Fail to plan and you plan to fail

Dear fellow traders,

Going into anything blind is a formula build for failure. This is especially so when you go into the stock market. There's an old saying that goes; "Fail to plan and you plan to fail." Simple words to live by. But a lot of people have ignored them and have consequently lost thousands of dollars to the vagaries of the market.

If you don't want to end up losing your shirt on the market, you better start your entry into it by formulating a trading plan.

So, how do we go about doing it then? Well, the foundations of a trading plan is this :

- what are your objective?
- How much money do you intend to earn?

It would be best and easiest to start your plan by setting a definite number for you to aim for every month or maybe weekly. This gives you a specific goal to meet and helps you focus on what you want.

Next, you should choose the particulars of your entry into the market. What markets are you interested in going into? What commodities or products? This choice should be based on your knowledge and interests. It's pretty self-defeating to trade in stocks you're in for purely money. That's because lack of interest usually translates into non-interest in current events in that particular product's field. Not knowing what's happening in a market that you're trading in would be disastrous. So focus on markets that you have knowledge of and are willing to learn about.

After knowing what you'll be trading in, it's time to roll up your sleeves and hit the books. Choosing particular stocks in a one field is important and this is done by reviewing the performance of the stocks in a particular market. This defines what stocks you will be getting and what your possible strategies are. Are you going to go for the slow and steady route? Stocks that have consistent performance through the years. Want some quick money? New stocks moving upwards in recent times can be a boon for you.

As I mentioned earlier, choosing stocks goes hand-in-hand with formulating a strategy. These strategies would specify at what price you would start buying a particular piece of stock and how much money to spend on it. They also indicate at what prices would you start selling the shares that you have accumulated some profits or to cut loss when your stock no longer performs.

Your trading plan should also include some specifics : just exactly what sort of trader would you be? A day trader who is focused on the daily market schedule or a swing trader who may hold on to a trade for day or months?

The plan should also specify how exactly are you going to trade : calling up your broker once in a while or having your own online trading account.

Of course, there's the danger of over-planning. Don't be seduced by all that fancy software being advertised. All you need for stock trading is an accurate way to get stock information and that can be as easy as going to Yahoo! Finance or visiting marketwatch.com. Or you can invest in the star trading system.

Finally, your plan should have a margin of error or at least a level of adaptability. A whole lot of things happen on the stock market and you can't exactly be expected to take into account everything that might happen in the market. Having your plan be able to handle something you didn't think about can help make sure you don't accidentally lose money. This is where money management will save you. As long as you allocate a fixed percentage (eg. 5 to 10%) of your capitol to every trade, you will not be burned if one or two of your trades didn't work out as expected. You will still have the capital to fight another day.

A good trading plan can mean the difference between losing your savings or having a nice little retirement, so keep this in your mind as you formulate your own.

Good trading,

Tony Chai

US Markets Still Weak

Dear traders,

Although the rise in the Japanese stock market earlier this the week has led the rally in the global stock markets, the US stock market indexes - namely, the Dow Jones Industrial Average, the S&P 500 Index and the NASDAQ Composite Index are still trading below their 30 Day Moving Average.

Investors are basically worried about that the allied coalition military intervention in Libya will prolong the shutdown of oil output from this OPEC nation. Oil prices traded near US$105 a barrel on Wednesday, 23 Mar 2011, in Asia. Since 14 Feb 2011, oil price has jumped 24 percent as violence broke out in North Africa and the Middle East.

Yours Truly,

Tony Chai

Why You Shouldn’t Get Into Stock Trading

Dear fellow traders,

Indeed, one of the most growing industries in the past few decades is stock trading.

This is because trillions of income can be generated in one day through hundreds or even thousands of trading transactions that come in different parts of the country and now, the world, made possible through fast Internet access.

In fact — due to its viability — more and more people are getting into it because they see how flexible the trading schedule could be, how easy to get access to stock trading, the efficiency of the means and ways that stock trading can be transported, the no or low minimum of costs and accounts, and its capability to always move.

If you want to get into stock trading, the 1st thing that you need to do is to conduct some research. This research should include :
(1) what stock trading is,
(2) what are the basic things that you need to know in order to get started with it, and
(3) what do you need to do in order to be successful in it.

You can conduct your research by searching for websites that offer information on it. These include Yahoo! Finance, Google Finance, Marketwatch.com, MSN Money etc.

