The first lesson that every prospective trader should learn is not so much in the charts, fundamentals or any of the other X’s and O’s. Sure knowledge of these concepts is necessary but there are many ex-traders that were masters of fundamentals and/or technical analysis that are either broke, out of the trading game or both. The main reason for this is because the trader was not psychologically and mentally prepared.
So what does it mean to be mentally prepared to trade in the stock market (or any other market for that matter)? Mentally prepared means keeping your emotions in check and sticking by the rules set by the trading system that you have chosen and researched to use for yourself. Simply put, do not fall in love with a stock. Just because the fundamentals look good doesn’t mean you should just dump your money into it and forget it. Yes, we all hear and read about Warren Buffet and long term value investing. Just keep in mind that he purchases large stakes in those companies and can, to some extent, control how that company is run. Also keep in mind that I’m talking about trading here and not investing.
Some of the best traders that I know have failed at least one time, learned lessons, built up more capital to try again and either failed again or succeeded. Those that failed again just repeated the process until they finally ‘got it’ and became a wealthy and successful trader. From my own experiences and well as theirs the biggest obstacle that was overcome was to not become emotionally involved in the companies that were traded. Once these companies hit certain thresholds, either on the upside or down, triggers were activated and money was either pulled out or put back in…no additional thought was needed. Basically, just stick to the system. If your system calls for you to sell everything after an 8% loss then sell it, don’t think about what-if or how great the company fundamentals are on paper. If it your system calls for you to sell half after a 20% gain then sell, don’t talk yourself into holding on to it. Now after you sell it you can revisit the trade and evaluate it to see if it’s worth trying again but make sure that is a whole different thought process and not linked to the initial trade.
Here are three good books that talk about the mental approach to trading that I have found helpful and insightful (I don’t have any monetary interest in any of these books nor do I receive any compensation for recommending them, they are just meant to be a resource):
1. High Probability Trading by Marcel Link
2. Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude by Mark Douglas
3. Trading For a Living: Psychology, Trading Tactics, Money Management by Alexander Elder
11 November 2008
17 October 2008
Saving Money Buying Auto's
I got a message from a friend the other day saying how cheap it was to buy a vehicle nowadays. It seems that everyone is offering zero percent financing for up to six years!!! Even the almighty Toyota brands are offering discounts and financing options, this was unheard of for them up to even six months ago. So basically is question to me was, “is this a good time to buy now?”
So I then proceeded to go out to the car lots and do some investigating. First stop, the local Toyota dealership. As I looked around I saw very few new vehicles and many used vehicles for sale. I talked to the salesman about the only new Highlander that was on the lot. I looked at the price and then proceeded to bargain with him as if I was going to buy it. In true Toyota fashion he didn’t budge much on the price saying that he doesn’t have to bargain on the price because Toyotas are a high demand vehicle and someone will buy it soon. I was tempted to tell him to wake up and look around. People are not buying vehicles when they are worried about their retirement, savings and mortgages. This isn’t 2005 anymore when everyone just refinanced and spent money at will. So I left the lot shaking my head wondering what person is going to pony up full price for that vehicle with options out the wazzoo.
My next stop was the local Ford dealership. I’ll tell you what; I hardly saw one new car on the lot. 99% of the car lot was used vehicles. I talked to the manager and he said that he was more than willing to deal with me on a used car and if I really wanted something new he could order me one. The fact is that they just couldn’t afford to keep a new stock of cars on the lot that they knew they couldn’t move. The only new vehicles on the lot were the F-150’s and F-250’s. Even most of those were 2008’s which would be going off the lot at a big discount in order to make room for the 2009’s.
So that’s my tale of two dealerships. One that realized the economic times and the other that was still living on past sales. I didn’t go to Chevy, Dodge or Honda because those two case studies were all that I was looking for. Here’s something to gnaw on though. Even if you want a new vehicle you better have the finances to do it because lenders are getting pretty weary of anyone that needs any type of credit…especially for new vehicles.
My advice to my friend was to wait until 2009. I’m predicting a crash for the auto industry as a whole due to the fallout of the current economy. Even if the economy improves by then the industry will feel the effects of the past year and it will become a trickle down effect…a delayed reaction if you may. If you have the money saved up and really want a new vehicle I would suggest to wait. The offers will get better and the discounts will get larger by early 2009 which will save you tons of money.
