Much has been discussed about the stages that a typical trader will encounter as they progress on their journey to profitability . In this article we will explore the 5 key phases that every trader goes through as they develop as a trader.  Many traders do not make it to profitability  . Indeed if you believe all you read, only 5% of traders are profitable . My guess would be that those 5% exist across stages 4 and 5, meaning 95% of those that start trading give up when at Stage 1, 2 or 3. If you make it through these stages, there is a strong probability that you will become one of a select few that can proudly state that you are a consistent, professional trader. When reading the below, ask yourself whereabouts in your trading journey are you.

Stage 1 –  Trading on Hearsay  . Most traders start and end their journey at this stage  . They act on hearsay and advice from ‘professionals’ and friends. These traders/investors do not understand money management or risk . They have probably never heard of a stop loss or a profit target and have certainly never thought about writing a trading plan. Instead they will pile their cash into a company because ‘Joe in accounts gave them a hot tip’ . Sadly these tips can not go on forever and the journey’s of these traders will invariably end in 1 of 2 ways. Most likely after a series of devastating losses, then will simply close their accounts and believing that trading is tantamount to gambling they will vow never to return to the markets. Those whose journey does not end at this point, will move quickly into Stage 2.

Stage 2 – Information overload and the holy grail. Those traders who do not give up at Stage 1 will likely enter into a wonderful and exciting stage of their journey. They will become learning sponges, absorbing every piece of trading literature they can find  . Their focus will be on finding trading systems that guarantee victory! They may even purchase a couple of systems (NO NO NO!!). They will skip from one system to the next constantly searching for the holy grail – that one system that delivers consistent profits. They will tweak settings on Stochastics and RSI  , each time thinking that they have found the holy grail  . They will have periods of success that makes them feel great. They will believe they have made until, until one day, their system simply stops working and they enter a period of losing trades. They will scratch their heads and maybe even tweak a few technical aspects of their systems. But the reality is,  it has now dawned on them that there is no such thing as the holy grail  . Despondent, many will now quit, convinced they have tried everything in their power in order to make money in the stock market. Those that don’t quit will move to a different and even more exciting  stage in their trading journey

Stage 3 – Profit and Loss (Large P/L and emotional swings). One day thinking you have made it, the next thinking that you have not. If a trader makes it this far, they have a great chance of going all the way . They now understand two great lessons. 1 do not listen to other people and 2, there is no such thing as the holy grail. Traders at stage 3, may now be developing the mind of a trader. They may already begin to understand the emotional and psychological aspects of trading and how vital these elements are. They will certainly have figured out what kind of trader they are (technical or fundamental, trader or investor, short and longer term) and they will now understand what is important in trading. They will likely enjoy sustained periods of success, only to be followed by depressing periods of drawdown. They will one day believe they understand how to make money, only for the next day to believe that they do not. This period of the trading journey can be a long and emotional one and requires significant perseverance and belief in one’s self. Few traders will actually give up at this point, many will continue to trade with a modicum of success. Perhaps it will become a hobby, that every now and then pays for a holiday or car insurance. It’s not a bad place to be. Traders at stage 3 are unlikely to lose all their money. But unless they move to Stage 4, they will not be able to take a shot at the title.

Stage 4 – Consistency. The early stages of being a consistent trader can be like sitting on a knife edge . There are periods when you suddenly believe you are back at Stage 3, a series of losses can still occur and you begin to doubt your ability and your system. This is not unusual, but most traders at Stage 4, will have begun to develop a traders mindset.  . It may be that they simply take time away from the markets, or they revert to low risk mechanical (technical) systems that can remove these emotions. They will totally understand that trading is a percentages game and that they only way of winning is by protecting their trading capital and by being disciplined in their approach. This Stage can last for years. Understanding and dealing with emotion can take many years. Until such time as wins and losses do not affect your mindset you will remain at this stage.

Stage 5 – Professional. These dudes are trading for living . They are sat in their home offices totally comfortable in their ability to make a living trading the financial markets. They have experienced periods of profitability and periods of loss and are agnostic to both. They accept that trading is simply about probability and being consistent in their approach of finding and trading edges. They will also likely have sizable trading accounts as they will be risking 1% or less on each position and looking to make 2-3% per trade.

Getting to Professional status is the dream of many (if not all) self-directed traders. Understanding the journey and the Stages in that journey will help us all to plot our paths to Stage 5.

