Stock Market Basics

Learning stock market basics is essential to be a successful day trader or swing trader. Jumping into the market and making trades without a thorough understanding of market dynamics is considered high risk.

While it is true that you must take risks to earn rewards, you must also learn self-discipline and risk management. The following tips will help you understand stock market basics so that you will know how to manage your portfolio carefully.

Trading Factors

  • Start with a trading idea about a stock, ETF or other security
  • Consider the time of day (open, close)
  • Observe the overall market and sector performance
  • Read financial news that is affecting the market
  • Pay attention to high volume stocks and ignore low volume stocks
  • Stay away or be careful of midday trading when volume dries up

Mechanics of Trading

There are various types of order types. Use limit orders if you want to execute trades at specific prices. Only use market orders if you want to instantly jump into a high volume stock with a tight spread. The standard lot for trading is 100 shares, but many day traders like to trade 1,000 shares at a time to maximize profits. Only traders with big accounts valued over $100,000 should think about larger lots. The bigger the lot, the higher the risk. Use software alerts that trigger buy or sell signals based on your trading philosophy.

Support and Resistance

A major key to stock market basics is support and resistance levels. Support is the low end of a trading range that can be seen in weekly or 52-week trading charts. Resistance  represents high end peak levels for a stock price. Common trader wisdom suggests that stocks breaking above 52-week average trend lines will continue to move higher until the stock appears to pullback from peaks. Conversely, stocks falling below 52-week support levels can be short opportunities.

Reading Charts

Charts are the basis of technical analysis. They come in several forms, with the most popular being bar, candlestick and line charts. Decide which type of charts help you understand support and resistance patterns most effectively. Learn the names of basic patterns and what they mean such as:

  • double tops
  • double bottoms
  • triple tops
  • triple bottoms
  • table tops
  • reversals
  • rounded bottoms
  • staircase

Do not assume that what goes up or down will reverse in the same day. Look for other evidence, such as increasing volume and news stories regarding the stock. Sometimes stocks make one big move in pre-market and stay flat the rest of the session. Stocks that gap up on bad news can sometimes reflect “short covering rallies.”

Searching For Trades

Stocks often rally or decline immediately following the release of quarterly earnings reports. Develop your own calendar of earnings dates so that you are prepared for possible breakouts and plunges. After a stock has a big run-up, expect a certain amount of pullback. In a choppy market day traders often sell strength and buy weakness or simply back off trading. Create stock lists that you can monitor throughout a session so that you are aware of multiple opportunities.

Buy Signals

  • Look for stocks starting to break out of a sideways pattern
  • Buy stocks that gap down at the open, but not in a bear market
  • Short stocks that gap up at the open in a bear market
  • Look for stocks that break above downtrends

Risk Management

Be aware that not every trade you make is going to be a winner. To protect your capital set limits to declines using “stop loss orders.” For small accounts avoid losses greater than $200 in one session.

 

The Psychology of Trading

Fear and greed can take over your trading day, faster than you can stop these emotions, if you are not prepared ahead of time.  Understanding what each of these critical emotions are before you start trading each day, can go a long way towards your eventual trading success.  The psychology of trading is not complicated, if you understand the basic premises of fear and greed.  Successful trading platforms always compensate both beginners and experienced traders for these hard to control factors.

The psychology of trading begins with your understanding of the following critical factors:

  • Knowing what fear is, in the stock or derivatives trading arenas, will be tantamount to your success.  Your stock, commodities contracts or derivative accounts are going to change quickly during each marketing day.  Whether you are a novice or an experienced trader, a foreign exchange trading market will move suddenly and unexpectedly.
  • The important psychological weapon to have, in all of these instances, is your own ability to control your reaction to what is happening with your  financial markets.  Be sure not to overreact, since fear will be your own natural reaction.
  • A second critical emotion to control is your own greed.  It is a natural inclination to stay with a winning trade position and receive all of the benefits from it that you can.  This can be a lucky strategy, but, most of the time, you are staying too long in the same direction.  A trading phenomenon called whipsaw can and does usually occur.  This means that your successful market position can turn downward, for other reasons than you are aware of.
  • Following more logical rules, to gain the most profit from your trading positions, is the smarter strategy.  The rules for successful trading include using standard protocols and experienced trading platforms, which help you understand the trading routes that have been profitable.

Learning about the business of stock trading, futures and commodities trading, forex and derivatives takes many hours of practice and years of experience.  Learning how to read the available chart studies is one method of understanding these volatile and profitable markets.  A good platform is important, since a profitable trading platform will have built in stop loss features that help you control any market volatility and your own psychology of trading.    A successful trading company will provide quality education, about the important features of each stock that you are trading or each type of derivative that you choose to purchase.  Experienced traders often find that a new trading platform has new ideas that are useful, also.

