Learn What Trend Trading Really Is

Comments (20)


Learn What Trend Trading Really Is

By: Carter Matzinger

Here's a simple question-what is trading? To answer, perhaps not so simply, we first need to understand what trading is NOT. Trading isn't about buying the fanciest chart, hanging on to something because it is a good buy, or feeling good about yourself because you can go to a cocktail party and relate to what everyone else is saying. Trading is about making money, period.

There are software systems that create pretty colors and tell you which stocks are safe to buy because they have moved a certain way in the past. If one particular stock has been going up and up and up, a trend follower concludes that the stock should continue moving UP! However, in order to follow a stock's true potential progress, would you rather wait for a computer program, or be actively and directly involved in its ascent?

Picture an apple in the center of a room, surrounded by 10 traders. Consider for a moment, each trader buying the apple until everyone has owned it. What is that apple worth? It is worth ONLY what someone will pay for it. Person #1 buys the apple for $1 and takes a bite. Person #2 then pays $2 for the same apple and takes another bite. Person #3 pays $3, and so on until finally, the last person takes that final bite. Yes, the apple is STILL worth only what the next person will pay for it-no more, and certainly no less. The only person left to sell it to is the one who walked into the room an hour late, looks at the apple's past price history, consults his software that says the smelly apple has had a great price performance, and determines that it's a worthwhile buy. That is precisely the definition of trend trading.

Make no mistake, successful trading is about you versus the guy sitting next to you with the pretty software. Don't waist your time trading with charts, spend your time leaning how the futures market really work.

About The Author

Carter Matzinger

Ezzone Trading is the author of "What the Stock Trading Seminars DON'T tell you!" We have developed a software to support people in trading futures successfully. Visit our site to find out more. http://www.ezzonetrader.com or mailto:sales@ezzonetrading.com

Comments

jdaugherty3 06.07.2010. 14:29

Best way to learn day trading from home? How do you learn how to day trade from home? I want to trade for a living from my house. I know it is possible. What are the best books to read and what are the best websites to use? Thanks!
Maybe I should rephrase that, "swing trade" or short term trades, is what I mean.

jdaugherty3

Admin 06.07.2010. 14:29

I day trade frequently.

It is a commonly held misconception that you can learn to day trade via published materials. This is why most day traders lose their money and defensively complain about market manipulation. Periodicals abound on the subject because there's money to be made putting out nonsensical reading materials, all of which purport to prepare the buyers of such materials for an unlimited earnings career. It is absurd, to say the least. And some Internet pitches go so far as to spiel a half page of utter nonsense such as you'll find on this page from another responder.

There is just one way to become a profit-oriented day trader:

Pick a bunch of stocks that show decent volatility and get to know them as well as you do your own face. This means track every last news item out there on each pick. Track the volume changes throughout the day, hour by hour and more if your lifestyle permits. Log into a journal the opening bids, the last price of the closing trade and highs + lows of each trading day for each stock pick.

When the market opens in the morning, you must be able to see in an instant where the opening bid sits and recognize the difference from the previous close. Decisions to buy or sell or maintain positions must be quick as a flash.

Day trading is most profitable when you see the news unfolding and know the trading ranges well enough to anticipate trend reversals. Then it's a matter of your ability to relate to momentum within the confines of trading and incorporate this with an intimate view of volumetric changes.

For day trading to succeed, you need an account balance of $25K along with the aforementioned Information. You also need excellent math-on-a-dime skills plus strong instincts so that you can successfully anticipate how the general public will respond to unfolding news affecting your picks.

This is a difficult process for sure but it keeps me on my toes every minute of every day. For relief from the tension, I respond to questions here and also do lots push ups and stationary bike riding, anything just to relieve tension and provide a healthful outlet for nervous energy.

Whatever you decide to do, understand this is a journey that tries the quickest minds and calls for great instincts. Along with day trades, I also hold positions in some longer-held picks that pay high quarterly yields, as financial protection. And I do a lot of swing trades where I will regularly buy and sell stocks I've had for anything from a few days to a couple of months.

