Trading Strategy: Pyramid Your Profits!

By Jordan Weir

If your seeing wild fluctuations in your trading portfolio, and not of the upwards kind, then your forgetting a critical piece of knowledge. To be a successful trader, you MUST cut your losses short, and let your profits run. It is THE most important lesson to learn, right up there with using a stop loss, and key concepts like support and resistance. To be a highly successful trader, you need to learn to pyramid your profits, greatly amplifying your gains, and turning the big winners, into true home runs.

The art of pyramiding your profits begins with good risk management. You should never risk more then 5% of your portfolio on any given trade, and many experienced traders use numbers as low as 2-3%. This doesn't mean someone with a $50000 portfolio can only invest in $2500 worth of a companies stock, it means that when they are setting their stop loss, they must be cognizant of how much they can lose on the trade.

To determine your position size, what you do is you take the amount your willing to risk, and divide that by the amount your risking per share (the difference between the stock price, and your stop loss). So on a $20 stock, if your stop loss is at 17.50, and your risking $2500, then you do $2500/2.50 = 1000 shares. Your position size should be 1000 shares.

Now lets say the stock then moves to 22.50, and you move your stop loss to $21. At this point, you've looked in $1000 in gains. To pyramid your profits, you then add shares to the position based on the profit made so far. At this point, you have made $1000 in gains, and your risk amount was $2500. Add these numbers together, and then divide by the difference between the current stock price, and the stop loss to get the number of shares you should add to the position. So 1000+2500=3500/1.50=2300 shares. By doing this, you greatly increase how much you make if it continues to go up, while still keeping losses minimal should it go against you.

Now lets analyze your position for a second. You bought 1000 shares at 20, and 2300 at 22.50. If it goes to 25, then you made $5000 on the original 1000 shares, and another $5750 on the second set of 2300 shares. If it goes down to your stop at 21, then you made $1000 on the original 1000 shares, and lost $3450 on the second set of $2300 shares, for an overall loss of $2450 (about the same as the risk you were willing to take on). The same idea can be applied to shorting stock as well. Just remember " add to your position as you become profitable, but keep your maximum loss relatively constant factoring in the unrealized gains.

Make no mistake; this strategy is applicable to long term investors as well. Assuming youre invested in an up trending stock, then adding shares to your investment whenever it breaks above the last high will greatly assist in maximizing the profits from the big overall trends that appear in the markets. If you're investing for longer time periods, its advisable to leave some profit in the case of it hitting the stop loss.

You may have heard the saying, you never go broke taking a profit. This idea is the polar opposite to pyramiding your profits, and is in fact, dangerous. To succeed in the investing world, your profits must be substantially higher then your losses, and that is whats accomplished by a trading strategy such as pyramiding your profits. Cut your losses short, and let your profits run.

The art of pyramiding your profits is essential to long term success in the stock market. They say that even some of the best traders are only right 50%, 40%, sometimes even only 30% of the time, but as that example showed, by pyramiding your profits, your gains will far outweigh the small losses you occasionally take. - 23200

About the Author:

Don't even CONSIDER trading another stock before visiting Jordan's website on Stock Trading Stategies. Learn about Stock Option Stategies, etfs, shorting and more by visiting the Stock and Options Guru!

How are Stock Prices Decided Upon?

By Robbin Carols

There are basically two main ways to profit from buying stocks. First, many corporations pay dividends to their shareholders. They may pay 50 cents per quarter for each share you own. This is not required of a corporation, so you may or may not be paid dividends.

You can also earn a profit through capital gain. When you buy stock, you will pay a certain price. If in the future the price goes up, and this is what you want it to do, you can sell it and make a profit. Subtract what you paid for what you sold it for and this is your capital gain.

When someone buys shares of stock, they do so in hopes of profiting through capital gains. High dividend paying stocks are often sought after by retirees who are looking for a stable source of income.

Stock prices have to increase if you want to make capital gains. Stock prices vary from day to day, so how do you know that it will go up? What makes stock prices change all the time?

Do you remember the principle of supply and demand that you learned in your high school economics class? It is a basic term that explains the change in stock prices just as the change in prices of any other goods or services.

When the supply increases and the demand stays the same, the price will decrease. When the demand increases and the supply stays the same, the price increases. They vary inversely and the price adjusts along with them.

Stock prices change depending on who is willing to buy and sell. If more people want to buy a particular stock than there are enough people to sell it to them, they have to increase the price. If more people want to sell a particular stock than there are enough people to buy from them, they have to drop the price.

If you understand how this works, you can better understand how to make money with stocks. You want to buy stocks that you think a lot of people will be buying in the future so that the price goes up. - 23200

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How do stock prices change? Find the answer to this question and find out who issues stocks.

Reasons to Invest in Oil and Gas

By Terry Stanfield

There are many reasons you might consider oil and gas investments. There are many benefits that make this sort of investment look very attractive. Here are six reasons why you might consider investing in oil and gas.

1. Easy to understand and research. Oil and gas investing is an easy investment to understand. You don't have to do years of research as you would in the stockbroker world. The gas investments field is very easy. You can make a good decision on your financial future without being a genius.

