Saturday, July 31, 2010

What skill is really needed for a trader in stocks

Trading in Stock Market is one of the toughest mental game in the world. Very few succeed in the game and majority of traders lose in the markets. What makes the difference between a loser and winner in stock market. Since trading stocks is a mental game, those who are having good emotional control over them win in the stock market.

If anybody takes decision impulsively instead of logically, he is likely to end up in loss. What most trader lack is, the ability to cut loss when it is small and the ability to hold their winning position till it gives a good profit. Lacking of both these qualities lead to loss in stocks.

The first and most important of this is, the ability to cut down their loss when it is small. Once you take a position, and if it is against you, you should not live on your wish but you should act on what your technical knowledge tells you. If your stop loss levels are triggered you need to book loss when it is small. Here always comes your ego. It will tell you not to close your position as if you will be right. Those who over come this ego, will certainly close their position. So one main quality a trader should posses is, he should overcome his ego.

The next thing is booking profits early. Even though it is not as evil as running the loss, it too have the same financial disaster. If you couldn’t make big profits in the long run, then what is the use of trading in the markets, that too with big risk associated with it.

Be a trader who book loss early and allow to run your profits. As legendary trader Jesse Livermore said ‘ Sitting right and sitting tight ‘ will give good profits in the long run

Wednesday, July 21, 2010

Indian Currency now has a new symbol

Of late, the Government of India has approved a new symbol for Indian Rupee in line with USD ( $ ), Euro and etc. Though the decision is late, it has come at a appropriate time when India is being recognized a world economic power. G-8 Group has lost it significance and it is being replaced by G-20 in which India and China are members. And it shows the importance of India in world arena.
The Government of India has shortlisted five symbols to finalize in one symbol from that. Finally, the symbol designed by Udayakumar from Chennai has got the nod of the government and he was awarded Rs 2 lakhs cash prize. Now the Government has to seize the opportunity that is being created in International arena as an important world power to market the symbol in financial world to popularize the symbol.
The Re symbol is not just a symbol, it is the symbol of India's pride, importance and dominance in international arena. We all know how the USD $ and Euro are dominating the world trade. Hope the Indian Rupee will rule the world one day.

Wednesday, July 7, 2010

The Legendary Trader, Jesse Livermore

Jesse Livermore was an legendary trader of stocks and commodities during the early 20th century. At the height of his fame, he earned more than USD 100 Million. He earned and lost millions of Dollars in his career.

At the young age, he left his house to work in bucket shops. Bucket shops are nothing but gambling house and their bets are based on the actual movement of stocks in New York Stock Exchange. Soon he mastered that game and started betting real money on stocks and earned windfall profits. This led to the banning of him from most of bucket shops. He earned more than what he gave to them.

One fine morning he moved to New York to try his luck. His experiences in the bucket shop had helped in making a good fortune in 1909 and 1929 crashes. Most of the time he played the Bear. He was known at that as a big Bear in the stock Market circles.

His famous strategy was to add further positions in winning trades and cutting the losses quickly. Some times he did not follow his own rules. So he lost all his fortunes. He died by killing himself and he was in huge debt when he died.

He has written a book  called ‘ Reminiscences ' of a stock market ‘ under a pseudo name. This Book is considered as a classic for its depiction of speculation in an interesting way, even now.

Monday, July 5, 2010

W D Gann, A Legendary Trader of Markets

GannGann was born on June 6, 1878 in Texas, USA. His father was a cotton industrialist. He started trading the stocks in 1902 when he was 24.

An avid reader of charts, he developed over the years a Technical Analysis method to determine the movement of stocks. He never revealed the method to anyone but he hinted that his forecasts were based Law of Vibration. He accurately forecasted where a stock would sell.

In 1909,  'The ticker and Investment Digest" Magazine reported they had oversaw his trading for October of that year and it included 286 winning trades and 22 losing, a win rate of 92%, which is unthinkable even now.

He also hinted what ever happened in stock market had happened earlier. He said, ‘History always repeats itself’. Later, he used astrology in predicting the stock market movements. And also Gann described the use of geometrical angles in the stock market.
After acquiring a huge fortune, he started teaching students of Technical Analysis. He wrote the following books;-
  • How to Make Profits Trading in Puts and Calls
  • 45 Years in Wall Street
  • Truth of the Stock Tape
  • How To Make Profits in Commodities
  • Truth of the Stock Tape and Wall Street Stock Selector
Any Student of Technical Analysis should at least have some insight about his method to be a successful Analyst.