The Traders Mindset and Risk Psychology

By Ahmad Hassam

Your personal trading psychology affects every trade entry and every trade exit that you make. Every great trader has a deep understanding of his/her psychology. Even great traders struggle with their inner demons from time to time. Those demons generally are fear, greed or regret.

The more you develop the traders mindset, the quicker you will confront your demons and the more success you will have in slaying them. In your journey from a novice trader to a master trader, you will have to keep an eye on your trading psychology.

There are certain traits that help traders and investors make consistent profit in the markets. Some of these traits will come naturally to you as a trader. However, others you will need to cultivate and acquire. Now this is what you feel when you acquire the traders mindset:

a. You will start believing in your trading system and stop worrying about the money. b. You will accept risk in trading and investing. Trading and investing are inherently risky. c. You will accept winning and losing trades equally as a part of trading. Even great trader cannot avoid a losing streak. d. You should try to make trading enjoyable. In the end you will start enjoying trading. e. You wont feel being victimized by the markets every time you lose. f. You will be always looking to improve your skills. Learning is a continuous process. g. The trading profits will start flowing into your bank account as your skills improve and begin accumulating. h. Markets will always be unpredictable. You will want to keep your opinions to the minimum. You will be more open minded in your reading about the markets with experience. i. Your skills will improve with each trade. You will want to learn from every trade or position. j. You will try to try to flow with the market and align trades in the direction of the market.

But you cannot achieve the traders mindset without overcoming the destructive emotions in you. These are the lists of some destructive emotions that you will have to face when trading:

1. Most of us fear failure! So fear of taking a loss and the fear of being stopped out is going to haunt you. 2. Anxiety will make you get out of the trades too quickly. 3. When you are not in control you wish and hope that you will make a winning trade. 4. You will feel as if being victimized by the market and will feel anger after a losing trade. 5. Never ever trade with borrowed money. It can ruin you. Trading with borrowed money or trading with money that you cannot afford to lose is a destructive emotion. 6. When you think adding on to a losing position can help you avoid a loss. 7. Just like addiction to gambling, compulsive trading 8. Excessive joy after winning a trade. You are tying your worth to the market. 9. Poor trading accounts profits. This results in poor self esteem. 10. Not following your trading system. You dont believe in your system or you havent tested it well. 11. Second guessing your strategy. Fear of loss can paralyze you. 12. Not trading the correct trade size. The trader might be refusing to take responsibility for managing the risk or be too lazy to calculate the proper trade size. 13. Trading too much. You feel like conquering the market which you cannot do. 14. Afraid to trade. This happens when there is no trading system in place. 15. Irritable after the trading day. Trading is like an emotional roller coaster due to anger, fear or greed. This happens when there are unrealistic trading expectations.

Try to take a look into the mirror and see if you are experiencing any of these destructive issues. This exercise will help you identify your strengths and weaknesses. When you find one of these emotions in yourself try to isolate and defuse it.

Once you have identified a certain destructive emotion present in you, try to write it down and find a solution. Just the action of writing it down will help you bring one step closer to nirvana. In essence, getting the Traders mindset is getting to a place of profitability, peace and bliss. - 23208

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. Get Netpicks Forex Signals Free!

How to Easily Pay Off Your Debts, No Matter How Many Times You've Failed

By Sean Payne

Many people who are in debt have tried at least once, and probably several times, to pay off their debts. Sadly, a significant number of these people end up getting even further into debt than they were when they started.

What causes this? Why do they end up accumulating more and more debt? The answer can be found in the methods that they use to try to get out of debt. Those people who use additional loans to get out of debt are only temporarily fixing the problem. Debt reduction loans might work for a while, but eventually the habits that caused the problem with debt in the first place will sabotage them.

The best answer to the problem is to correct the underlying habitual behaviors that create the problem of debt. The easiest way to accomplish this is to use a debt payoff plan that won't let you continue in your overspending ways.

What are the steps of the best plan for getting out of debt and avoiding bad habits?

The first step is to build up a "buffer" between you and overspending. When you're running low on money, even a small financial problem can make you go back to using debt. What exactly is a buffer? This is a small amount of money that you save, somewhere around $500 to $1000, depending on how much money you make. Your buffer should be enough money to fix your vehicle if it breaks down, hire a plumber if a sewage pipe breaks, or pay your bills if there's a delay in getting your paycheck.

The second step is to take on no new debt. This means no consolidation loans and no second mortgages. People who use second mortgages to consolidate and pay off their debt are replacing their unsecured debt with a loan secured by their home. The problem, then, is that if they can't keep up with payments on this new loan, they are at risk of losing their home.

