This morning (12-3-09) I was glued to the TV and the Senate Banking Committee hearing on the reinstatement of Ben Bernanke. The old boy from Kentucky, senator Bunning, was giving him the work over! Boy, did he let him have it!
Bunning ended his comments with "Your Fed has become the Creature From Jekyll Island". WOW! He also told him that he would do everything in his power to see that ol Ben was not reinstated as Fed Chairman! It was good TV. I wonder if they will even show any of it on the news? I doubt it.
Bunning also asked questions of why the bail out companies were ever allowed to pay such Huge bonuses to their executives. He brought out several other good points and questions which Bernanke never answered. Senator Dodd wouldn't even allow it or make time for it (I don't think Ben wanted to respond to the points anyway).
If you have never read anything about the Creature From Jekyll Island, you should. You can find YouTube video (you may even see some here on this blog) as well as the book online. Just Google it and you should find all kinds of links to it. You will discover some exciting history that often is not covered in the main stream. In fact, the main stream tries to ignore or flat out discredit many of these historical events.
It never ceases to amaze me how much wool the big boys have pulled over most folks eyes. So much so, that if you try to tell people these things, the majority of them will think that you have lost your mind.
Personally I don't think there is much we can do about it. Many investors are wondering what will happen with the Fed.
As index traders we really don't care what they do (we figure it will probably be wrong anyway). We just follow the index wherever it goes for income that they can't take back from us.
That is what index trading can provide for you, an income they can't take away. Good to have this day and age!
It really does not matter what the market (or Fed) does, we can go along for the ride. The question is, will you be with us, or setting on the sidelines waiting for a real solution to the world's problems? (Hint: Don't hold your breath while you're waiting!). The Fed will keep pulling their stunts with the money supply, and as traders we will go along for at least part of the ride. That way, we can cash in no matter what the Creature from Jekyll Island does.
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Doug West has worked in Financial Planning and Investment training for over 20 years. Get his No-Cost Audio Report on how you can Secure Your Retirement with Free-Online Tools:
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Thursday, December 3, 2009
Sunday, November 15, 2009
Maximizing Your Retirement Income & Lifestyle
Millions of baby-boomers are now reaching retirement age. With the recent meltdown in the markets, many may be wondering what they can do to insure the lifestyle and income they once were planning for. In this article, I give you my favorite retirement income strategies.
First off, if you are still working, you should MAX out any employer-matched plans you may have at work. The closer you are to retirement, the more you should be contributing to these plans. If the markets scare you, then asked about any guaranteed interest option your employer may offer, and put as much as you possibly can in the plan.
Think about it, if your employer matches your contributions 50% or even 25%, where else can you get that kind of instant return on your money? NOWHERE! So, if you are not maxing that thing out (and most folks are not) you really need to start. Even if it means you have to cut back on your lifestyle right now.
Secondly, if you don't have an employer matched fund at work, what other options do they have? If you work for a school system you should look in the benefits of a 403(b) plan.
If you are self-employed, and have not saved anything for retirement, you may think seriously about working a few years for the school system and maxing out the plan.
My favorite retirement vehicle by far is the Roth. Either the Roth IRA and/or Roth 401k. These could well be the best wealth generating tools available for the average person today! In my opinion, many tax advisors, financial planners, and CPAs have given their clients bad advice in this area. I think every man, woman, and child in the US should have one of these accounts!
With a Roth, you can't take a full tax deduction in the year you contribute to it, as you can with a traditional plan. BUT, when you pull the money out, it is all tax-free with a Roth! So what would you rather have, a tax-deduction now, or tax-free income for life?
In a truly self-directed plan (again, I prefer the Roth if you qualify) you can invest money in the market, in real estate, in a business, and many other areas. With your plan at work, you normally have limited choices. Now you may not have a desire to be the next Donald Trumph, but you may get motivated to do a real estate deal or two if it could quickly beef up your retirement account. Remember, if that is a Roth account, all the growth is Tax-Free!
I've taught hundreds of folks how to trade the index, which is my next favorite place to generate retirement income. You can also do that inside of a Roth for tax-free cash flow! With a little practice and patience, you should be able to get good at it. If you do, you will have an unlimited retirement plan and income that no one can take away.
If you don't want to keep all of your retirement money solely in US dollars (not a bad idea these days with the debt the US is growing), look for investments with international interests. You don't have to trade currency to do it. For instance, any company that has worldwide interests (and most do these days) benefits from the currency market anyway. Think about McDonald's and the stores they have all over the globe. (just don't be fully invested in any one stock or market - and don't eat all your meals at Micky D's if you want to enjoy retirement long).