You might visit www.investorshub.com and examine the home page where there's a list of most popular day trade vehicles. I would never recommend trusting anything there but at least you'll be introduced to picks being promoted by very active traders.

Good luck to you!

Len

Admin

William M 07.10.2009. 12:23

What is better out of trading ordinary spot forex or currency options? I am 18 years old and I am considering trading currencies as a home based business. I've had practice with ordinary spot forex and find it okay. I want to know what is better if I was to trade ordinary spot forex or currency options? Which is better, and which has the best chance of you becoming successful and becoming a millionaire out of?

William M

Admin 07.10.2009. 12:23

Currencies tend to trend long term and be volatile in the short term.

Have a look at this chart from finviz & see if you agree.

http://www.finviz.com/forex_charts.ashx?t=ALL&tf=w1

I only trade currencies using long term call options. Why?

1. I have a known level of exposure (I can't loose any more than I put in)

2. I feel its lower risk, as I am trend trading - trends can also revert.

3. It is definitely lower risk than spot trading, as I am not trading on margin - I can still loose everything though.

4. I've had a few friends take up currency trading (spot), do quite well for a bit then have a bad run, only one out of 6 is still in the game.

5. It suits my personality. If you can handle the swings, spot trading might be the thing for you.

Open up a demo account and see how you go.

Give your self time to learn before putting your own money down - once its gone, its gone.

Admin

hando59 05.02.2008. 12:09

What is the best way to learn fundamental forex trading? Is forex trading worthwhile as a second income generator?

hando59

Admin 05.02.2008. 12:09

Well you could take courses on US and World economics, read some financial economies books and/or know when and the fundamental news that affects price swings are reported. Stay clear during these volatile times because they can take out your stop in a heartbeat and a few beats later go back the other way. And remember that the news could already be mostly priced into the current price.

http://www.forex.com/learn.html
Link will answer many questions and answers you should know. I have 3 accounts (never put all your money/eggs in one account/basket). You can start with $500 when you can afford to open account. Since you are just starting you will lose money if you don't learn the basics, first. #1 best tip, don't trade your real money until you try trading demo account. When you can trade a demo for about 2-3months daily and make money then if you feel ready slowly start trading real money. So making and/or losing money depends on how well you can trade. For some it very profitable, for many it is not. So trading with the right tools and knowledge can become a very good income(s) for short and long term goals. And trade with the current trend.

I use Lightning Strikes Trading System for trading in any time frame and it works on forex, stocks, bonds, etf's, mutual funds, etc... They have 3 free training sessions a week and you don't have to buy the software to join in the live chat and text. They focus their training/trading on the Forex markets major currencies. You can even watch some recorded past live sessions. Here are some past charts that I used.
http://f1.grp.yahoofs.com/v1/MB16R0zjjaZ...
http://f1.grp.yahoofs.com/v1/MB16RxjOUQt...
There are 7 indicators (2 short, 2 medium, and 3 long term) and if volume is reported another one is added (on balance volume). Plus whatever time-frame is used the 2 green horizontal lines are the support and resistance for that time frame. So when indicators are all touching the bottom price is at or very, very near support. At top is at or very, very near resistance. Which helps my entry/exits and risk/reward ratio.
http://f1.grp.yahoofs.com/v1/MB16R9Wv-wt...
http://f1.grp.yahoofs.com/v1/MB16R9wSKdV...
http://f1.grp.yahoofs.com/v1/QCt6R2fYIj6...
http://f1.grp.yahoofs.com/v1/QCt6R3R0VQe...
If you can not view charts above or want to see other charts, I can email them.

Start learning the basics of fundamentals and technical analysis so you will be more informed in your investments. You can find all the basic info you need to learn on websites for free.
This site should give you a good start.
http://finance.yahoo.com/education

Try what you learn on demo sites. They can be a very fun but educational way to learn from mistakes. If you pick 75% right with play money then you might be ready to start slowly investing.
http://simulator.investopedia.com/
http://simulator.zacks.com/
http://www.fxcm.com/open-free-100k.jsp
http://www.alpari-idc.com/en/metatrader4...
Or just google for more.

