and maybe even prepare for split results.

NASDAQ Outlook

The NASDAQ's 1.16% loss on Friday was the biggest of all indices, leaving the index at 2459.82, lower by 28.85 points. That one day spoiled an otherwise positive week; the composite ended 16.06 points below the prior week's close, losing 0.65% over the last five trading sessions. Of course, this give-and-take is nothing new at all....the NASDAQ is just back at home in the range.

In the middle of last week, it appeared as if the resistance line at 2470 (red) would finally be hurdled for good. By Friday, we were told it still wasn't out of the picture. You'll also recognize that the composite failed to reach a new 52-week high when it peaked only at 2496.52 - the previous peak of 2508.93 was hit in mid-January. So, the lack of retained progress is still as problem here.

To make matters even a little more bearish, we're very near a bearish MACD crossunder, as well as a bearish Chaikin line cross under zero. (On the other hand, it's also worth noting that MACD and Chaikin line signals have been relatively ineffective during this sideways period for the market.)

So, all we're really left with is the moving average lines to measure the NASDAQ's next likely move. As of Friday, we closed under the 10 and 20 day moving averages (red and blue, respectively). In the past, that's been the beginning if a sell signal. However, like the Chaikin and MACD tools, such crosses haven't meant a lot of late. Instead, we're still keying in on the 50 day line (purple) at 2446. Unless we close under that level, we really can't get too worried. In fact, we may even trade under that level for a few days (slightly) without jump-starting a real bearish trend. Why? The small moves under the 50 day line in late December and late January didn't really cause any bearish problems.

Though we're not yet able to say things are decisively bearish or bullish, we continue to see all the moving average lines flatten out, with the 10 and 20 day lines getting pretty close to crossing under the 50 day average. That's a bearish red flag we have to take pretty seriously, as we can't just chalk it up to a few days worth of volatility. There's nothing to really conclude anything bearish out of that situation just yet, but it's definitely staying on the radar.

NASDAQ Chart - Daily

Click for Larger Image

S&P 500 Outlook

Off by 10.25 points on Friday, the S&P 500's 0.71% dip into the red left the large-cap index at 1438.05. That was essentially the lone culprit behind the weekly loss of 10.35 points. However, we still see a significant amount of bullishness on this chart.

Don't fret over Friday - we've been there dozens of times in the last few months, and none of those instances were a big problem. Instead, it just seems to be par for the course when it comes to the S&P 500....two steps forward, one step back. If you look closely, you'll see the SPX is still above its key support line (dashed) at 1425, as well as the 50 day moving average line (purple) at 1422. As long as either holds up as support, we're not even going to flinch. Of course, that means the S&P 500 could slide a little lower and still be in a generally bullish trend.

The potential trump card is still the VIX, and it got a little more twisted on Friday. We had been discussing the 'zone' between 9.8 and 12.5 (dashed, on the VIX chart) as the range we were watching to mark possible reversals. However, those lines were also matched by the VIX's Bollinger bands (blue, on the VIX chart). Well, the 'extreme' ranges changed on Friday, as the VIX intercepted the upper band at 11.50. Is that the ceiling, or is 12.50 still the line to watch. We can't say for sure, but we put a little more faith in the self-adjusting Bollinger band lines. If our preference is the right one, then the VIX just peaked, and should travel lower soon. When and if it does, the market should be pressured higher (yet one more reason why the bulls should still be satisfied).

A move above the recent high of 1453 would go far in getting other buyers on board, though we haven't seen explosive rallies stem from the move to new highs lately.

S&P 500 Chart - Daily

Click for Larger Image<br />

Dow Jones Industrial Average Outlook

On Friday, the Dow Jones Industrial Average closed at 12,580.83, down 56.8 points (-0.45%) for the day, which meant a 72.66 point loss (-0.57%) for the week. Obviously that's not exactly bullish, but it still leaves the Dow within a generally bullish framework. So, no need to run for the hills just yet.

Bearish, or bullish? It depends on your timeframe. Like the other two indices, we think the Dow may be facing a couple of inconsequential 'down' sessions after hitting peaks late last week. For the Dow, that notion is highlighted by the fact that the chart is at the upper edge of its mildly-bullish 'zone' (framed by blue lines). As you can see over the last few weeks, the Dow has been bouncing around in that channel. If history holds up, we're due for more of the same.

