Why Do We Need Market Analysis For Successful Trading?

What strategy do you follow to get substantial return from the stock market? Don't you really survey the market, or do you follow the general rule of trading? If your answer to any of these questions is yes, then there is very little chance of your success in the market. Unlike you, those traders who believe in the need of comprehensive market analysis always reap the benefits from their investment. So, the question arises is what kind of analysis is needed for trading in the volatile market? The answer to this question is quite simple, but there are several things that need to be considered while surveying the market.

If you are a new trader, then you will have to do more work in order to understand the market. How stock prices go up and down, which company shares you need to focus on and other factors that affect the market. On the other hand, those who are already in the trading business and are unable to make substantial profits from the same need to alter in their trading strategies. They should understand the data that are displayed in the form of stock quotes and charts and on that basis trade on time.

First of all, consider those traders who are new in the stock market company trading. No doubt, trading today provides quick profits in a very short period of time and that's the reason why this business is booming in the present time. Investors on the other hand also want to make profits from their hard earned money. Online trading gives them the chance of making profits in the best possible way. But, it requires a little hard work from investors' side. Initially, you will have to understand the market - there are open resources available on the Internet. Read articles, newsletters, reviews and other stock related resources and gain some knowledge such as what is trading, how trading is done online, what are the things you need to consider while buying and selling of stocks and a lot more.

However, once you open an account on the stock trading company website, you can access a wealth of information from the site. Though there are several topics and contents available on the Internet and if you read all these stuff, you might get confused. Therefore, read up-to-date content from the company Website where you have an online account. However, you should also discuss with professional experts regarding your investment plan. There are financial experts available online who can help you anytime.

In addition to that traders need to understand the market. And the best way to judge the market is through the data in the form of stock quotes. These are statistical data that show stock prices plus the variation in the stock prices. So, once you understand the data, you can judge whether stock prices would go up or down in the coming days. Most traders face problems in buying and selling of stocks on time. This is the most crucial period when traders need to understand the market moods. And if you have done some market analysis, you would easily be able to take the right decision. Buy and sell stocks on time and if the share prices go up, sell your trading company shares or you can wait for further rise in the share prices, but only for couple of days.

Investment is a must for every individual. But how and where you invest also matters a lot. Online stock market trading is the best option one can choose. Invest in the right direction, do some market analysis and reap the benefits for your future financial security.

Number 1 Loser Indicator - Why Trading Moving Averages Fail

The purpose of this article is to present traders across the world an alternative view on trading strategies that rely on moving averages cross. This is an alternative opinion on the main problem of traders losing day after day without seeing the core of the problem. The main point is to demonstrate that if a trader wants to achieve different results then he has to do things differently. Most of you are not going to like what I am about to say, but that is harsh reality of trading markets.

I know a lot of you are using the most popular indicator in the Market (Moving Average - MA). What you do not realize is that is that MA is the #1 loser in the market. Don't get me wrong, all indicators are losers, but MA is the leader.

Here is the bottom line.

Indicators are not really the problem. It is the instruction that comes with them and people that use them is the problem.

Let's take for example MA.

This is by far the most abused indicator in the world. It has lost so much money it should have been illegal to use it. Incidentally, no one seems to realize that.

Most trading systems in the market follow the wisdom of the MA crossing strategy. 90% of trading system has some type of MA crossing scheme in it. Most indicators (MACD, Stoch, ADX, CCI) are build around that concept. That is why all indicators or EA (automated trading system) in general are garbage. Yes, I said it. They are all garbage.

What is the reason for MA cross failure? When looking at MA or any indicators based on MA one needs to understand that price does not care where your MA is in relation to current price. Market does not care where MA is pointing or if your indicator is overbought or oversold. MA cross happens too late for an entry and usually when you see the cross and ready to put on a trade the price will go the opposite direction. Tadah! Not again. And you will wander why? You did follow your trading plan as you were taught but there was another loss...Frustration? No, it is more than that...

Having said all that, where do a want to forex trader should turn for help? The truth is there no one that can help you because the answer would be too simple for you to accept and follow. No one can help you except for yourself.

For example:

I trade against everything that I have learned in forex trading classes. I trade against everything the books, the technical gurus, the TV, the market analysis, the news, even the TREND. Yes, I trade against the trend. So when I talk about trading most traders will stay away from what I am saying because it makes no sense to them. Others will hate me for making money trading against all the rules that market "gurus" preach.

I am going to share what I do and get some stones and mud thrown at me in the process.

It should be fun to watch and read the comments I will be getting. So sit back and relax as I am going to unleash my sac of truth.

Here is how I trade.

I only buy low and sell high using my naked eye and simple support and resistance levels. I DO NOT USE MA CROSSING. IT IS DUMB TO USE MA CROSSING.

Below is a summary of what I do to prepare for a trade:

(and yes, I do trade without indicators )

1. I don't do any analysis on weekends or days before. When I open my chart I look at a Daily Time Frame. I am not too concern about all these technical analysis. They are too confusing and too boring for me to be wasting my time on. As you may already know, most of your trades are always ending up in the wrong side. So the forex market itself does not follow technical analysis when it comes to taking my money so why should I?

2. I determine the intermediate term trend with the H4 and H1 to see where the price is in relation to past price action. This is easy to do with your naked eye. No need for expensive indicator. If you are addicted to indicators then do like the others are doing. Drop a 200 EMA on your charts and say to yourself if the price is above the 200 EMA, the trend is up and if the price is below it the trend is down. Oh, and don't forget to note where the MA is pointing.

3. I look at where the price is located in relation the highest point in the chart and the lowest point. Or for new guy, this means the highest the price has been before returning back down and the lowest the price has been before returning back up. They are also called swings. You can do all this with your naked eye.

