We are on a mission of teaching commodity futures traders how to trade the futures or forex markets for profits with upcoming free trade seminars. You can probably ignore 90% of all the trading techniques you learned about in the past, such as Relative strength indexes, oscillators, divergence, elliott waves, traditional cycles, timing, seasonal trends, astrology, pitch-forks, volume, stochastics, over-bought and oversold technical analysis. An example of how overbought/oversold indicators can fail is a chart of Gold futures or Crude Oil over the past few years which looked seriously overbought and topping-out at times but kept on going up anyway.
There is no requirement that you must use or pay attention to most technical indicators. The Technical Analysis list of technical indicators is very lengthy. All you need to do is return to chart basics. Use a few relatively simple chart patterns such as swing-highs and swing-lows, perhaps a trend-index, support/resistance levels, (and more complicated methods like Gann angles and squaring of price and time). Try combining them with trading techniques that can actually work, such as divergence indicators and in-sync harmonic data files, which are in good harmony with the market you are trading.
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The price of some stocks, especially recent "hot" IPOs and high tech stocks, can easily soar and drop suddenly. In these fast markets when many investors want to trade at the same time and prices change quickly, delays can develop across the board. Executions and confirmations slow down, while reports of prices lag behind actual prices. In these markets, investors can suffer unexpected losses very quickly.
Investors trading online over the web are used to instant access to their trading accounts and near instantaneous executions of stock trades, consequently, online trading traders need to fully understand how they can protect themselves in fast-moving markets.
You can limit your losses in fast-moving markets if you
With a click of mouse, you can buy and sell stocks from more than 100 online brokers offering executions as low as $5 per transaction. Although online trading saves investors time and money, it does not take the homework out of making investment decisions. You may be able to make a trade in a nanosecond, but making wise investment decisions takes time. Before you trade, know why you are buying or selling, and the risk of your investment.
To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled.
For example, if you want to buy the stock of a "hot" IPO that was initially offered at $9, but don't want to end up paying more than $20 for the stock, you can place a limit order to buy the stock at any price up to $20. By entering a limit order rather than a market order, you will not be caught buying the stock at $90 and then suffering immediate losses as the stock drops later in the day or the weeks ahead.
Remember that your limit order may never be executed because the market price may quickly surpass your limit before your order can be filled. But by using a limit order you also protect yourself from buying the stock at too high a price.
Investors may find that technological "choke points" can slow or prevent their orders from reaching an online firm. For example, problems can occur where:
A capacity problem or limitation at any of these choke points can cause a delay or failure in an investor's attempt to access an online firm's automated trading system.
Most online trading firms offer alternatives for placing trades. These options may include cell phone trades, faxing your order, or doing it the low-tech way--talking to a broker over the phone. Make sure you know whether using these different options may increase your costs. And remember, if you experience delays getting online, you may experience similar delays when you turn to one of these alternatives.
Some investors have mistakenly assumed that their orders have not been executed and place another order. They end up either owning twice as much stock as they could afford or wanted, or with sell orders, selling stock they do not own. Talk with your firm about how you should handle a situation where you are unsure if your original order was executed.
When you cancel an online trade, it is important to make sure your original transaction was not executed. Although you may receive an electronic receipt for the cancellation, don't assume that that means the trade was in-fact canceled. Orders can only be canceled if they have not been executed. Ask your discount stock broker about how you may verify a trade cancellation order really worked.
In a cash account, you must pay for the purchase of a stock before you sell it. If you buy and sell a stock before paying for it, you are free riding, which violates the credit extension provisions of the Federal Reserve Board. If you free ride, your broker must "freeze" your account for 90 days. You can still trade during the freeze, but you must fully pay for any purchase on the date you trade while the freeze is in effect.
You can avoid the freeze if you fully pay for the stock within five days from the date of the purchase with funds that do not come from the sale of the stock. You can always ask your broker for an extension or waiver, but you may not get it.
Now is the time to reread your margin agreement and pay attention to the fine print. If your account has fallen below the firm's maintenance margin requirement, your broker has the legal right to sell your securities at any time without consulting you first.
Some investors have been rudely surprised that "margin calls" are a courtesy, not a requirement. Brokers are not required to make margin calls to their customers.
Even when your broker offers you time to put more cash or securities into your account to meet a margin call, the broker can act without waiting for you to meet the call. In a rapidly declining market your broker can sell your entire margin account at a substantial loss to you, because you did not use any trading account draw down minimizer and the stocks declined heavily in value.
There are no Securities and Exchange Commission regulations that require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays.
Act promptly. By law, you only have a limited time to take legal action. Follow these steps to solve your problem:
1. Talk to your broker and ask for a full explanation. Take notes of the answers you receive.
2. If you are dissatisfied with the response and believe that you have been treated unfairly, ask to talk with the broker's branch manager. In the case of an online firm, go directly to step number three.
3. If your are still unhappy, write to the compliance department at the brokers main office. Explain your problem clearly, and tell the firm how you want it resolved. Ask the compliance office to respond to you in writing within 30 days.
4. If you're still dissatisfied, then send a letter of complaint to the NASD, your state securities dept., or Office of Investor Education at the US SEC along with copies of the letters you've sent already to your stock brokerage firm.