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  • Trader Lyn

    Trader Lyn 12:30 pm on November 28, 2011 Permalink | Log in to leave a Comment  

    We are headed for disaster or an opportunity are you prepared? 

    The last disaster the saw Dow plunged all the way to 6,500 and the Standard & Poor’s 500 collapsed to just below 700 followed by  the All Ordinaries here in Australia which plunged to 3,000 points.

    What is interesting in the last 12 years we had 2 massive stock market crashes it’s happening every 6 years 2002 recession  2008 Recession 2014 behold the future.

    Why have I been so bearish? Because governments and central banks around the world have borrowed, printed, and spent far too much over the past few years bailing out anyone and everyone.

    It stopped a massive meltdown in global capital markets but for how long? the PRIVATE credit crisis has turned into a massive SOVEREIGN credit crisis.

    Ask yourself “Who now controls the credit markets who are these people that own the printing press and what is their plan?

    They have nationalised the debt through bailing out the financial companies that were about to fail a failure would’ve shut down the Global credit markets overnight remember those companies

    American Insurance Group, Citgroup, Fannie Mae, Freddie Mac, Ginnie Mae and much more.

    Who really knows what that end figure is how many Trillions have been spent to rescue them we will never know through their accounting rules of offsetting debt not marking it to the market the real loss is never exposed.

    Now, the next stage of the crisis is taking down country after country, bond market after bond market, and even government after government!

    European bond markets are in free fall from Spain to Belgium to Hungary to Italy and Greece. France is on the verge of losing its AAA rating, and  Germany the stronger nation can’t seem to find investors for its bonds it’s causing borrowing costs and debt costs to rise, pretty soon they won’t be able to meet the interest payments on the debt.

    New news coming out of Belgium and Austria has crushed their bonds And now the bailout of bankrupt Belgian bank Dexia may fall apart, which just could hurt France’s AAA rating and then who else does t hurt?

    We have seen the collapse of MF Global a global derivatives broker who were also a primary dealer in treasury securities they are the 8th largest bankruptcy I the US.

    Then more warning signs of global manufacturing and service sector activity slowing as China confirmed this last week releasing PMI at 48 below the minimum level of 50.

    The last time these indicators were going haywire like this was a warning sign of a recession.

    There are lots of opportunities in a recession that’s why I love the stock market it’s the only place I know of,

    where you can make money on a falling asset so collapses like Bear Stern, Lehmann Brothers, American Insurance Group, Fannie Mae ect that saw their shares fell to pennies on the dollar in just a few months meant there was huge profits for those that bought the insurance policy’s, that invested on the opposite side. Ah time to pay attention and watch what the smart money is already doing yep betting on the downside again.

     
  • Michael Brook

    Michael Brook 11:28 am on May 27, 2011 Permalink | Log in to leave a Comment
    Tags: pattern, resilience, ,   

    How to Build Resilience into your Trading 

    Anyone trading in the Australian market, and other markets for that matter, over the 5 months would have noticed the see-saw movement of price and volatility that is present at the moment. The chart below consists of XJO over the past months. Since January 1 we have had a 2% downswing, a 5.6% upswing, the Japanese Tsunami crash of 9.4%, the bounce of the Tsunami crash of an 11.25% upswing and then a 7.8% downswing.

    This volatility presents problems for many traders. The rapid changes of direction of the market will present problems for trend following traders who will be unable to have a solid trend. This will be an issue for pattern traders who will trade patterns that rapidly fail after taking the entry. There will be many sharp movements of price that will be taking out lots of trader’s stops.

    In the face of such volatility, many traders have expressed to us exasperation as to how to trade this market and the fact that they are taking losses on a repeated basis. Given the trading environment, the ability to react to volatility and remain focussed and resilient in the face of such a trading environment is challenging many traders.

    This article presents one model of Resilience applied to the trading context to assist them in their trading success.

    A model of resilience.

    In many risk/performance fields, resilience is a required ability or quality to endure the challenges that the performance field throws at them.

    Can you imagine a martial artist being unable to handle the rigours of training being able to acquire a high level of skill? Can you imagine an endurance runner who stopped his running training every time it rained?

    Studies in the field of expertise and expert performance have focussed on the skill acquisition of experts and how they remain resilient through the learning journey. A number of consistent patterns show up in resilient individuals and how they approach challenging environments.

    A resilient individual in response to challenging environments shows:

    1.     The ability to learn from adversity and take a longer term view of events.

    2.     The ability to plan for contingencies. Having contingencies has your ability to have planned actions in the event of bad things happening in the market.

    3.     Robustness – They foster within themselves the ability to respond to the situation in the moment it is happening and execute their contingencies.

    4.     The ability to Recover –They have plans in place for recovery from the situation that they endured.

    Traders who are resilient show these very characteristics.

    Resilient traders are constantly looking to learn from every experience in the market. In adverse market conditions they are seeking to understand those markets because they know they will surely reoccur.