So I then proceeded to go out to the car lots and do some investigating. First stop, the local Toyota dealership. As I looked around I saw very few new vehicles and many used vehicles for sale. I talked to the salesman about the only new Highlander that was on the lot. I looked at the price and then proceeded to bargain with him as if I was going to buy it. In true Toyota fashion he didn’t budge much on the price saying that he doesn’t have to bargain on the price because Toyotas are a high demand vehicle and someone will buy it soon. I was tempted to tell him to wake up and look around. People are not buying vehicles when they are worried about their retirement, savings and mortgages. This isn’t 2005 anymore when everyone just refinanced and spent money at will. So I left the lot shaking my head wondering what person is going to pony up full price for that vehicle with options out the wazzoo.
My next stop was the local Ford dealership. I’ll tell you what; I hardly saw one new car on the lot. 99% of the car lot was used vehicles. I talked to the manager and he said that he was more than willing to deal with me on a used car and if I really wanted something new he could order me one. The fact is that they just couldn’t afford to keep a new stock of cars on the lot that they knew they couldn’t move. The only new vehicles on the lot were the F-150’s and F-250’s. Even most of those were 2008’s which would be going off the lot at a big discount in order to make room for the 2009’s.
So that’s my tale of two dealerships. One that realized the economic times and the other that was still living on past sales. I didn’t go to Chevy, Dodge or Honda because those two case studies were all that I was looking for. Here’s something to gnaw on though. Even if you want a new vehicle you better have the finances to do it because lenders are getting pretty weary of anyone that needs any type of credit…especially for new vehicles.
My advice to my friend was to wait until 2009. I’m predicting a crash for the auto industry as a whole due to the fallout of the current economy. Even if the economy improves by then the industry will feel the effects of the past year and it will become a trickle down effect…a delayed reaction if you may. If you have the money saved up and really want a new vehicle I would suggest to wait. The offers will get better and the discounts will get larger by early 2009 which will save you tons of money.
13 October 2008
Saving Money; 3 Easy Steps
Everyone wants extra money in their pockets and web searches show this fact everyday. Why are the same people searching for ways to save money when they already know the answer? Simple, they have the answer and they don't like what it says. What people really want is to make more money in order to live the lifestyle that they are currently living. But get this...once people attain a higher wage they end up spending more money and are AGAIN living paycheck to paycheck. Unless people reprogram their brains on what needs to be saved and how, they will always end up in the same place no matter what the pay stub reads at the end of the day.
Must Do's:
1. Stop drinking the expensive coffees and eating the expensive meals when you could make pretty much the same things at home. I used to love going to Starbucks but I changed that. I did splurge and buy a Cuisinart Grind 'n Brew coffeemaker and now buy the Starbucks or Millstone whole beans and make it myself in the morning. Sure it's still expensive coffee but I don't want to drink junk in the morning. So I save money by not buying it by the cup everyday but I don't take away my morning enjoyment. Food is the same way, invest in a dang cookbook. Cutting down an eat out or two a week and gradually making it a special treat instead of something common will save you hundreds per month.
2. Credit Card Killer. You can get the best saving advice in the world from refinancing to getting lower rates to opening CD's. The fact is that nothing of that matters if you can't get your credit cards under control. You could solve many of life's problems without that dang bill every month correct? Try and consolidate your credit card bills with those cheap transfer rates to your lowest rate credit card. Don't use the other cards!!! Focus on paying off that one credit card bill every month. Paying just the minimum is a killer too but not as bad as your credit rating taking a nosedive into the crapper.
3. Open a separate savings account. Is it really that hard to put 10% of your paycheck into a savings account and leaving it there until you have enough to take your vacation, buy your car or whatever??? It really isn't. If you physically took out a pen and paper and wrote down what you spend money on daily and did this for a whole month without cheating I'm sure you could come up with that 10% somewhere. When you're tempted to splurge think to yourself if what you're splurging on is worth putting off that towel on the beach in Maui.
Stop looking for instant gratification and take in the whole picture. Just doing these three things will put you on the right path to taking back your financial freedom.
Must Do's:
1. Stop drinking the expensive coffees and eating the expensive meals when you could make pretty much the same things at home. I used to love going to Starbucks but I changed that. I did splurge and buy a Cuisinart Grind 'n Brew coffeemaker and now buy the Starbucks or Millstone whole beans and make it myself in the morning. Sure it's still expensive coffee but I don't want to drink junk in the morning. So I save money by not buying it by the cup everyday but I don't take away my morning enjoyment. Food is the same way, invest in a dang cookbook. Cutting down an eat out or two a week and gradually making it a special treat instead of something common will save you hundreds per month.
2. Credit Card Killer. You can get the best saving advice in the world from refinancing to getting lower rates to opening CD's. The fact is that nothing of that matters if you can't get your credit cards under control. You could solve many of life's problems without that dang bill every month correct? Try and consolidate your credit card bills with those cheap transfer rates to your lowest rate credit card. Don't use the other cards!!! Focus on paying off that one credit card bill every month. Paying just the minimum is a killer too but not as bad as your credit rating taking a nosedive into the crapper.