Two other areas to look at are ETFs, and MLPs. Both of these vehicles offer great income and earnings potential. You can even play foreign currency or about anything else you like these days inside of an ETF. This now makes it a whole lot easier to diversify.
With a little research and action on your part, you should have no problem creating the income and lifestyle you planned for in your golden years - even if you are already there!
Get my Free Audio Report on how to secure your financial future and retirement NOW.
First off, if you are still working, you should MAX out any employer-matched plans you may have at work. The closer you are to retirement, the more you should be contributing to these plans. If the markets scare you, then asked about any guaranteed interest option your employer may offer, and put as much as you possibly can in the plan.
Think about it, if your employer matches your contributions 50% or even 25%, where else can you get that kind of instant return on your money? NOWHERE! So, if you are not maxing that thing out (and most folks are not) you really need to start. Even if it means you have to cut back on your lifestyle right now.
Secondly, if you don't have an employer matched fund at work, what other options do they have? If you work for a school system you should look in the benefits of a 403(b) plan.
If you are self-employed, and have not saved anything for retirement, you may think seriously about working a few years for the school system and maxing out the plan.
My favorite retirement vehicle by far is the Roth. Either the Roth IRA and/or Roth 401k. These could well be the best wealth generating tools available for the average person today! In my opinion, many tax advisors, financial planners, and CPAs have given their clients bad advice in this area. I think every man, woman, and child in the US should have one of these accounts!
With a Roth, you can't take a full tax deduction in the year you contribute to it, as you can with a traditional plan. BUT, when you pull the money out, it is all tax-free with a Roth! So what would you rather have, a tax-deduction now, or tax-free income for life?
In a truly self-directed plan (again, I prefer the Roth if you qualify) you can invest money in the market, in real estate, in a business, and many other areas. With your plan at work, you normally have limited choices. Now you may not have a desire to be the next Donald Trumph, but you may get motivated to do a real estate deal or two if it could quickly beef up your retirement account. Remember, if that is a Roth account, all the growth is Tax-Free!
I've taught hundreds of folks how to trade the index, which is my next favorite place to generate retirement income. You can also do that inside of a Roth for tax-free cash flow! With a little practice and patience, you should be able to get good at it. If you do, you will have an unlimited retirement plan and income that no one can take away.
If you don't want to keep all of your retirement money solely in US dollars (not a bad idea these days with the debt the US is growing), look for investments with international interests. You don't have to trade currency to do it. For instance, any company that has worldwide interests (and most do these days) benefits from the currency market anyway. Think about McDonald's and the stores they have all over the globe. (just don't be fully invested in any one stock or market - and don't eat all your meals at Micky D's if you want to enjoy retirement long).
Two other areas to look at are ETFs, and MLPs. Both of these vehicles offer great income and earnings potential. You can even play foreign currency or about anything else you like these days inside of an ETF. This now makes it a whole lot easier to diversify.
With a little research and action on your part, you should have no problem creating the income and lifestyle you planned for in your golden years - even if you are already there!
Get my Free Audio Report on how to secure your financial future and retirement NOW.
Friday, October 16, 2009
Trade Currencies Through ETFs in Your Stock Account
So you have wanted to trade currencies, but the whole FOREX world has you confounded? Or you like the idea, but the fact that banks and governments are involved has you scared out of your wits!
Here are a couple of options for ones that want to take advantage of the opportunities in foreign currency without the huge learning curve to learn the FOREX market.
Maybe the pairs have you stumped. Which pair to trade and when? Can't I just park some of my money in a Foreign currency and not have it all in USD? We will get to that in a minute, but first let's cover a simple way to trade and invest in currency.
You can now use ETFs (exchange traded funds) to trade or invest in currencies through your current stock brokerage account. Many brokers don't know much about these because they focus on other areas, so don't waste your time asking them too many questions.
But, you can use ETFs to buy many of the world's major currencies. You can buy ETFs that track the Euro (stock symbol FXE), the British pound (FXB), the Australian dollar (FXA), the Japanese yen (FXY), the Swiss franc (FXF), and the Canadian dollar (FXC).
There are even ETFs for some of the smaller currencies. For instance you can play Sweden's krona (FXS) and even the Mexican peso (FXM). And, more currency ETFs are coming out all the time. There are even ETFs that cover a basket of currencies, like the Asian (check the Yahoo Finance web site for more) currencies.