4. I am waiting for the price to reach my levels to take the trade.

5. I do use 60M and 5M to spot true support and true resistance. All my entries are on M5 chart, except for times when I apply specific strategies on M1 chart.

6. I only risk less than 2% of my account on any trade. Almost all of my stops are 10 pips or 10 ticks.

7. I follow my stop loss rules and let the market do its job.

And yes, sometimes I do trade even without all this stuff described above. Just be there in the right time and with right order. Sometimes I am lucky to reach my day target in first 5-10 minutes of session opening. This does not happen everyday, but this happens pretty often to mention it. With no indicators at all.

Benefits of Becoming a Member of an Online Trading Platform

Trading in share based on the prevailing market conditions seems an easy job when seen from afar. When you actually start experience it you will realize that it is no easy cup of tea! Thanks to the online trading portals that offer brokerage solution besides providing tips, recommending BSE share, NSE share, mutual funds, and more. If you become a registered member of an online trading platform that delivers what it promises, you will also receive alerts on the swing timing so that you are able to get maximum returns from your BSE or NSE trading venture. Performance of open positions in case of signals may also be alerted to you via interim updates.

Sticking with the signals will require you to first understand all online stock trading terminologies so that you do not get confused. It is again when you are confident that you will be able to stick to the signals. As a novice trader, you will come across a world of possibilities and impossibilities in BSE or NSE trading.

Intraday trading, swing trading, and long term trading are common affairs in the NSE and BSE share market. While the first involves trading for the day, the second involves a period of seven days, and the third for an unlimited period. The risk is more noticeable in the first, lesser in the second and the least in the last. Of course, in intraday trading, if the wheel of fortune turns in ones favor, bulk investment can give huge returns on investment. Before taking the big risk a number of parameters need to be considered. Expert traders who have already become millionaires well know how to go forward while trading in a share no matter whether it is BSE share trading or NSE trading.

Just following recommendations won't help you. Research and exercise from your end is a must if you want to experience a win-win situation. You can focus on the recommended stocks forwarded by your online stock trading company; such recommended stocks are selected from amid a horde of stocks by market experts. Filtering potential stocks from amid the recommended stocks will help you reach your target. One of the greatest advantages of getting registered at an online trading platform is that you can not only experience trading in share but also read all relevant stock news, view BSE share charts, take a glimpse of the NSE and BSE indices, reach top share brokers, get stock tips, and more at a single platform. With a subscription, you can get alerts via SMS including mails in your mailbox. Thus your online stock trading encompassing BSE share trading and NSE trading will certainly yield results.

Losses are part of the stock trading game, but repeat big losses may lower your spirits forcing you to exit from the scene. It is advisable to start investing with small amounts and then later go for bigger investments when you are confident enough to understand changing market dynamics.

Stock Analysis - Technical vs. Fundamental

There are two different methods most stock traders employ to analyze a stock as a potential investment and each is a different from the other as night and day. In fact, the subject has caused more than one healthy debate between successful traders and investors and will likely continue do so for quite some time. Fundamental vs. technical analysis, which is the best way to trade? First, I have to admit I am a devout technical analyst. I write about the subject and own a company who publishes a technical analysis stock trading course. I didn't start out in the stock market that way but gradually came to the conclusion I understood technical criteria better than fundamental criteria. Even though I believe that technical analysis leads to more profit, less loss, and is easier to understand, I do leave room for possibility that there are investors who perform just as well as I do using fundamental analysis.

Fundamental analysis is the study of the financial condition of a publicly traded company. When you visit a financial website such as MSN Money, Yahoo Finance or CBS Market Watch and enter a stock symbol, the information that will be displayed is mostly fundamental criteria. It includes figures such as gross sales, gross profit, sales growth, income growth, net profit margin, debt to equity ratio, institutional analyst recommendations among other various criteria. The fundamental analyst compares these numbers to those of other companies in the same industry group of against the S&P 500 average and decides if the stock is worthy of being added to his of her portfolio.

Many fundamental analysts are buy and hold investors. They're willing to add a stock to their portfolio and wait until the investment matures, which is different than most technical analysts. Fundamental analysts by nature are patient with their investing approach. They may hold an individual stock for years, allowing it time to gain a return (hopefully) and in some cases reap the dividends the stock may or may not pay.

Technical analysts decide which stock they will invest in based on criteria they see on a stock chart. The technical analyst believes that the stock chart also charts the mood of the specific market. To put it another way, the stock chart gives the investor a peek into the market psychology. While large financial institutions and brokerage houses recommend stocks to their customers based on fundamental criteria, they all have traders on the floor who honor technical criteria on a daily trading basis. You can actually watch technical rules being "obeyed" on an intraday chart as the price forms patterns indicating the stock is losing steam or there is strong buying taking place. These intraday patterns are traded by day traders but the same rules apply to daily charts and allow the technical analyst the ability to read market psychology in charts of many time frames.

The technical analyst uses the daily chart to forecast his or her trades. The different continuation, topping, bottoming and reversal patterns are to numerous to list in this article. Most technical traders buy on a price breakout and sell on the first pullback or consolidation in price. The breakout is forecast on the chart and the entry is strategically timed to a precise buy point. It takes some study and training but the rewards are great and quick.

The technical analyst is usually impatient and not willing to keep their money tied up in a stock for very long. Most usually hold for less than a couple of months, with a couple of weeks being more common. The trade is placed only to "ride the wave" and the position is exited once the wave is over.

If you haven't begun to trade stocks and are thinking about starting, you need to decide which way YOU feel comfortable analyzing and trading stocks. It's a personal decision based on what you feel comfortable with. Technical traders are usually a little more aggressive in their approach to trading stocks than their fundamental counterparts. Either way is ok as long as you are willing to put the time into studying your craft.