The Attitude To Investing - Do You Have What It Takes?

By Damian Papworth

When it comes to making investments wisely, few things count as much as having the right attitude. What does attitude have to do with it? Well, it's simple: investments need to be based solely on information and particular reasons that relate strictly to the investment itself and not anything else. The worst thing an investor can do is end up making decisions based on extraneous affairs that are irrelevant to the investment. That's where the saying "Plan the trade, and trade the plan" comes from. This article details some points which may assist with this.

1. Only invest with money that is not and will not be destined for basic living expenses. Even if the money is needed only several months down the line do not even think of using it for an investment. The reason for this is that if you do invest that money, subsequent decisions on the investment will be shaped by basic living expense needs, which strictly speaking is not a factor pertinent to the investment.

To give an example, imagine that that money is destined for a mortgage repayment in three months time. It just may turn out that your investment drops precisely on the week when you need that cash. In this scenario, following the correct strategy you would hold off for another week; yet given your need to repay your mortgage on time, you close that particular investment. In the end, the decisions relating to the investment were made based on information irrelevant to the investment itself and a loss is incurred. Hence the wisdom of only investing money that you do not need for living.

2. When making investments, it is often a helpful technique to imagine to yourself that that money has been completely lost the minute you invested it. The simple reality is that many investments look bad before they end up looking good, which is simply due to the normal fluctuations in investment markets. Countless investments have been ruined by people (myself included) who chickened out too soon and didn't allow the investment to come to fruition in time.

If you convince yourself the money is gone when you invest it, its much easier to avoid getting the jitters during these times. (And let me tell you, there is nothing worse than closing a trade early for a loss, only to watch it turn around and become successful, if only you had let it run its course.)

3. Another part of your attitude as an investor must be the recognition that failed investments are just a part of the game. Any investor will incur losses at one point or another during their track record; what's important is to know how to react to those losses in the right way, with the right attitude. Letting them affect you in disproportionate measure will keep you from ever becoming a savvy investor in the long term. Below are two very helpful ways for viewing unsuccessful trades:

3a). Rather than considering your trades on a one by one basis, look at them as a complete group. For example, a certain strategy you use may make you a profit four out of five times, which is to say that one out of five times you run a loss. What you should do in this circumstance is rack up the net profit across all five trades, including the losing trade, and divide the result by five. The final figure would be your per trade profit. In this way, the losing trade is merely part of a broader winning strategy: 20% of the total net result is in fact due to the losing trade, because it is a necessary part of a broader strategy.

This way you will be encouraged to continue trading your successful strategy, rather than get discouraged when one trade goes wrong.

3b). View your losses as education expenses. Most professionals in the finance industries have spent years and tens of thousands of dollars in universities and educational facilities, learning to ply their trade. Unsuccessful trades are a professional investors "university". To do this properly you have to make sure you analyze these trades and learn from them. Do this in a professional and unemotional manner, otherwise you may fail to make the grade, which will mean you miss out on making long term money through investing.

Investment markets are renowned for being able to bring out the very best and the very worst in people. It is fundamental that an investor learn how to dominate and control such emotions, remove them from the decision making process, so that they don't weigh where they don't belong. Remember the saying: "Plan the trade, trade the plan. - 23217

About the Author:

Damian Papworth invests for his lifestyle and his family. Recently he researched baby high chairs. He put a website together with his analysis on high chairs for babies.

Discover The Truth About Out Of The Money Covered Call Option Writing!

By Marc Abrams

Incredible things have been promised by many websites and e-books regarding investment training strategies. One of the more common stock market trading strategies taught is to sell covered call options on stocks. These websites promise that you can earn up to 10% monthly returns using that very strategy. Sound good? Read on.

I will be the first to admit that selling out-of-the-money covered calls can bring lucrative monthly returns under the right circumstances. This strategy has been successfully used by me. However, this strategy is not without its disadvantages. The public has not been properly educated by the website and e-book marketers. They market this strategy as conservative with little risk. They leave you holding the bag when it all goes wrong.

Selling out-of-the-money covered calls works when the stock market is going up in value. Additionally, when the stock market is neutral (not going up or down by any meaningful amount), this strategy also works well. I don't know about you, but when was the last time the stock market traded sideways for any length of time?

We are currently in the midst of an extremely volatile market. We have recently seen swings in the Dow as much as 200 points in either direction on any given day. Hardly a profitable market for an out-of-the-money covered call writer. Once that stock you are holding starts to decline, so do your profits. I can assure you that profits can evaporate very quickly. I have seen stocks fall from $10 per share to $1 per share over night! There is never enough premium on an option sale to cover that kind of decline.

The key to out-of-the-money covered call writing is to select stocks that will get called. Too many advocates of this strategy do not want the stock to get called. They want you to keep the stock so you can sell a covered call option on it the next month. This is a flawed strategy. You need to select stocks that are trending up in value, hence, a rising market. Those are the stocks that will maximize your profit. If the stock gets called, I know I ended up making my maximum anticipated return.

What if the stock shoots way up in value? The stock simply gets called away if it rises up past the strike price and stays there through expiration. Isn't that what you wanted to begin with? Because you did not participate in those gains you may feel like you left money on the table. If that upsets you then just buy the stock outright and don't sell covered call options on that stock. Why not just let the stock get called away, take your profit and move on? Then look for another stock to buy and sell calls on for the next month.

