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^
thanks for the link Kicks..i will look into that
-J23C
thanks for the link Kicks..i will look into that
-J23C
OFFICIAL STOCK MARKET & ECONOMY THREAD VOL. SCHOOL'S OUT
- Thread in 'General' Thread starter Started by dey know yayo,
- Start date
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Forex trading is probably the riskiest, most dangerous game in trading IMO. There is a lot of leverage involved while trading. You can control $100,000 with aninvest of only $1,000, depending on your broker. As with trading stocks, in Forex you'll need to master technical analysis, fundamental analysis, chartpatterns, chart time-frame analysis, candlestick patterns, support and resistance, indicators and oscillators, and a dozen other things. Nearly everyone whoopens a real money account will lose it all within the first 3 months of trading. Especially those who go with $250-$500 minimum and high 400:1 leverage. Thoselow dollar minimum amounts are designed to work against the newbie trader because to initiate a trade you have to risk a high amount to open a trade andimmediately you are at a disadvantage.
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400:1 leverage! %*+ are people thinking...to anyone who thinks that's okay read When Genius Failed
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yup. thats how3 the game is played
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If you guys could recommend a couple of books to read to learn, which would they be? It was always an interest on learning just never knew where to start. Alsoi was browsing and came across some of those virtual stock exchange games.. has any1 used any of these to get their wet feet before they plunged in real money?I don't want to go in uneducated. ty
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Try the stock simulator on investopedia.com
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kicksfiend thanks for that site.
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TY just signed up for it, going to check it out over the weekend. Any books, or a site that i could read to learn the extreme basics from step 1, andgradually learn to what you guys are doing?
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I don't know of any good books on trading stocks because I've never really read any. You can find almost all the information on trading stocks on thewebsite I provided.
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Jim Cramer outlined 25 rules that he believes will help investors play the markets defensively to avoid big losses and keep their money safe.
25 Rules For Defensive Investing
1. Stay Diversified. Cramer said diversification is the only free lunch in investing. He advocated not having more than 20% of yourportfolio in any sector and avoiding having "two-of-a-kind" at all costs. He recalled investors losing fortunes in the past when they sank all theirmoney in hot stocks of the day such as dot.coms, telcos and energy merchandisers like Enron.
2. Buy and sell slowly. Never buy or sell a position all at once. he said. Instead, buy into a position slowly, taking advantage ofweakness, and take profits on the way up.
3. Your first loss is your best loss. "If your thesis on a stock changes, take the loss and sell," Cramer told viewers. Don'tlet a trade turn into an investment by being afraid to sell. If the reason you bought a stock is no longer valid, you have to sell it, he said.
4. Dividends limit losses. Look for stocks that consistently grow their dividends year after year. As a stock's yield increases, itattracts new investors and helps limit the downside risk. You need only ask yourself, "Is the dividend safe?"
5. It's always good to have some cash. Professional investors always have cash on hand. Cash is a tool that should be used to buyquality companies after big market sell-offs.
6. Don't own too many volatile stocks. More than one volatile stock in a portfolio is not being diversified. Be honest and ask yourselfif you can handle the wild price swings before investing in a volatile stock.
7. Know what you own. Knowing what a company does will help distinguish between a broken stock and a broken company and prevents panicselling.
8. Don't own low-dollar stocks. Stocks don't go to $2 and $3 a share because they're doing well. Speculating on low-dollarstocks can wipe out a portfolio.
9. Accounting irregularities equals sell. Stocks with accounting problems should be sold immediately and are off-limits until the issuesare fully resolved.
10. Stay away for two good quarters following an earnings shortfall. It takes at least six months for a company to turn itself around aftera big earnings miss. Investors should not wait it out.
11. When your broker stops talking about a stock, it's time to sell. Silence isn't golden when it comes to stocks. If your brokerstops pushing a stock, its time to move on.
12. After a big run, get defensive. Check the S&P Proprietary Oscillator, a paid product, to determine if a stock is overbought oroversold. Plus or minus 5 is the key number to look for. Also check the Investor's Intelligence Bull/Bear Ratio, another great indicator of marketsentiment on a particular stock.
13. If a stock's dividend yield is twice that of Treasuries, sell it. Dividends that reach that level should be a warning sign that theyield may be in jeopardy. There are two exceptions: oil tanker stocks, whose yield is based on their day rates, and master limited partnerships.