Here are my favorite sites.

http://stockcharts.com/
Has basically all you need from fundamental to technical terms. Plus stock screens, charts, public chart lists, and much more useful info.

https://www.fidelity.com/
Has good learning resources.

http://moneycentral.msn.com/home.asp
In addition to yahoo finance.

http://www.reuters.com/
For news and more.

http://www.marketwatch.com/default.aspx
For news and more.

http://www.valueprime.com/index.php
For rating stock risk/reward ratio and reports.

http://www.barchart.com/
For investing in more than stocks.

http://www.investopedia.com/
For more great learning tools.

http://www.lightninglive.com/
For best software timing your entry/exits any time frame for day traders and long term investors.

Others worth exploring.
http://www.equis.com/
http://www.stockta.com/
http://www.secform4.com/

Best Wishes,
Burt Whitley

Admin

valgraphies 26.03.2008. 04:48

What is the secret to successful forex trading? A complete newbie to forex trading, I am having difficulties figuring out where to look for information, but also what exactly to look for. Commodities? Bank quarterly results?

valgraphies

Admin 26.03.2008. 04:48

Well you could take courses on US and World economics, read some financial economies books and/or know when and the fundamental news that affects price swings are reported. Stay clear during these volatile times because they can take out your stop in a heartbeat and a few beats later go back the other way. And remember that the news could already be mostly priced into the current price.

http://www.forex.com/learn.html
Link will answer many questions and answers you should know. I have 3 accounts (never put all your money/eggs in one account/basket). You can start with $500 when you can afford to open account. Since you are just starting you will lose money if you don't learn the basics, first. #1 best tip, don't trade your real money until you try trading demo account. When you can trade a demo for about 2-3months daily and make money then if you feel ready slowly start trading real money. So making and/or losing money depends on how well you can trade. For some it very profitable, for many it is not. So trading with the right tools and knowledge can become a very good income(s) for short and long term goals. And trade with the current trend.

I use Lightning Strikes Trading System for trading in any time frame and it works on forex, stocks, bonds, etf's, mutual funds, etc... They have 3 free training sessions a week and you don't have to buy the software to join in the live chat and text. They focus their training/trading on the Forex markets major currencies. You can even watch some recorded past live sessions. Here are some past charts that I used.
http://f1.grp.yahoofs.com/v1/MB16R0zjjaZ...
http://f1.grp.yahoofs.com/v1/MB16RxjOUQt...
There are 7 indicators (2 short, 2 medium, and 3 long term) and if volume is reported another one is added (on balance volume). Plus whatever time-frame is used the 2 green horizontal lines are the support and resistance for that time frame. So when indicators are all touching the bottom price is at or very, very near support. At top is at or very, very near resistance. Which helps my entry/exits and risk/reward ratio.
http://f1.grp.yahoofs.com/v1/MB16R9Wv-wt...
http://f1.grp.yahoofs.com/v1/MB16R9wSKdV...
http://f1.grp.yahoofs.com/v1/QCt6R2fYIj6...
http://f1.grp.yahoofs.com/v1/QCt6R3R0VQe...
If you can not view charts above or want to see other charts, I can email them. Or you can view more charts in this yahoo group. http://finance.groups.yahoo.com/group/lightninglive/

Start learning the basics of fundamentals and technical analysis so you will be more informed in your investments. You can find all the basic info you need to learn on websites for free.
This site should give you a good start.
http://finance.yahoo.com/education

Try what you learn on demo sites. They can be a very fun but educational way to learn from mistakes. If you pick 75% right with play money then you might be ready to start slowly investing.
http://simulator.investopedia.com/
http://simulator.zacks.com/
http://www.fxcm.com/open-free-100k.jsp
http://www.alpari-idc.com/en/metatrader4...
Or just google for more.

