Simple Way to Get Rich - Reinvesting Your Earnings

Warren Buffett provides inspiration on how to get rich by reinvesting your profits. Together with his partner at that time, the magnate bought four more pinball machines and installed them in a barbershop using money earned from the first machine they had installed as their first investment.

Buffets story is not different from most other people who get rich whether in businesses or in their respective professions because they all pumped back their earnings into their 'money-maker' to achieve growth.

What are some of the reasons why reinvesting your earnings is the simple way to get rich?

1.      Increased efficiency increases earnings.

One way of cutting costs in business is by increasing efficiency. Elimination of redundancies not only reduces expenditure, but it also increases output or quality depending on the strategy at hand. This can be done through the acquisition of better tools, equipment, or service providers.

2.      Sustainability comes from knowledge.

For the professionals, and businesspersons, reinvesting in education is key to ensuring sustainability and to increase competence. Knowledge about your investment not only prepares you how to handle growth but it also prepares you on how to deal with emerging challenges. The process of becoming wealthy depend on how well you respond to ensure there is the continuous flow of earnings in the long-term.

3.      Reinvesting frees up your time.

Time is money. Earnings are profits, this shows that the investments are paying off. By reinvesting into the business, you are increasing the amount of input, and hence the output will correspond to the input. This means that if you invested $100 and it earned you $100 in profit in one week, reinvesting the profit will give you an investment of $200 and the earnings for the subsequent week will be $200. You would have reduced the time it took you to earn the extra $100 by at least a half. A repeat of the same will result in more money made in less period's hence more free time to pursue other ventures.

4.      Financial freedom

The most common ways of raising capital are debt financing or equity financing. These two come with their own disadvantages including loss of stakes in the case of equity funding and interest paid in the event of debt financing. Consequently, these sources of financing may strip away your independence in running the investment, and the risk of defaulting in the case of debt financing may add undue pressure that may affect our health or business. Reinvesting your earnings ensures that you remain financially independent and debt free, hence raising your investments financial health and hence a boost in your journey towards getting rich.

Reinvestment of your earnings provides you with a guaranteed path towards getting rich because it ensures that you build on your capital and your commitment to your investment.

Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.

 

 

 

 

 

 

Article by By Chris Bouchard

10 Day Trading Tips to Become a Better Trader

Warren Buffett once said, "The stock market is a device for transferring money from the impatient to the patient". This applies to both - traders and investors alike. However, if you are an absolute beginner, there is always some room for improvement. We have listed below the 10 best day trading tips that successful traders follow. Learn them mindfully and take note to level up your trading. Moreover, you can also check out the best day trading tips and make money from online trading in Indian stock markets.

This is why rookie traders often look for advice from experts who have carved their names in the industry. Read on to find out what you may require before venturing in this high-risk but ultimately-rewarding industry.

1. Learn from a Professional Trader - Day Trading Tips

It is always better to learn to trade from an expert before you jump directly into the ocean. Try and find out who has a good teaching methodology and carefully choose the one that suits your style. Most of the trainers or masters will definitely charge a fee for the time spared. Don't you worry! It is no fee. It is called investment.

After all, you are a trader and one day when you have made it big, you may be approached by newbies and you likewise charge them. But most importantly, if you invest into education, you are saving on market tuition from learning the lessons the hard way, on the expense of your account balance.

2. Pay Attention to the Financial News

Want to be the best trader around? Keep a close eye on the world around you especially business news. Stay updated about firms entangled in IP issues, Failed FDA nod, Board reshuffle, International projects, and dismal earnings estimates of the quarter.

Every news related to the firm you are making an investment in makes sense. Back your decision with these inputs. For a smarter decision while trading, keep abreast of every piece of information on your preferred investment firm.

3. Found Your Niche? Ace It!

Nobody can guarantee you a blockbuster return. You make your own choices and decisions and learn from your mistakes. Only you know which strategies or niches worked for you and which don't. If you really have the zeal to excel in day trading, you need to be right on top of your business.

