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's blog: 10 ways to succeed online trading in 2017 - Views ( 143808 ) -article by: AliCatCapital

AliCatCapitals' BLOG ( 27 articles!)

10 ways to succeed online trading in 2017 - Views ( 432 )
10 ways to succeed online trading in 2017  

10 ways to succeed online trading in 2017

Author: AliCatCapital , Last Modified, 2020-10-29 10:20:07

Category: finance Keywords: Ten-ways-to-succeed-online-trading

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10 ways to succeed online trading in 2017

SECTOR ANALYSIS - 14 YEAR STOCK PRICE RELATIVE PERFORMANCE2004200520062007200820092010201120122013201420152016201705001,0001,5002,000
YearIndustrialsFinanceBasic MaterialsChemicalsConsumer GoodsServicesEnergyTechnology
2004100100100100100100100100
2005157110170100460200150210
2006160190160120162300200560
2007100100104140400400250300
2008157110170240560500300460
2009160120160140262600350620
2010100130304240400700400400
2011170140170140469800450460
2012160130160140162900500620
20131101701041434001,200550400
2014170160170204460700600460
20151601501602241601,600650662
2016100140140230400500700800
20171301501902606009007501,240
SECTOR PERFORMANCE TOTALCyclicalsTechnologyIndustrialsBasic Indu…EnergyStaplesServicesFinance-100102030
SectorRisersFallers
Cyclicals4-1
Technology40
Industrials8-2
Basic Industry90
Energy2-3
Staples12-8
Services16-6
Finance20-6
SECTOR NET POSITIONS-5051015CyclicalsTechnologyIndustrialsBasic Indu…EnergyStaplesServicesFinance
SectorCurrent Net MoversPrevious Net Movers
Cyclicals31
Technology44
Industrials64
Basic Industry91
Energy-13
Staples414
Services1012
Finance1410
Over the years I have spent a considerable amount of free time on trains commuting to work. I used some of my free time working, some of it on leisure like reading and some of it making money. Arriving at work knowing that I had already earned more than I was about to be paid for my whole working day was nice, it gave me a sense of satisfaction. I'm not talking millions here, but quite often it would be ฃ900 or so. At one point I lived In Brussels and worked in London for a bank, following this role I joined a large management consulting practice and again spent a lot of time commuting. Making money online, trading the markets, is not easy, but the act of trading is simple to do. Many trading apps are built to let you trade, but these are not trading systems ,they are order management systems. There is a HUGE DIFFERENCE and if you do not understand the distinction you will more than your fair share. Most cfd systems for example are rigged to remove any profit, a it like the casino, when you play roulette you always lose, it is a mathematical fact, sure you get some wins, but in the long run they become losses, games like poker are skilled based, games like roulette a chance based, Regulators are concerned about chance based models because these cause users to become losers. Trading the markets is a game, Your job is make sure you place the game of skill not the game of chance. If you do you will be able to trade profitably, no matter what level you wish to scale it to. I used highly sophisticated models to pick and manage stocks. I know that they are highly sophisticated because I am a qualified Chartered Accountant and having worked with many analysts I know excel modelling inside out, it comes with the territory. It is not the sort of nonsense many trading sites write about. There is an army of technical analysts that do little more than follow lines on a graph and think they can read something into it, some probably can, many I would wager cannot. I am not a technical trader or tea leaf reader, same thing really. I used Trusted Financial Strategy, trusted not because some author says so, Ben Graham aside, but because I tested the meods using real money, mine and my clients. time to Throughout this month, countless traders will write clickbait articles listing all of the ways that marketing is destined to change this year. Most of those pieces will be unoriginal, redundant and uninteresting.

And now for something completely different: what ignorant practices, intentional deceptions and grandiose delusions will continue to occur in the digital marketing world in 2017?

1. Actually trade, too many people talk tto much and trade too little. Don't overtrade, but make sure you don't miss out by taking no action at all;.

2. LEarn how to pick stocks. You need a stock picing system, it wont be any good to begin, but it is a system and can be tweaked over time. Randomly selecting which stock to buy is deadly and will cost you big time. If your system involves listening to what the TV pundits advise you will lose even more. Learn how to pick using Risk Return analysis then place your bets like a man, or woman, and manage that position like its your new born baby.