14. If a company has a new CEO, stay away. New CEOs need time to settle in and develop a plan, and that's not the time to own thestock.
15. Never turn a trade into an investment. If you bought a stock because of a specific catalyst, sell it when that catalyst changes ordisappears.
16. Never sell call or put options. Selling a call option just gives away your upside. Selling a put option limits your upside, while stillexposing yourself to all of the downside.
17. Never use margin. Buying stocks on margin is just dangerous. Once you get in the hole, you will never get out. Don't use it.
18. Never buy a stock at its all-time high. Be prepared to miss a stock rather than reaching to buy it at the high. Instead, wait for a 5%to 8% pullback before pulling the trigger.
19. Play with the house's money. Take money off the table as stocks go up until you've recovered your initial investment, then itdoesn't matter as much what happens later.
20. Keep your head clear. When times get tough, it's OK to consider selling. You can always buy them back later at lower prices.
21. Contribute to retirement accounts throughout the year. Don't invest in that 401k all at once. Instead spread the payments outduring the year and contribute more during the months when the market goes down.
22. Mutual funds should be diversified, too. If you have money in multiple funds, make sure they don't all invest in the same kind ofstocks.
23. Playing defense is crucial in volatile markets. Don't wait for down stocks to recover. Bad stocks are likely to go even lower. Moveon.
24. Invest in stocks with buyback programs. Companies that buy back their own stock offer a cushion to investors, helping to limit thedownside risk.
25. Don't stop looking at your monthly statement. If you don't look at your monthly statements, you won't know how bad thingsreally are. Keep your eyes open and stay current.
I don't agree with a couple though.
#8. It is questionable. There are stocks that have pulled off the bottom to much higher prices in the past few months. BAC, LVS, PALM, F, MGM, JAVA,MTL, CBG are a few.
#17. There are people I know who use margin on a daily basis and are fine. However, they do know what they are doing and are experienced traders. But I believeCramer is referring to long term traders. He is saying don't use it for long term trades or even swing trades. It's too dangerous and one bad gap downcan really screw you over.
25 Rules For Defensive Investing
1. Stay Diversified. Cramer said diversification is the only free lunch in investing. He advocated not having more than 20% of yourportfolio in any sector and avoiding having "two-of-a-kind" at all costs. He recalled investors losing fortunes in the past when they sank all theirmoney in hot stocks of the day such as dot.coms, telcos and energy merchandisers like Enron.
2. Buy and sell slowly. Never buy or sell a position all at once. he said. Instead, buy into a position slowly, taking advantage ofweakness, and take profits on the way up.
3. Your first loss is your best loss. "If your thesis on a stock changes, take the loss and sell," Cramer told viewers. Don'tlet a trade turn into an investment by being afraid to sell. If the reason you bought a stock is no longer valid, you have to sell it, he said.
4. Dividends limit losses. Look for stocks that consistently grow their dividends year after year. As a stock's yield increases, itattracts new investors and helps limit the downside risk. You need only ask yourself, "Is the dividend safe?"
5. It's always good to have some cash. Professional investors always have cash on hand. Cash is a tool that should be used to buyquality companies after big market sell-offs.
6. Don't own too many volatile stocks. More than one volatile stock in a portfolio is not being diversified. Be honest and ask yourselfif you can handle the wild price swings before investing in a volatile stock.
7. Know what you own. Knowing what a company does will help distinguish between a broken stock and a broken company and prevents panicselling.
8. Don't own low-dollar stocks. Stocks don't go to $2 and $3 a share because they're doing well. Speculating on low-dollarstocks can wipe out a portfolio.
9. Accounting irregularities equals sell. Stocks with accounting problems should be sold immediately and are off-limits until the issuesare fully resolved.
10. Stay away for two good quarters following an earnings shortfall. It takes at least six months for a company to turn itself around aftera big earnings miss. Investors should not wait it out.
11. When your broker stops talking about a stock, it's time to sell. Silence isn't golden when it comes to stocks. If your brokerstops pushing a stock, its time to move on.
12. After a big run, get defensive. Check the S&P Proprietary Oscillator, a paid product, to determine if a stock is overbought oroversold. Plus or minus 5 is the key number to look for. Also check the Investor's Intelligence Bull/Bear Ratio, another great indicator of marketsentiment on a particular stock.