    Resilient traders know what their stops are and know when to stop trading. They have their drop dead points set and know when to pull out of the market all together and act on those plans when the conditions are met.

    Resilient traders know keep and honour their stops and don’t hesitate to act on them.

    Finally, resilient traders are focussed on acting the moment they sense the market has turned around and then maximise their recovery. Resilient traders know when their emotions are clouding their decision making skills and use that as a trigger to get out of the market.

    “Before you can have trading consistency, you must have emotional consistency”

    - Dr Brett Steenbarger

    The core of trading is the mindset of an intense focus on:

    •       Probability orientation.

    •       Pattern recognition.

    •       Decision making.

    A resilient trader is able to make timely decisions, recognise when the probability of a trade is not in his favour and the patterns that are presenting themselves in any market that represent opportunities at that time.

    How to build resilience into your trading plan.

    Every trader who is successful over the long term has a trading plan and they build resilience into their trading through their trading.

    Below are some ways that you can build resilience into your trading plan.

    Have a drop dead point.

    This is the point at which you stop trading all together. This acts as a circuit breaker to reduce your losses. If you don’t know what yours is then your probably should not be trading. At trading state we often deal with struggling traders who don’t have drop dead points in their trading. Successful traders know when to stop losing. Unsuccessful traders do not.

    Having trading patterns for different markets.

    By having trading patterns for different markets, either trending, freefall or rangebound, this builds in contingency planning and focuses on a trader on being able to respond to the markets that are presenting themselves in the moment..

    Using feedback loops.

    Having feedback spread sheets to track the metrics of your trading enables you to learn from every single trade even in a market that is difficult to trade in. This builds learning into trading process that allows you to learn from adverse market conditions.

    Use position size decay.

    Position size decay is the concept where with each losing trade the next trade becomes incrementally smaller. This progressively reduces your risk exposure and can substantially reduce drawdowns on your trading balance. The prepares you as a trader to be fully available for  the opportunities that will present themselves when the market turn.

    “You can’t change the market, but you can change how you respond to it.”

    As traders we live in a world that is inherently risky and uncertain on a daily basis. Few other professions or occupations have the same degree of uncertainty.  This is something at we are unable to change.

    We can however be prepared for bad markets as well as good ones. We can’t change the market but we can change how we respond to it and what we do in each moment

     
    • Trader Lyn

      Trader Lyn 11:39 am on May 27, 2011 Permalink

      Thanks Mike for another great article!

    • Keith Kong (ZTrade) 12:33 pm on June 3, 2011 Permalink

      Hi Michael,

      Thanks for sharing. It is a very good article. “You can’t change the market, but you can change how you respond to it.” I couldn’t agree with you more. I’ve seem so many people to response to the market use the “buy and hold” strategy and to be exact they are “pray and hold”.

  • Trader Lyn

    Trader Lyn 9:33 am on February 17, 2011 Permalink | Log in to leave a Comment
    Tags: option, profit, , , strike price, vertical spread   

    Trading with Options can be safer than shares…. 

    Have you wished you could profit from a stock price rise without owning the shares?

    Then let me show you a way, using options, which will limit your losses and carries less risk than owning the shares outright.

    How would you like to rent that option out at the same time, receiving additional income, and reducing the amount you have at risk even more?

    Let me introduce you to a “Vertical Spread”.

    It’s a bull-call spread option trading strategy, so when you think that the price of a stock will go up moderately in the near term, you can reduce your risk.

    To construct a Bull call spread you buy an at-the-money call option and sell an out-of-the-money call option, of the same expiration month. It is also known as the “bull call debit spread” as a debit is taken upon entering the trade.

    The maximum gain is reached for the bull call spread options strategy, when the stock price moves above the higher strike price of the two calls, and it is equal to the difference between the strike price of the two call options minus the initial debit taken to enter the position.

    To put it simply, a Vertical Spread is an options trading strategy with which a trader makes a simultaneous purchase and sale of two options of the same type that have the same expiration dates, but different strike prices. The widening or narrowing of the difference between the option premiums on the two positions, determines the profits.

    The formula for calculating maximum profit is given below:

    •    Max Profit = Strike Price of Short Call – Strike Price of Long Call – Net Premium Paid – Commissions Paid

    •    Max Profit Achieved When Price of Underlying >= Strike Price of Short Call

    The bull call spread strategy will result in a loss if the stock price declines at expiration. The maximum loss cannot be more than the initial debit taken to enter the spread position.

    The formula for calculating maximum loss is given below:

    •    Max Loss = Net Premium Paid + Commissions Paid

    •    Max Loss Occurs When Price of Underlying <= Strike Price of Long Call

    Bull Call Spread Example

    If you believe that XYZ stock trading at $42 is going to rally soon, you buy a March 40 call for $300 and sell a March 45 call for $100. The net investment required to put on the spread is a debit of $200.

    If you bought the equivalent of 100 shares your investment would be $420.