As long as the lower edge of that range and/or the 50 day moving average line at 12,422 hold up as support, we're not going to get too concerned for the bulls. In fact, the bulls may not even have to suffer at all.....the 10 and 20 day lines acted as support at the end of last week. Of course, they haven't been consistent support in months, so don't get too excited about it now. The bigger bullish picture means much more.

Dow Jones Industrial Average Chart

Click for Larger Image

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Have an excellent week.

Friday, February 09, 2007

Buy On The Rumor Sell On The News

Traders have a variety of sayings and expressions about the market. Two famous expressions about the market are "buy on fear sell on greed", and "buy on the rumor and sell on the news". Today we're going to discuss the latter.

What is the reasoning, if any behind the phrase, "Buy on the rumor, sell on the news"?

"Buy the rumor, sell the news." is a phrase that may makes its speaker sound like a veteran trader possibly. Long-term investors aren't going to be too concerned with this phrase and what the rationale behind the phrase is, as it plays a bigger role in a short-term trader's stock moves.

Many times a rumor will circulate around a stock or a company. The rumor might be that the company is going to be acquired by a competitor, or that an exciting new cure for cancer is about to be released. When a company is rumored to be acquired, those who are acting on the rumor can mentally fill in more or less any acquisition price that they like, until an announcement turns the rumor to fact. Should an actual acquisition ever be announced, the facts rarely end up being as attractive as the upper limits of the rumor. Because all the best possibilities have already been "priced into" the stock before the real news breaks, the actual announcement tends to reveal the limits to the good news, rather than just the positives that are at the center of any rumor.

Simply put, when a new rumor on a stock starts brewing on wall street, chances are the price is going to start moving based on just the rumor. Once the real news hits the wires, whether its good or bad, all the traders who bought on the rumor and now having profits will be exiting their positions to book the profit of the move. Stock rumors are all about getting in first and getting out first. Stock rumors can be very profitable. In case their not profitable don't forget to set stop-loss once you take your position.

We love buying on the rumor and selling on the news. Our trades using this strategy have provided us consistent strong gains over the years. Social human nature is the provider of this consistency. Everyone want to make money in the markets thats for sure. The ones who act quickly and promptly on entering the position once they know about the rumor, and then exiting on or before the actual news, have the best chances for good profits.

Stock Rumors is one excellent service that provides timely real-time stock rumors. We use Stock Rumors service and have very good results from it. Now you don't have to be on the street to get these valuable stock rumors in time to take advantage of them. Stock Rumors does that work for you and emails you in real-time the rumor for you to take advantage of it at a very affordable price, and actually a very low price in our opinion. For the amount we pay them for the service and the amount of money we've made on the rumors, Stock Rumors is dirt cheap in our opinion. We don't know why they don't raise the price. There's other similar stock rumor advisory services available, but after trying Stock Rumors, we found they are just as good or better as some of the others at a fraction of the price.

Click the Stock Rumors link below to receive a free 7 day trial. We beleive you'll be glad you did. Buy on the rumor sell on the news!

Stock Rumors

StockRumors.com
Todays stock rumors before they become tomorrows stock news.

Free 7 Day Trial.


The idea behind StockRumors.com is pretty simple. They do not perform miracles. They simply contact their reliable sources from traders, fund managers and analysts. They hear what rumors are circulating the street and they pass it onto their members. The results speak for themselves. Rumors move equities, consequently making you money.

Join the Stock Rumors online community so you can increase your knowledge of what is being said in Wall Street's rumor pipeline and get today's stock rumors before they become tomorrow's stock news.

Thursday, February 08, 2007

Affordable Charting Software

Today I'm writing about one of the first stock charting programs I use that I really liked. Worden Brothers Telechart charting software program. When I was first starting out investing and trading in the markets back in 1989, Telechart amongst many others was one of the first charting software programs I used. It was a very good and affordable program for me as I was starting out in the markets.

Today, my partners and I use eSignal and Tradestation with addon trading stratgies which provides a much more robust and more expensive trading platform. Telechart has evolved over the years I've seen, into a charting program now rivaling eSignal and Tradestation, and is much more affordable. For new investors looking to save a few bucks on the charting program costs, Telechart is an excellent affordable choice.