Here are my favorite sites.

http://finance.groups.yahoo.com/group/lightninglive/
Join group to see and discuss LS charts.

http://stockcharts.com/
Has basically all you need from fundamental to technical terms. Plus stock screens, charts, public chart lists, and much more useful info.

https://www.fidelity.com/
Has good learning resources.

http://moneycentral.msn.com/home.asp
In addition to yahoo finance.

http://www.reuters.com/
For news and more.

http://www.marketwatch.com/default.aspx
For news and more.

http://www.valueprime.com/index.php
For rating stock risk/reward ratio and reports.

http://www.barchart.com/
For investing in more than stocks.

http://www.investopedia.com/
For more great learning tools.

http://www.lightninglive.com/
For best software timing your entry/exits any time frame for day traders and long term investors.

Others worth exploring.
http://www.equis.com/
http://www.stockta.com/
http://www.secform4.com/

Best Wishes,
Burt Whitley

Admin

StoryTime 28.06.2007. 06:10

What is the best way to begin learning about personal finance and investments? It is a truly scary and daunting subject that I must learn about even though I don't like the subject matter much and basically have trouble understanding. Where do I start and to whom do I listen ? Everyone has an opinion but everyone also has their own agenda. I need to learn this from the bottom up and would like to learn it from an unbiased source. Any thoughts?

StoryTime

Admin 28.06.2007. 06:10

Get involved and hands on.

In order to learn faster and get a hang of it, open a trading account, read personal finance and investment journal more often.

Choose an industry that you can understand better before you invest. Learn more about the industry trend, like oil and gas is different from technology stock.

Hands on, do more research like an Investment Analyst as if you have a billion dollar to buy over a business and run it your self.

Some investors even visit the factories, outlet and etc of the business that they plan to invest.

Read Warren Buffet books, sign up a mock trading account to see how it works, understand the brokerage charges, understand the settlement rules and cycle.

Reading financial stmt may not be enough, as many organizations are very creative in their accounting.

Good Luck, and wish you prosper from your investment

Admin

Marcel 19.06.2013. 15:33

How start trading on the stock market (for absolute beginner)? I'm 18 years (South African), and i'd like to start trading. I only have a debit card. Do I need a credit card to trade? DO i need a lot of capital? What sites, books, and resources would you recommend for me to read? Is it possible to get rich from investing in stocks if you are really good?

Marcel

Admin 19.06.2013. 15:33

I can only speak of North American markets. Credit card ARE NOT and CAN NOT be used for the purchase of securities, you will have to deposit actual funds.

Yes you can become very rich from investing in stocks but rather than be very good at it you must fully understand not only the markets, but the products traded in those markets and most importantly you must understand the rules and regulations that govern bot the markets and the products

To be a trader you must first learn how to invest. You must know the products and the markets in which they trade, how security transactions are cleared and more importantly you must know the rules that govern those products and markets. So you must know what you?re doing, why you?re doing it, and how to do it. You should start by reading ?Investing for Dummies? by Eric Tyson.

Here?s a list of books you should consider, at least read half of them
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas

And when you think you want to trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/

Before you enter your first order you need to address four major policies and have very strong discipline to follow them
1 - You need a written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself. Always use stops either to protect you on the down side or to lock in profits on the up side. Never trade on emotions, when emotions get involved walk away. Don?t try to out-smart the market, you?ll loose but if you always take what the market is willing to give you, you?ll be successful. Other words, you don?t trade against the trend since the market is always right. And NEVER trade on emotions, once you let emotions in your trades you will loose
2 - A written money management program is essential. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested. Never go into a trade without knowing when and where you are going to get out of it. Never let a loss on a trade get greater than 8%-10%, always take you loss and walk away - don't loose more than you need to and don't be afraid to take the loss. Remember you never can get hurt taking a profit. Never average down, but you can average up.
3 - You must have sufficient trading/investment capital. Use your own money, there?s no need to go into debt so that you can trade and/or invest. Margin can be used but only with restraints, never let the account wall below 45% equity. Unless you fully understand margins you should not use it.
4 ? A full and complete understanding of the rules & regulations of the industry. If your going to play in the game be sure you know the rules of the game and always follow them.