The next step is to create a plan to pay off your debts. Keep in mind that the order in which you pay off each debt makes a significant difference. If you do it wrong, you can lose your motivation to get out of debt. If you do it right, you'll pay off each debt quickly while gaining more and more motivation to finally get out of debt.

The fourth step is to work your plan. The easiest way to accomplish this is to automate your plan for paying off debt. The best way to do this is to use an automatic bill payment service. Your bank probably offers this service. Once you set it up, an automatic bill payment service will keep you from incurring any late fees. This alone makes it worthwhile, but when you add in the fact that most bill payment services are free, this becomes a must-do if you're serious about getting out of debt.

The final step is to stick to your plan. After a while, you will have developed a little bit of momentum, and this will become easier. Once again, choosing the correct debt repayment plan can make a huge difference.

There you have it: You now know how to pay off debt even if you failed last time and every time before that. All it takes is the right approach. - 23208

About the Author:

Sean Payne has taught people how to get out of debt for over 10 years. To get more information about how to pay off debt, get Sean's excellent free course on debt reduction management.

Covered Call Strategy Made Easy

By Maclin Vestor

Every day people speculate wildly on stocks putting leveraged bets that a stock will be bought out, or surge in value. However, for every buyer there is a seller, for everyone who buys the leverage, there are people who sell the leverage. If you dream of a $1 stock flying to $100, this isn't for you, you should learn to be the one buying calls, not selling them. Be warned, however that if you are a buyer of call options that you will be taking on much greater risk, and you will be relying on the price of the stock moving up sometimes very significantly in order for you to make money. In addition, buying options require costs that are not redeamable, so even if the stock remains the same price you could still lose money buying options.

However, if you believe in buying for the long run, yet think things currently will stay the same, get worse, or better yet, get better, but by a limited amount, then a covered call strategy may in fact be right for you.

It is said that a call option is similar to putting a $100 nonrefundable down in hopes of reserving an item at a price lower than you believe it will be sold for. Now selling a call is instead selling that right to allow others to buy away your item that you own at a fixed price such as $1000. If for example there was a new car that wasn't even released yet, and the retail value was set at $20,000, and you believed there would be a lot of demand, you might pay 2000 to speculate at a set price of $22,000 that it would be worth more. The car would have to be worth $24,000 for you to break even, but if it was worth $26,000 you would double your money, where as someone who reserved it at $20,000 and paid the full $20,000 would tie up 10 times more money for the same gain. Now one can obviously see the excitement for owning a call option, but why would you sell an option?

Lets say you were actually the builder of that $20,000 car. You may have put $30,000 into it, you may have put $15,000 into it, it really doesn't matter, because you think that the car will be sold for around $20,000 which is what it would go for now. For some reason you think that this car actually will go up in value over time, however for the next month you do not. You would then sell the $20,000 option, and if you're right and the car stays under $22,000 then you collect that full $2000. If you're wrong and the car goes to $23,000, then you still collect $1000 as the contract is only worth $1000 but you sold it for $2,000. If the car goes to $26,000 you would owe $4000. Since you owned the car itself, you would pay the contract buyer the difference, or the car would be called in, and you would have to sell it at $22,000, and give the contract buyer the $4000 difference. If you still wanted the car, you would have to buy it back at $26,000. Even if the car went to $100,000 you would still gain $2,000 for the contract. Of course, you would miss out on a HUGE gain, but it is the price you pay for writing calls. The risk is both that you miss out on a bigger gain, and that you are still only offered limited protection from a loss.

One example is if instead the car could only be sold for $18,000. Although this normally would be a $2,000 loss, you would collect the $2,000 from the option call buyer and lose nothing. Now if the car attracted no buyers, it would be worthless, and you would only collect a lousy $2,000. Options work in a very similar way to the above example. Writing a covered call is merely selling a contract that entitles someone else to you potential gains, that you risk giving up for guaranteed income. You sell hope for a sure thing at the expense of giving up your own potential for large gains, while still maintaining the downside risk of the stock.

In a covered call trading system, the idea is to write covered calls over and over again every single month, collecting a premium. Ideally you would want to have the stock rise to the strike price and expire, and then you could perform a covered call the next month at a higher and higher strike price as your stock actually gained in value.

