I've read a lot of books on stocks. They are divided into two different camps: fundamental and technical indicators. The first thing is to know the difference. Fundamental indicators depend on reviewing the company's fundamentals, such as p/e ratios, growth, balance sheets, dividends, etc., etc. This is what Warren Buffett uses to buy companies or stocks. There are many books on this subject that will help you, but I haven't found these books to be helpful in buying and selling stocks at all.
There, I've said it. The truth is out.
If you are Warren Buffett, you can afford to wait two or five or ten years for your stocks to increase in value. I can't wait that long. I need volatility in trading. I need stocks that will change from $50 to $55 to $48 in a day. That's where technical trading comes in.
So, your first lesson, if you choose to begin, is to go to bigcharts.com or stockcharts.com, and fool around with their charts. Try different technical indicators such as stochastics, rsi, dmi, moving averages, etc. See how they affect the stock chart. It doesn't matter what time period you choose, you will see they all are basically the same. They show you what is happening within that time period.
Even if you decide you're not a day trader type, this will still help you understand the market and where it stands at this moment and in the past. In my opinion, understanding the market is perhaps one of the most important life skills you should know.
As we go forward, we will discuss the types of technicals I have found to be helpful and how to read them.
Sue
Friday, October 10, 2008
In the beginning...
This is probably the dumbest time to start a blog on daytrading, but...that's me. While the market is crashing around us, I had this brilliant idea. Anyway, if you read any books on the market, you know the authors say "Every day is a great day to trade the markets." Every day provides an opportunity to make money.
I've been following the markets for more than five years. I started with a commodities book by Ken Roberts, moved on to commodity books by Larry Williams and decided commodities were NOT for me. The reason? At that time you called in your order, got your charts from a book, and could lose your shirt when the market went limit down or limit up. It wasn't for me.
Then, I lost my job.
What do most people do when they lose their job? Well, they look for another one. But, I was exhausted. I had gone through three years of hell after leaving a company where I had spent a relatively happy twenty years. I had worked in a bank that appreciated, encouraged, promoted, and listened. But, heaven was not to be and it was sold to a larger bank.
My problems began. My job was given to an up and coming young man from the outside bank. I was demoted (at least I wasn't fired some said). I worked at the job for six months and was incredibly bored. It wasn't me. I had to rely on commercial loans specialists to get me referrals. There were few.
I finally smartened up. Was this what I wanted to do for the rest of my life? I subsequently submitted my resume to a well know insurance company for a management position. Miracle of all miracles, I was hired...all in a matter of a two weeks. It was incredible.
I gratefully said goodbye to my boss who had so graciously given me the first bad review in my whole career and went on to a new life in insurance (Ha!).
I believed that, since this insurance company had been in business for more than one hundred years, it obviously had worked out any operational kinks and would be running smoothly. I was sadly mistaken. It was a mess. They were just beginning to try to work through the results of their decision to throw out the computer system they had relied on for forty years and live with a watered down version that was unfriendly to the needs of the company. To make matters worse, my boss's new boss decided to be a hands on boss to all of us in management and was the veritable "dragon lady."
I worked hard, harder than my senior officers. Unlike the people I had worked for at the bank, these people came in at 9:00 am and left at 5:00 pm. They weren't willing to give the company any extra time. I became sick of going to work every morning an hour or two before them, working like a chicken with my head cut off all day, and being the last one to go home at 7:00 or 8:00 at night. I had two boys to raise, a husband with a demanding job, and I just didn't want to handle it anymore. Every evening, at the dinner table, I would say how much I hated my job.
There were rumours that we were going to be sold. I was relieved. My co-manager was terrified and feared for her job. I wondered why. Her husband made great money. Her children were grown and gone. She suffered from asthma because of the stress. Why not enjoy life?
I assured her that I would be gone first. She had been with the company for fifteen years. I had been there less than three. I told her I wanted to be fired. (Please! Please! Fire me!) And, that's exactly what happened. I had told the spy that I didn't care and she relayed my request.
After such a bad experience, can you just dust yourself off and get up on that horse again? Most people can. I considered it. I had a variety of opportunities. I had a teaching degree. I could have taught high school. But, it wasn't what I wanted. I was sick of people controlling me and my destiny.
I decided the stock market might be the way to go. I paid $99 for a course called "ku" trading. Basically, it was a technical trading system. I saw how anyone could consistently make $1 or more each day by daytrading. If you bought 500 shares, that was $500 a day less commission of around $9. Not bad.
And, there's more. But, that's another day...
I've been following the markets for more than five years. I started with a commodities book by Ken Roberts, moved on to commodity books by Larry Williams and decided commodities were NOT for me. The reason? At that time you called in your order, got your charts from a book, and could lose your shirt when the market went limit down or limit up. It wasn't for me.
Then, I lost my job.
What do most people do when they lose their job? Well, they look for another one. But, I was exhausted. I had gone through three years of hell after leaving a company where I had spent a relatively happy twenty years. I had worked in a bank that appreciated, encouraged, promoted, and listened. But, heaven was not to be and it was sold to a larger bank.
My problems began. My job was given to an up and coming young man from the outside bank. I was demoted (at least I wasn't fired some said). I worked at the job for six months and was incredibly bored. It wasn't me. I had to rely on commercial loans specialists to get me referrals. There were few.
I finally smartened up. Was this what I wanted to do for the rest of my life? I subsequently submitted my resume to a well know insurance company for a management position. Miracle of all miracles, I was hired...all in a matter of a two weeks. It was incredible.
I gratefully said goodbye to my boss who had so graciously given me the first bad review in my whole career and went on to a new life in insurance (Ha!).
I believed that, since this insurance company had been in business for more than one hundred years, it obviously had worked out any operational kinks and would be running smoothly. I was sadly mistaken. It was a mess. They were just beginning to try to work through the results of their decision to throw out the computer system they had relied on for forty years and live with a watered down version that was unfriendly to the needs of the company. To make matters worse, my boss's new boss decided to be a hands on boss to all of us in management and was the veritable "dragon lady."
I worked hard, harder than my senior officers. Unlike the people I had worked for at the bank, these people came in at 9:00 am and left at 5:00 pm. They weren't willing to give the company any extra time. I became sick of going to work every morning an hour or two before them, working like a chicken with my head cut off all day, and being the last one to go home at 7:00 or 8:00 at night. I had two boys to raise, a husband with a demanding job, and I just didn't want to handle it anymore. Every evening, at the dinner table, I would say how much I hated my job.
There were rumours that we were going to be sold. I was relieved. My co-manager was terrified and feared for her job. I wondered why. Her husband made great money. Her children were grown and gone. She suffered from asthma because of the stress. Why not enjoy life?
I assured her that I would be gone first. She had been with the company for fifteen years. I had been there less than three. I told her I wanted to be fired. (Please! Please! Fire me!) And, that's exactly what happened. I had told the spy that I didn't care and she relayed my request.
After such a bad experience, can you just dust yourself off and get up on that horse again? Most people can. I considered it. I had a variety of opportunities. I had a teaching degree. I could have taught high school. But, it wasn't what I wanted. I was sick of people controlling me and my destiny.
I decided the stock market might be the way to go. I paid $99 for a course called "ku" trading. Basically, it was a technical trading system. I saw how anyone could consistently make $1 or more each day by daytrading. If you bought 500 shares, that was $500 a day less commission of around $9. Not bad.
And, there's more. But, that's another day...
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