Instead of having to open up a FOREX account, you can buy these ETFs right from your Scottrade (my favorite), Ameritrade, or any stock brokerage account (Just ask Chuck).
There are a couple of drawbacks to investing in currency ETFs. First, ETFs don't provide the leverage you can get with a Forex account (which can be good since leverage can also mean larger losses). Second, you will need to pay commissions as you would on your stock trades. This might be considered a disadvantage for some since one of the big selling points with FOREX is the supposed "No Commissions" (but like everything in the investment world, they will get fees out of you in other ways).
If you do your homework, you could be trading currencies right there in your E*Trade or Charles Schwab account. With all the talk of the USD dropping into oblivion, it might be good to park some of your money in other currencies!
One other way you can do that is to look into the options they have for you at Everbank.
Everbank is an online bank that has some truly innovative products. They offer several accounts that are held in, or profit from foreign currency. Most of these are in the form of Certificates of Deposit (CD's) and may or may not offer the protection of FDIC insurance.
There you have it, two simple ways to invest in currencies without opening up a FOREX account, or leaving the country!
Here are a couple of options for ones that want to take advantage of the opportunities in foreign currency without the huge learning curve to learn the FOREX market.
Maybe the pairs have you stumped. Which pair to trade and when? Can't I just park some of my money in a Foreign currency and not have it all in USD? We will get to that in a minute, but first let's cover a simple way to trade and invest in currency.
You can now use ETFs (exchange traded funds) to trade or invest in currencies through your current stock brokerage account. Many brokers don't know much about these because they focus on other areas, so don't waste your time asking them too many questions.
But, you can use ETFs to buy many of the world's major currencies. You can buy ETFs that track the Euro (stock symbol FXE), the British pound (FXB), the Australian dollar (FXA), the Japanese yen (FXY), the Swiss franc (FXF), and the Canadian dollar (FXC).
There are even ETFs for some of the smaller currencies. For instance you can play Sweden's krona (FXS) and even the Mexican peso (FXM). And, more currency ETFs are coming out all the time. There are even ETFs that cover a basket of currencies, like the Asian (check the Yahoo Finance web site for more) currencies.
Instead of having to open up a FOREX account, you can buy these ETFs right from your Scottrade (my favorite), Ameritrade, or any stock brokerage account (Just ask Chuck).
There are a couple of drawbacks to investing in currency ETFs. First, ETFs don't provide the leverage you can get with a Forex account (which can be good since leverage can also mean larger losses). Second, you will need to pay commissions as you would on your stock trades. This might be considered a disadvantage for some since one of the big selling points with FOREX is the supposed "No Commissions" (but like everything in the investment world, they will get fees out of you in other ways).
If you do your homework, you could be trading currencies right there in your E*Trade or Charles Schwab account. With all the talk of the USD dropping into oblivion, it might be good to park some of your money in other currencies!
One other way you can do that is to look into the options they have for you at Everbank.
Everbank is an online bank that has some truly innovative products. They offer several accounts that are held in, or profit from foreign currency. Most of these are in the form of Certificates of Deposit (CD's) and may or may not offer the protection of FDIC insurance.
There you have it, two simple ways to invest in currencies without opening up a FOREX account, or leaving the country!
Wednesday, October 14, 2009
You Only Lose If You Quit!
I found this article I wrote Years ago while surfing the web (slow day in the market - even though the Dow did hit and close above 10,000 Yea!), and thought I would share it with you. It's a good pick-me-up for anyone that might not be where they want to be financially right now. Enjoy!
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I received an email from a man who told me that his family would all leave him if he got involved in another home business opportunity! Apparently, he had failed in a few attempts at home business, and online trading, so the family had this man labeled as a loser. Sound familiar?
I cannot understand why your family would disown you because of your wanting to set up a business to provide for them. Just because you have failed in business, that does not make you a loser! Many of the wealthiest men in the world have failed many times! Most of us have heard the story of Abe Lincoln, who failed in about everything he tried, until he became the 16th president of the United States.
I have failed in many of my business ventures, but the lessons I learned from those experiences are invaluable to me. I have earned more in one week than many people in the US earn all year! If I'd quit years ago, I would probably be working 40 hours somewhere for a lousy $300 or $400 per week right now. With my home biz, and the Internet, I can make that much or more if I work or not!
In many businesses, including any good home business, you only lose if you quit! Think about it. In many home biz opportunities today, you have the possibility to earn more than many doctors, lawyers and other professional people earn! It may take you a few months or even years to get there but how long did those professionals have to go to school to get to the large incomes? YEARS OF STUDY AND BIG TUITION CHECKS - MUCHO $$$$$$ !