Once you have found the niche to work upon, become really good at that. Master it and it will enhance your odds of success in the trading manifold.

4. Treat it like a Business!

Have a hobby? Pursue it somewhere else. Making money and day trading is a serious business. You don't do it for fun so even before you start to trade, you need to settle with the fact that it is a serious, time-consuming business and it will take time to break even. If you want to gamble, Las Vegas might have better odds.

5. Follow the Pros

Julius Caesar once said, "Experience is the teacher of all things". Trading experts, despite their level of training, have a lot to boast, thanks to experience.

Follow the moves of the pros and find out what are they investing in? When do they buy? When do they sell? For how long do they hold? Try and understand how profit is made. You can learn a great deal from the mistakes they once made and then harness them to your advantage.

6. Have Patience. Rome was not built in a day. It takes time to master any skill and the same goes with stock trading. It can give you the best returns only if you trade wisely. Researchers have shown that those who trade less tend to earn better than the one who trades very frequently.

This is just like stalking your prey and then striking when you have absolute chances of success. Always remember that when you trade in average and not-so-good setups, you lose on good deals and eventually your profits take a hit. Therefore, one crucial day trading tips are that quality matters over quantity.

7. Don't be Emotional & Follow Day Trading Tips

The world of trading calls that you keep a level mind and remember that if you let your emotions get the better of you while trading, you will most likely lose out on your money. Emotions make you take irrational, impulsive decisions which should never happen.

Frequent errors like letting your losses get out of proportion, adding to a losing position, not making timely withdrawals et cetera are made time and again. People fall into the emotional trap and make unconsidered decisions. And while you cannot help having them, learning to control your emotions will go a long way in positioning you as a shrewd trader. Work on the emotional quotient and you'll make wiser decisions.

8. Sharing is Caring. Now that you have learned from your mistakes and other's as well, it is time to share. You must share the experience you had while trading. You can start a blog, a YouTube channel or other medium for reaching out. Furthermore, you can have a comment section for answering the questions of your visitors.

This will not only help others but will certainly keep you disciplined. This habit will make you more accountable and you might think twice before making a trade you know; you should not be making.

9. When There Are No Good Plays, Don't Trade!

What? Do not be shocked as this is no less a practical tip than the rest. Sometimes it is good that you do not trade. Trading just for the mere fact is not a smart choice.

Trade only when you see money lying on the floor or the offer is too lucrative to let it go. Take your chances and remember that this is a highly dynamic world so weigh all possible benefits of making a move against sitting back and speculating.

10. Have Confidence. As obvious as it may sound, this is a key component of a refined trader. Whichever trading style you choose, you got to believe in yourself as failure to believe in the efforts you are putting or the decisions you are taking will never make you a winner. I might sound strange, but people do not get good returns just because they cannot believe they will. This negative thinking results in negative returns.

Remember! Successful traders were also amateurs and novices when they started out. Their success has come from the hard work and efforts they have put in. Make mistakes and learn from them to continue trading until you start making profits.

As mentioned in the beginning, these day trading tips shared will let you learn some important hacks to improve Your game. Apply these diligently and you are sure to advance in your endeavours.

Good luck with your trading ventures! Do not forget to like and share this post on your social networks.

If you like my post, please do share with your friends and families.

By Ratan_Kumar

5 Proven Steps To Doing Really Well In Trading

Hi. Have you ever wondered what it takes to do well in trading or what necessary steps you need to do? I keep receiving these questions quite often. So, let me give you my five proven steps. I have been doing well with them in my own trading, so I believe they can help you too.

Step #1: Questions
You may or may not like it, but successful trading is about the ability to come up with new, fresh ideas. Fortunately, it is not as difficult as it sounds. All you need to do is to keep asking this question: "What happens if...?" What happens if I buy when the RSI indicator is overbought instead of oversold? What happens if I start moving my stop-loss according to my moving average? By asking the "What happens if...?" question constantly, you start to move forward fast and I can guarantee you some of your ideas will be sooner or later big winners.

