Make Money On The Way Down?

Somebody recently left a comment on my site and said they favored long term holding of stock. I can completely understand the reasoning. It all has to do with strategy. What are you investing for? Pension? Or buy the new dream home. Now I’m not saying it’s easy. Not too many out there can do it. Although, I have read about stay home women in China that are now have a full time and very profitable career from trading.

It’s not out of the normal persons boundary to learn and apply learning.

I read very recently and cannot find the article, but it mentioned that holding for the long term is not profitable. As most long term traders earn 6 to 7% on their portfolio.

However, the wisdom is in compound interest. Each year after the initial year you begin earning interest on interest, which is a very profitable scenario. Although, with peaks and troughs the way they are, when is it time to get out. I personally know the feeling of greed and the feeling of fear caused from the market. When your stock drops something inside, greed, says it will come back. I can be profitable again as you watch the flashing red increase in opacity. On the other hand when do you take profit.

Fear of taking the profit too soon? Could have made more. Much much more?

What I’m saying is your action to get out of the market is based on need. You finally it an age or a time period and you want to take out your earnings. What if the market is low? What is you can’t wait another year or two for the market to recover? The long term play can be dictated by external circumstances.

Trading short term for profit gives you the control. You can exit and enter at times that are timed to precision. Maximizing profit and reducing risk.

So there is a law here that states that you can’t short the market, borrowing stock, selling it at a high price, buying back at lower price, and returning the number of stock minus the profit from selling. I agree that markets should not be able to short. It’s too dangerous to market stability.

However, you can still take advantage of a falling market with spread betting.

I recently got this email from EWI, Elliot Wave International.

“The latest rally in stocks and commodities has accompanied the temporary return of inflation, which in turn has brought signs of an impending official “recovery.” But it is mostly another illusion borne of optimism, as a weak dollar—a result of expanded credit—has once again puffed up the economic data. But this trend will roll over shortly behind the stock market, and we will once again see that the economy is on an undulating toboggan ride to the bottom of the valley.”

From what I’m seeing lately in the market. The market looks like it’s running out of steam and about to drop dead. Numbers don’t stack. The charts show lack of ambition. The last week has shown the largest amount of trading to occur on SELL days. This combined with convergent divergence in the leading indices is shown a strong signal to SELL.

If you haven’t got a spread betting account, I would get one immediately. And the devour what knowledge you can.

I’ll update more on what I’m following soon.

Build Wealth One Tic at a Time

A few months back I was glued to the screen of my laptop. Watching every tick of the stock chart.

I had seen a great opportunity to buy some sun microsystem stock when IBM where in process of buying. Stock rallied like 80% in a day it was nuts. I tried all day to buy but I couldn’t because my account is only set up to buy stock from the LSE. I couldn’t bypass the redtap to make a purchase that day.

I didn’t want to miss out on an opportunity like that again, so I looked into spread betting. Spread betting is where I could bet on what direction the market was going. At least this way I could have exposure to the stock I was looking at.

I decided I was going to learn how to trade and spent the following three months glued to the laptop. I stopped eating regularly, stopped going to the gym, and really it consumed my life. You see if I was waiting for a stock to hit a certain point i certainly could not go have my tea. If I was in the trade I certainly couldn’t go to the gym. I had to manage my trades.

This was the first mistake. Don’t use your own money when you start. It’s very tempting. Especially when you start making some right trades. Pick up a demo account at Barclays or ADVFN. They are not the only ones.  It is very important to choose the right spread betting company. Soon I will write up a comparison and hopefully give you a better idea of what they offer.

Anyways, If you are interested in building your wealth. Stocks are one of the three pillars to financial success. Spread betting offers you a exposure to the market without investing too much capital.

I bought AIB shares when they were doing very poorly. I read up on their balance sheet and seemed very healthy. Forums and trading platforms where under the same allusion. Suddenly, the bank was found to be doing alot worse that it had said. Shares tumbelled even more and I though my investment was sunk. Luckily the government came to the rescue. Unfortunately for the taxpayer, but great for me. Today it’s up 28% to the tune of £450. Not alot but it’s my first crack at the whip in shares. I figured, buy and forget about them for 10 -20 years. So that’s what I will do.

Remember, the government was created by the rich for the rich. Controlling the masses was the goal. Today with then information age, we are beginning to find that the government is weaker against the masses when the masses consolidate for action. But still, you don’t want to be there with a picked sign do you? you would and I would rather have the clout and ability to change things from the inside. Look at Sir Sugar Alan, he has the ability now to make a difference.

Let’s look at this exemplary behavior. You can make a difference  but first you must understand the system and how to build your wealth from it. Don’t sit in the dark anymore hopping that someone will come save you. It won’t happen! You must learn to compete. It’s the only way to live a life of freedom! At least you are free in your endeavor to make the difference in your life. Rather be free trying than to be imprisoned behind the desk.

Take action now, not tomorrow, but Now!

I wish you all the success the world has to offer!