I have a good friend who has been in networking over 20 years now. In the first 18 years, he barely scraped by. Finally, he got with the company that was right for him. All those years of experience PAID OFF BIG! He now is the top dog in a very popular nutritional MLM company, and earns over $300,000 PER MONTH! This is not some hyped up story, because I actually have seen the man's checks. How many professional men would like to make that kind of income? If he would have listened to everyone telling him he was wasting his time, he never would have gotten there.
If you have been involved in the home biz industry for any amount of time, no doubt you know folks who make incredible money. Sure, there is a lot of hype but, there are a lot of true success stories as well. What if my friend had worked a 40-hour per week job all his life? Just over broke, right?
One woman we know of made over $400,000 last year selling other people's products with online Free Affiliate programs! The opportunities are endless for anyone with a creative mind who is willing to work.
With the Internet in the picture, we have not even seen the start of the types of income that will be generated online. Online networking is where mail order MLM was back in the 60's - its infant stages! For those who have taken the time to do their homework, and/or get with someone who has, the sky is the limit!
If your family and friends make fun of your business, smile! Many others before you have dealt with the same thing. One day, if you have the right product or program, do your work, and stay consistent, those folks will just have to eat their words.
I love to run into ones who at one time spoke to everyone in my county and told them what a "fool Doug West is" for being involved in that "no-account business", that I should "get a real JOB!" Now, I do not believe in a showy display of one's means of living by any means, but in a small area, word gets around when you are doing pretty well financially. Those good old boys with the real jobs... they'll start to wonder what would have happened if they had started their own home biz way back when.
Things come back to ya' sometimes. Let people talk - because they will anyway. Just remember - YOU CAN'T LOSE UNLESS YOU QUIT!
#################################################
I received an email from a man who told me that his family would all leave him if he got involved in another home business opportunity! Apparently, he had failed in a few attempts at home business, and online trading, so the family had this man labeled as a loser. Sound familiar?
I cannot understand why your family would disown you because of your wanting to set up a business to provide for them. Just because you have failed in business, that does not make you a loser! Many of the wealthiest men in the world have failed many times! Most of us have heard the story of Abe Lincoln, who failed in about everything he tried, until he became the 16th president of the United States.
I have failed in many of my business ventures, but the lessons I learned from those experiences are invaluable to me. I have earned more in one week than many people in the US earn all year! If I'd quit years ago, I would probably be working 40 hours somewhere for a lousy $300 or $400 per week right now. With my home biz, and the Internet, I can make that much or more if I work or not!
In many businesses, including any good home business, you only lose if you quit! Think about it. In many home biz opportunities today, you have the possibility to earn more than many doctors, lawyers and other professional people earn! It may take you a few months or even years to get there but how long did those professionals have to go to school to get to the large incomes? YEARS OF STUDY AND BIG TUITION CHECKS - MUCHO $$$$$$ !
I have a good friend who has been in networking over 20 years now. In the first 18 years, he barely scraped by. Finally, he got with the company that was right for him. All those years of experience PAID OFF BIG! He now is the top dog in a very popular nutritional MLM company, and earns over $300,000 PER MONTH! This is not some hyped up story, because I actually have seen the man's checks. How many professional men would like to make that kind of income? If he would have listened to everyone telling him he was wasting his time, he never would have gotten there.
If you have been involved in the home biz industry for any amount of time, no doubt you know folks who make incredible money. Sure, there is a lot of hype but, there are a lot of true success stories as well. What if my friend had worked a 40-hour per week job all his life? Just over broke, right?
One woman we know of made over $400,000 last year selling other people's products with online Free Affiliate programs! The opportunities are endless for anyone with a creative mind who is willing to work.
With the Internet in the picture, we have not even seen the start of the types of income that will be generated online. Online networking is where mail order MLM was back in the 60's - its infant stages! For those who have taken the time to do their homework, and/or get with someone who has, the sky is the limit!
If your family and friends make fun of your business, smile! Many others before you have dealt with the same thing. One day, if you have the right product or program, do your work, and stay consistent, those folks will just have to eat their words.
I love to run into ones who at one time spoke to everyone in my county and told them what a "fool Doug West is" for being involved in that "no-account business", that I should "get a real JOB!" Now, I do not believe in a showy display of one's means of living by any means, but in a small area, word gets around when you are doing pretty well financially. Those good old boys with the real jobs... they'll start to wonder what would have happened if they had started their own home biz way back when.