Psychology of trading is used for success in the financial markets, with the following applications:

  • Psychology is useful in order to understand the inner workings of each company and its company stock that you choose to trade.
  • Psychology is one of the fundamental elements of the financial market.  How a market moves up or down can be determined by market fear or greed, in itself.  A large purchase or release of a certain commodity, on a particular derivative market, can completely change the direction of that commodity trade market.
  • Psychology is about your emotions, and containing your emotions, while you are trading, is always recommended.  This means that you will need to remain disciplined and will need to stay on your predetermined trading course of action.  Traders always need to make informed and rational financial trading decisions.

 

Rockwell Trading Offers Day Trading Education for Beginners and Seasoned Professionals Alike

For aspiring day traders and investors, learning the ropes can be both complex and overwhelming. In order to trek through this complicated world, traders often seek out educational services from trading companies. Austin-based company Rockwell Trading provides in-depth educational courses and self-help materials in order for amateurs and professionals alike to achieve their trading goals.

Easy to understand and execute

To simplify the world of trading, the company supplies several day trading courses focused on imparting high quality, efficient day trading knowledge. Courses offered provide the company’s philosophy on trading, including several useable and practical strategies. Lessons are designed to be easy to understand and execute. This company takes a no-frills approach, believing that most day traders make the process more complicated than it needs to be.

Simpler is better

Their courses emphasize the mantra that simpler means better when it comes to day trading tactics. Extensive courses are offered in several DVD packages, including the “Power Crossover Method”, “Five Trading Strategies Bundle”, and “Personal Coaching Program.” Most strategies can be learned in less than one day – in some cases, in even less than an hour.

Multiple platforms for learning

Simple yet effective, the Rockwell approach is also available in several eBooks, including a free eBook for download on the website. Interested customers can also view several topical day trading webinars and workshops presented by the company’s founders. By signing up for their Club, aspiring traders can also keep updated on trading strategies, tools, psychology, and other crucial aspects of trading. Club members receive monthly, one-hour mini trading courses helpful in keeping up with volatile markets.

For beginners and experienced traders alike

Educational services provided are beneficial for both beginners and seasoned traders. A simple, time-effective investment, the program gives new traders exactly what they need to know to execute effective trading strategies. Alternatively, the program serves as an add-on for experienced traders looking for new trading ideas and hoping to combine some program strategies with their own.

Affordable and high quality

The company also strives to provide its resources at an affordable rate. Recognizing that educational courses can be a significant investment, simplified, high quality services are presented at low rates. A majority of the company’s products and services are available for less than $100 while many are available for free.

Founded by Markus Heitkoetter in 2005 and following a career with IBM while centered in Munich, Germany, the company was formed to give exceptional trading strategies to both beginners and professionals. With the goal of offering powerful and unique strategies for day trading via its variety of courses: eBooks, consulting services and webinars, the company provides a systematic approach to everyday trading. As a member of the Better Business Bureau, they also received an A+ rating.

For more information, visit www.rockwelltrading.com.

Trading Secrets Revealed by Rockwell Trading

If you’re reading this, chances are you’re interested in learning how to build a career as a trader. Here’s a tip: Don’t try to invent the wheel, because it’s already been done. Markus Heitkoetter has been there and done that, and is offering his easy-to-read and informative eBook, “The Complete Guide to Day Trading,” for free. Contained in this eBook is an abundance of little-known trade secrets that were realized only after years of hard work; you can also order his Kindle e-Book, “The Simple Strategy.”

Here’s how it all started: When Markus Heitkoetter was a teenager, living in Germany, he invested the equivalent of $50 in VW stock. The investment generated a 20% return, and he was hooked; although he didn’t know it at the time, Rockwell Trading was already sowing its roots.

As an adult, other matters took precedence, such as becoming a corporate rising star with IBM and starting a family. Markus knew that if he played the corporate game, and worked the requisite 60 or more hours a week, he could secure his future with a comfortable retirement down the road. However, he wondered if the sacrifice of his health and private life was worth it.

Time passed, and in 2000, the Internet bubble burst. Not long afterwards, IBM announced imminent changes, but not the good kind; these changes meant that substantial personnel layoffs were coming in the near future. Markus could see the writing on the wall, and a few of his own seeds of change began to sprout. Although his early passion as a day trader had been latent for a while, Markus knew the time was ripe for a 180 degree turn in his career, and he knew where his heart was taking him.

With a meager year’s savings, a small family to support, and a tough economy looming, Markus moved to Austin, Texas, and began the daunting work of becoming a trader. His goal, however, was not obtained easily. There was plenty of trial and error, sweat, and yes, a few tears. Still, undaunted, Markus knew he was headed in the right direction, and he persisted. His persistence paid off with that “Eureka!” moment, when he began to understand, with clarity, a few simple, remarkable principles of trading that had eluded him until that moment. His hard work has been well worth the effort; he now enjoys the life he had envisioned as a youth — the life of the American Dream.