Worden Brothers provides full 24/7 online support along with books, videos, training, and discussion forums. Basic service packages provide 1-Year Discount: Buy 10 months and get 2 FREE... a 20% bonus! 2-Year Discount: Buy 18 months and get 6 FREE... a 33% bonus! Access Worden.com homepage articles, Video Notes, and Discussion Boards. Enjoy free Technical Support via phone & email. 100% US-based in-house support staff. Gold & Premium service packages are available which provide many more features and advantages.

We highly recommend Telechart because of its more than adequate charting abilities and other value added features, and the most important point, of its affordability. Click the Telechart image below to take advantage of Telecharts free 30 day trial.

I remember when I was just starting out trading the markets, saving any amount of cash was very important to me with my very small trading account during that time. The basis of my website and blog is to help those beginning investors and traders to lessen the mistakes that we all make when betting money in the markets. Good day and good trading.

Worden Brothers Telechart

Worden Brothers - Telechart
Stock Market Charting Data Research and Online Market Tools

Free 30 Day Trial
.


Download the Telechart Software and trial free for 30 days. Stock data going back to 1982. Lightning fast charting, scanning, and sorting. Online training and discussion forums. Telechart features speed to view more charts per session, simplicity, with 20 years of historical data, and a additional free bonus of a tutorial video set.

Voted best charting software for 2006 by readers of Stock & Commodities Magazine. Voted best in its category since 1993. Daily weekly trading strategies videos, notes, and reports.

Wednesday, February 07, 2007

Ego Trading

If there's one word that costs traders the most money, I would have to say it is "ego". See, what we believe about ourselves - whether it's true or now - prevents us from seeing and acting on what the market is really telling us. Read on below for details on how to not let ego take over in your trading or click the Ego Trading header link above to learn even more.

1. Master The Internal Ego

The idea is a simple one - you must precisely recognize what is keeping you from taking your trading success to the next level. The vast majority of the time, it's your ego getting in the way. This isn't the arrogant or over-confident type of ego. Instead, it's more along the lines of a defensive, protective ego. The problem is, that kind of self-shielding ego is what prevents real learning. Let's take a closer look.

We're all human, and being human, we don't want to admit that we are wrong about a trade. The ego wants to uphold an ideal version of self that allows for only successes and not failures.Some traders lose millions of dollars trying to protect the ego's version of reality. Your goal should be to trade without ego, without personal judgment of your self worth. Trading is a business, and the businessmen who do the best are the ones who treat as such. It's not a reflection of them personally. In fact it's usually just a reflection of a mostly-mechanized trading system. In order to make money trading, your goal is to keep losses small while letting winners run. Your ego is not equipped to do that naturally, but a trading system is.

But aren't you up against traders with a ton of experience and great trading systems? Absolutely. But remember, everyone follows the same learning curve, and nothing is free. You'll have to spend time and effort to get good at this. How do you do that? Learn!

The reality is that you chose to enter each and every trade. Examine why the losing trades failed, and why the winners were successful. This can be painful, at least initially, since the ego is built to deflect blame yet accept praise (this is why we said the ego can create problems). That's a trap. If you find yourself saying "that was a good trade entry but..." then stop yourself immediately. Either everything before 'but' or after 'but' is inaccurate. If you rationalize or justify poor trades, then you'll never learn from them. This is an important reality - the ego can prevent real learning. If you can learn to accept some failure without being emotionally devastated, then you'll be a good trader. In fact it's been said that the world's top traders aren't necessarily geniuses - they're survivors. They lasted longer because they could handle their ego, and in so doing learned a great deal just by being able to stay in the game longer.

2. Defend The External Ego

So what can you do today to start managing your ego? There's not enough space here to even really begin. However, there is one characteristic that seems to separate the great traders from the average ones. The great ones realize what kind of problems that a lack of confidence can present, so they don't even risk a shattered ego. How? They keep their trading activities to themselves. While the amateur trader will often tell friends, neighbors, and total strangers about trades he may have entered, it's all too often a setup for disaster.

Call it Murphy's Law if you want, but one of the 'sure-fire' trades you just entered and told your neighbor about will turn against you soon. And like clockwork, the neighbor will ask how it panned out. You have one of two options at that point: tell the truth, or lie. You could lie to the neighbor and say the trade went fine. However, even though the neighbor may not know any better, the damage to our own ego is still a reality. Instead of acknowledging a losing position, we're forced to conceal the trade, which hurts your internal self-image.

