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.
Showing posts with label IRA. Show all posts
Showing posts with label IRA. Show all posts
Thursday, October 8, 2009
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!
**********************************************
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 $1,000 or more daily from the markets, and you can too. Learn to make short-term trades and you will never have to second-guess the bulls and bears. Just learn to take what it gives you with his simple and easy to understand course on Index Trading
Tuesday, July 28, 2009
Is the Recession Over?
Newsweek announced yesterday that the Recession is Over! Are they right? Find out in our latest edition of OIO & how to cash in either way. And don't miss our OI Radio show today where you will hear:
The 7 Things You Must Do to Thrive in This Economy
as we interview Mark Monchek of PerformXcellence. To tune in go to:
http://opportunityinvestigator.com
and click on the Radio Show link at the top of the page to listen in Live at Noon EST today - Tuesday the 28th - or to listen to past shows.
Make sure you get a PDF copy of our latest issue of OIO. In it you will find:
* How To Invest in Washington's Biggest Federal Landlord –
and add income to your retirement or portfolio with a HUGE
Upside Potential
* Why Al Gore's Prediction of Climate Change May Happen
Within the Next 24 Months & What you can do to Protect Your
Family Now
* Could The Recession Be Over? Penny Stocks that Could Earn
500% in a few months or less!
* MLP's – Add Income To Your Portfolio with these High-
Paying Stock Alternatives
* Biz Opps that Could Be HUGE in the Months Ahead
* Simple Technique To Cash In No Matter What the Market or Economy Does
($ave $500 IF You Act NOW)
http://opportunityinvestigator.com/recession.html
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
Watch a video on signs the recession may be ending HERE
There could be GREAT times ahead for index traders! If you have been considering enrolling in my index course there has never been a better time. For a limited time you can SAVE $500. Visit:
http://opportunityinvestigator.com/recession.html
For details. Have a great day!
The 7 Things You Must Do to Thrive in This Economy
as we interview Mark Monchek of PerformXcellence. To tune in go to:
http://opportunityinvestigator.com
and click on the Radio Show link at the top of the page to listen in Live at Noon EST today - Tuesday the 28th - or to listen to past shows.
Make sure you get a PDF copy of our latest issue of OIO. In it you will find:
* How To Invest in Washington's Biggest Federal Landlord –
and add income to your retirement or portfolio with a HUGE
Upside Potential
* Why Al Gore's Prediction of Climate Change May Happen
Within the Next 24 Months & What you can do to Protect Your
Family Now
* Could The Recession Be Over? Penny Stocks that Could Earn
500% in a few months or less!
* MLP's – Add Income To Your Portfolio with these High-
Paying Stock Alternatives
* Biz Opps that Could Be HUGE in the Months Ahead
* Simple Technique To Cash In No Matter What the Market or Economy Does
($ave $500 IF You Act NOW)
http://opportunityinvestigator.com/recession.html
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
Watch a video on signs the recession may be ending HERE
There could be GREAT times ahead for index traders! If you have been considering enrolling in my index course there has never been a better time. For a limited time you can SAVE $500. Visit:
http://opportunityinvestigator.com/recession.html
For details. Have a great day!
Friday, July 10, 2009
Iraqi Dinar
If you have not yet heard about the uncommon opportunity to invest in the currency of Iraq (the Iraqi dinar or IQD), then it would be worth your time to check into it.
You won't hear much about it in the mainstream media. The politicians won't let you in on it (even though many of them are heavily invested in the Iraqi dinar), and your banker probably knows nothing about it.
However, for a few hundred dollars (still within the reach of most folks - even in these hard times), you might well get into the investment of a lifetime.
Currently the Iraqi dinar does not have a value on the world stage. Basically, the value is whatever the street will give you for it. You can find it on eBay and other auction sites, but don't buy it there. You want to make sure that you get yours from a reputable, registered currency dealer. These dealers have to be registered with the US Treasury (if they are located here in the states).
Why do we say that the Iraqi dinar is an investment of a lifetime? Currently you can get a million dinar for around one thousand US. In times past the IQD was worth over $3 USD.
Is it a sure bet? There is no such thing. However, the upside on this is so HUGE that you might feel like a dunce if you didn't at least get a quarter million dinar (about $300 US) or so.
There are a few ways a person could invest in the Iraqi dinar. Most folks prefer to simply buy the currency from a reputable dealer and just hold onto it (you might want to put it in your safety deposit box and the bank - if you have a stable bank you can trust to be there - actually - you should be able to get your dinar and other items out even if the bank folds -they are dropping like flies these days).
You could also open up an account with a bank in Iraq (don't worry you won't have to go to Bagdad to do it), but we've heard more con than pro on that route.
If you have an Iraqi bank account, you can now even play their stock market which has gone electronic. For there market to really open up to the world, they will Have to get a world value on their currency. With the US pulling troops out of the country, there are many signs that this could happen soon. Look for our Opportunity Investigator Radio Show on BlogTalkRaio and find the episode on the Iraqi dinar, to hear more about it.
Most folks today would rather go to the casino or bingo hall and spend a couple hundred bucks. Gaming is one of the most profitable industries left after the meltdown. BUT, if you look into what I'm telling you here, it may well change your life and help you beat your own recession!
You won't hear much about it in the mainstream media. The politicians won't let you in on it (even though many of them are heavily invested in the Iraqi dinar), and your banker probably knows nothing about it.
However, for a few hundred dollars (still within the reach of most folks - even in these hard times), you might well get into the investment of a lifetime.
Currently the Iraqi dinar does not have a value on the world stage. Basically, the value is whatever the street will give you for it. You can find it on eBay and other auction sites, but don't buy it there. You want to make sure that you get yours from a reputable, registered currency dealer. These dealers have to be registered with the US Treasury (if they are located here in the states).
Why do we say that the Iraqi dinar is an investment of a lifetime? Currently you can get a million dinar for around one thousand US. In times past the IQD was worth over $3 USD.
Is it a sure bet? There is no such thing. However, the upside on this is so HUGE that you might feel like a dunce if you didn't at least get a quarter million dinar (about $300 US) or so.
There are a few ways a person could invest in the Iraqi dinar. Most folks prefer to simply buy the currency from a reputable dealer and just hold onto it (you might want to put it in your safety deposit box and the bank - if you have a stable bank you can trust to be there - actually - you should be able to get your dinar and other items out even if the bank folds -they are dropping like flies these days).
You could also open up an account with a bank in Iraq (don't worry you won't have to go to Bagdad to do it), but we've heard more con than pro on that route.
If you have an Iraqi bank account, you can now even play their stock market which has gone electronic. For there market to really open up to the world, they will Have to get a world value on their currency. With the US pulling troops out of the country, there are many signs that this could happen soon. Look for our Opportunity Investigator Radio Show on BlogTalkRaio and find the episode on the Iraqi dinar, to hear more about it.
Most folks today would rather go to the casino or bingo hall and spend a couple hundred bucks. Gaming is one of the most profitable industries left after the meltdown. BUT, if you look into what I'm telling you here, it may well change your life and help you beat your own recession!
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