Things come back to ya' sometimes. Let people talk - because they will anyway. Just remember - YOU CAN'T LOSE UNLESS YOU QUIT!
Thursday, October 8, 2009
Index Investing - Your Own Hedge Fund
With the Bernie Madoff fiasco, some investors feel that any hedge fund is just a scam. It is easy to see why you might feel that way. Savvy investors know that there are still some great hedge fund managers out there, but how do you find them?
In this article we want to talk a little about creating your own hedge fund using Index Investing.
When you invest in an index you are just wanting movement of that index, such as the dow, mini dow, S&P, emini S&P, Russell, mini Russell
Millionaires Are Made During Depressions and Recessions, and there are savvy investors that are making tons of money right now in the markets (and with Real Estate).
To create your own hedge, you need to learn how to make money when the market is dropping. Did you know that 80 percent of all investors have not plan for capitalizing on market drops? That is a MAJOR disadvantage, don't you think!
To really HEDGE anything you need to be able to earn money no matter what the market is doing. That is what the Wall Street insiders do, and that is what YOU should be doing too.
Stock Trading Vs. Index Investing
Most people who invest in anything look to the stock market. That's only natural, that is what you hear the most about. You have no doubt also heard things like "Stay away from futures or you will lose your shirt". My response to that is, look how many stock investors lost their shirts with the meltdown. Then many pulled their money out of the market (sadly - many had their cash in mutual funds - we like ETFs MUCH better) and missed the ride back up.
Wall Street hopes you get out at the bottom, and they want you to buy at the top. So, you are getting out when they are getting in, and when you are getting in, they are exiting!
It can be tough for most folks to make money with stocks when the market is tanking. Finding a company that you will bet against (by shorting their stock), in my opinion is harder than finding a good company to ride up with.
There are so many ways that these big corporations can cook the books. That should be more obvious after the melt down than ever.
We like trading the index, cause it is just as easy to short and ride it down as it is to ride it up. In fact, it is even easier on the way down because prices nearly always drop faster than they rise. It took Microsoft YEARS to reach is pinnacle, but only a few months to fall down to earth (with must of that drop coming within a couple weeks). The overall index acts the same way, only within minutes or sometimes seconds.
In my opinion, learning to trade an index, either long or short term is one of the best ways to hedge.
In this article we want to talk a little about creating your own hedge fund using Index Investing.
When you invest in an index you are just wanting movement of that index, such as the dow, mini dow, S&P, emini S&P, Russell, mini Russell
Millionaires Are Made During Depressions and Recessions, and there are savvy investors that are making tons of money right now in the markets (and with Real Estate).
To create your own hedge, you need to learn how to make money when the market is dropping. Did you know that 80 percent of all investors have not plan for capitalizing on market drops? That is a MAJOR disadvantage, don't you think!
To really HEDGE anything you need to be able to earn money no matter what the market is doing. That is what the Wall Street insiders do, and that is what YOU should be doing too.
Stock Trading Vs. Index Investing
Most people who invest in anything look to the stock market. That's only natural, that is what you hear the most about. You have no doubt also heard things like "Stay away from futures or you will lose your shirt". My response to that is, look how many stock investors lost their shirts with the meltdown. Then many pulled their money out of the market (sadly - many had their cash in mutual funds - we like ETFs MUCH better) and missed the ride back up.
Wall Street hopes you get out at the bottom, and they want you to buy at the top. So, you are getting out when they are getting in, and when you are getting in, they are exiting!
It can be tough for most folks to make money with stocks when the market is tanking. Finding a company that you will bet against (by shorting their stock), in my opinion is harder than finding a good company to ride up with.
There are so many ways that these big corporations can cook the books. That should be more obvious after the melt down than ever.
We like trading the index, cause it is just as easy to short and ride it down as it is to ride it up. In fact, it is even easier on the way down because prices nearly always drop faster than they rise. It took Microsoft YEARS to reach is pinnacle, but only a few months to fall down to earth (with must of that drop coming within a couple weeks). The overall index acts the same way, only within minutes or sometimes seconds.
In my opinion, learning to trade an index, either long or short term is one of the best ways to hedge.
Monday, August 10, 2009
You MUST Manage Your Risks To Win
If you want to stay alive long term as an investor, trader, or even in business, you MUST learn to manage your risk!