There is no shortage of reviews written by gurus in the penny stock arena, and generally I try to ignore these articles . But I just read an article that made my blood boil: the article concerned Penny Stocks.

As a long time veteran of day trading on both Wall Street and the CME there are very few areas of investing that are infested with more vice, scammers and downright cheating than the penny stock market.

I realize this will get some traders dander up …. and I will supply ample evidence with hard facts and experience ,  not all Penny Stocks are scams…but an overwhelming number of Penny Stocks are simply vehicles for obtaining capital for companies that don’t have a product to sell or a service to offer .

The life of many penny stocks starts as follows:   As you may have noticed , most penny stocks are promoted through newsletters and advertising.  There are sound reasons for this method of promotion , as the penny stock companies usually promise the newsletter advertisers a block of stock in exchange for getting the stock price rise.  The newsletter usually touts the “potential” for the stock to rise founded upon certain factors occurring and usually pontificate, at length on the unbelievable potential the stock has should these “certain” factors occur.

I usually recommend the potential investors in penny stocks contact the stock itself and ask about capitalization and revenues .  Without exception, these stocks usually are extremely undercapitalized and have no revenue to speak of .  Usually an investor questioning the company will be rerouted to an answering service or the newsletter promoting the penny stock.  The SEC has estimated that the majority of penny stocks are in the “pump and dump” category. And with good reason.

A normal stock, traded on an exchange, usually has a firm designated as a market maker in that stock, along with a floor specialist who facilitates the trading of that stock.  This method allows the public transparency in the trading of any equity and allows an investor to see the exact and verifiable volume and price movement of the security.

This transparent system is little more than an illusion in the Penny Stock market, and the penny stock issues are usually without a true market maker.  All to often, the market maker in a penny stock scheme is the very company itself.  The fox is in the henhouse, so to speak.  What this means is that the Penny Stock company is setting both the bid and ask prices on its own stock.  Further, most Penny stocks are traded on the ‘Pink Sheets” which puts it into the category of trading in the wild west .

Many experts have estimated that 9 out 10 Penny Stocks fail inside the first year of their offering .  I have heard numbers as low as 7 out of 10 bandied about, but the point is simple.  When you are trading penny stocks you are playing in a non-transparent, non-exchanged oriented market, and this is the recipe for disaster .  It is usually just a matter of time.

in summary , I won’t suggest that all penny stocks are fraudulent or scams , just the majority of them, and odds do not favor long term success.  My warning is clear and based on years of experience , there are simply too many exchange traded stocks that will earn you ample money than risking sums of your hard earned money in the Penny Stock Market.

I am a long time institutional and retail trader. I still day trade every day, but usually only from 6 AM to lunch break. After so many years of trading, I take pleasure in sharing some of the knowledge I have acquired in sharing it with those in the early stages of their trading career.

You can learn to trade in a system that works, because I trade the same system every day that I teach. I encourage you to visit my site and sign up for the free nightly videos(a $500 value) where I share some of the techniques I have used to make me so successful. This is a great offer for new traders and intermediate traders who are not having the class success they expected. Click here to start receiving your informational and fact filled videos every night.

There are three easy ways to find information on Day Trading.  Researching in all areas aids give you a well balanced view on the material area and you and your family will be fully informed.

The first place you may want to look is encyclopedia type starting points. You can now find this kind of facts on sites like Wikipedia. These starting points assist give you and your family an unbiased view of Day Trading . This helps give you a base of facts when you go to learn more about Day Trading .

Another starting point of material is blogs and websites like this one. These give you and your family other people’s point of view. These can be helpful resources and reviews, since they are frequently written out of experience.  One thing to keep in mind when browsing the web for facts is to consider the source . Someone who is also selling a product related to Day Trading  may be additional biased in what they tell you .

A 3rd starting point of material would be books. Books are a excellent resource when trying to learn further about Day Trading.  However they can occasionally be relatively expensive. One great way to find books on your thought area for an affordable price is nonprofit used book sales. These are normally held by libraries and AAUWs. They offer books for a fraction of the cover price. This aids you learn further on Day Trading without breaking the bank. To find book sales, search Google, your local library website or stop in at your local library.

If you and your family are looking for specialty books, check out Amazon or other online used book markets. You can more often than not find a book for a deep discount (maybe not as much as book sales but still for a great price). This will assist you gain some further knowledge on Day Trading without staring at a computer monitor for long periods of time.