Unless you are willing to study and follow the above you will never make it as a trader. To be successful as a trader it takes work and constant study of the markets and the products traded in those markets, there is no easy way.

Admin

Sarah Dane 12.04.2009. 18:09

How long does it take to learn show jumping? How long does it take to learn to show jump if you have no riding experience at all?

I'm 22 yr F.

Is it too late to start?

Sarah Dane

Admin 12.04.2009. 18:09

As others have said, it's never too late. It might take you longer to achieve suppleness and softness, but it can happen. Tip number one: seek out the best trainer you possibly can. Whatever you can afford, it's worth it to have the basics taught right. Look for trainers with proven wins in the show ring and speak with some of their students. Go to the shows. Talk to the trainers with wins in equitation (with its focus on the rider). Read trade and local equine magazines and the names will start popping out at you.

Now, keep in mind that it will probably be months before you're actually jumping, although this depends on how often you can ride. If you get in the saddle every day, you will improve faster than if you lesson just once a week. But even then, you should only jump when you are walk, trot, cantering around the ring without assistance and without leaning on your horse's mouth. Your instructor, if they're any good, will teach you about balance, striding, collection and extension, pace, and impulsion before you begin jumping. And even then, they will be small jumps at first.

It takes riders many years before they work up to the Grand Prix ring. I rode for almost 20 years before making my debut, and I'd competed in Mini Prixs and the equitation medal classes beforehand. Fortunately, rated shows start their jumper classes at Level 0, which is 2'9". And open shows often have jumper divisions from crossrails to 4'. Keep in mind, most trainers usually require their students to school 3 to 6 inches higher than what they would be showing. So it can take several months to a year before you even make it into the ring.

This is not a sport that's quickly mastered. We all devote significant chunks of time to it, and even accomplished horsemen admit they still have much to learn. Listen to George Morris (United States chef d'equipe for the 2008 Show Jumping team in Beijing). He always talks about riding as a learning experience, no matter how much you think you know, there's always more to learn.

I highly suggest you investigate classical horsemanship. There are plenty of books on the subject matter. These methods have been established for hundreds of years. They work. Ignore the modern trends and fads, and anyone who works with lots of gadgets and devices.

Admin

Joyce 17.03.2007. 18:35

What is the best way to learn how to trade options on soybean futures? I would like to learn on my own. Are there any free sites or good books that would include the ticker symbols so that I can virtual trade them for practice? Also, I am level four in trading options in my IRA account. Can options on futures be traded in an IRA account? Thanks!

Joyce

Admin 17.03.2007. 18:35

Hi,

I am a retired futures trader. The best way is to move to Chicago and get a job in one the the trading pits and learn the basics from the ground up. Trying to learn this stuff from a book is almost impossible and yes there are a plethora of books out there, but the trading pit is the best way.

Go to Amazon, enter "futures trading" and select a book. Most of the stories you hear about some individual making millions are guys who got lucky, bet against the trend and made millions. Then, they will sell you a book on how they did it. Problem is it won't work and you will be out. They made a lucky guess. Doesn't tell about the thousands that lost their shirts and pants in this zero-sum game.

Kindest Personal Regards,

Walt Brown
Site Build It Certified Webmaster
capecod1@capecod-beaches.com

Admin

evan 22.10.2012. 21:47

What are some strategies for trading stock options? I need some strategies for trading stock options. right now I am just trading stock options and losing money. any help?

evan

Admin 22.10.2012. 21:47

Can stock options be risky investments? Yes, they can be if you do not know how to properly trade them. This includes understanding all the available strategies option traders can use, which stocks simply cannot provide.

For the past seven years, I have been a full-time options trader. This is how I make my living. This is easier said than done. However, by reading and actually trading you will learn how to be successful. The key is to find how you like to trade options and to stay consistent.