Step #2: Robustness testing
Most strategies are flawed. That is the fact. But how do you know which ones are not? You can always find it out through extensive robustness testing. What does it mean? In my case it mainly means three things: A) A good strategy can easily adjust to changing market conditions. An extensive walk-forward testing is needed at this stage. B) A good strategy performs reasonably well in other markets. C) A good strategy has been developed only on a part of all your historical data and performs well on the rest. To be very honest with you, about 95% of all my strategies never pass my robustness testing criteria, but when they do, it's time to move to the next step.

Step #3: Portfolio
One strategy will help you learn, but a portfolio of strategies will help you grow. You don't need to have a big portfolio at the beginning, but even three strategies are much better than just a single one. Remember, if you want a smooth equity and a steady income from your trading as soon as possible, the only way is through diversification and portfolio. Very few people are aware of this and even fewer spend significant time by modelling different portfolios. I personally spend a lot of time trying to find out the best way to combine my strategies together to make a good portfolio.

Step #4: Position sizing
Let me ask you a question: Do you want to make it big or do you want to stay small? Because if you want to make it big, then you need to start seriously thinking about position sizing. This topic can be complex, but it can be also extremely rewarding. So, where do you start? I highly suggest reading Van Tharp's book "The Definitive Guide to Position Sizing." You will learn a lot. Personally, it has moved my trading to a whole new level.

Step #5: Persistence
Listen, it can be done. It does not matter what education you have, how old you are, or even how confident you feel at this moment. I have seen many people succeed. I have seen traders making it from zero to quite a nice living, and that is why I believe that you can do it too. Yes, it does take some time, effort, and learning, but once you are finally there, it is all worth it. So, stay persistent and mainly never give up, and that is all.

 

 

 

 

 

By Tomas Nesnidal

 

 

Modern Ways of Position Sizing

When I first started trading more than a decade ago, I thought trading success was about being right - knowing when to enter the market and milk some money out of it quickly.

Pretty soon the markets taught me that this was not the right path to follow!

I slowly started shifting my mindset from being right to simple probabilities: I was not concerned about being right or wrong anymore, but rather about how much I lost when the trade did not work and how much I made when the trade was profitable.

But 3 years ago, when I started designing the top-notch trading algorithms we are now using in our hedge fund, I wanted to go even further, so I turned my attention to an even higher level of risk management - based on the question:

What is the right position of my trade at any given moment?

Initially, we developed a special testing platform with the head, a programmer in my hedge fund and started testing an endless number of ideas to find new techniques for position sizing. The idea was simple - the higher the chance that the current market conditions were in our favour, the greater % of our capital we should risk (the more futures contract we should trade), and vice versa.

We had quite a lot of fun testing all our ideas and some of them were cool (yet pretty simple). Eventually, the testing led us to an even bigger idea we used to build our proprietary position sizing "brain" we called "Trading Director", but even if you are not at the phase of building your own hedge fund (yet), there are still plenty of simple ways you can use this approach and start testing advanced position sizing techniques.

Here a few simple ones you can test today:

1. The day of the week matters - Some days of the week have much stronger results than others, therefore, you can adjust your position size accordingly: On some days of the week, you can increase your position by 25, 50, or even 100% (and on some days you should decrease the position size too).

2. The previous day's action often helps - The way the market traded on the previous day often matters. Just analyse what your trades look like when the previous day was an up day, when it was a down day, when it was a low-volatility day and when it was a high-volatility day. The previous day's action can be correlated with the quality of your entries; therefore, you have another great opportunity to set the size of your position accordingly.

3. An opening gap can make a lot of difference - In In some markets, a large gap can mean that there might not be enough space for a further movement in the gap's direction, therefore, analysing whether the current trading day opened with a gap, in which direction, and in what size, can be another effective way to determine a more appropriate position size for the given day.

Of course, there are many more techniques to explore, but these 3 are pretty good and are safe to start with. The more you experiment with different position sizing methods, under different market setups and conditions, the more interesting the results.