13. If a stock's dividend yield is twice that of Treasuries, sell it. Dividends that reach that level should be a warning sign that theyield may be in jeopardy. There are two exceptions: oil tanker stocks, whose yield is based on their day rates, and master limited partnerships.
14. If a company has a new CEO, stay away. New CEOs need time to settle in and develop a plan, and that's not the time to own thestock.
15. Never turn a trade into an investment. If you bought a stock because of a specific catalyst, sell it when that catalyst changes ordisappears.
16. Never sell call or put options. Selling a call option just gives away your upside. Selling a put option limits your upside, while stillexposing yourself to all of the downside.
17. Never use margin. Buying stocks on margin is just dangerous. Once you get in the hole, you will never get out. Don't use it.
18. Never buy a stock at its all-time high. Be prepared to miss a stock rather than reaching to buy it at the high. Instead, wait for a 5%to 8% pullback before pulling the trigger.
19. Play with the house's money. Take money off the table as stocks go up until you've recovered your initial investment, then itdoesn't matter as much what happens later.
20. Keep your head clear. When times get tough, it's OK to consider selling. You can always buy them back later at lower prices.
21. Contribute to retirement accounts throughout the year. Don't invest in that 401k all at once. Instead spread the payments outduring the year and contribute more during the months when the market goes down.
22. Mutual funds should be diversified, too. If you have money in multiple funds, make sure they don't all invest in the same kind ofstocks.
23. Playing defense is crucial in volatile markets. Don't wait for down stocks to recover. Bad stocks are likely to go even lower. Moveon.
24. Invest in stocks with buyback programs. Companies that buy back their own stock offer a cushion to investors, helping to limit thedownside risk.
25. Don't stop looking at your monthly statement. If you don't look at your monthly statements, you won't know how bad thingsreally are. Keep your eyes open and stay current.
I don't agree with a couple though.
#8. It is questionable. There are stocks that have pulled off the bottom to much higher prices in the past few months. BAC, LVS, PALM, F, MGM, JAVA,MTL, CBG are a few.
#17. There are people I know who use margin on a daily basis and are fine. However, they do know what they are doing and are experienced traders. But I believeCramer is referring to long term traders. He is saying don't use it for long term trades or even swing trades. It's too dangerous and one bad gap downcan really screw you over.
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i dont know about number 11 and i dont understand 16. does he want people to exercise their options.
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Not sure what he means on 16 either. I've never traded options.
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Honestly, you're probably right. Trading currencies is difficult, but so is trading stocks. The only reason I suggested it was because that's how Ientered trading. There are micro and mini lots. Instead of leveraging your money to trade regular 100,000 lots. You can trade mini lots which are 10,000dollars worth of currency or micro lots worth 1,000 dollars worth of currency. Like any investment you need to look into it before you start. Other benefitsinclude that the markets are open 24 hours during the week and it's the most liquid market (meaning orders go through fast).
If you look into it and you think it's for you, then trade fake money for a while before getting involved. I was just throwing out a suggestion for thosethat can't day trade.
First of all Jim Cramer doesn't know what he's talking about. Most of those rules for defensive investing, I don't agree with. If you followed histrades you'd basically be following "an index composed of 18% Russell 1000 Growth, 29% Russell 1000 Value, and 53% Russell 2000 Growth" orsimply, the overall market. Take a look at this research into Cramer's picks:
Mad Money
Secondly, that statement for 16 doesn't really make sense. I'm guessing he meant is if you were already holding a position and you decided to write aoption on it. When you write an option, you're betting that the option you write doesn't get used. If you write a call, you're obligated to sell aspecific amount of shares at a specific price if the person who bought the call exercises it (giving him the opportunity to buy it at the strike price). If youwrite a put, you're obligated to buy a specific amount of shares at the strike price if the person who bought the put decides to exercise it (giving himthe opportunity to sell the stock at a strike price).
He's wrong if that's what he means, but wrong to a point. If you're holding 1000 shares of SPY at 100, you can decide to sell a call option at 140.The long position allows you to profit off the stock price if it goes up from 1000, but if you think the market won't go above 1400 (thus meaning no one intheir right mind would exercise a call that allows them to buy SPY at 140) you profit off the money you make from selling the call option.