3. Manage Risk, OK you can select stocks, you have read the financial and analytsed the trends, Youve even learned how to allocate capital like Warren Buffet, but once you have added you stocks to your portfolio, they will move, Dont be forced nto panic selling, if the TV Pundit warns you to sell, ignore and go with your plan and sell on the Signal, the signal that has embedded your secret algorithms.

4. Pick like Buffet, Allocate capital based on Rationality. Analyse Riskiness of a stock and compare Risk to Returns, the data is free and requyres a little modelling but it will save you thousands in costly missallocaiton of your precious capital.

5. Understand dynamic stop loss. I think I am the inventor of the dynamic stop loss as I never read about it yet it makes so much sense. Most traders set absolute get me out limits. This is fine but it results in a lot of money being left on the table. You will invariably sell too soon or too late. The sahre price of a volatile stock moves more than a steady climber or a low income stock. So build target stop loss signals around the price movement, This results in better signals, it will keep you in stocks that rebound and make you money and it will get you out of the inevitable dogs. To make any money trading you must take risk and buy volatyle stocks but you must have the wherewithall to hold them and get out when it is profitable to do so.

6. Spread your risk. Pick and Trade a basket of stocks, do not palce all of your eggs in one basket, I use capital allocation to pick a basket of 12 stocks, this is the mathematically proven number to give maximum diversification of you portfolio. Picking all the stocks in the index is tantamount to playing the index, and is not profitable due to the cost per trade, you'd be better off gambling on the index, but this is exactly that, a gamble. Stock pickers do not gamble, rather they place bets, strategically using mathematical logic. Statistics is your friend, learn about confidence intervals and put this knowledge to good use when deciding on the size of you portfolio Allocate more capital to the stocks that offer you the highest return for any level of risk and looked at t it another way take the smallest risk for any lvel of reture, so most of you money will be on your top bet, but life is never like a plan, things will go wong and your stock spread will act as a kind of cussion or buffer agains losses, because some of the smaller amounts of capital placed on longer shot picks will turn out good and offset losses on your main pick.

7. Kep a trading book as a log of all your trades. Over time you will be able to refer back to this and measure you performance with some credability, I always keep the whole portfolio pick, this way I can gauge the returns based on my pick logic at the time.

8. Sectore rotation is your friend, the markets move in cycles, this is due to the economy and the debt cycle. Longterm and short term debt cycles drive the central bank to react to inflation by setting interst rates and quantitative easing policy. You should now enough to gauge where you are in the economic and business cycle at the time of your trades, and base your stock picking around this. As wecome into a period where the fed or other central bankers are proned to raising interest rates, this is likely, certainly mathematically speaking , have a downward pressure on house prices, Property companeis will be squeezed as their borrowing osts rise precisely when their product sales drop, many will gout out of businesses, and or restructure, this is not the time to be long property, so know htis and make jusdgemetal calls when deciding where to lace your cash.

9. Know the difference between Intrinsic value and market price, The Stock market doe snot in genmeral represent the true value of a company, it temnds to represent the price people are willing tpo pay to play or own a share, this price moves daily based on market announcements. Markets tend to over react both on the up and down side, You should have an idea what you believe the intrinsic value of a stock is, and buy when the market goes below this as it is offereing you a bargain and sell when it goes abover this as it is over priced and nont a bargai, successful traders trade bargains, it is possible to buy and sell the same bargain over and over. I have a mining stock that I new was a bargain and I traded it 106 times profiting on 87 trades. Simple sell it and buy it back when it is cheap enough to justify it. This type of trade is a swing bout the intrinsic mean, and must be done in the context of the market cycle, typically in the upward trend of the cycle.

10. Pay your taxes, if you are not paying tax on your trading profits, well you have none. Profitable traders complete the asset section of the trax return and will typically exceed the capital gains tax allowances and pay tax on trading profits like any other business. To pay tax is to be profitable, I'm not saying paying tax is enjoyable, but it is a validation of your profitability. Keep detailed trading accounts based on your trading log or trading book and draw up you trading P&L Profita nd loss account and balancesheet at the year end and add this to you overall self assessment tax t=return. Your trading losses, which are inevitable can be offset agains trading gains and trading profit calculated, deduct the tax free allowance then submit this amount to tax, the revenue will look at your submission and refurn you if you inadvertabtly over pay them.

AliCatCapital

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