On the other hand, you could tell the truth and own up to a bad trade, but that would negatively impact your confidence in a slightly different way. You see, our perception of how others see us has a far greater impact (for better and worse) than our perception of ourselves. It may not be fair or logical, but it's a fact nonetheless. And when we fail publicly (even at our own hands), we start to internalize and misinterpret external data, whether or not it's accurate. In other words, our damaged ego affects our judgment.

For instance, the neighbor may ask "How much did you lose?", while the trader may hear "Why didn't you use tighter stops?"

The neighbor may ask "Why did you buy it in the first place?", while the trader may hear "Can't you do adequate research?"

The neighbor may say "Better luck next time.", while the trader may hear "You have no business being in the market."

You get the idea - enough of those innocent questions, and the trader is no longer trading. Or worse, the trader has changed his or her trading strategy in an effort to salvage some confidence. And all because he opened the door to his ego!

The only real defense against such an attack is to simply not share the details of your trading with others. There's nothing wrong with telling others you trade, but in no way will detailing your trading activity enhance your return. In fact, it may potentially do the opposite. If you profess a trade position to someone else, you have made a subconscious commitment to it - maybe one you shouldn't have. If you know someone may ask you about that position later, you're more apt to hold it, even if it's a loser you'd normally get rid of.

Good day and good trading!

By not sharing your trades with friends and colleagues, you allow yourself to make mistakes free of criticism. You allow yourself to fail. You allow yourself to focus on finding better trades rather than proving someone else wrong. When you don't have to worry about protecting your psyche, you can shift the focus from defense to offense - a necessary trait for all traders.


Trading Simulation Game
Dr. Van Tharp - International Institute of Trading Mastery
"Secrets of the Masters" Trading Game

Helping others become the best trader or investor they can be has been Tharp's mission since 1982. An Original "Market Wizard", Dr. Tharp offers unique learning strategies, and his trading education techniques for producing great traders that are some of the most effective in the field. Over the years Tharp has helped people overcome problems with system development and trading psychology, and success related issues such as self-sabotage. His trading education programs are of the highest quality and are world-renowned. When you think about the golden rule of trading, it basically describes exits-how you abort losses and ride winners. When you think about Position Sizing, it basically controls how much you risk on any given trade.

Tuesday, February 06, 2007

Developing A Winning Trading System

The following is provided from our premier training partner, Dr. Van K. Tharp. from the International Institute of Trading Mastery. Dr. Van is a traders coach, and is included in Jack D. Schwager famous book of interviews with the worlds top traders called "Market Wizards". Click the Developing A Winning Trading System header link above to learn more about Van Tharps winning trading philosophy.

"When I first entered the business of coaching traders most people thought that a trading system was an indicator." - VK Tharp
There are folks out there who are obsessed with,

1) Finding the right stock that will make them a fortune and they think there is some magic way to do that.

2) Working on developing a trading system to the point of perfectionism; and never getting around to actually trading.

3) Finding the ideal “system.”

4) Just looking for someone to tell them what to do

Do you relate to any of these scenarios?

Every trader needs a strategy or system to form a framework for their trading. Without a repeatable way to identify and execute trades, one can never be a consistent performer. Basically your system is a roadmap that guides your trading and keeps you from making decisions when you are least able to do so. Meaning that trading can be stressful. It's easy to get distracted. Life goes on regardless of what the market is doing. If you hear news about the market changing or you're running late for your next appointment you are not likely to make good decisions about your trades.

However, many people believe that a trading system is something that is “bought in a box,” something that other people have created with specific technical skills or secret knowledge of the markets that they just don’t have. Well it isn’t.

There are hundreds, if not thousands, of trading systems that work. But most people, after purchasing a system, will not follow the system or trade it exactly as it was intended. Why not? Because the system doesn’t fit them or their style of trading.

One of the biggest secrets of successful trading is finding a trading system that fits you personally. Developing your own system allows compatibility with your own beliefs, objectives, personality, and edges.

Why develop my own system? Isn’t it easier to just go buy a system with proven results?

When someone else develops a system for you, you don't know what biases they might have. Most system development software is designed because people want to know the perfect answer to the markets. They want to be able to predict the markets perfectly. As a result, you can buy software now for a few hundred dollars that will allow you to overlay numerous studies over past market data.

