http://www.guerillastocktrading.com/stock-trading/pair-trading-apple-appl-and-research-in-motion-rimm I have got oodles of interest on my pair trading article and the play I entered in both Apple and Research In Motion. I went long Apple and short Research In Motion.
The approach of matching a long position with a short position in two stocks of the same sector is called pair trading. This forms a hedge against the sector and the general market that the two stocks are in. The hedge created is essentially a gamble that you are placing on the two stocks; the stock you are long in against the stock you are short in.
As its name suggests, a pair trading line of attack is a double-pronged method, where two apparently unrelated option or stock positions are opened simultaneously. The tactic can give somewhat of a safety net to defend against an unexpected move in a certain sector, while capitalizing on a specific equity’s relative-strength backdrop.
In effect, a pair trader hedges his or her bets, opening positions in two interrelated equities or indexes and working them against one another, choosing 1 call (bullish) position and 1 put (bearish) position. The duo of positions then collectively gives money-making returns amid a number of outcomes.
For instance, I had a great point of view regarding Apple, but a pessimistic sentiment concerning Research In Motion. I went long on Apple whereas I shorted Research In Motion.
I also had an uneasy sentiment concerning the entire technology sector. By taking a short position in Research In Motion, it permitted me to profit if a large sell off in technology happened. This profit on the short side would offset my losses in Apple on the long side.
Apple maintained its relative strength versus Research In Motion. The shares rallied and the short side of the trade (Research In Motion) fell. Both sides of the paired trade enter positive territory.
However let us say the whole tech sector suffers a broad decline. The Research In Motion short is profitable, counter-acting the Apple long position which nets a loss. This is a better outcome than if I merely went long on Apple.
You’re looking for the percentage change in the market between Apple and Research In Motion to move in Apple’s favor no matter which direction Apple or Research In Motion go.
On May 14, 2009, I went long Apple at 122, and short Research In Motion at 71. I closed out the pair on July 10th 2009 with Apple at 137 and Research In Motion at 66. I made 12% on my Apple long, and 7% on my Research In Motion short. So the total gain was 19%.
Duration : 0:2:48
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Technorati Tags: pairstrategy, pairtrading, stocktrading
Posted July 29th, 2010
by admin
http://www.guerillastocktrading.com/stock-trading/the-black-art-of-trend-trading Institutional traders have targeted trade the trend investors like us. With cold, evil, fashion, Institutional stock traders are selling into the up swings and covering shorts into the down swings to compact the swing range too narrow for most of us. This has created both to the upside and to the downside over the previous week.
What has spooked bears like myself is that a certified higher low is now in place with confirmation on today’s chart.
Like I wrote about last week, the life cycle of the previous downtrend channel has completed. We are now in nomad territory where a different channel is being formed. We do not have enough information yet to determine if we are going into a sideways trading channel, or an uptrend channel.
When there is no clear trend, then what must trade the trend traders do? Walk to the sidelines and the protection of cash.
At present we have been in cash two times over the past several weeks and when we thought a new trend had been established making us jump back in, it turns out we were head faked and murdered. I do not know about you but I’m weary of getting my butt kicked by the better prepared and armed Institutional traders.
Someday we might have a Traders Bill Of Rights where the battlefield is made just, but for now, inequalities continue to exist amid professional and amateur traders such as Institutional traders have access to all limit orders, they have direct access to market makers and can make non-open market trades, they have access to a faster stock data feed and can use high frequency trading schemes against us, and they use the news organizations to manipulate public opinion about a company or the economy as a whole.
Something that is also key is that on the daily chart of SPY, bulls have re-taken the 50 day MA however we still need confirmation of the break.
The mistake I made was jumping back in this Stock Market twice now and being incorrect both times. This suggests that I ought to raise the bar for what I view to be a new trend forming. This means that I ought to find more bullish or bearish indicators on the charts than I have in the past. Even a Bearish Head and Shoulders Top and a Burial Cross was not sufficient to place my money on the short side. Not even a Bullish Downtrend Channel break was sufficient to put my money on the long side. All these technical indicators have meant little over the last several weeks. The only thing that these technical indicators have done is to entice us trade the trend traders from off the sidelines and into a trap where we have been slaughtered by the thousands.
Duration : 0:5:36
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Technorati Tags: daytrading, stocktrading, tradethetrend
Posted July 27th, 2010
by admin
The Stock Market can be extremely intimidating and it’s complexity scares off many people from even getting into the stock market. Do not be intimidated and let your fears prevent you from participating in the stock market and getting your share of the pie.
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Posted July 26th, 2010
by admin
http://www.powerfulstocktips.com – Adam Porter teaches you some of the most common Candlestick Patterns in charting, to give you an edge in trading the Stock Market.
