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March 29, 2012

The 3 Chart Patterns You Can’t Afford Not to Trade

Chart patterns are specific price-action patterns in stock prices that have repeated themselves for decades, giving prudent traders many profitable trading opportunities. However, there are many chart patterns that are unreliable and not profitable. In this article we will cover the 3 highest win rate patterns that almost guarantee long-term profitability and gains.

Pattern #1: Head & Shoulders
The Head & Shoulders is one of the most reliable chart patterns, having accuracy of almost 90% and generating profits for decades. The head & shoulders is a reversal pattern, that indicates a shift in trend and beginning of a reversal.

We will usually trade this pattern when the neckline is broken, and will join the trade right at the breakout. However, for even more accurate entry it is recommended to wait for price to pull back to the neckline, and begin the new trend. The pullback entry is even more accurate than the breakout one, reaching around 95% accuracy. This is a chart pattern you must trade and master.

Pattern #2: Double Top
The Double Top is another pattern which you must trade, as it provides very good win rate (around 76% winning trades) and very consistent profits in many stocks and Forex pairs.

The Double Top is created when price tries to break a resistance level twice and is unable to, creating a shape resembling the letter ‘M’. Eventually price breaks the neckline downwards, which is the sell signal for chart traders. We will also enter a short trade if price pulls back to the broken neckline from below.

Pattern #3: The Channel
The Channel is one of the most accurate chart patterns that appears in almost any Stock or index, and are the foundation of trends. The Channel consists of two parallel trend lines in a certain direction – it can be either ascending or descending.

The Channel symbolizes a healthy trend in which price moves forward in a certain rythem. We can trade the channel in several methods: The first one is to take trades on the trend lines themselves (make sure to enter only with the direction of the trend and not against it).

Another trading method that is particularly powerful with channels is to enter after it is broken: entering short when an ascending channel is broken and entering long when a descending channel is broken. For extra accuracy we recommend not to enter the breakout itself but wait for the pullback.

Conclusion
Chart patterns are a very reliable and consistent way of trading, and if you focus just on the 3 patterns mentioned above, you will generate stable profits from any market you trade. Choose one pattern at a time, learn to identify it on historical charts and then proceed to master it in real trading.

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March 26, 2012

Use These Tips to Make Money Trading Stocks and Forex

If you keep listening to your friends you will keep your day job, keep working for 30 years each and every day and not make serious money and you know why? Because your friends think trading stocks and Forex is nothing but luck and gambling and they can’t be more wrong.

In this article I will share with you a few important tips that will help you make money trading stocks and currencies, so take a pen and a paper and write this down because all the professional traders in the world started using these tips and you should too if you want to make money.

Trade with an amount of money that suits you

At first trading will be difficult and you may lose some money before you get the grasp of it and understand the market and that’s natural. That is why you should trade with an amount of money that suits you as a trader and that means trading with the amount you don’t afraid of losing. I know how it sounds but if you’re afraid of losing you will lose because you will make decisions according to your emotions and not your head and you will lose money, so at first trade with a small amount of money and slowly with time add more money to your trading bankroll.

Always come prepared to any trading day

You should always come prepared prior to any trading day and that means working for 2-3 hours each day searching for stocks and currencies, writing down the entry and exit points of each stock and never leave anything to chance. Only this way you’ll control your bankroll, know exactly how much you’ll profit from a trade and limit your losses to a minimum if the trade was not successful.

Trade with your head and not with your gut

Trading stocks and Forex has nothing to do with luck and we are not gambling here. You read charts, you analyze them, you read news and you know your entry and exit points and with this analytical work plan you make money. If you start trading according to your emotions and gut feelings you may make mistakes and lose money, so always trade smart and don’t let your feelings get involve in your trade but this will come with more trades and experience.

Be patient learn from mistakes and never stop reading charts

If I have one tip to give you in order to succeed in trading is to read as many charts as you can. The more charts you read the more you’ll understand how the market and how the stocks react, you’ll know to anticipate the next move of your stocks and currencies and you’ll have more experience in trading and here it means a lot. Even when you don’t trade keep reading charts, see if you’re right and with time you will master the market and in less than 3-4 years will be able to be a professional trader and believe me this is not a long time as professional traders usually are millionaires because there is a lot of money in the market and with time you will get your piece of it as well.