The chart below shows how it would work:
Keep in mind this is only an example. The x-axis is SPY's share price and the y-axis is the proft. If you bought it at 100, you'd lose money if it wentbelow there and you'd profit if it went up. In this example, I only sold 10 call options (because it's long 1000 shares or 10 contracts of 100 shares)but more options would make the chart an inverted v. Basically at 140, all call options you wrote would be exercised, preventing you from profiting further.That's what Cramer meant by limiting your upside.
Keep in mind, you're intending to sell the stock before it hit it peaked and you're betting it won't go above 140. If you're right and itdoesn't hit 140, you profit off the money you made when you wrote call. When you write a put or call and it isn't exercised, you basically profit 100%off the writing because you keep whatever it was selling at when you wrote it.
Options are great when you have an idea where the markets going. I'm currently holding onto a strip straddle so I'm covered whichever way the marketgoes. Click the image for more information on this type of options strategy and a bunch of other strategies.
I'm covered if SPY falls below 93 or above 115. I'm more heavily biased towards the downside (I have way more puts than calls) so I'm reallybetting the market falls from here. I'm just prepared in case there's the off chance the market skyrockets from here till December (when the optionsexpire), I won't lose the whole amount I paid for those options. If it stays in the 93-115 range, I can lose a maximum of half my investment because of howI spread out the different options.
That book was great. I'm currently reading:
Ahead of The Curve by Joseph H. Ellis (which is about putting economic data together to actually understand what's what with the economy)
House of Cards by William D. Cohan (about the failure of Bear Stearns and the current economic problems from Wall Street's point of view)
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Also, many (of the not so prominent; which are actually owned in many cases by the same Corp.) Forex brokerages trade against their own clients.
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Originally Posted by wawaweewa
Also, many (of the not so prominent; which are actually owned in many cases by the same Corp.) Forex brokerages trade against their own clients.
http://www.100forexbrokers.com/stp-ecn-brokers
List of brokerages with no dealing desks so they can't trade against you. I use FXCM for trading currencies because they provide better spreads than myequities brokerage (ThinkorSwim).
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Originally Posted by kicksfiend
Originally Posted by wawaweewa
Also, many (of the not so prominent; which are actually owned in many cases by the same Corp.) Forex brokerages trade against their own clients.
http://www.100forexbrokers.com/stp-ecn-brokers
List of brokerages with no dealing desks so they can't trade against you. I use FXCM for trading currencies because they provide better spreads than my equities brokerage (ThinkorSwim).
There are good ones. I could use my broker too (IB) but in Forex you have to be sniper like and with very tight stops.
I trade forex once in a while (major trend changes/big moves) but I try to stay away from it.
I was just saying that a lot of the newer people who start to trade forex gravitate towards the smaller brokerages with their low minimums and monster leveragewhile not knowing that they're probably being traded against by that same brokerage.
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Obviously there should be due dilligence involved whenever you make any sort of investment. I either trade large trends in forex (getting ready to buy dollarsvs. eur/gbp/yen because if the correction is as bad as I think it will be, there will be a large demand for dollars but we'll see about that one) or Imight straight scalp if I'm up late watching European/Asian markets and S&P/Dow/Nasdaq futures. I've had a good amount of success scalping for somereason but I don't usually put that much money into those trades.
How is Interactive Brokers? I see their ad all the time on Bloomberg. I'm looking into switching to a new brokerage soon. I've had ThinkorSwim since Istarted trading. IB commissions are better than I'm paying now but I'm leaning towards Lightspeed because I know a few traders who use it. Any infowould be appreciated.
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The charting software isn't the greatest. I actually use TOS for charting.
Have never used LS. I'd imagine it's mostly preference and the quality of customer service.
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kicksfiend- I haven't read those books yet; I have heard they are interesting reads. I am about to read The Myth of the Rational Market by Justin Fox.
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"Phantom of the Pits" is a great read.
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DOLE FOOD COMPANY, INC. FILES REGISTRATION STATEMENT FOR INITIAL PUBLIC OFFERING
WESTLAKE VILLAGE, CA - AUGUST 14, 2009
Dole Food Company, Inc. announced today that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to aproposed initial public offering of shares of its common stock. The offered shares will include shares to be newly issued by Dole as well as shares to be soldby the sole current stockholder of the company. The number of shares to be offered, the allocation of shares to be sold as between Dole and its solestockholder and the price range for the offering have not yet been determined. Dole expects to use the net proceeds it receives from the offering to pay downcertain indebtedness, and the remaining net proceeds, if any, for general corporate purposes. Dole will not receive any of the proceeds from the sale of sharesby its sole stockholder. Dole intends to apply to list the common stock on The New York Stock Exchange under the ticker symbol "DOLE."
