Trading Strategy Based On Market Sentiment (Part I)

By Ahmad Hassam

Do you see the market as a big mechanical matrix which is devoid of emotions? How do you view the forex market is very important. Most traders have a love hate relationship with the market thinking that the market is either against them or for them.

The truth is that forex market is just the compressed display of emotions. At anyone time the market is emanating the emotions of currency speculators around the world.

A market is like a big living organism made up of millions of cells. Each cell carries its own functions and interacts with other cells of the body keeping the living organism alive around the clock.

Knowing what the market thinks and how it thinks is crucial to trading success. A forex market comprises millions of participants acting out their perceptions and emotions.

Ultimately, you as the trader are dealing with other traders out there in the market. These traders can be big institutional players or an independent individual trader like you and me. You need to know what the other traders are thinking at anyone time.

Market sentiment is the most important factor that drives the markets especially the currency markets and other financial markets. What is the market sentiment? Market sentiment is simply what the majority of the market participants are perceived to be thinking or feeling about the market at anyone time.

Market sentiment sums up to the overall dominating emotions of the market participants. Traders tend to act based on what they feel and think of certain currencies. They form their opinions based on emotions regarding their strengths or weaknesses relative to other currencies. It explains the current actions of the market as well as the future course of action.

Market sentiment is primarily based on the participating traders emotions. These emotions are one of the greatest factors in the determination of the currency exchange rate. One thing you should know is that market sentiment is not logical.

Market sentiment is like a fickle lover. It is capable of changing its mind based on new information that can upset the existing emotion. Market sentiment can be bearish, bullish or just plain confused.

If the majority of the market participants want to sell the currency, the market sentiment is deemed to be bearish. If the majority wants to buy that currency, the market sentiment is bullish. When most market participants are unsure of what to do at a particular moment, the sentiments end up being mixed up.

If you can understand what the other traders are thinking and why the market is doing what it is doing, you will be in a better position to plan the entry and exit for your trade. Understanding the current market sentiment and exploiting it with an appropriate trading strategy can help maximize your trading profits. In Part II of this article we will discuss what factors influence the market sentiment. - 23217

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know Candlestick Patterns. Learn Forex Trading!

Some Tips For Day Trading the Exchange

By Jim Flecher

Day trading the market involves the quick buying and selling of stocks on a day by day basis. This method is used to secure fast profits from the relentless changes in stock values, minute to minute, second to second. It is rare that a day trader will remain in a trade over the course of a night into the next day.

PC watching the markets twenty four seven in order to be a successful day trader?'

The answer is no. It is not critical to sit at a PC twenty four seven.

As with all financial investments, day trading is risky in reality, it's one of the riskiest forms of trading out there. The stock prices rise or fall according to the behaviour of the market, which is completely unpredictable.

If you are constrained by a small amount of capital, you may not be ready to buy large quantities of a stock, but buying only a bit can add to the danger of a loss. And, manifestly, it is not possible to envision with certainty which stocks will result in profits and which in losses.

It's also important to know that in day trading, it's the number of shares instead of the value of shares that should be the focus. If you day trade, you may face losses, but even for the costlier stocks, the loss should be debatable, because prices do not usually fluctuate to an acute degree over the course of only 1 day.

The day trading industry deals in a large variety of stocks and shares. Here are only a few : Growth-Buying Shares shares made of profit, which continue to grow in value . Eventually, these shares will start to decline in price, and an experienced trader can usually predict the future of this type of share.

Although these shares are generally inexpensive, they seem to be a very risky investment for day traders. You'd be safer to go with big caps and / or mid-caps, which are way more secure and stable thanks to a premium.

Unloved Stocks company stock that has not performed well in the past. Traders buy these shares in the hopes of generating profits if and when the stock rises in value. As with tiny caps, unloved stocks can be a dangerous choice for day traders.

These examples are not your sole options when it comes to day trading stocks. The best way to figure out which type of stock is right for you is to invest some time for careful research, a knowledge understanding of market patterns, a solid strategy, and a controlled trading plan.

The key to successful day trading is to be prepared. Know as much as practicable about the industry before you start essentially trading. You need to be taught how to trade ONLY when the market gives the right signals. - 23217

About the Author:

Find more on top ten stocks to buy and stock trading mistakes.

Tourism Helps Drive Luxury Home Sales On The Ocean

By Hubert Miles

Talk about luxury homes on the ocean and you'll probably picture waves crashing on the coast with large homes overlooking sand dunes. These mental images likely came from a trip to some of the most famous beaches in the United States.

Scenic urban hot spots and resort towns along the Atlantic, Pacific, and Gulf coast offer luxury real estate markets that fuel both the local economies but also provide an economic boost for many outlying areas. These real estate markets help to provide both vacation rental, timeshares, and luxury home sales in their respected states.

Quiet resort towns like Plymouth, Massachusetts and the Outer Banks of NC provide opportunities for those looking to own a piece of history. Many of these areas are small fishing villages that have some sort of historical impact on the United States.

New construction properties have become popular choices in large urban areas. Many of these are luxury condo developments that offer views of the beach and ocean. In addition to great views, many of the units are spacious with a low maintenance lifestyle.

Recent years have seen the evolution of these coastal towns and urban areas in very different ways. Urban areas have created thriving investment atmospheres with vacation rentals forming a solid backbone for the real estate industry. While smaller towns struggle to maintain their sense of history and independence through zoning ordinances that put restrictions on commercial construction.