Now say you own 100 shares of a stock at $73 per share. Lets say you don't expect it to go up beyond 75 this month. So you sell a covered call at $75, receiving a fixed amount like $200. If the stock rises above 75, you will not be entitled to the gain, but you will receive the $200 for the stock going from $73 to $75 ($2 per share for 100 shares). The hope is that you can continuously collect these calls and that the stock never goes above whatever strike price you buy. You are essentially trading a stocks potential for steady income. Of course if your stock goes to zero, you lose everything but the $200. Its important to own stocks that will be around for a long time, and to know this, you must understand a stocks balance sheet and financial statements, and you still probably want to be willing to cut your losses short, selling both your call and your stock price. You still need to educate yourself in the risk of the less liquid option market as there is a big difference in the bid and ask price. - 23208

About the Author:

Maclin Vestor teaches about varioustrading systems and teaches you how to buy stock that works for you.

Make Money With Penny Stocks - Here's How!

By Grant Dougan

Penny stocks are business share offerings made to the public by companies that are too tiny or new to have a listing with the major share exchanges. These offer high growth possibilities, and your initial purchase can be quite small, but you stand the risk of the business becoming bankrupt and you losing your investment. People are drawn to these kinds of shares due to the case that despite the risks you can see sizeable returns.

Choosing penny shares correctly means that you must have an unbiased appraisal of the organization's business model. Similar to choosing stocks of any other kind of publicly traded business, it's appropriate to read up on everything about the organization. This relates to knowing what the company do, the product they make, what products are offered, how their business plan functions and who they are competing with.

Something that makes penny stocks so intriguing is the idea that most of the companies issuing them are extremely simple. A typical sort of penny stock is a mining company that benefits when the cost of the resource it produces increases above a certain price. There are also oil exploration stocks that are valued in the same way.

Penny shares are thought of as a high risk vehicle, according to the Securities and Exchange Commission. The risks you take on with these stocks include improper of financial issues, limited trading volume and unfortunately even fraud.

Keep in mind that the reporting guidelines for penny stocks aren't typically as regulated as shares on bigger exchanges. One kind of penny stock is known as the Pink Sheets, there's hardly any regulatory requirement on penny shares, no standard accounting standards or reporting guidelines.

Because of this this little or no regulation, this kind of share is very vulnerable to being manipulated and unfortunately even fraud. A well known common schemes is called referred to as a "pump and dump" - investors manipulating the price of stocks to jump up and then sell all of their stocks at once and leave other people out big money.

Don't let the above scare you off these types of shares! Penny stocks always have risks but also have a big potential for a large gain. You can find lots of real, sound small businesses, and they have to get going somewhere. Tons of organizations that are classified as penny shares are headed to be successful in the oncoming future. If you're someone who can choose one of these companies, your gains on your investment will be hefty.

When you are able to choose companies that have promise, your payoff are going to be massive. It's possible that you drop money on several trades, yet the one winning pick will give you such a big return that any previous losing choices won't be an issue. - 23208

About the Author:

Make use of these penny stock tips and you will find yourself making great money on your investments. Click Here to learn about a penny stock trading system that has been making great money for the past four years!

Forex Option Trading Great Profit Potential

By Mark Green

With the forex option trading market growing larger and larger every day, it is no wonder so many people are getting into it. The smaller margins are used in leverage so that the small traders can still make large profits. With the potential of making massive profits, it is a great trade to start in.

With forex option trading it is critical to know how to use it to an advantage. You may be thinking how could you actually use it to your advantage. Truth is that it is setup for your advantage, with option trading you use smaller margins and leverage them in the market to make high profit potentials. If you are new to forex, it is the best place to start. You can turn small trades into larger trades and eventually use your higher margin in higher leverage trades and make higher profits.

For many investors, forex option trading has become the favored trading. The great part about forex is it gives flexibility to the investors. Quickly put, option trading is a currency contract enabling the buyer the right to purchase or sell the foreign exchange spot contract on the established price to the date specified.

If you are looking for a way to make your forex option trading more serious, there may be something in store for you. Are you are looking for a way to step up your trading and to achieve the margins that you want? What if you could trade better than the average trader, right away. If you are a new trader, or a skilled trader, there is something you could add to your tactics to increase your profits.

There is always room to increase your forex option trading profits. Knowing what to improve can be a hard thing for a trader. Wouldn't you value information passed on to you from a long time experienced trader that can save you countless hours of trial and error? It is always key to keep an edge over the average trader, discover a secret to making your trades more profitable. Get the secret to making more money on your trades, get yourself on track with the key to making you money in forex. The sooner you take action, the sooner you will see the profits that you want to make. - 23208

About the Author:

If you are new to Forex Option Trading , you simply can not miss the opportunities you will learn about in this guide. Others profess to be the best, but the proof is in the pudding. Get yourself a guide while they last.