Remember, you can create an excellent source of income selling out of the money covered calls in a rising stock market. However, the stock market we find ourselves in today is less than ideal for this strategy. There are other strategies, however, that offer significant protection in a declining or volatile stock market. - 23217

About the Author:

Marc Abrams Is A Certified Public Accountant With Over 15 Years of Financial And Investing Experience. Visit Marc's Website at http://www.rebuildingmyfuture.com To Learn More About Writing Covered Calls In Today's Stock Market

Russia Stocks Doing Well

By Mike Swanson

The Russia economy is growing and this is one of the biggest news stories considering the current economic climate in which we find ourselves. There are many who are convinced that the global recession is worse than the Great Depression and that this could go on for years to come. This is all speculation though and no-one seems to be sure, but it worries stock market beginners. What is certain though is that times are very tough indeed.

The year of 1989 marked the fall of the Berlin Wall and for many this was the first peak that they got inside of Russia. Up to then they were largely unaware of the country's history and culture and it seemed as if a whole new market had opened up.

This change meant that the country was suddenly thrown into the international economy and at first it must be said that it did not do too well at all. While this was of course a failing for the country itself, it was also a poor reflection on the western economists that had provided advice to the Russian government. Hindsight suggested that Russia should have taken the same path as China.

But this is not the case any more with Russia as the country is one of the few that seems to actually be experiencing growth in the middle of this economic maelstrom. This is indeed incredible and speaks to the fact that the government is working to ensure that there is greater economic diversification.

The government wants to ensure that the success of the whole economy is not just bound to one economic activity. So they will work to ensure that the country of Russia can rely on activities such as services going forward. This is a strategy that many other countries have used successfully in the past.

If they continue to get this right, then it should come as little surprise that the Russia economy is growing even at a time like this. - 23217

About the Author:

For more on investing in emerging markets go to the bric stocks report.

Trading Decreased Volatility Breakout (Part III)

By Ahmad Hassam

When you have identified the triangle formation on either the daily or weekly chart, get ready for a breakout. Each triangle type has its own directional bias. When you trade triangle breakouts, ignore any first breakout attempts whether it is to the upside or the downside. There can be three possibilities when you try to trade the decreased volatility breakout strategy.

Possibility No 1: You should not forget to ignore the first breakout. Suppose the second breakout attempt is in the upside direction for an ascending triangle and it is in the downside direction for the descending triangle. In other words, the second breakout attempt is in the direction expected of the triangle type. This breakout could signal either the continuation of the existing trend or the trend reversal.

Place a stop buy order at least 10 pips above the horizontal resistance level to capture the potential upside breakout in case of an ascending triangle. Set profit target according to your time frame. Place a stop loss order 10 pips below the horizontal level of the triangle to protect against false breakout. You should make sure each side of the triangle gets touched two times at least.

Place a stop sell order 10 pips below the horizontal support level to capture the potential downside breakout for a descending triangle. Again make sure the triangle is touched two times before the breakout. Place a stop loss order 10 pips above the horizontal support level.

Possibility No 2: The second breakout is in the downside in case of an ascending triangle and it is to the upside in case of the descending triangle. Again ignore the first breakout attempt. In other words, the second breakout attempt is in the opposite direction of the expected triangle type breakout direction.

In case of an ascending triangle, ignore the first breakout attempt and make sure the triangle is touched at least two times. Since the breakout direction is opposite to the most expected direction, cut the position size to half for this trade in order to reduce risk. Set stop sell order at least 10 pips below the upward sloping trendline in order to capture the expected downside breakout. Place the stop loss 10 pips below the breakout point.

Place a stop buy entry order at least 10 pips above the downward sloping trendline in order to capture the potential upside breakout in case of a descending triangle. Set your profit target in accordance with your time frame. Place stop loss 10 pips below the breaking point. Again reduce the position size to half in order to reduce risk.

Possible Case No 3: The decreased volatility breakout strategy works better when it is implemented on a daily or weekly chart. Dont use intraday charts on this strategy. You must have observed that we havent talked about the symmetrical triangle case yet. Now, there is an equal possibility of upside as well as the downside breakout in case of symmetrical triangles. Place stop buy entry order or the stop sell entry order 10 pips above the downward sloping trendline or 10 pips below the upward sloping trendline. Similarly set your stop loss orders. Just follow similar guidelines as given for the ascending and the descending triangle. - 23217

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Develop your own Forex Trading System. Learn Forex Trading !

There Was Never A Better Time To Invest In Real Estate

By Trudy Mandelson

The current economic downturn and the fear of an impending recession has driven the normal real estate market, which worked on speculation and gambling to a virtual standstill. The credit that typically sustained it has vanished as savings associations have started to massively recall their loans and to rain foreclosures down upon those who have defaulted.

A direct side effect has been the driving of house prices to their lowest point in many years as debt weary owners wanting to get rid of their real estate before they are foreclosed are selling their houses for far below their market value. This means that the opportunity to buy investment properties is here.

There is always a market for reasonably priced good homes even in the middle of a potentially stormy financial climate. In addition, housing markets tend to be cyclical and prices will eventually bounce back so their current nadir, as long as it lasts, may be the final opportunity to purchase investment properties at such bargain prices. The amount of property anxiously on sale at more than reasonable prices borders on the staggering.

Investors who are educated enough in real estate, are aware of market fluxuations and are willing to run the risk which can be as high or low as the investor feels comfortable with stand to make a huge return in the middle and long term.

Whether an investor is attempting to purchase a property to flip it immediately or to fix it up before selling, this is a great time. As long as the investor is disciplined, evenhanded, methodical and not looking to make a quick and simple buck there has not been as a propitious time to obtain valuable houses on the cheap in a long time. This is no time for speculators or unskilled investors who rely on luck and the gift of gab. For serious businessmen, however, the opportunities are yours for the taking. - 23217

About the Author:

If you're interested in real estate investing or if you want to become a real estate investor right away be sure to visit these two websites of mine you'll find a great deal of useful resources on them.