    The stock price of XYZ begins to rise and closes at $46 on expiration date. Both options expire in-the-money with the March 40 call having an intrinsic value of $600 and the March 45 call having an intrinsic value of $100. This means that the spread is now worth $500 at expiration. Since the debit was $200 to enter the trade the net profit is $300.

    If the price of XYZ had declined to $38 instead, both options expire worthless. You will lose the entire investment of $200, which is also the maximum possible loss.

    If you owned the shares at $42 and it is at $38.00 you would incur a $400 loss so using the option has reduced your loss.

    To find out more about this strategy, join our 3-hour vertical spread training webinar, including 4 weeks of follow up live-trading sessions, starting on Wednesday 222nd February.

    This is an excellent opportunity to expand your knowledge and have another strategy available to make you a more profitable trader. We hold these training webinars only once a year and run them live to keep the information current and relevant to the market right now. This is great strategy for a conservative trader with limited funds. You will learn how to create a trading plan using the strategy that suits your risk profile. Visit https://www.stockcourse.net/wl?3i9=7t16325 to learn more.

     
  • Lyn Summers

    Lyn Summers 1:22 pm on June 28, 2010 Permalink | Log in to leave a Comment
    Tags: Fibonacci, Technical Analysis   

    The Health of the Markets 

    These are symptoms of a market in trouble

    On Monday, the S&P 500 pushed above 1,120 to trigger stop-losses of the short-sellers.

    Then the bulls rushed in … only to have the market suddenly collapse under their feet back under 1,120 then 1,100.

    So are you bullish … bearish … or confused? I’ll tell you what I think:

    This behaviour and other recent incidents like the recent “flash crash,” on May 6th are not symptoms of a healthy market.

    Have a look at a monthly chart of the S&P 500

    SP500 with Fibonacci

    This chart shows Fibonacci retracements, common support and resistance lines used by technical analysts. The market bumped its head on overhead resistance and seems headed lower. Now, it doesn’t have to be a straight line. But you can bet that traders are looking at this chart and weighing it with poor fundamental news.

    What fundamental news? I’m talking about stubbornly high unemployment … weakening retail sales … building permits falling off a cliff … decreasing mortgage applications …

    This is the kind of news that will cause the S&P 500 and broad market to slide lower.

    In this scary market, where should you be investing right now?

    I don’t know if we’re in the early stages of a Depression. I do know that a lot of fuel for the U.S. market rally off the March 2009 lows came from the United States borrowing and spending $1.5 trillion a year, or 11% of GDP, for the last two years!

    There’s a word for that kind of borrowing: Unsustainable! The markets may be coming to that conclusion. Along with worries over Europe, that could be one reason why the S&P 500 lost 10% of its value in just a month!

    The good news is you can make money in a falling market — using put options, yes for every dollar a stock falls is a dollar profit in your pocket.

    You can start with a little as a few hundred dollars.

    I think you need to be careful if you are long-term trading or investing.

    Ask yourself what stocks and funds you want to hold for the long term. Are they in your portfolio now? Are you holding some “losers” hoping they’ll come back? Maybe you should put that money to better use elsewhere, because come-back time may be a long way off.

    It may be time to take profits on those holdings while they are there or

    Did you know that you can insure your stocks yes with Put options just like the insurance we have on our cars if your car is worth less than your portfolio and you have no insurance on your portfolio, why are you taking unnecessary risk?

    You may think you are a safe driver but what about the other drivers on the road we can’t control.

    Trader Lyn

     
  • Lyn Summers

    Lyn Summers 4:25 pm on May 17, 2010 Permalink | Log in to leave a Comment  

    Exciting News on TWS support 

    Halifax Brokers have announced a new level of support for Stockcourse Students and here are the details:

    Please make sure you let them know you are a Stockcourse Student when you call

    1. 24 hour (Trading Days Only) Phone support for any operational questions on TWS Contact Number is 1300 363 505 or +61 2 9373 4300 (Outside Australia).

    2. On Setup of new accounts Halifax will contact you (the client) and run through the initial setup and operation of the program.

    3. They are working on a condensed help guide to get you through the basic questions when you start trading and will send to all Stockcourse Students when it is complete.

    The concerns raised here has prompted me to have a look at some other options on trading programs and it appears to me that the TWS format is the most comprehensive program that covers all areas of trading we teach in one program, it also does not require you to send your money overseas which we at Stockcourse believe is the best situation in the current economic climate.

    We at Stockcourse have also been applying a huge effort to give you more information and training to operate TWS more efficiently and have 7 training videos in our Videos page under Free Stuff, we have also been working with Simon Euers to bring you some Webinar and Live Workshops which we will be announcing Dates after the next Student Support meeting here in Brisbane.

    Thankyou again for your continued support and feedback and those numbers for TWS help are 1300 363 505 and +61 2 9373 4300. If you do not get the results from Halifax you would like then forward your concerns directly to me via email so that I can follow up personally on robbi.james@stockcourse.net

     

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