And if you really want to get advanced with this concept (which I highly recommend), then one of the best ways is to use Market Internals to analyse market conditions. This is one of the techniques we are using in our hedge fund and this is also where you can start seeing some fascinating possibilities.

Happy trading and happy position sizing!

 

 

 

 

 

 

 

 

Article by Tomas_Nesnidal

 

Important Basics To Check When Trading Online Securities

Online securities trading can be very rewarding when done in the right way. When interested in this kind of investment, you would need to select a good trading platform that makes the process easy for you. You are also better off getting a broker to help you with the trading depending on the kind of trader you want to be. There are so many brokers out there, most of which offer free account opening on their platforms so you can start the trading. Whether you are just a beginner in this kind of trading or you are an advanced trader, it is important to make sure that you choose the right platform and brokerage for your trading and below are the most important basics that should matter when making your decision.

Types of securities

It is only wise to begin by finding out what securities, you will be able to trade in on the platform. It is best that you choose one that gives you the chance to trade in all the securities you are interested in currently or maybe interested in the near future. Shares, IPOS, futures, and options are some of the securities you can choose to trade in.

Real time quotes

There are different ways that price quotes can be pulled but if what you get is data that is not really up to date, then you will be doing very little in terms of maximizing your returns. Most web based platforms offer real time data, but Is it important to make sure that is what you really get with your trades. You may need to refresh manually, but the platform should have the right measures in place to offer real time streaming.

Alerts and watch lists

As an active trader, you will find alerts very important to your trading. The watch lists and alerts can depend on different aspects that are likely to have an impact on the trading. You therefore should select a platform that makes it possible for you to customize such alerts via text or email so you can make any decisions related to the trading.

Order execution and timing

A good trading platform should at least make it possible for you to place orders that can be executed at any given time within the trading hours or which remain good unless you cancel them. On platforms that are more advanced, you may be in a position to place limit orders with more variability so you have more control over order timings and also executions.

Kinds of orders

Placing trade orders can differ from one platform to another but you basically can place, trailing stop orders, market on close orders stop loss orders among others. A wider selection of orders could prove to be better for those just starting to get familiar with the online trading. For advanced kind of traders, then a platform that makes it possible to place conditional orders for multiple trades they set up can be great. This way, automatic executions are made possible depending on the specific triggers selected.

Plus500 review offers great insights on why the platform is one of the best you can choose for your trading. Apart from the competitive rates and low spread, the platform offers access to trailing stop orders, buy and sell limit orders and stop loss orders too.

 

 

 

 

 

By Shalini_Madhav

 

These 3 Indicators Work Extremely Well to Set Your Trades

Although Bollinger bands is one of the most used and reliable indicators to determine trends and breakouts. You should use it in combination with other indicators such as the Parabolic SAR which indicates price reversal and the Stochastics oscillator which indicates momentum. These other indicators will help you determine whether the signals provided by the Bollinger Bands are in fact good.

Bollinger Bands (BB)

As we discussed in previous posts, the BB is made from 3 bands: the lower, the middle, and the upper BBs. The middle band is comprised of your commonly used 20-day Simple Moving Average. The "juice", however, is in the upper and lower bands since they will indicate your trading signals. Depending on your setup, the BBs will show the price moving within a range, what is the range of the price 85-90% of the time.

By knowing the range within which the price is moving during a consolidation, you can buy or go long when the price hits the lower band and, conversely sell or go short when the price hits the upper band. Another signal for the BB is when the price breaks through the bands which usually indicate the beginning of a trend in the direction of the breakout.

The Bollinger Bands also help determine the volatility of the market. In a nutshell, a squeeze or narrow band width show a period of low volatility and usually indicates that a surge is impending and, therefore, a strong move in price is about to occur.

You should never use Bollinger bands alone to make your trading decisions. Use the BBs in conjunction with your trend or Fibonacci indicators to make a killer combination to successful trades.

