I’ve hit a few home runs in my trading career but mostly that was because of the other team making errors, not my batting. They have even come at times when I thought the game was lost. But being a team player and making base hits consistently has served to put my team in sight of winning the World Series.

Risk capital is generally considered no more than 10% of your savings.

The News Moves the Market

There has been volumes written about the news and it’s effects on the stock market.  It all goes back to that old adage, “Those who refuse to study history are bound to repeat it.”  When applied to the general stock market it is how the news is distributed and the general mood of the market that defines what why the market is prone to move.

How The News Moves

News is distributed widely but not evenly.  High-tech, high-dollar traders get market news long before we little guys get the same news.  Sometimes days and weeks past before the little guy gets news that has already been acted upon by those who have faster news outlets.  Is there anything we can do to level the odds?

What Can We Do?

 Since we all get our news via the headlines first, and the story second, we can watch the market movements and imply what the first string traders are thinking.  This is where studying the history of the market comes in. 

An Example

I offer an example of a headline I read today.  “Unemployment, as shown by first time claims, comes in higher than expected.”  You may not have heard this for hours or days but it is already affecting the markets.  When the news hit the wires, volume to the downside increased.  As the news gets further and further disseminated, each release, from each new channel, has the same effect. 

This is telling us “average joe” traders that the first stringers, the “market players” see this as a negative.  As that news trickles down to the man on the street, this will affect distrust and distain for the market, i.e.; the market will be placed under more downside pressure as people on the street try to protect their hard-earned retirement funds. 

 People will act according to their fears and more downside pressure is applied.  Thus the general mood, when taken as a whole will be an expectation to the downside because of this little bit of news.

Effect the Same for Different News

Other news is effecting the market at the same time, some positive and others negative.  The more weight given to any given story will be first be shown by a viseral response by first string traders, and then by Joe trader, and then the man on the street just like the example explains. 

The sum of the market expectations can be watched in the volume and directions of these responses and by observing the difference in accumulation and disturbution as the market reacts during this drama that unfolds daily, we can better judge the future direction of the stock markets. 

How can We Use This News Or Any Other

News moves at the speed of light.  People don’t live that way.  This is why we can catch a ride if we can keep our eyes on the news and study how this wave moves the market.  We don’t get in at the bottom or out at the top but yet we can surf our way to profitable trading. 

In short words, watch the headlines, watch the wave, catch the wave, catch the profits.  Sounds as easy as watching history unfold, again.

Debt Reduction Calculator

If you ever thought, or are thinking about what debt does for your potential to earn and save, then you’ll understand why this makes a great widget to add to your arsenal of financial and money tool box.  It allows anyone tha uses MS Excel or OpenOffice develop a plan to reduce this drag on your well-being.  Delivered by C/net’s Download.com, it is guaranteed to be virus-free.  And to top off the goodness of this software, it’s free too.

Help stamp out debt!  Download now.

Hump Day Contest
October 22, 2008

The MOST Important Function For New Stock Traders

What would you say is the most important function that a new stock trader must perform? Would you like to know? I’ve added this to my Winner’s Post. Since no one even tried last week,

 I’ve decided that I will reveal to the the person with the best guess, which really doesn’t mean a right guess, what that actually is. It will be in the form of a password protected post. This post will just keep building so with active participation any who wins will get all past answers and the passwords for future Winner’s Posts. That’s a great deal.

Comment below to win the password. What have you got to lose?

If this had happened on Main Street, though, we’d be hearing from our presidential candidates telling us how each was responsible for the influx of money to our financial systems was their idea and that it shows us all that there is still money out there that is unregulated and still not taxed.

Hump Day Contest - Wednesdays And The Market

Wednesdays are typically a high point a week’s trading pattern.  But today doesn’t seem to be a good day.  The market has little direction either up or down and it’s difficult to ascertain any market direction from the trading that has thus far happened.  But as I started to write this post the market took its most decisive downturn of the day (after the opening trades).  I went in with my  usual position at 10:24am.  I should have waited a few minutes until after 10:30am but I chose the right direction.  How did I do that?  I’ll let you guess. 

Would you like to know what I’m trading?  I’ve decided that I will reveal to the the person with the best guess what that actually is.  It will be in the form of a password protected post.   I’ll let this play until Friday.  If no one comes close I keep the password to myself. 

Comment below to win the password.  What have you got to lose?

Am I sad or discouraged? Am I going to berate myself or question those things that made my previous trade successful? I think not.

There is never a good reason to chase a stock, chase a gain, or to chase a rainbow. For all of these, the return could be the same. Everyone that does chase these things increases their risks of never getting to a pot of gold and never achieving their financial goals.