Within a few minutes, you can begin to think that the markets are perfectly predictable. And that belief will stay with you until you attempt to trade the real market instead of the historically optimized market. Many trading accounts have plummeted from this very thinking. One “sure-thing” trade placed without proper position sizing can wipe some traders completely out of the game.

And what if the person peddling the system is just a great marketer who makes their money from selling systems – not from actual trading? How would you know?

In Van’s experience very few people have really good systems and one of his jobs is to teach traders what it takes to develop a complete system for themselves. It isn’t rocket science; it just takes commitment and the right knowledge.

You may be thinking, “But I don’t have the computer or math skills to create a system myself.”

This is one of the biggest misconceptions out there.

If computers, math or anything mechanical terrifies you, that doesn’t mean that you can’t determine how and what you want to trade, which is the basis behind developing your own system. In fact, you’re the ONLY person that really knows what will work for you.

The key thing to remember about system development is that the trading strategy is THOUGHT UP by you because it fits your beliefs, wants, desires and needs. You can hire someone else to computerize your strategy if you want to do that and can’t do it yourself. There are plenty of programmers that will do this for you.

However, not all trading systems have to be computerized! In fact, people have designed and tested successful trading systems for years by hand. Of course computers make things quicker, faster and more efficient, but they are not necessary at all unless you need to use computers to feel comfortable about your trading.

(If you disagree with this, then you probably DO need computer testing to feel comfortable or maybe you believe that when a computer generates numbers, it is more accurate)

If you truly understand what a trading system really is; then this will all make sense. It isn’t complex, unless you choose to make it so!

Below is a low risk high reward trading system built into a software program. This trading software looks for three specific chart patterns which have over time provided low risk high reward trades. Reward/Risk ratios of 3:1 upwards of 15:1 which is huge. Along with applying Van Tharp's trading concepts to your own personal style of trading and using the MTPredictor Trading Software, winning in the markets is a virtual certainty.

High Reward Low Risk Trading Software

MTPredictor Trading Software
High Reward Low Risk Trading
Free Trial / 10% Discount For Invest2Success.com Users


MTPredictor Trading Software that finds, evaluates and manages high reward low risk trade setups in stocks, forex, futures, options, indexes, currencies and commodities. For margin leverage trading accounts, the software comes with an automatic money management function to correctly position size and not over leverage.

Monday, February 05, 2007

Weekly Stock Market Outlook

NASDAQ Outlook

The NASDAQ's close of 2478.88 was the result of a 7.5 point rally on Friday - a gain of 0.3%. For the week, the gain of 1.66% (+40.39 points) matched that of the Dow. Perhaps more importantly, it was a close just a hair above that key resistance at 2470 we've been talking about. Talk about walking a tight rope! It was only the first close above it, so it's not like things are in cement here....but it's a start.

You'll find the many of the same ideas we discuss about the NASDAQ's chart will be repeated with the S&P 500 commentary. However, it's still worth a look in both places.

We've been preaching the possibility of a pullback for a while, after the composite stopped making progress in late November. However, Friday's rally is putting serious pressure on the upper edge of that horizontal trading range. In fact, it broke it. That move has to make us wonder if the last 10 weeks was simply a consolidation period within a bigger-picture uptrend. The buyers have remained persistent, and made a reasonably strong statement at the end of last week. If it was just a consolidation mode, then perhaps we should be thinking like bulls again.

As is stands right now, it's a bit too soon to say. We'd like to see a couple more closes above 2470 before making the call, just to verify the conviction of last week's buyers. However, we have to concede that the volume behind last week's buying was pretty darn solid....and bodes well for the bulls.

NASDAQ Chart - Daily

Click For Larger Chart

S&P 500 Outlook

The close at 1448.40 for the S&P 500 on Friday was a new multi-year high close, and obviously left the index past that resistance level of 1431. It was the result of a 2.45 point gain (+0.17%) for the day, and a 1.84% (+26.20) point gain for the week. The SPX's leadership verifies - so far at least - that the pundits who were calling for large caps to lead this year were right.

Let's call a spade a spade - the break to new highs is bullish. And while it's tempting to say the pattern we've seen for moths now is likely to play out again, we're not going to say it just yet. What's that pattern? A small, subtle move into new high levels, then a slightly smaller easing back to a generally bullish support line. Volatile? No....more like choppy.