Stochastic

Stochastic measures the momentum of the currency pair. The plot range for Stochastic goes from 0 to 100. When the Stochastic goes over 80 that usually indicated that the market is overbought and that a downtrend is about to develop. Conversely, when the Stochastic goes under 20 that may indicate that the market is oversold, and an uptrend may be starting to develop. Obviously, at 50 the Stochastic would indicate that the price is flat and there's no movement. Keep in mind that, unlike other indicators, the Stochastic indicator does not signal the highest or lowest price level, but rather a possible reversal of price direction. Like any other indicator, the Stochastic oscillator should be used with other indicator to assist you with your trades.

Parabolic Stop and Reverse (SAR)

The Parabolic SAR one of the most used indicators to help determine a reversal in price. As a rule of thumb, traders go long or buy when the Parabolic SAR dots go below the price line and the opposite is true when the Parabolic SAR dots go above the price line indicating a sell signal. Always keep in mind that this indicator only works when the currency pair is trending and will not produce reliable signals if the currency is consolidating or, in other words, a flat market.

Conclusion

Use your chart setup to determine a trend whether you use Fibonacci, MACD, candlesticks, line charts, or any other trend indicator of your liking. Corroborate your entry and exit points with indicators like the ones outlined above and your chances of a successful trade increase dramatically.

Next... My lifelong passion is to educate investors like you on how to have a successful career trading. Sign up now to my blog and instantly get your copy of the Understanding the Myths of Market Trends and Patterns

3 Types of Financial Analysis and When They Matter

Financial analysis is conducted using information posted on a business' financial statements to evaluate the current financial position and the past performance.

Financial Key performance indicators such as liquidity, profitability, and solvency among others highlighted by this process are used to ascertain the financial strengths and weaknesses of the business entity.

This analysis can be performed internally within the organization to facilitate decision making by management. External parties and stakeholders such as auditors, regulators, financial analysts, investors, and competitors can also conduct their analysis using the available facts to ascertain the entity's financial position. These stakeholders equally utilize the information for decision-making suitable for their respective interests.

Three types of financial analyses can be performed with businesses financial statements are horizontal analysis, vertical analysis, and ratio analysis.

1.      Horizontal analysis

Horizontal analysis of financial information entails the assessment and comparison of the relative changes in specific items in a financial statement over stipulated accounting period. The items in question could be sales, revenue, etc., and the accounting periods can be months, quarters, years, etc.

This type of financial analysis is best applied when seeking to determine the dynamic behaviour of an item so as to observe the trend of the item over the specified accounting periods. This is important in determining the factors behind the trend, whether positive or negative. For example, the net profit of a business can be tracked over a five-year period.

However, there are two ways of conducting a horizontal analysis, namely, percentage analysis and absolute analysis.

In the absolute analysis, the comparisons are carried out using the figures posted in the financial statements whereas in percentage analysis, the comparisons entail presenting the relative change in the figures into percentages.

2.      Vertical analysis

Also known as the common-size analysis, this vertical analysis involves comparison of figures of separate items to a standard figure on the balance sheet over a specified accounting period. For example, taking the total revenue of an accounting period to be 100%, other items such as employee benefits and debt repayment for a particular period can be calculated as percentages against the total revenue of the specific accounting period.

This form of analysis is most useful in the determination of the efficiency of business items by comparing how they stack up against common items such as income.

3.      Ratio analysis

This method of financial analysis correlates the different items of a balance sheet to the income statement to determine the financial performance of the firm. Assets are measured against liabilities and presented in a simpler way that is comprehensible without quoting huge figures.

Ratio analysis matters most when analysts and stakeholders seek to determine the viability and sustainability of an entity's long-term and short-term financial strategies.

Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.

