Saturday January 26, 2008

Financial Rewards of Trading

Many people are under the impression that all you have to do is pick some good stocks to trade & you’re on your way to your first million.

Why not take a look at our Investment Tools section for the best way to take money out of the Market.

The truth is a lot more complex than that; after all if it was that easy then everyone would be playing the markets, which of course they’re not.

To become a successful trader you need to ditch your emotions & play a simple defined strategy, either your own or someone else’s & stick to it no matter what happens.

This is the downfall of most traders, they have a great strategy, they start making loads of cash & then they start taking risks, in other words they deviate from their strategy.

Rule no 1.Your strategy must be written in stone, so if your strategy is to dump the stock after a 5% drop, then you’d better be sure to dump the stock.

It’s also a good idea from the start to ask yourself if you want to take trading seriously or just to trade when you feel like it. Many traders who take up trading full time will eventually migrate over to day trading.

A typical day trader could make hundreds of trades in any given day. So what you need to do is ask yourself if you want to be stuck at home all day, day trading or if you’d like to just make a few trades a week.

The truth is that you can have it both ways if you want. You don’t have to become a fully-fledged day trader to make money on the markets. You can break up your portfolio into day trades & long term trades.

Some traders will only make a day trade when they’re absolutely sure that the market is going up. Mostly they’ll play earnings & only make a few trade a week but still make a lot of money doing so.

What most people don’t realize is that you can make quiet a bit of money by just trading earnings. Most people think that earnings only come out every quarter so you can only trade them four times a year.

This is not the case at all, all companies don’t report their earnings at the same time but will report them through out the year so you can trade them at any time. Take a look at Yahoos earnings calendar for the latest earnings.

Yahoo Earnings Calendar - http://biz.yahoo.com/research/earncal/today.html

Chart courtesy of StockCharts.com