In this article, I will mention the many successes and pitfalls that I have had trading options and what I have learned over the years, but also the mistakes I have seen others make. While my trading style may not suit everyone, my hope is that it may provide some clarity about options and the many different strategies they offer traders.

One of the most important aspects to being a successful options trader is finding a strategy and method that fits your expectations and style of trading. This can take a long time for beginners to figure out. I do recommend "virtual trading," to test out different strategies. The list of available option strategies is vast. Here are some of my personal favorites:

Buying long calls
Buying long puts
Strangles
Iron condors
Reverse iron condors
Butterfly spreads (long put butterfly)
Weekly options strategies
My daily options trading strategy
Often times, a beginning options trader is bouncing around from different strategy to different strategy. One of the first things I tell a new options trader is to focus on a select number of stocks initially. If you are interested in technology, then following Apple (AAPL), Google (GOOG), Intel (INTC), Research In Motion (RIMM), and others in the same sector is a great start. Understanding how a stock moves is beyond important.

One of the key aspects with my daily options strategy that I developed over seven years ago is that I mainly focus on nine stocks exclusively. Every single day, I have the same stocks up on my grid chart.

I currently use the following stocks for the daily options trading strategy:

Main Stocks

Apple
Google
CF Industries (CF)
Wynn Resorts (WYNN)
F5 Networks (FFIV)
Intuitive Surgical (ISRG)
Chipotle Mexican Grill (CMG)
VMware (VMW)
Baidu (BIDU)
Salesforce (CRM)
Supplemental Stocks

Las Vegas Sands (LVS)
Direxion Financial Bull 3X (FAS)
Direxion Financial Bear 3X (FAZ)
EMC Corp. (EMC)
Marvell Technology (MRVL)
MGM Resorts (MGM)
Alcoa (AA)
Citigroup (C)
Nvidia (NVDA)
SanDisk (SNDK)
Research In Motion
AK Steel (AKS)
The point here is that after watching these stocks on a daily basis for such a long time-frame, it is easy for me to spot when a particular stock has bottomed or topped daily while also using the technical indicators. If I were to put a stock on that list tomorrow that I was not familiar with, I definitely would not be comfortable making a trade as quickly as I would with the stocks I do follow. This applies to all trading. It is never a good idea to try to catch a upward or downward trend with unfamiliar stocks. The chances are high that by the time you are in the trade, it has already topped or bottomed. Stick to what you follow.

If you have not read any of my daily options trading strategy articles, I highly recommend that you do. There are literally hundreds of comments on those articles and I have answered just about every question asked. It is really a great strategy. One of the reasons I wanted to share it with the public is because I knew how successful it would be for so many traders. Here are the links to all five of the articles in the series:

Part 1: seekingalpha.com/article/296636-profiting-daily-with-cf-industries
Part 2: seekingalpha.com/article/304428-a-daily-options-trading-strategy-for-high-flying-stocks
Part 3: seekingalpha.com/article/310018-daily-options-trading-strategy-charts-notes-a-new-addition
Part 4: seekingalpha.com/article/310018-daily-options-trading-strategy-charts-notes-a-new-addition
Part 5: seekingalpha.com/article/314770-the-daily-options-strategy-part-5-final-notes-charts-and-alternate-stocks-to-use

Admin

rocky9281 09.10.2009. 17:53

What is the best strategy for trading(what is most popular among the pros)? 1.Trading overstretched markets
2.Trading Patterns.

or is it something else?? pls mention it

thanks

rocky9281

Admin 09.10.2009. 17:53

They just jump on trends and stay on for the ride.

Read ---
Trend Following: How Great Traders Make Millions in Up or Down Markets, New Expanded Edition, (Paperback) by Michael W. Covel (updated edition not required)
The Complete TurtleTrader: How 23 Novice Investors Became Overnight Millionaires by Michael W. Covel
From these you will learn how the market really moves.

If you don't understand some of the technical terms ---
Getting Started in Technical Analysis by Jack D. Schwager
or, if you want to jump in the deep end
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy

Admin

Write a comment

* = required field

:

:

:

:


* Yes No