In business that might be your expenses, or knowing how much you will spend on advertising (especially with untested sources). You keep track of things so that you don't keep throwing good money after bad. In other words, if you track your advertising results (which you MUST do), and a certain campaign is not working - you scrap it and try something else. For those ad ideas that are working, you keep doing them, and stop when they quit being effective.
For those of us involved in index trading (or any type of market trading for that matter), it is even more simple. We MUST know before we go into a trade, how much we are willing to risk or lose on it to see if it works. Even if we are going to average, we still need to calculate it out. How many times will we average, what is my max loss. Once you know that figure, it may determine how many times you can average (place additional orders to improve your entry point).
The market may change and dictate that we get out early, but it MUST never dictate how big our loss will be. In other words, we NEVER let a small loss turn into a big one. It would be like throwing money away on advertising that does not work.
Most folks (especially those who have been ingrained with the buy and hold mentality) keep holding losing trades until they become catastrophic losses. A huge losing trade that wipes out their account (or 50% or more of it - which is exactly what happened to most stock investors with the mortgage meltdown fiasco).
Learn to keep your losses small and be ready to trade another day. Some traders shut down if they have two losing trades in a row (some days, you are just not in the zone!).
Risk To Reward Ratios
Most "experts" will tell you to calculate the risk-to-reward ratio before you get into a trade or investment. In my opinion, they are almost impossible to calculate. My first rule of trading is that in the market "Anything Can Happen at Any Time". So how will you know what a trade could do or what the potential reward is? Whose formula will you use to calculate it?
I've heard "experts" claim you need at least a 2 to 1, others say a 3 to 1, or even a 5 to 1 or better reward ratio, or you should NEVER even open the trade! That simply means that you should not enter a trade unless you can make double the money you may ultimately lose on it (for a 2 to 1 ratio). While it is a good idea in theory, it would keep me out of a lot of really good trades (for one thing, I know that nobody can be sure what the market will do - anything can and does happen).
While you should be looking for highly probable moves that have the potential to turn into NICE runs, the truth is, you NEVER know what is going to happen. I've seen traders take losses on trades that were once in profit simply because they were holding out until some arbitrary reward ratio was met.
We teach our traders to get into a highly probably move and then lock in some profit and see what happens! Once you have nothing to lose (by locking in some profit), and a HUGE potential upside, you can't really go wrong. As traders we should WANT to be in that position as often as possible. Sometimes we even get our targets out of the way and let the winning trade RUN! Forget about holding onto a trade until some calculated ratio is reached.
On any chart you look at there are floors and ceilings that are easy to see. You must take note of them and trade according to what "might" happen. However, if you lock in profit as soon as you can, you will be way ahead of the guy that is looking for some magical reward ratio.
Calculate How Much You Will Earn
Just as important as calculating your max loss on any one trade, is knowing when to shut down for the day. A daily profit goal can help. It can also help you to formulate your plan for trading.
It would be good if your max loss was less than your daily goal, then one loss would not ruin your day.
Sure, there will be days when you don't reach your goal, but there will be days when you surpass it, because you stuck to your plan, and locked in profit when you had a chance. Many days I have several little trades, and then one nice run and I'm done.
An Advanced Move
This is not for beginners. New traders should get in and take whatever the market is offering by locking in profit as mentioned above. However, once you account size has grown, it opens up more options for you, like the move I'm about to describe.
Let's say your goal is $1,000 a day in your trading. For this example, let's say you are trading the mini-DOW (my favorite index). The mini-Dow is worth $5 per tick. So, if you start with 10 contracts, you would need 20 ticks to get to your goal of a grand for the day (we will ignore the broker commissions since they are really small anyway).
First, you look for the highly probable set up you want. When it appears, you open the trade with 10 contracts. If it moves 20 ticks in your favor, you are done. However, if it moves against you (a back tick), you average up to 20 contracts (by adding 10 more contracts to your trade at a new entry point). Now with 20 open you will need just 10 ticks to get to $1,000. If you average up to 40 you will need just 5 ticks. If you go up to 80 you will need 2.5 ticks.
Again, to pull this move off, you would have to have the DEEP pockets required. You could do the same thing with a $100 daily goal and starting out with 1 contract. In either case you MUST have the risk calculated. At some point you could use averaging to get to your acceptable loss level.
Risk-to-reward traders would probably never do this move. However, if you have the experience, and account size it is fairly easy to do. Some days you could be through in a few seconds.
Whatever style of trading or business is right for you, learn to calculate your max loss on any one deal, and you will be MILES ahead of most folks who never think in these terms. Remember, you MUST manage risk to win at anything!