Today, with just one click, thousands of information could appear right in front of you. For you to save time, it would be best if you are very specific on what you are looking for. If you know what the exact terms that you are looking for, it would be easier for you to find the information you need regarding stock trading.

For a list of trading or finance related terms, visit :
http://www.investopedia.com/dictionary/

But, despite all these advantages, there are also reasons that you need to consider why you Should Not get into stock if given another option or business opportunity.

Experts say that people should not be very impulsive in getting into stock trading without really gathering their facts straight. This is because the investment involved in stock trading is not a joke. And once you lose a lot of money of investment, it will be hard to recover in that same industry.

If you have another business option that you think that you will succeed in, it will be best to try it first because stock trading can break your heart and your pocket once you get started the wrong way.

Experts say that people should not get into stock trading because :

There Is No Exchange System Available.
This is one the greatest risks that people who get into stock trading must face. Since it is a free flowing market with no definite time of operations, one can never be sure if they can close a transaction or not. If you are not comfortable with the idea that your business has no regulated mechanism, then don’t invest on it in the first place.

It Can Be Quite Complicated.
Compared to other markets, the nature of stock trading is much more complicated and harder to understand. Since it is quite different in terms of the approaches and techniques being used, some people easily get tired of getting the hang of it. Because of its complicated nature, it takes years for some traders to understand all the things that they need to understand about the process. Some may even refer to trading as an art.

It Has 2 Sides To Every Position.
Although it is the nature of a market to have more than one side position, the two-side position of stock trading can be confusing to most people. This is because the currencies that are being dealt with change rapidly and fluctuates unexpectedly compared to other markets.

But to me, I believe if you follow a good trading system and practise good money management, you have at least started off in the correct footing in your stock or option trading journey. Then, you would persevere and keep learning hands-on from your trading experiences to become better and better in your trading.

Yours Truly,

Tony Chai

Wall Street Falls Again

Dear fellow traders,

On Thursday, 10 March 2011, The Market Big 3, namely, the Dow Jones Industrial Average, the S&P 500 Index and the NASDAQ Composite Index suffered another big drop due to several negative news which might hit the US economy further.

On Thursday, 10 March 2011, the Labor Department announced that the number of people seeking unemployment benefits rose last week. Applications increased by 26,000 to a seasonally adjusted 397,000 during the week ended 5 March 2011.

The US government incurred the largest-ever budget deficit of $222.5 billion for the single month in February 2011. This eclipsed last February's record by nearly $2 billion. This ensures 2011's annual deficit to end as the biggest in U.S. history. The full-year deficit would exceed 2009's record deficit of $1.41 trillion.

The widening deficit is due to the impact of the tax-cut package that US President Barack Obama and congressional Republicans introduced in Dec, 2010.

Also, Oil prices have hovered around US$103 a barrel on Friday, 11 March 2011, in Asia as traders now worried that the protests in Saudi Arabia could escalate and might disrupt production in the world's largest crude exporter.

As of this writing, the Asian share markets extended their losses on Friday, 11 March 2011, following the Dow Jones Industrial Average's biggest one-day drop since August 2010. China has also reported that the country is experiencing high inflation, announcing that its February 2011 inflation remained elevated at 4.9%.

On Thursday, 10 March 2011, The Dow shed -228.48 points, or 1.87%, to 11,984.61; The S&P 500 dropped -24.91 points, or 1.89%, to 1,295.11 and the NASDAQ fell -50.7 points, or 1.84%, to 2,701.02. All 3 indexes have currently breached the 30 Day Moving Average once again.

I'm watching the stop loss level of my few bullish positions tightly. Seemed like the market bloodshed might continue on Friday, 11 March 2011.

Yours Truly,

Tony Chai

US Markets Fell on 1 March 2011

Dear fellow traders,

On 1 Mar 2011 (Tuesday), with rising unrest in Libya and Mr Ben Bernanke, Head of the Federal Reserve, announcing that rising energy prices will affect the economy, the main US market indexes all fell.

On 1 Mar 2011, The Dow Jones Industrial Average shredded 168 points, or -1.38%, to 12,058. The S & P 500 Index also dropped 22 points (-1.57%) to close at 1,306.33. The 30 day simple moving average (SMA) for both indexes have been tested again. If the drop persists, the next support will be the 50 day SMA. If you have bullish positions, it’s advisable that you have stop loss in place for your positions.

Yours truly,

Tony Chai