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December 21, 2011

Property or Stocks? What is yours

A question that has been considered for decades is whether it is better to invest in property or stocks. Both markets are increasing in value and have been for many years so where is the wisest place to invest your money? This article will consider the pros and cons of investment property vs. stocks.

The Pros of Real Estate

  • Real estate investment is accessible to everyone. Everyone needs a home in which to live and everyone is able to gain access to a loan if they approach it sensibly. Whilst most people are not exposed to stocks and bonds as a child everyone is exposed to a plethora of different properties and buildings. This enables people to build a knowledge base over the years and gain an automatic insight into investing in property.
  • It is a tangible investment. Property is something you can physically see and touch whereas stocks and bonds are not.
  • It is difficult to defraud someone who is buying real estate. The buyer can turn up and see the property and can run property valuation software from home so they know the true value of the property when they buy it.
  • Using debt, you can make a much larger investment than you have the means for. This enables a larger initial investment than could be managed in other forms of investment.

The Cons of Real Estate

  • When compared to stocks real estate can take a lot of time to manage. If a water main bursts at midnight then it will be you who gets a phone call and you will have to deal with it straight away.
  • If the property is unoccupied for any reason then it will effectively be costing you money each month. Mortgage repayments will be due regardless of whether you were able to find a tenant.

The Pros of the Stock Market

  • The greatest wealth creator in the history of finance is that of stock trade. Despite occasional crashes which could see large losses, the investment and reinvestment in stocks is the single greatest creator of wealth in the world.
  • Ownership of stocks and shares does not require any input from you. Once you own the stocks you are able to sit back and watch the company improve and grow along with your investment.
  • You will receive cash dividends every year. Unlike the housing market which could cost you each month, dividends will provide you with cash every year.
  • Stocks enable diversity of investment. Unlike a house which requires huge input all at once, stocks can be bought in small amounts when you are able to and they will still have the same effect.
  • Stocks can be sold easily and rapidly. If you need cash or want to get out of your share position then it is easy to sell your stocks rapidly. Those who make the most money from stocks often buy and resell stocks within a single day.

Cons of the Stock Market

  • Despite their steady growth over the years, stocks are able to crash without warning. Global financial changes can cause stocks and shares to drop in value dramatically within just a few minutes. This means that your solid investment could crash at any time leaving you without your funds.
  • The price of stocks can fluctuate massively in short periods of time even when there is no financial crash. The nature of stocks means that within a day there can be huge fluctuations in the value of stocks, making it a very uncertain place in which to invest.
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August 11, 2011

News of people becoming less interested in stock trading

Dealing wisely with your money and finances is really a difficult task to do. It requires some special risk taking skills and acumen. Some people are naturally blessed with such skills and talent while others gain it gradually through experience. When it comes to stock trading, not every person is able to get the good results and earn a large amount of profit through investing. It involves some decision making skills. The profit and loss sometimes becomes highly unpredictable. The conditions of stock market can be changed in no time. However, there are some people who are sharp enough to sense the changes before they actually occur. These smart people are able to be successful in stock market and trading. Some people who are involved in the business of stock trading often seek help through expert stock brokers who are professional in this field and can give them a better advice in order to increase their profits.

Due to the recession and increasing inflation nowadays in all around the world, people are becoming less inclined towards stock trading. This business requires people to invest a large amount of money. In some cases they are able to gain a lot of profit while in some unfortunate cases they have to face a devastating loss. This is why according to the latest news and surveys, it has been found that majority of the people in this world and especially belonging to Western countries of America and Canada are no more willing to invest in stock market in the year 2011. This is because of the great loss they have been suffering since the year 2009. People of ages from 35 to 70 are quite less interested in the stock market these days.

Around 60% of the people have now become hopeless due to their activities and loss in stock trading while more than 40% have planned never to invest in the stock market again. However, there is still a ray of hope left in some other people. Around 25% of people are still willing to invest this year and the rest of people have plans to invest their money after a year or more.

It is noted that the years from 2000 to 2002 were regarded as the era of grand recession in those countries. It was indeed the bear market those days. However, the years onwards were quite better except the year 2008 which proved to be quite devastating. The year 2008 made many of the risk takers scary of the stock market.
It should be noted that the results of statistics and surveys are quite approximate and they always contain some errors. However, they are still used for estimating the future conditions. The financial crisis prevailing in the countries have become a hindrance for the people who used to like to invest and earn profit through stock market. Though the present situation is not good but some optimistic persons are still looking to have a brighter future ahead that will lead to financial stability and prosperity.

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