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Doug West has taught hundreds of folks to pull from $100 to $1,000 or more daily from the markets, and you can too. Learn to make short-term trades and you will never have to second-guess the bulls and bears. Just learn to take what it gives you with his simple and easy to understand course on Index Trading
In business that might be your expenses, or knowing how much you will spend on advertising (especially with untested sources). You keep track of things so that you don't keep throwing good money after bad. In other words, if you track your advertising results (which you MUST do), and a certain campaign is not working - you scrap it and try something else. For those ad ideas that are working, you keep doing them, and stop when they quit being effective.
For those of us involved in index trading (or any type of market trading for that matter), it is even more simple. We MUST know before we go into a trade, how much we are willing to risk or lose on it to see if it works. Even if we are going to average, we still need to calculate it out. How many times will we average, what is my max loss. Once you know that figure, it may determine how many times you can average (place additional orders to improve your entry point).
The market may change and dictate that we get out early, but it MUST never dictate how big our loss will be. In other words, we NEVER let a small loss turn into a big one. It would be like throwing money away on advertising that does not work.
Most folks (especially those who have been ingrained with the buy and hold mentality) keep holding losing trades until they become catastrophic losses. A huge losing trade that wipes out their account (or 50% or more of it - which is exactly what happened to most stock investors with the mortgage meltdown fiasco).
Learn to keep your losses small and be ready to trade another day. Some traders shut down if they have two losing trades in a row (some days, you are just not in the zone!).
Risk To Reward Ratios
Most "experts" will tell you to calculate the risk-to-reward ratio before you get into a trade or investment. In my opinion, they are almost impossible to calculate. My first rule of trading is that in the market "Anything Can Happen at Any Time". So how will you know what a trade could do or what the potential reward is? Whose formula will you use to calculate it?
I've heard "experts" claim you need at least a 2 to 1, others say a 3 to 1, or even a 5 to 1 or better reward ratio, or you should NEVER even open the trade! That simply means that you should not enter a trade unless you can make double the money you may ultimately lose on it (for a 2 to 1 ratio). While it is a good idea in theory, it would keep me out of a lot of really good trades (for one thing, I know that nobody can be sure what the market will do - anything can and does happen).
While you should be looking for highly probable moves that have the potential to turn into NICE runs, the truth is, you NEVER know what is going to happen. I've seen traders take losses on trades that were once in profit simply because they were holding out until some arbitrary reward ratio was met.
We teach our traders to get into a highly probably move and then lock in some profit and see what happens! Once you have nothing to lose (by locking in some profit), and a HUGE potential upside, you can't really go wrong. As traders we should WANT to be in that position as often as possible. Sometimes we even get our targets out of the way and let the winning trade RUN! Forget about holding onto a trade until some calculated ratio is reached.
On any chart you look at there are floors and ceilings that are easy to see. You must take note of them and trade according to what "might" happen. However, if you lock in profit as soon as you can, you will be way ahead of the guy that is looking for some magical reward ratio.
Calculate How Much You Will Earn
Just as important as calculating your max loss on any one trade, is knowing when to shut down for the day. A daily profit goal can help. It can also help you to formulate your plan for trading.
It would be good if your max loss was less than your daily goal, then one loss would not ruin your day.
Sure, there will be days when you don't reach your goal, but there will be days when you surpass it, because you stuck to your plan, and locked in profit when you had a chance. Many days I have several little trades, and then one nice run and I'm done.
An Advanced Move
This is not for beginners. New traders should get in and take whatever the market is offering by locking in profit as mentioned above. However, once you account size has grown, it opens up more options for you, like the move I'm about to describe.
Let's say your goal is $1,000 a day in your trading. For this example, let's say you are trading the mini-DOW (my favorite index). The mini-Dow is worth $5 per tick. So, if you start with 10 contracts, you would need 20 ticks to get to your goal of a grand for the day (we will ignore the broker commissions since they are really small anyway).
First, you look for the highly probable set up you want. When it appears, you open the trade with 10 contracts. If it moves 20 ticks in your favor, you are done. However, if it moves against you (a back tick), you average up to 20 contracts (by adding 10 more contracts to your trade at a new entry point). Now with 20 open you will need just 10 ticks to get to $1,000. If you average up to 40 you will need just 5 ticks. If you go up to 80 you will need 2.5 ticks.
Again, to pull this move off, you would have to have the DEEP pockets required. You could do the same thing with a $100 daily goal and starting out with 1 contract. In either case you MUST have the risk calculated. At some point you could use averaging to get to your acceptable loss level.