3. Open a separate savings account. Is it really that hard to put 10% of your paycheck into a savings account and leaving it there until you have enough to take your vacation, buy your car or whatever??? It really isn't. If you physically took out a pen and paper and wrote down what you spend money on daily and did this for a whole month without cheating I'm sure you could come up with that 10% somewhere. When you're tempted to splurge think to yourself if what you're splurging on is worth putting off that towel on the beach in Maui.
Stop looking for instant gratification and take in the whole picture. Just doing these three things will put you on the right path to taking back your financial freedom.
10 October 2008
How To Protect Your Investments And Still Make Money
Unless you’re living in a dungeon you know what the market it looking like right now. I’m sure that all of you are diversified in your investments. If you’re not diversified then you’re getting smoked in a very bad way right now. Unless of course you own lots of index put options.
I was talking with some novice investors yesterday and I couldn’t believe that they didn’t realize that you can play the downside of the market just as easily as you can play the upside. I guess I just take it for granted that not everyone has the time and energy to follow the markets as closely as some of us do. With some simple technical strategies you could make a very good living off of trading only the indexes with a solid exit strategy, but I’ll save that for another article or our newsletter.
I didn’t have much time to fully educate them on the various nuances of investing but I did give them this advice. If they were nervous and wanted to stay in the market AND liked the companies that they had, then they should buy some protective puts against their stock positions. The online brokers that I deal with all allow you to do this because you’re not buying naked calls/puts but just hedging a position that you already own. This helps to protect your position in the stock while making up for some of the losses to the downside (Selling calls achieves a similar affect). I also informed them that they could buy puts on the S&P (SPY), Dow Jones (DIA) and the NASDAQ (QQQQ). Also with the NASDAQ I like to protect myself by buying the QID’s which, in a nutshell, makes money when the NASDAQ dives.
Now these are the plays I do but looking at the bewildered looks on their faces and noticing their anxiety on the markets I told them to look into Municipal Bonds which are very attractive (I wrote an article on that subject a few weeks ago). Of course Muni’s are not the only course of action; you could also look into other high rate bonds like Treasury notes/bonds but personally I like Muni’s right now.
I almost exclusively invest in stock derivatives but if you’re not comfortable doing so then there are other investment vehicles that you can take advantage of in tough times such as these. At the very least I informed my captive audience to look into options plays and paper trade them (it cost no money and you can see the consequences of your actions).
I was talking with some novice investors yesterday and I couldn’t believe that they didn’t realize that you can play the downside of the market just as easily as you can play the upside. I guess I just take it for granted that not everyone has the time and energy to follow the markets as closely as some of us do. With some simple technical strategies you could make a very good living off of trading only the indexes with a solid exit strategy, but I’ll save that for another article or our newsletter.
I didn’t have much time to fully educate them on the various nuances of investing but I did give them this advice. If they were nervous and wanted to stay in the market AND liked the companies that they had, then they should buy some protective puts against their stock positions. The online brokers that I deal with all allow you to do this because you’re not buying naked calls/puts but just hedging a position that you already own. This helps to protect your position in the stock while making up for some of the losses to the downside (Selling calls achieves a similar affect). I also informed them that they could buy puts on the S&P (SPY), Dow Jones (DIA) and the NASDAQ (QQQQ). Also with the NASDAQ I like to protect myself by buying the QID’s which, in a nutshell, makes money when the NASDAQ dives.
Now these are the plays I do but looking at the bewildered looks on their faces and noticing their anxiety on the markets I told them to look into Municipal Bonds which are very attractive (I wrote an article on that subject a few weeks ago). Of course Muni’s are not the only course of action; you could also look into other high rate bonds like Treasury notes/bonds but personally I like Muni’s right now.
I almost exclusively invest in stock derivatives but if you’re not comfortable doing so then there are other investment vehicles that you can take advantage of in tough times such as these. At the very least I informed my captive audience to look into options plays and paper trade them (it cost no money and you can see the consequences of your actions).
30 September 2008
Diversify Your Income
Many of us have felt the pain of our investments over the past couple of months and especially over the past few weeks. As we speak the stock market fluctuations are creating havoc with individual investors and hard working employees’ retirement accounts. This is precisely the reason why investments alone can not be counted on as a supplemental and/or prime source of income, there are just too many what-if’s involved.