Goldman, Sachs & Co., BofA Merrill Lynch, Deutsche Bank Securities and Wells Fargo Securities will act as joint book running managers for the offering. Theoffering will be made by means of a prospectus. When available, copies of the preliminary prospectus relating to the offering may be obtained from theprospectus department of Goldman, Sachs & Co. at 85 Broad Street, New York, New York 10004, Attention: Prospectus Department, by telephone at 212-902-1171.
Definitely watching this. I will wait to see where the dust settles before entry. Since there are no charts, I have no way of formulating an opinion.
WESTLAKE VILLAGE, CA - AUGUST 14, 2009
Dole Food Company, Inc. announced today that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to aproposed initial public offering of shares of its common stock. The offered shares will include shares to be newly issued by Dole as well as shares to be soldby the sole current stockholder of the company. The number of shares to be offered, the allocation of shares to be sold as between Dole and its solestockholder and the price range for the offering have not yet been determined. Dole expects to use the net proceeds it receives from the offering to pay downcertain indebtedness, and the remaining net proceeds, if any, for general corporate purposes. Dole will not receive any of the proceeds from the sale of sharesby its sole stockholder. Dole intends to apply to list the common stock on The New York Stock Exchange under the ticker symbol "DOLE."
Goldman, Sachs & Co., BofA Merrill Lynch, Deutsche Bank Securities and Wells Fargo Securities will act as joint book running managers for the offering. Theoffering will be made by means of a prospectus. When available, copies of the preliminary prospectus relating to the offering may be obtained from theprospectus department of Goldman, Sachs & Co. at 85 Broad Street, New York, New York 10004, Attention: Prospectus Department, by telephone at 212-902-1171.
Definitely watching this. I will wait to see where the dust settles before entry. Since there are no charts, I have no way of formulating an opinion.
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same here. companies that provide necessities ftw
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Dole isnt going anywhere. They are the number one grower in bananas, which is the worlds biggest tonnage item of produce sold.
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Check out Rosetta Stone. The banks underwriting it underpriced the issuance and it popped 60% after it's IPO. I'm leaning towards that type of pophappening again. When banks underwrite an IPO, they buy shares from the company to sell it. Taking the risk if people don't buy it. If they underprice theissuance and it goes up, they make more money. With Goldman Sachs underwriting it, I'm definitely gonna leaning towards them underpricing it and itjumping. It just depends on when it will be.
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Haven't been in here for a minute.
Seriously? So you're saying that simply looking at price graph will better prevent someone from "getting Enron'd", as opposed to performingdue diligence on the company itself? Not really, unless of course you don't know how to properly analyzea company.
I'm not saying that people shouldn't consider the technicals. They do provide insight to the market's psychology. I'm saying that technicalsshouldn't be the primary thing considered. IMO, estimate the value of the company and consider the macroeconomicenvironment first. If not, you're just gambling with your money.
Originally Posted by wawaweewa
Originally Posted by theconditioner
Originally Posted by kicksfiend
Originally Posted by theconditioner
Guys, where are the fundamental analyses? I see a lot of technicals, but that is it.
Most of the people in here are short term traders, not long term investors.
Yeah, I know. But even traders need to consider the fundamentals.
When 70%+ of trading is done by algorithms fundamentals don't mean *++*.
Fundamentals are mostly a crock anyway except for connecting the dots when it relates to what secondary and tertiary corp's benefit from specific deals.
Fundamental's are good until you get enron'd or tyco'd.
You're better of sticking to TA and Macro analysis of sectors/market direction as a whole.
Seriously? So you're saying that simply looking at price graph will better prevent someone from "getting Enron'd", as opposed to performingdue diligence on the company itself? Not really, unless of course you don't know how to properly analyzea company.
I'm not saying that people shouldn't consider the technicals. They do provide insight to the market's psychology. I'm saying that technicalsshouldn't be the primary thing considered. IMO, estimate the value of the company and consider the macroeconomicenvironment first. If not, you're just gambling with your money.