Risk-to-reward traders would probably never do this move. However, if you have the experience, and account size it is fairly easy to do. Some days you could be through in a few seconds.
Whatever style of trading or business is right for you, learn to calculate your max loss on any one deal, and you will be MILES ahead of most folks who never think in these terms. Remember, you MUST manage risk to win at anything!
**********************************************
Doug West has taught hundreds of folks to pull from $100 to $1,000 or more daily from the markets, and you can too. Learn to make short-term trades and you will never have to second-guess the bulls and bears. Just learn to take what it gives you with his simple and easy to understand course on Index Trading
Monday, August 3, 2009
Lifesaving Summer Info You Need
In case you missed any of our recent updates I wanted to share with you the Great News!
Here is what you Need to know:
* Wonderful Summer Recession Special
* Opportunity Investigator Radio (Listen to episodes online - Live & recorded More on what you may have missed - in a minute)
* New Issue of OIO that you can download:
*********************************************
Make sure you get a PDF copy of our latest issue of OIO. In it you will find:
* How To Invest in Washington's Biggest Federal Landlord – and add income to your retirement or portfolio with a HUGE Upside Potential
* Why Al Gore's Prediction of Climate Change May Happen Within the Next 24 Months & What you can do to Protect Your Family Now
* Could The Recession Be Over? Penny Stocks that Could Earn 500% in a few months or less!
* MLP's – Add Income To Your Portfolio with these High-Paying Stock Alternatives
* Biz Opps that Could Be HUGE in the Months Ahead
* Simple Technique To Cash In No Matter What the Market or Economy Does ($ave $500 IF You Act NOW)
Don't miss it. Download your copy now at:
http://www.nosecretincome.com/July09.html
That link will redirect you to the pdf file. If you need help with downloading see:
http://www.kosoma.com/howtodownload.html
*********************************************
Now - More on Opportunity Investigator Radio (If you have biz or investment opps you would like us to investigate - let us know).
Here are some things you may have missed:
* The 7 Things You Must Do to Thrive in This Economy
We interview Mark Monchek of PerformXcellence. Mark shared some Great Tips for anyone who is in business for themselves - online or off.
* What the Government is NOT Telling You About Global Warming!
Don't miss this Hair Raising Episode with Former US Intelligence Analyst John Moore - it could save your life!
* An Investment That Could Change Your Life
Don't miss this one about an investment that could create millions of new millionaires!
To tune in go to:
OpportunityInvestigator.com
and click on the Radio Show link at the top of the page to listen in Live or to past episodes.
Have a Great day!
Your Friends @
Kosoma Publishing
Here is what you Need to know:
* Wonderful Summer Recession Special
* Opportunity Investigator Radio (Listen to episodes online - Live & recorded More on what you may have missed - in a minute)
* New Issue of OIO that you can download:
*********************************************
Make sure you get a PDF copy of our latest issue of OIO. In it you will find:
* How To Invest in Washington's Biggest Federal Landlord – and add income to your retirement or portfolio with a HUGE Upside Potential
* Why Al Gore's Prediction of Climate Change May Happen Within the Next 24 Months & What you can do to Protect Your Family Now
* Could The Recession Be Over? Penny Stocks that Could Earn 500% in a few months or less!
* MLP's – Add Income To Your Portfolio with these High-Paying Stock Alternatives
* Biz Opps that Could Be HUGE in the Months Ahead
* Simple Technique To Cash In No Matter What the Market or Economy Does ($ave $500 IF You Act NOW)
Don't miss it. Download your copy now at:
http://www.nosecretincome.com/July09.html
That link will redirect you to the pdf file. If you need help with downloading see:
http://www.kosoma.com/howtodownload.html
*********************************************
Now - More on Opportunity Investigator Radio (If you have biz or investment opps you would like us to investigate - let us know).
Here are some things you may have missed:
* The 7 Things You Must Do to Thrive in This Economy
We interview Mark Monchek of PerformXcellence. Mark shared some Great Tips for anyone who is in business for themselves - online or off.
* What the Government is NOT Telling You About Global Warming!
Don't miss this Hair Raising Episode with Former US Intelligence Analyst John Moore - it could save your life!
* An Investment That Could Change Your Life
Don't miss this one about an investment that could create millions of new millionaires!
To tune in go to:
OpportunityInvestigator.com
and click on the Radio Show link at the top of the page to listen in Live or to past episodes.
Have a Great day!
Your Friends @
Kosoma Publishing
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