Many people seek advice from me on what to do because they know that I invest in stock derivatives. The first thing I tell people are to spread there money and time around and I don’t mean diversification in the stock market (yes that is important) but in other money making ventures. People just don’t realize how incredibility easy and affordable it is to set up a business working out of their own home. The market I’m talking about here is called affiliate marketing. Affiliate marketing campaigns means that you’re basically selling other people’s products in return for a commission which is sometimes up to 75% of the selling price!!! There are many techniques involved that I will not get involved in here but it is not that difficult to start making a few hundred bucks a week.
Thousands of people everyday try affiliate marketing but very few make money doing it. It is very easy to get frustrated because the big money is not instantaneous and list buildings as well as writing good copy are prerequisites. Of course anything to do with writing can be hired out at a relatively cheap price from some websites (elance comes to mind). If you are knowledgeable about something and have average writing skills you can get started right away without paying someone else.
What I tell people is to start simple and ask people in the industry that have had success lots of questions. This is not a business you can do alone out of a hat. Even though it’s a home based business it involved working with and talking to others that are in the know and setting up joint ventures with those people. After a few successful sales you’ll be ready to create your own front-end and back-end products at which point you’ll notice a steady influx of income. The beauty of your own product is that you don’t have to sit and think up your own product from scratch. Find out what products are selling and are on the incline. Take those products and make your own improvements and sell the improved product.
Affiliate marketing is a great way to make extra income if you’re willing to work at it. Like I said, it’s easy to start up but it takes work to get it up to speed. Given the current state of the economy we really don’t have the luxury to sit on our hands while your investments are going down the tube. Start by creating another stream of income.
Many people seek advice from me on what to do because they know that I invest in stock derivatives. The first thing I tell people are to spread there money and time around and I don’t mean diversification in the stock market (yes that is important) but in other money making ventures. People just don’t realize how incredibility easy and affordable it is to set up a business working out of their own home. The market I’m talking about here is called affiliate marketing. Affiliate marketing campaigns means that you’re basically selling other people’s products in return for a commission which is sometimes up to 75% of the selling price!!! There are many techniques involved that I will not get involved in here but it is not that difficult to start making a few hundred bucks a week.
Thousands of people everyday try affiliate marketing but very few make money doing it. It is very easy to get frustrated because the big money is not instantaneous and list buildings as well as writing good copy are prerequisites. Of course anything to do with writing can be hired out at a relatively cheap price from some websites (elance comes to mind). If you are knowledgeable about something and have average writing skills you can get started right away without paying someone else.
What I tell people is to start simple and ask people in the industry that have had success lots of questions. This is not a business you can do alone out of a hat. Even though it’s a home based business it involved working with and talking to others that are in the know and setting up joint ventures with those people. After a few successful sales you’ll be ready to create your own front-end and back-end products at which point you’ll notice a steady influx of income. The beauty of your own product is that you don’t have to sit and think up your own product from scratch. Find out what products are selling and are on the incline. Take those products and make your own improvements and sell the improved product.
Affiliate marketing is a great way to make extra income if you’re willing to work at it. Like I said, it’s easy to start up but it takes work to get it up to speed. Given the current state of the economy we really don’t have the luxury to sit on our hands while your investments are going down the tube. Start by creating another stream of income.
25 September 2008
Municipal Bonds; A Safe Bet
If you’re an investor that is leery about the state of the economy and the mass of credit issues facing companies then you probably are not sure where to safely put your hard earned money. One conservative yet still liquid option is to invest in Municipal Bonds (Munis) which offer a high rate of interest and principal payments received from the issuer. Munis are bonds issued by public entities below the state level in order to raise money to build and/or make improvements.
For the most part Munis are exempt from Federal Taxes and in many areas, local/state taxes as well. This is where research comes in because there are a group of taxable Munis. These often offer a higher rate of return but with taxes taken you’re usually better off taking a lower yield tax exempt bond. Good websites for researching Munis and their rates are www.investingbonds.com and www.bondsonline.com
Munis are also liquid which means your money is not trapped and you can cash out of them at any time. Make sure you pay attention to the yield of the bond because if you have to sell it prior to maturity you will get the current yield rate and NOT the maturity yield. The minimum investment for most Munis is five grand, so it’s affordable to most investors that want to enjoy the conservative approach while receiving predictable and steady payments from their bond investment. One other great option of Munis is that you can sell your bonds prior to maturity in the over-the-counter market. This is especially advantages if the price of your bond has grown substantially and you can make more out of selling it in the open market than you can make from keeping it through maturity.