Article By Chris Bouchard

Smart Trading Options for Conservative Investors in 2018

When it comes to the stock trade for the conservative investor, there is no doubt we are talking about stock options. But what exactly is a conservative approach to trading? And what techniques can the savvy investor utilize in 2018 to manage risk and ensure growth? We have outlined a few options that might be right up your alley:

1.      Covered Call Options

The covered call is really the most conservative of options and some say it's even more conservative than purchasing the original stock. Frequently used within IRA accounts, the covered call can be approached by a conservative investor from two perspectives:

·       Generate Consistent Income: You can employ this strategy without selling shares of a business while still generating monthly or weekly income. This strategy is usually used to capitalize in the event that your stock price is projected to decrease or not show improvement within in the short-term.

·       Sell Stocks at Premiums Selling stocks above the current price may be useful when you can stipulate the price on a stock with which you'd not be uncomfortable selling. This tactic is useful in getting a stock that you are not in a hurry to offer and the sale of the Call may eventually take the stock but at the cost that you establish when the option was sold by you.

2.      Use Puts as Insurance

This is a strategy that can be used by you if you anticipate a reversal in a short-term stock price hike. Because you're interested in reaping the long-term benefits, you are interested in taking the short-term profits, therefore purchasing a Put will ensure that if the stock goes down in value, the value of the Put will go up. Furthermore, you can sell the Put at a greater cost than you paid for it and reap a gain while the price of the stock is declining.

3.      Secure Puts with Cash

Another method of securing your interest in a long-term investment is to hold adequate capital in cash on a stock that may see a fall in price. Of course, you must understand the business you're investing in and set a pre-determined price for your stock Put, but this is a simple method to ensure your long-term investment is protected because when the stock does fall, you can close in on the stock Put price.

As with any investment opportunity, the strategies for stock options are endless. Although the stock market is normally associated with short-term investments, conservative investors are starting to identify options for long-term investments within the stock exchange system that not only generate income but add value to your portfolio with minimally involved risk.

Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.

Know the Different Times of the Day to Make Profits

Did you know that the tendencies that occur in U.S. stocks can be broken down into sequential order for a "usual" trading day? While reviewing this information, remember that the times listed are approximations, which means you cannot expect to see a pullback/reversal each day at the exact same time. What you will see is that the pullbacks are common near the times listed.

Each of the times listed here are present in Eastern Standard time, with opening taking place at 9:30 AM and the close being at 4 PM.

The tendencies are also based on the index movement, which is an average of several stocks and there may be slight differences in some cases.

9:30 AM
Opening time/bell is also when there is a push in a certain direction. The price may also begin to whipsaw to and from a few times, but in most cases, one direction is going to prevail.

If you don't see too much movement in the initial 15 minutes, it may be a slow day overall. The initial hour is the most volatile time.

9:45 AM
The dominate direction that the price moved in is usually the initial test. There is either going to be a noticeable pullback or a complete reversal of the trend.

10 AM to 10:30 AM
This is another time when the "gut check" for the trend is going to come into play. This is when another major correction against the existing trend is going to occur. It can be a full reversal or a pullback. You can look at the context of the actual price moves to determine what to do.

11:15 AM to 11:30 AM
The London stock market will close at 11:30 AM ET. Between this time the European traders are getting out of their positions, which is when a new low or high is created or tested. These are usually the last significant moves prior to the price settling down over lunch.

1:30 PM to 2 PM
This is when the trends are most likely to be reasserted. Watch out for a breakout during this time.

2 PM to 2:45 PM
There isn't too much to watch but you should be wary. It is getting closer to the end of the day, with many people shuffling for their positions.

3 PM to 3:30 PM
The trend may swiftly change during this time. In many cases, the period is a "shakeout" when individuals may begin to try and reassert themselves. In some cases, you can make money, but don't count on it.

3:55 PM to 4 PM
Unless you have a certain strategy in place for trading in the last few minutes of the day, then you should finish up three to five minutes prior to closing. The US markets are going to have a closing auction, and everything is done in a single transaction, which occurs at 4 PM.

As you can see, by knowing how stock prices usually behave at different times of the day, you will have a competitive advantage over those traders that do not. This knowledge can lead to more profitable trades and to success in you trading.

 

 

 

Article by Luis Nieves