2. Potential returns. Returns can have a projection of anywhere from five to ten times the initial investment. This is a very risky investment but you can make a lot of money when oil is found. The investment is in most cases of success is incredibly profitable.

3. The investment. When you get into gas investments and your investment does well you have the potential to be very rich. Money is what it is all about and the industry of oil and gas gives the biggest profit for investors.

4. Immediate results. You can start receiving money when you hit a well as soon as 60 to 90 days. Profit begins immediately. The profit on this type of investment will happen right away and the projections are usually through the roof. There isn't an investment on the market that provides results as quickly as oil and gas has the potential to.

5. Tax deductions. There are many tax deductions you can claim the next time you file your taxes. These deductions can get you a good sized return or make it so you owe less money when you file next year. Oil investments have more tax write-offs than any other investment out there. This is because there is so much about your investment that you can claim. The things you can claim include the tangible and intangible costs, you are given a depletion allowance, and more.

6. If you don't find oil, 100% of your costs can be written off. In the event that you hit a dry hole and find your investment is down the hole and you lose everything you can write off 100% of investment as a loss of a business. This is a very big advantage.

There are many reasons you might consider oil and gas investing as your next big endeavor. If you are looking for something solid to sink your money into this might be it. Oil investments can be a risky decision but you can make a huge profit in the long run. - 23200

About the Author:

Visit Evans Energy's site for information on investng in oil and gas and oil and gas investment benefits.

Ways to Invest in Oil and Gas

By Terry Stanfield

If you are interested in oil and gas investing there are three primary ways you can go about starting your investment. These ways include investing in companies, mutual funds, and commodities. You can make a lot of money in this industry if you are smart about your investments.

Investors consider gas investments to be safe. This is because there are so many ways that someone can invest their money in the industry. You are not limited to only buying stock in a business but there are so many other ways to invest too. It is easy to diversify your portfolio of investments with only oil and gas in the many different ways you can invest.

The primary way to take advantage of oil investments is through company stock. If you find a drilling company that you want to invest in because you believe they will strike oil some time soon you can purchase their stocks. There are tons of companies out there who drill for oil. There are independent companies and medium-sized businesses and more. It is important to know that stock with gas investments does not always provide the largest return on investment.

Mutual funds that have a primary focus on energy is another way you can look at oil and gas investing. A mutual fund in this field may focus on the oil and gas but have stock in many companies in the field. This fund may include large companies and independent companies too. One type of a mutual fund is a drilling fund. This is broken down into two fields; exploratory and developmental drilling. Exploratory drilling is as the name suggests, exploring to find oil and gas. Developmental drilling uses wells that already exist. It monitors the development and production limits.

Gas investments can also include commodities. This includes things like royalty funds, leas acquisition funds, and even combination funds. There are many ways commodities are offered for investments in the oil and gas industry.

There are many ways you can invest in the oil and gas industry. If you are interested in oil and gas investments you should consider looking into the different methods. You can invest your money in company stock, mutual funds, and even commodities. Some investors make a huge amount of profit and some don't. Any type of investing is risky so you should do plenty of research before you do anything with your investment. - 23200

About the Author:

Visit Evans Energy's site for information on investng in oil and gas and oil and gas investment benefits.

Forex Training

By Hass67

Life is beautiful. Did you see the movie, Beautiful Mind? It was about Professor John Nash who was a pioneer in Game Theory. He was awarded a Nobel Prize. Every moment of your life is beautiful. Develop new passions. Learn new things.

Just like by buying tennis racquet or a golf set wont make you a good tennis or a gold player. When as a boy, I started playing tennis; I was a very poor player. Good tennis player would not play with me. But I had an ambition to become a good tennis player.

The whole day I would wait when evening would come and I could play tennis. I would do wall practice. So, I would practice and practice. Sometimes, I would play with my coach.

I had an ambition. I had a dream. I wanted to be known as a good tennis player. Winning and losing lies in your mind. If you have seen the movie, The Secret, it explains the secret of success very beautifully.

Becoming a successful forex trader should be your dream. Learn everything you can about forex. Practice and practice! Dont rush.

Your forex training should start by taking a forex trading course that digesting it in full. First prepare yourself only then enter the battlefield. You need to understand a lot of thinks before you start trading forex.

The most important steps for you to grasp is to how to identify the behavior of the market at a certain point in time. You can only do this by learning Technical Analysis.

Understand the use of indicators. Learn how to analyze charts. Know what are lagging indicators and what leading indicators are. Try to figure out how price action is taking place at a certain point in time.

Know what is the support and resistance at that point. Develop your perspective about the market. You should understand depth what are SMAs, EMAs, MACD, Bollinger Bands etc and how to interpret price action through them. Understanding use of Pivot Points is must for you to predict whether the currency market is bearish or bullish.

Understanding the principles of money management is must for you. Do not put more than 1% of your account on a single trade. Many traders overlook money management but it is the thing that will determine your long term success. - 23200

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in online trading; stock and forex trading. Know the Best Forex Trading Course. Discover a revolutionary new Forex Robot.