Besides looking at tax exempt status another important issue to look for from companies that offer Munis is to make sure they have a BBB rating or better. The higher the rating the more reassuring it will be that the company will be able to pay you the principal/interest that they promised. Also remember that the highest yields are not always the best. A good rule of thumb is the higher the yield for Munis the more risk you take of the company not being able to payoff the principle/interest. One more way to make your investment safe is to purchase Insured Municipal Bonds whereas the insurance company will pay you the principal and interest owed in the rare cases where the Muni company defaults.
There is no absolute safe haven for investments. If you’re looking for a very reliable investment with nice steady interest payments then I suggest looking into investing in Municipal Bonds. From my experience they offer one of the safest investment vehicles for conservative and economy leery investors. It sure beats stuffing your money under the mattress and letting it devalue over time.
For the most part Munis are exempt from Federal Taxes and in many areas, local/state taxes as well. This is where research comes in because there are a group of taxable Munis. These often offer a higher rate of return but with taxes taken you’re usually better off taking a lower yield tax exempt bond. Good websites for researching Munis and their rates are www.investingbonds.com and www.bondsonline.com
Munis are also liquid which means your money is not trapped and you can cash out of them at any time. Make sure you pay attention to the yield of the bond because if you have to sell it prior to maturity you will get the current yield rate and NOT the maturity yield. The minimum investment for most Munis is five grand, so it’s affordable to most investors that want to enjoy the conservative approach while receiving predictable and steady payments from their bond investment. One other great option of Munis is that you can sell your bonds prior to maturity in the over-the-counter market. This is especially advantages if the price of your bond has grown substantially and you can make more out of selling it in the open market than you can make from keeping it through maturity.
Besides looking at tax exempt status another important issue to look for from companies that offer Munis is to make sure they have a BBB rating or better. The higher the rating the more reassuring it will be that the company will be able to pay you the principal/interest that they promised. Also remember that the highest yields are not always the best. A good rule of thumb is the higher the yield for Munis the more risk you take of the company not being able to payoff the principle/interest. One more way to make your investment safe is to purchase Insured Municipal Bonds whereas the insurance company will pay you the principal and interest owed in the rare cases where the Muni company defaults.
There is no absolute safe haven for investments. If you’re looking for a very reliable investment with nice steady interest payments then I suggest looking into investing in Municipal Bonds. From my experience they offer one of the safest investment vehicles for conservative and economy leery investors. It sure beats stuffing your money under the mattress and letting it devalue over time.
24 September 2008
Making Affiliate Marketing Cost Effective
The number one reason that affiliate marketers fail is quite frankly…cost. Not the cost to set up a marketing page or to find products, that’s relatively cheap and easy. The cost I’m talking about is adwords and advertising costs to get people to their website. New affiliate marketers are spending hundreds of dollars just to finally get a sale on their $40 dollar product. The problem is that most of the people that have been around own the high sales niches and you’d have to pay way more than you should just to get a click on your website. What you may not know is that those advertisers at the top of the list are paying less than what you are at the bottom of the list. The reason is simple, it’s called ‘cost per click’ or CPC for short. The higher percentage that number is, the more Google wants your ads to the top because even if they make less per click they will make more in the long run because a good ad will have more clicks per day hence making them (Google) more money.
One easy way to increase your CPC is to limit who sees your ad and when they see it. One simple way to do this is to change your settings so that your ad doesn’t show up on the content network. This will give you less impressions and less clicks but it will raise your CPC percentage in a short amount of time. It does this because of the decline in impressions. A large amount of impressions with few clicks is killer on a CPC percentage. So in the short term you may get less visitors to your site but if you have patience and raise your CPC percentage by doing this you will be paying less per click on your add and will eventually get yourself in the top 3-4 slots which is where you want to be. Once you get that you can then add the content network back on if you wish. This whole process only takes a matter of days to a couple of weeks to accomplish.
So the short answer is yes, affiliate marketing can be cost effective and lucrative if you know how to get Google to get you higher on the ad list for a fraction of the cost that the advertisers below you are paying for their ads.
One easy way to increase your CPC is to limit who sees your ad and when they see it. One simple way to do this is to change your settings so that your ad doesn’t show up on the content network. This will give you less impressions and less clicks but it will raise your CPC percentage in a short amount of time. It does this because of the decline in impressions. A large amount of impressions with few clicks is killer on a CPC percentage. So in the short term you may get less visitors to your site but if you have patience and raise your CPC percentage by doing this you will be paying less per click on your add and will eventually get yourself in the top 3-4 slots which is where you want to be. Once you get that you can then add the content network back on if you wish. This whole process only takes a matter of days to a couple of weeks to accomplish.
So the short answer is yes, affiliate marketing can be cost effective and lucrative if you know how to get Google to get you higher on the ad list for a fraction of the cost that the advertisers below you are paying for their ads.
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