Duration : 0:6:52
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Technorati Tags: adam, beginners, candlestick, Lesson, pattern, porter, stock, trading
Posted July 24th, 2010
by admin
The Stock Market can be extremely intimidating and it’s complexity scares off many people from even getting into the stock market. Do not be intimidated and let your fears prevent you from participating in the stock market and getting your share of the pie.
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Posted July 22nd, 2010
by admin
http://www.guerillastocktrading.com/forex-trading/why-cutting-losses-is-essential-to-a-winning-stock-trading-system Your search on information on the subject of avoiding losses in trading says to me that your brain is in the correct place. A large amount of rookie investors concentrate on materialism or in other words the reverse of risk aversion. Amateur investors think how much money they might make if only, and not about how they can lessen stock trading losses.
Can you avoid losses in stock trading? Nix that idea. My own 10 year accuracy fluctuates between 70% and 80%. Hence, 20% to 30% of my stock trades result in losses. However, there are steps you can take to reduce losses in trading.
1 – Don’t attempt to get back your losses. The worst action you can do subsequent to a loss in stock trading is to come to a decision that on your next trade you are going to make back the loss. Many amateur stock traders will put on a riskier trade in a small cap or any stock they believe can appreciate in value even more than their first losing trade with the idea that they will make back the money they lost. Do not do this. Putting on a riskier trade means you just improved your chances of having a second losing trade. Do not get gluttonous and lose all feeling of fear because of a loss. Instead look at your stock trading method. Did you stick with your stop loss plan? Did you rationalize and give reason for why you were still holding the losing stock even while your initial profit thesis was broken? Make all adjustments you need to your Stock Trading system then move on.
2 – Stick with your stock trading method. Stop hopping around from stock trading system to trading system as soon as you face a loss. No stock trading method is perfect. Continue with your trading method and make adjustments as desired but don’t leap from trading system to trading system. Become very good at a trading method before you decide to knife it. As well, do not get fearful and become too conservative.
3 – Ascertain the trend of the major indices. Use either the S&P 500 or the Nasdaq and establish the trend prior to buying or shorting a stock. The concept is to trade with the trend, not counter to it.
4 – Determine your profit thesis before you enter the stock trade. Your profit thesis should include what percentage profit you will have before you sell, and what percentage loss you will have before your sell. You ought to never risk more than you are attempting to gain. Case in point, in company ABC I’m going for a 5% to 10% gain, with a 5% stop loss. Get rid of your losing trade fast but let your winners ride.
5 – Time your entry better. I have found that when I go long a stock, if I’m up the first day of buying, my odds of it being a winning trade for me go way up. The entry is so critical that several well-known stock traders have gone as far to say that they make their money on the entry, not on the sell. In the video below, I let you see a method I use to time my entry better. Provided you have a Scottrade trading account, you will be able to employ this tool.
Duration : 0:5:24
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Technorati Tags: avoidinglossesin, stockmarket, trading
Posted July 21st, 2010
by admin
FREE Newsletter and FREE eBook – click here – http://www.bullmarketnewsletter.net/
Duration : 0:7:58
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Technorati Tags: analysis, bull, bullish, Charts, daytrading, education, market, otcbb, penny, pinksheet, spng, spongetech, stock, stocks, technical, trading
Posted July 18th, 2010
by admin
The Stock Trading volume seems to shoot up several times especially during the last few minutes of the day. Why is this?
Adding to what others have answered as well, a lot people put in orders to buy or sell that are to be executed right in the morning, so you have increased volume due to that. You also have many active day traders (myself a former one of those) who take advantage of this, and create a lot of the opening volume. Volume dies down during the day for several reasons, as most people are working, and those who trade are not as active in the middle of the day, simply because the volume is lower. The end of the day marks the return of most day traders, and for those traders that only hold positions in stocks for the duration of the day, they will go flat (buy or sell whatever orders they’re holding so they’re empty) adding to the increased volume. I hope this helps.
Posted July 18th, 2010
by admin
You can learn a lot by visiting an online stock trading site before opening a brokerage account and joining in the Investing fun. Most companies who host an online Stock Trading site will allow visitors to peruse their site to ensure it is a good match between an investor and an online brokerage.
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Posted July 18th, 2010
by admin
FREE Newsletter and FREE eBook – click here – http://www.bullmarketnewsletter.net/
Are you a FaceBook member? Want ‘real time’ alerts? Join our fan page – www.facebook.com/BullMarketNewsletter
Duration : 0:9:45
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Technorati Tags: analysis, bull, bullish, Charts, claytrader, daytrading, education, HESG, market, otcbb, penny, pinksheet, stock, stocks, technical, trading
Posted July 15th, 2010
by admin