If you learned from all three starting points you and your family will become well informed on Day Trading . This will help you and your family develop your own options on the item material and aid you and your family when you deal with this subject matter in the future.

Getting into new markets since the stock market seems to have turned sour? It’s a trend that many people are following, taking their investment money and putting it in foreign investments. It can be a risk, just as much of one, if not more than having Wall Street determine your future. A lot of economic uncertainty has turned most people’s finances on its ear and no one really seems to know when we’re going to bounce back. If you’re interested in getting into a financially stable and sound market, read my AVAFx review. They’re an online Forex broker that may just be for you.

 

I didn’t expect to be so impressed. Some of the things that I look for in a good broker and platform are ease of use, low minimum opening balances and room to grow. There are others, of course, but to me, these are very important. AVAFx fits the bill, all the way around.

 

You can open an account with AVAFx for only $100. That’s incredible. These days, no one has the cash to open huge trading accounts. Everyone is hoping to find a new way to increase their wealth and build financial stability for the future.

 

The interface that they use makes life easy for you-it made it incredibly easy for me doing this AVAFx review! There are so many incredibly complicated sites out there when it comes to trading. What sense does it make to leave your customers scratching their heads? No matter how many times you’ve been on your computer, you’ll find the interface to be simple. If you don’t know what that means, simply put-you won’t get lost when trying to use the site.

 

They’ve got a very easy to understand and use interface. It’s not so simple that it’s lacking, though. No matter what you know or don’t know about the Forex or computers in general, you’ll be able to jump right into the platform that you’re given-bet you didn’t expect to learn that from my AVAFx review, now did you?

 

Of course, you’re investing in the market to make money and the great thing about them is that you’ll get the best of both worlds because they have a proven track record for making excellent trades, too! Hopefully this AVAFX review has helped show you some important pieces of information about what to look for in a Forex broker.

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Many people want to click=’ShowSpinOptions(18)’>trade in option for intraday due to its low capital requirement and huge profit potentiality. However it is being experienced that the option buyers used to lose money very often. The reason is quite simple traders jump into the option trade
without well-read the answer of the following questions. I will request you to find the answer of these questions then jump into the option trade for intraday. Certainly I will give you the valid mathematical answer for the below mentioned questions.

   1. Which strike option to trade for intraday in nifty?
   2. When to trade in options and when not to trader in options for intraday?
   3. Use the option information processing system?
   4. How to initiate option positional strategy?  

Let us start the discussion from the 1st point “Which strike option to trade for intraday in nifty?” this  Nifty Options method is not limited to nifty option it is useful to all stock options
too.While making a choice of strike to trade in option we often find the following problem.

A. Just In the money and at the money call options of nifty used to have high time value and has greater risk to trade for intraday.

B. Deep out of money options have less chance to appreciate in comparison to the just in the money options. Hence it is not suitable for intraday trade.

Simple mathematical round to choose a right strike for trade:

a. Go to the www.NseIndia.com

b. Click on the get quote under the future column

c. Get the quote for nifty

d. In the retire find the daily volatility

e. For 12th January it was 1.04

f. 11th closing price was 5256.10 as per the volatility principle explained by me in the article “Trade in nifty future intraday for making sure profit”.

g. The high to low range will be 54.66 for the day.

h. Hence I will see nifty at 5310 or at 5201 for 12th January 2011.

i. Hence 5200 and 5300 strike options either call or put is important for me as a trader. For intraday trading point of view.

j. The midpoint of 5310 and 5201 is 5255.50 will decide the trend. Price above 5255.50 will plate maximum till 5310 and below 5255.50 will scale till 5201 under this volatility considerateness.

when to trade in options and when not to trader in options for intraday?

As per the above discussion I will have maximum price range 54.66 for intraday.

1. If current high, low difference of opinion is less than 27.33(54.66/2) point then time has not come for trading in the chosen strike options.

2. If the current price is above 5310 or below 5200 then strike chosen by me to trade in options is not correct.

3. If current opening is above 5255.50 but below 5310 then good time to trade in 5300 ce option

4. If current price is below 5255 but above 5201 good time to trade in 5200 put option

5. If the current price is above the 1.618% growth retracement level of last settlements high and low then do not trade in call options for intraday.( to know why 1.618 revisit the Fibonacci principle)

6. If the current price is below the 1.618% decay retracement level of last settlements high and low then do not trade in put options for intraday.( to know why 1.618 revisit the Fibonacci principle)

How to use binomial option calculator?