Why could now be different? December and January could arguable be called a consolidation period (and a bullish wedge, in some regards). That may have been enough time for the market's spring top recoil itself, and the breakout on Friday might be a sign that the spring has been sprung.

Or maybe it's just more of the same back and forth we've been contending with.

If forced to choose, we'll choose conservatively - for the time being - and guess the hot three-day move is likely to result in a dip. While history is part of the foundation for that opinion, we're also keying in on the VIX. Closing at 10.08 on Friday after reaching a low of 9.96, the VIX is essentially back at levels recently associated with a short-term market top. See the red dashed line on the VIX chart; it's at 9.8. The last three times we got near that line, the market was also about to make a small correction. Maybe this time will be different, or maybe not. But if it is different, it would be an uncanny move back into uncharted territory for the VIX. Anything is possible.

Even then, the worst-case scenario is probably a tumble all the way back to the 50 day line at 1418. Or, maybe the straight-line support (blue, dashed) around 1421. Any pullback is likely to get stopped and reversed there.

Side note....the SPX is only about 100 points from its all-time high of 1552.85, hit back in March of 2000. It would take a 7.2% move from current levels to reach it....which would actually be quite a move. However, if the index can indeed make it there and a little beyond that level - probably sometime in the middle of the year - the even has the potential to start a bullish firestorm. Just something to keep in mind. Of course, we may not get there directly (in a straight shot) from here.

S&P 500 Chart - Daily

Click For Larger Chart

Dow Jones Industrial Average Outlook

On Friday, the Dow Jones Industrial Average gave up 21 points (-0.17%) to end the day at 12,653. That was still a gain of 1.33% for the week, as the Dow ended the session 166 points above where it closed out the week before.

No need to repeat the above comments here....the same basic idea still applies. The only thing we'll add - which suggests we're set for s short-term retreat - is being at the upper edge of that generally bullish zone (framed by bright blue lines). Other than that, things are bullish across the board....momentum, support at the key moving averages, and even that generally bullish channel.

The likely worst-case scenario here is a dip back to the recent support areas. That's 12,422 at the worst, but possibly even higher than that.

Dow Jones Industrial Average Chart

Click For Larger Chart

Have a good week!

Saturday, February 03, 2007

Investment Careers

A career in the financial, investing, trading industry is very rewarding and has many benefits. I know it has been for myself and my partners. Most of these job search links below require NASD licensing. American Investment Training provides home study courses, and testing for all NASD licenses.




• NASD Exam Study Courses & Licensing


American Investment Training provides cd and manual course study training, licensing and broker training for the Series 7 general securities exam and Series 3 exams for Forex Futures Commodities available with all other NASD exams. AIT provides home study course training cd's and manuals for the CFA Exams also. AIT also provides Group on-site NASD and Sales Training to individuals and securities firms worldwide.



Search the investment jobs links below for all type of finance and investment jobs in Accounting, Asset Management, Capital Markets, Commodities, Compliance / Legal Consultancy, Corporate Banking, Credit Debt / Fixed Income, Derivatives, Equities, FX & Money Markets, Global Custody, Graduates & Internships, Hedge Funds, HR & Recruitment, Information Services, Information Technology, Insurance, Investment Banking, Investment Consulting, Investor Relations / PR Operations, Private Banking / Broking, Private Equity / Venture Capital, Quantitative Analytics Research, Retail Banking, Risk Management, Sales & Marketing, Trading. Browse jobs by sector & location.

INVESTMENT JOBS SEARCH

• eFinancial Careers

• Financial Jobs

• Hedge Fund Jobs Database

• Hedge Fund Employment

• Jobs In The Money

• Money Careers

• American Investment Training Courses For The NASD Exams

American Investment Training provides cd and manual course study training, licensing and broker training for the Series 7 general securities exam and Series 3 exams for Forex Futures Commodities available with all other NASD exams. AIT provides home study course training cd's and manuals for the CFA Exams also. AIT also provides Group on-site NASD and Sales Training to individuals and securities firms worldwide.

The investment and finance industry is broad with a lot of financial opportunity. Choose an area that you like, get educated and licensed, and begin a rewarding career in investing and finance today. Good day!