If you’re seeking the freedom and excitement of a career in trading, don’t try to reinvent the wheel, and remember that you don’t have to go it alone. In addition to the eBooks, check out www.rockwelltrading.com for inspiration on the trading market, or just to read more about Markus’s incredible journey, and how he turned Rockwell Trading into the power force it is today.

Develop Your Daily Plan For Day Trading

Getting started with Day Trading is a big adjustment for almost anyone. Even if you worked in a financial services company, this may be the first time that you’ve had complete control over how you spend your time and when you do your trades. If you want to start out right, it’s a good idea to spend some time making a plan for how you’re going to allocate your attention and time so that you can develop the skills and confidence that you’ll need to start bringing in a profit.

Don’t be too eager to start trading the second the market opens. It’s common for there to be a lot of buy and sell orders that need to be processed at this time of day, from the people who sent them in while the market was closed. This makes the first 15 minutes or so of the day particularly volatile and risky, and not a great time for rookies to be experimenting.

Instead, use this time to do a quick review of the financial news and your plans for how you’re going to make trading decisions. Whether you’re using the techniques developed by Markus Heitkoetter of Rockwell Trading or you’re trying to figure it out on your own, starting the day by making sure you have a clear picture in your mind for what you need to do is the best path to Day Trading success.

The tougher part of the day is making sure that you stick with the plan that you’ve set for yourself. Traders often miss out on opportunities by getting too fixated on the amount they spent, and not thinking of an investment purely in terms of what it could be worth in the future. It can help to practice with pretend trading on paper first, just to give yourself a chance to follow your plan without the anxiety of having real money at stake. This is also a good opportunity to make sure that you fully understand it, and how to follow through with it.

The actual mechanics of online trading are usually fairly simple. Companies work hard to make sure that their interface is simple and intuitive enough that they’re not chasing customers away from making trades. The part of learning to trade online that usually takes more work is getting up to speed on how to take in information and use it to make decisions.

Day Trading Is Easier With the Right Help

If you haven’t been working in finance for most of your life, you probably only have a vague idea of how the market works and why stocks behave as they do. A simple knowledge of these things is enough for most people to make informed decisions about how to allocate the funds in a 401k, or when it’s time to move money out of the market in expectation of needing it in the near future. If you want to get more deeply involved, such as by Day Trading, you’ll need to develop a much deeper understanding of prices and why they move. That’s when you should be turning to the experts for help.

The option of making money through online trading has been there for decades now, but most people just don’t have the knowledge that’s needed to take advantage of the opportunity. In fact, most rookies who jump into the market end up quickly losing everything rather than producing the profits of their dreams. It’s not that it’s impossible to make money through rapid trades, it’s just that they don’t have the knowledge or the strategy that it takes.

In theory, you could build that knowledge on your own. There’s nothing stopping you from reading everything that you can find while also making practice trades on paper to get a feel for how different strategies serve you.

The problem with this approach is that it will take a lot more time and effort for you. By using the kinds of strategies that Markus Heitkoetter makes available through Rockwell Trading you can immediately have a plan in hand that was developed by professional investors. Then, you only have to worry about making small refinements to suit your particular situation, not developing something from scratch.

If Day Trading was simple or guaranteed, everyone would be doing it.Just to get started you have to learn a lot about the markets, make a plan, and figure out how to trade online with whatever company you choose. You can make your learning curve, and your path to profits, a lot more comfortable if you take advantage of the opportunity to learn from the experts.

Understand Both the Risks and Benefits of Day Trading

The key concept that drives the stock market is that the ownership of companies can be divided into many small segments, and these can be bought and sold among individuals who want to own a share of that company. The price of such a stock is determined by how much someone else is willing to pay for it at any given moment of the day, which leads to prices that fluctuate almost constantly when the market is open.

The goal of Day Trading is to take advantage of these changes that happen during the day, and to actively trade over the course of the hours the market is open to make a profit.

Anyone who is thinking about starting to trade online needs to understand that it’s entirely possible to lose money doing so. In fact, the North American Securities Administrators Association has claimed that this approach is very risky for many amateurs. In fact, they say that many of them will end up losing all of the money that they took into the market.

At the same time, though, there are other people engaged in online trading who are making a significant profit at it and who even turn it into their primary source of income. Every opportunity to make money also presents a risk of losing it, and traders who don’t have discipline and a solid plan are more likely to spend their time losing than gaining.

It’s important to be willing to spend part of each day learning more about the way that the market works, and to take advantage of all of the information that you can get about Day Trading.

When Markus Heitkoetter founded Rockwell Trading his mission was to make information available to ordinary people that would allow them to grab hold of their own financial destinies. No one can absolutely guarantee a profit in the stock market, but the system that he offers greatly simplifies the things that you need to do and know.