Now I have following information  ( NIFTY FUTURE TIPS )

I will do intraday trade only in 5200 or 5300 strike call or put option.

Nifty has a chance to go up to 5310 or to 5201

Price above 5255.50 trends is in favor of the buyer

Price below 5255.50 trends is in favor of the sellers.

Price range set for the day based on volatility is approximately 54.66 points

I need to calculate the trend confirmation point: Just use the price point 5255.50 in the binomial option calculator it will give you the buying entry point and selling entry point.

I will buy 5200 call option if nifty cross above 5270.30(0.272 % retracement from 5255.5 to 5310) and buy 5300 put option if nifty fall below 5240.70 (0.272 % Fibonacci retracement drawn from 5255.5 to 5201)

Why so? Since it is the option which is just becoming deep in the money it will have less time value component.

Now I need 3 things.

1. Price of 5200 call option at 5270.30 (this is my entry price)

2. Price of 5200 call option at 5240.70 (this is my stop loss)

3. Price of my call option at 5310(this my maximum target)

Similarly I need the 3 things for the put option.

1. Price of 5300 put option at 5240.70 (This is my entry price)

2. Price of 5300 put option at 5270.30 (this is my stop loss)

3. Price of my put option at 5201(this my maximum target)

Now I will use the following information in the binomial option calculator:

Current price is mid point 5255.50,

Strike price 5200

I will input the current option premium (this will be used to calculate the actual volatility in the option and actual volatility will be used to calculated the target and stop loss for the option) 105 when nifty was trading at 5250 on 12th January 2009.

I will choose the call option.

In volatility field I will entry any positive number >50. (This will be used only once for reference to calculate the actual volatility). I have entered 50

Days till expiry will be the number of calendar days. I have entered 17  

It has given me the following out put ( I have got 5267.70 and 5243.30 since I am using the Gann angle proportion instead of the  Fibonacci proportion. However Gann proportion is more accurate as compared to the Fibonacci proportion)

Buy 5200 ce at 111 when nifty will be at 5267.70 for target 119@5180, 127@ 5293, 144@5316. Since I know nifty in upside can scale to 5310 I will keep my final target below 144. Stop loss for the call option is 88

Now keeping all other information as same I will change the strike to 5300 and will select 5300 put option. This too has given us the information buy 5300 pe at 111 when nifty will be 5243.30 for target 118 @5231-125@5219-139@5195. since I know nifty may scale max till 5200 I will keep my final target below 139. Stop loss will be 92 for this entry.

Currently both strike options at 105 and nifty is at 5250. I will wait for my entry to come in order to initiate the position.

From the above I know to buy nifty 5200 ca at 111 for target 144 stop loss 88 and 5300 pe for target 139 and stop loss 92.

If you wish to buy  2 call and 1 put then your maximum profit at 5310 will be (144-111)X100-(111-80)X50=1750

Max loss (111-80) X100+ (139-111) X50= 1700 at 5200 level.

By simulating other option strategy with different strike one can make wonderful money using this calculator.

Other benefit of this binomial option calculator:

13th January:  intraday volatility 1.03. Previous day close 5208.90. Hence price range set for the day is 55.26. Upside target are 5264.10, down side target 5153.64. Mid point is 5209. 5200 call and 5200 put will be best choice. Since nifty has less chance to go to 5100 or 5300. At that time nifty was at 5190.

I have used current price as 5209, strike as 5200, selected call option, entered the call premium as 86.

I have been advised to buy 5200 ce at 93 @5221, stop loss 74 @ 5196.75 target 100 at 5233, 106 at 5245,121 at 5269.

I have been advised to buy 5200 pe at 96 @5196, stop loss 80 @ 5221 target 101 at 5184, 107 at 5173 and 119 at 5149.

Since the current price of 5200 ce and 5200 pe are 86 and 90 respectively 5190 this says it is mispriced.   As per the calculation call option must trade below 74 and put must above 96. Hence buying 2 put and 1 call at this moment is advisable.  

Hence binomial option calculator of Smart Finance will also inform you the miss pricing of the option.  We hope you enjoy reading about the best share market tips