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Friday, July 15, 2005

The Art of the Trade: Having an Edge

Allan has summed up why having an an edge on the stock markets is the key in successful trading.
Allan writes the following, which I totally agree:
The few people I know of who are successful at trading all have one thing in common, they have an edge. What is an edge? An edge is a technique, or a special insight, or understanding, or technology that sets one apart from the trading hive.

So the art of the trade, simply put, is to find something that works and trade it.
Read further:
All Allan: The Art of the Trade Launches Special Situations Trader launches a new product called BriefingTrader, with a monthly fee of $250 (free in beta trial period). Live In Play:
14:14 Launches Special Situations Trader product is launching a new product designed to provide specific trading ideas and action-oriented analysis of volatility events. It will also include unfiltered market chatter. This product is for readers looking for straightforward and strong opinions. Readers must use the analysis with discretion and take responsibility for any use of the content. If you would like to be considered for a trial of the beta version of this product, please click here. The beta trial is free and will be followed by a trial period. You will be contacted Monday via email as to the status (please add your Organization and Title on the sign-up page). There will be a limited number of clients approved for this product.
Read further: Live In Play: Launches Special Situations Trader product (paid subscription required)

Saving Money by Doing Nothing

Some weeks ago I published a post about overtrading (taken from Investor's Business Daily) as a common mistake made by a lot of traders and investors. There is another good article about this topic in column by Barry Ritholtz.

Apprenticed Investor: Nothing Doing
By Barry Ritholtz
7/14/2005 10:22 AM EDT
Let's be blunt: There is something exhilarating, even thrilling, about trading. The adventure of putting a position on, the buzz of watching it rally -- it can be such a delight that it almost feels illicit.

Clearly there is a rush to trading, especially when the market is really hot. But if you are getting that excited by trading, then the odds are you have become far too emotionally involved in the trade.

This is a huge mistake.

There's nothing wrong with having, say, 5% of your portfolio in a "mad money" account for more speculative trades or just to have "some skin in the game." But if you are trading to get your jollies, then you are not spending your money well.

There are times when doing nothing is your best course of action. But knowing when to sit one out is a problem many investors have.

All too many investors are on autopilot; they always buy 1,000-share lots, they trade the same stocks, they make about the same number of trades per week. Why even trade if you don't like the market? That's a decision that too many people make without actually considering their options carefully.
Read further: Apprenticed Investor: Nothing Doing
The Big Picture: Apprenticed Investor: Nothing Doing

See also:
Avoid Overtrading By Pausing After Losses

Monday, July 11, 2005

Off-topic: Posting in the Upcoming Days

I'll be on a business trip for 4 days, so I don't know if I have enough time to post anything in my blog during the upcoming days. Sorry for the possible slight pause in posting, but please, look into the Archive to find something to read.

Coming Week: Profit Parade

Coming Week: Profit Parade
By Mike Marino

7/10/2005 7:39 AM EDT

Wall Street is looking ahead to a week jam-packed with earnings and important economic data. And that should make for some hectic trading action.

"The bigger names will obviously set the tone for the market, but I expect trading to be volatile. Thursday and Friday will be important because the consumer will have a better picture of any inflationary pressures after the release of the CPI and PPI data."

Read further: Coming Week: Profit Parade