Final Remarks

Is it time to treat yourself to that coastal home that you deserve? Choose the area you like and contact a local Realtor to get a list of available homes for sale. - 23217

About the Author:

Hubert Miles is the founder of Waterfront Houses USA, an online marketing service that offers Coastal Real Estate and Ocean Real Estate in the US and the Caribbean.

Can You Learn To Trade Like A Hedge Fund Manager? (Part II)

By Ahmad Hassam

You must have read Part I of how hedge fund managers trade forex. You need to understand that hedge fund managers are always on their nerves edge. They constantly look for strategies that work.

Hedge fund managers aim is to make good money consistently while always on their guard because a trade can go bad any time. If a trade goes bad, they know beforehand how to get out of a bad position before it results in a huge loss. You as individual investors also would put your own money at stake in the hope of making good money.

You should decide whether you want to range trade or trend trade? Many hedge fund managers are trend following traders. If you want to become a trend trader than you need to become a master of predicting and anticipating trends in your favorite currency pairs. If you want to be a contrarian trader and range trade, than you should understand how to scalp.

You also need to decide the time frame that you will trade most. You should decide whether you will use the 5 min charts, 30 min charts, 4 hour charts , daily charts etc and why.

Will you only day trade or hold your position overnight? If you are doing a job, will you trade after hours? What time of trading best suits you? These things should be very clear in your mind before you start trading.

Learning the art of entry and exit is essential for your success. Should it be single entry, single exit? Should it be single entry, multiple exits? Should it be multiple entries, single exit? Should it be multiple entry, multiple exits?

You should understand the money management rules. Never ever put more than 1% of your equity at stake in a single trade. Learn to calculate the risk/reward ratio.

Now, test drive the forex system by back testing and forward testing. Back testing can be done on Metatrader and other platforms. Forward test your strategies on a demo account.

Open a mini account and try to test it live with a small amount of money. This way you will not lose much money but will be playing against your emotions.

Ultimately trading is all about developing discipline and controlling emotions. You dont get this feel in demo trading when you know nothing is at stake.

Now is the time to get intimate with your strategies. There are two main types of trading strategies"one has a high percentage of profitable trades in a number of trades and the other has a high profit factor per trade.

The key here is to know exactly what type of market environment your strategy performs well in and what type of market environment your strategy fails in, because only then will you know when it is time to pull the plug.

Understand how much drawdown you can afford on your trading account with this trading strategy. You can establish a bench mark figure using a back test. Decide before hand how much drawdown is acceptable before you pull the plug out of the trade.

The last step of thinking or trading like a hedge fund manager is self reflection. Oftentimes we become so absorbed with trading that we do not notice the obvious.

This is why it is good to spend some time on a weekly or monthly basis to self reflect on your past trading performance. You need to fix a certain level of pips per day for yourself and keep on tweaking your trading strategies until you reach that figure. - 23217

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!

Hot Stocks are A Winning Gamble

By Hannah Page

In the last few years, a new way of playing the exchange has appeared. Ignoring the conventional wisdom of buy low, sell high, hot stocks employs a different method of gaining high returns on investments. Buy high and sell higher is the idea behind hot stocks. It's a strategy that's's working for many financiers. It's a hit and run approach to investing.

The good thing about purchasing stocks this way is the short turn around time. Your money isn't tied up waiting for an undervalued stock to rise. The old strategy is still good, but adding hot stocks trading to your investment planning will help grow your money quicker.

This investment plan is especially suited to day traders. You have to be aware of the market trends and select stocks that are showing an obvious smooth increase. Buy the stock and after it rises enough to give you a profit, sell it. Don't be tempted to keep hold of it beyond making a good profit. This is a strategy, not a get rich fast scheme.

If you chose a hot stock that turns out not to be so hot, lose it right away even if you've got to sell at a loss. Holding on to the stock after it starts to drop could bring an even bigger loss. The stock exchange is a bet and occasionally you lose. Minimize your losses.

With hot stocks, you will choose to buy and sell a selected stock in one day. To make use of this technique of stocking trading, you have got to stay on top of your investments and watch the stocks closely. Study market trends. When a stock drops, sell it right away. Do not get greedy or use the old gamblers instinct that tells you you can still win. You can't on this one stock, but their are lots of others.

Anyone who is trading seriously in the market should use more than one strategy. Hot stocks are great, but they're frequently high risk. Your portfolio should be diversified, with proved stocks from different business sectors. This helps offset losses and protects your investments. Hot stocks should really only be part of your investment plan.

Hot stocks only work as a short term investment. These are stocks which should be acquired and sold in less than a week. If the stock continues to rise after you sell, that is's okay, you definitely made a profit. The stock could just as simply drop in price.

If you are using a broker for your stock transactions, you will have to pay a fee each time you sell or buy a stock. This will have a repercussion on your bottom line. There are online trading services that are less expensive than brokers for transactions of this type. If you are considering making an investment in hot stocks, you should look into techniques to save on brokerage charges. This could be substantial when many transactions are involved and could even wipe out your profits.

By investing sensibly and using different investment strategies you can make money in the stock exchange. Hot stocks are part of an overall investment plan. Your investments should be spread across different financial instruments to protect your principal and maximize your return. Hot stocks can help you achieve your monetary goals, but shouldn't be your only financial investment. The stock market can be like the lotto, so bet with your head, not over it. - 23217

About the Author:

Find more on hot stock to buy and gold stock newsletter.