Category: 2. Trading Concepts

Financial trading is not just about numbers, figures, and charts. It is much more than that. Trading is an amalgam of the right knowledge and skills, hard work, consistency, persistence, and right attitudes. Always remember that there is no short cut to success that lasts long. Similarly, financial trading success cannot be achieved without struggle.…

Trading vs gambling  According to one definition, the word “gambling” means chance-taking, risk, or venturing. That means trading and gambling both involve an element of risk. It is the prime similarity between the two. Risk is always there when you trade or invest your capital somewhere. Even if you don’t invest your money and retain…

Just like the seasons, financial markets experience cycles. When you apply basic economic principles and portfolio strategies, you can take advantage of these major market movements. You can choose to either ride the wave or weather the storm. Generally, every market cycle lasts about four to five years. Within every cycle, there are usually six…

This means that the order will get filled only at the present limit mark or better. Trailing stop limit orders gives investors more control over their trades although, it gets risky when the price comes down fast. Why is a Trailing Stop so Important? Right before you dive into the market, it is important to…

Based on your investing techniques, different types of order can help investors to trade stocks better. A market order basically purchases or sells shares at the predominant market prices until the order gets done. A limit order determines a certain price at which the order should gets filled. Even though it is not assured that…

The economy continuously changes and moves in certain predictable cycles. It is possible to predict the next economic stage and the economic conditions of that stage. It is normal that certain sectors perform better than others at any given time. Investors try to shift their investments to sectors that tend to better perform in the next…

How to calculate the risk/reward ratio? A professional and astute trader always aims to know and manage the risk related to his portfolio. On the other hand, an amateur and immature trader may be content without it. As we have already discussed the R/R ratio helps traders to assess the expected return and the associated risk…

Basic principles of Dow Theory  Dow Theory has the following basic principles.  There are 3 parts of trends According to the Dow Theory, a trend has three parts: Primary trend The overall trend of the market is the primary trend and it can last anywhere between one year and many years. When each high goes beyond…