Make money trading Using The Best Education, tools and software

Trading blogs are one of the best ways to get good trading tips, education and advice related to trading, and of course the best part is that it’s usually all free!

But some caution is required because it only takes a few hours work throw up a blog and start posting trading information, make sure the person that you are reading knows what he or she is talking about before acting aggressively on what you may have learnt.

One of the best blogs that I have found, and refer to often is the Top Dog Trading Blog, written by expert trader and trading educator Dr Barry Burns.

On this blog you will find a lot of high quality content:

• Trading Articles
• Trading Videos
• Access To A Free Video Trading Course
• Trading Tips
• Commentary on recent market conditions and topics
• Insights as how a professioanl trader thinks and trades

The blog is relevant if you are interested in trading:

• Stocks
• Futures
• Forex
• As a day trader
• As a swing trader
• As an investor or swing trader

Check it out here:

Best Trading Blog

Best ETF Trading System - Part 1

There are many misconceptions about money management, most think it means trading with stops, but that is only a small part of it.

Below is a short part of the complimentary report you can download instantly called How to Safely Double Your Profits in 2009 Trading ETFs.

Get the full details here >> Best ETF Trading System

This little tip alone could save your trading account.

Why use risk controls?

Every trader and investor must guard himself against drawdown’s, which refers to the percentage drop in his account size after one losing trade or consecutive losing trades. For example, imagine that after losing a few trades in a row, your $20,000 account is reduced to $12,000, that would be a drawdown of 8,000/20,000 = 40%. 

That is a big loss!. If I were to ask some new traders, “In order to be back up to $20,000, what percentage return do you need to generate?”,  the correct answer may surprise you.

Many would answer, “Since I lost 40%, I have to make back 40%!” This couldn’t be more wrong! Note that after losing 40%, the trader now starts with a lower base, i.e. to undo the $8,000 loss, the return he needs to generate is 8,000/12,000 = 66.6%! That is why these free training videos are so important to help dispel some of the myths of trading.

The more severe the drawdown, the harder it becomes to undo the damage, as shown in the numbers below.

Drawdown %         % Required to get back to break even

10%                         11.1%  (This is easy to make up in one good trend)
20%                         25%  (This is also fairly easy to make up)
30%                         42.8%
40%                         66.6%
50%                         100%
60%                         150%
70%                         233.3%
80%                         400%
90%                         900%

That is why all professional money managers only risk 1-2% per trade. It’s because no matter how good your trading system is at some point it is a statistical fact you could have 10 losers in a row. Based on risking only 1-2% per trade this is only a 10-20% drawdown and easily recovered.

99% of the hype trading and investing courses in existence don’t say or do this. They say risk 5-10% per trade. It is wrong and will cause you serious financial pain if you follow their advice.

Many of them also use arbitrary stop loss advice. For example, they say, “Place your stop at $100.10 because that is on the other side of a major support or resistance, trend line, MA, etc.”

This makes your risk based on the size of the stop. That is also wrong because the risk can be too large and it’s not the same risk on each trade.

Others reverse this and say risk only 2% total period and let that determine your stop. This is also wrong and will hurt you because it is important to have the correct technical stop.

The answer is to do both. Use a percentage and technical stop together. It works like this. Let’s say the technical stop is $100.10, but based on your entry price that is a 3% risk.

Since your plan calls for a 2% risk you simply lower the number of shares you are trading. This lets you stay within your 2% risk and have the correct technical stop. This is exactly what most professional money mangers do.

Some say that this will lower their profits because of trading fewer shares. So what! Study the numbers above again. You know the old quote, “More risk equals more reward.” Well it’s not always true.

Sometimes more risk equals more risk! If you lose your money you have no chance to make a profit. Even losing 50% is disastrous because you would then need to make 100% to get back to even.

Like Warren Buffet says, there are only two rules in investing. Rule #1: Don’t lose money. Rule #2: Don’t forget rule #1.

I’d like to add a third rule. Correct money management and position sizing must be mastered to insure your long term success.

The good news is that it is easy to have correct money management and position sizing. I just explained how to use a combo of a % stop and a technical stop.

If you want more of an explanation please watch this set of free trading videos, visit my free video area on the homepage and click on the “Why have risk controls” video.

The system of entries, stops and profits taking is only half of your key to success. The other half is money management. If you get this part wrong you will lose your account every time regardless of how good your system is.

If you are interested in learning how to safely average 6% per month trading Exchange Traded Funds then click on the lick below:

Best ETF Trading System

Please note, in order to access the full set of free ETF trading videos you must first opt in for the complimentary report.

A new summary pdf file has been posted that provides a summary of all the Top Dog Trading Courses

You can find it here:

Top Dog Trading Review

Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.

You only have to think back to major stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.

Just by reading the balance sheet and other quarterly reports they release gives you a very limited insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.

So what is the secret to technical analysis?, I’m about to tell you, here are my golden rules:

* Only use 3-5 simple technical analysis indicators

* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective

* After selecting your indicators and parameter settings don’t mess with them.

The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.

The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.

For the record my set of indicators are:

* 4 Simple Moving Averages

* Bollinger Bands

* MACD

* Stochastics

But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:

Top Dog Trading Review

The most successful floor traders are those that have the most experiance, this is no coincidence at all and should be a pointer for those who aspire to become a good trader. Day trading can be likened to being a sportsman, such as a golf pro or tennis champion, you need to be trained and in good physical shape. Skills are needed which must be developed over time and practiced until they become 2nd nature. If you want to learn how to day trade you must be prepared to put in the effort. Here are some of the key skills that you must develop as a trader.

1. Technical analysis can be used for futures as well as the more standard stocks, options and bonds that most people trade. This can give you a large edge over other traders who have not taken the time to study the charts support and resistance areas, trendline and patterns. Learning technical analysis is really a must do if you want to trade futures successfully.

2. This is a very simple point but is very important, always have your trading plan prepared before you enter a trade, never try and create it on the fly, you will be much too emotional. Make sure that you have an entry and exit point in your plan.

3. Keep your losses small!, this is the one thing that every trader must do if they want to stay in the game for a long time. By doing this you will preserve your capital allowing you to trade another day. Your small gains will compensate your small losses allowing your big wins to give you an overall profit

4. Over trading is a big mistake that a lot of amateurs make. Professionals tend to be more patient and wait for the better opportunities to come along, this is called cherry picking and takes both patience and discipline. These are essential skills that you must develop.

5. This is a big day trading tip, it is important that you track all your trades and review them to see where you are making the mistakes. This is hard work, but this is what separates the professionals from the amateurs. Unless you do this you will keep on making the same mistakes. The best way to do this is to keep both a daily and weekly log.

6. Only trade when you are both physically and mentally prepared. This is often overlooked but is very important. Do you think a golf star can win a game when they are tired and mentally not focused?, it’s unlikely. Being prepared means getting a good nights sleep, having your trading station and charts well prepared before the market opens, taking the time each day to review your trading plan and rules. Finally you must have the mental frame of mind and confidence that you are going to be successful today in your trading.

7. If you are new to trading futures take the time to paper trade until you are very confident that you are going to make money. You will know when you are ready because you will start to hate paper trading knowing that you could be making real cash profits on a consistent basis.

Remember that the markets only trend for about 20-35% of the time, the rest is either sideways or very choppy, if you want to do trend trading to win you must be fully prepared when the opportunities arise.