Bulls To Bears: Trading Psyche And Mindset

Traders have been dealing with a bag of mixed signals lately. One second the market’s on fire - the next second it's cold as ice. It comes on strong - then the drop. The one thing that stays the same, is that traders are always on the hunt for big profits. They get exhilarated when their stocks make money and lose enthusiasm for trading when they lose money. This is a very bad trading mindset. Traders will have the success they seek more often when they act like they are in the market for long-term. When a trader gains a better understanding of why those trades are down, and losing short-term value - they will begin to trade more effectively.

 

Your state of mind and they way you think about the markets, plays an absolutely critical role in your ability to make better trades and succeed at trading the markets. We are talking about discipline, a general sense of self-control. Typically, traders with good levels of self-control in other areas in their life, make better overall investors. So, if you are someone who is very irrational or disorganized, or otherwise lack other forms of self-control, you will need to fix your mindset and overall trading psyche if you want to succeed and make money trading stocks. It is extremely tough to be a highly controlled person trading stocks if you're not controlled in other areas of your life as well.

 

If you're not a person of high self-control then you have to re-train your brain to be a person who thinks counter intuitively. What that means is, you have to think different from the multitude of stock traders who fail, the “flock” of sheep, so to speak. When the market looks like it wants to breakout, making higher highs, it’s likely to be a false breakout, and a majority of novice traders get sucked right into that false breakout, only to get slammed by  the downturn when it materializes. This is another one of many examples where a market looks great and even ‘feels’ great like it’s going to continue to surge higher, and just when almost everyone is onboard and "drinking the kool aid" the market tanks and reverses and moves sharply to the down side.

 

We are not suggesting that you can always avoid losses with this theory, not at all. What we are suggesting, is that experience tells us when you are patient, and maintaining good trading habits, not acting with haste, you have better trading successes. We feel that trading should be viewed and treated like your own business. Your trading methodology should also be your business strategy when trading the markets. You should include things like, better trade setups, and risk management plans, stop loss protection, profit target executions, trading convictions, etc.. Any successful business has a strategy and a plan of execution in place. You should do the same with your trading business. If you don’t have an investment strategy and plan then you’re really just throwing "darts at the wall." That is not intelligent investing.

 

Whatever your current trading plan is? It needs to be reinforced on a regular basis, so it becomes part of your winning trading mindset. The Bulls To Bears trading strategy the one we teach in our program is essentially a “K-I-S-S” approach. Keep it simple silly! This is all built into the BullToBears.com trading plan and we teach it daily and try to reinforce it into our subscribers trading psyche.

 

To be a better than average trader you must truly believe in your own ability, as well as your trading strategy. As I mentioned before, in other blogs, there's no room for hesitation when placing trades if you want to succeed long-term in the market. But, don't ever get overly confident, as too much confidence in any trader could end up being a very humbling experience.

 

Very successful traders think differently from most traders. They act differently too. They are more planned and structured than most people. Winning traders are not easily distracted from their trading strategy, from the long-term reward, regardless if the market is up 2000 or down 2000 points in a day. We teach our subscribers to have long-term and short-term goals and after a while they learn to tune out all the noise. They continue and build up short-term goals, and this eventually leads to the long-term  success. They are focused on continuing on, moving forward and learning the game. They are rewarded when staying focused and executing their trading plan with discipline and precision.

 

The power you can acquire as a savvy trader with a structured daily trading routine cannot be exaggerated adequacy. Repetition is how you form better habits, these habits will either make you or break you and determine your trading life span. That depending on what your knowledge and experiences are... What does your stock trading routine consist of currently? Do you even have one? If you aren’t sure, then you don’t. You should be able to explain in- depth what your daily trading routine is and you should have a specified understanding for analyzing the markets each day.

 

So, the remaining questions are... Are you ready? Are you really ready to become a better, a stronger and more effective and successful version of yourself? This only YOU can decide! If your answer is yes, then you better get ready to make some meaningful changes because nothing different is going to happen without change.

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Till Next time... As always, Happy Trading!!!

Bulls To Bears: Surviving Choppy Markets

Investors are always searching for robust returns as well as consistent gains on their investments. When the market is weak, dealing with heavy sell offs and a declining stock portfolio isn't anyone's idea of a good time.

They are called selloffs because investors react to these big declines by panicking, liquidating and selling off  stock positions. We see this happening over and over again despite investors having  held top quality companies with good fundamentals within their group of holdings.

Professional seasoned investors will tend to do the very opposite. Through experience they have learned to see a big correction or huge downturn as a chance to review their risks within their portfolio and take that opportunity to add to good positions creating a cheaper entry price rather then selling into that weakness. 

When confronted with adverse market conditions like big sell offs, whether or not it's a one-day decline or longer, an investor must take the time to review their portfolio and access the collateral damage occurring. Having to deal with your portfolio during market volatility may be burdensome, but an important necessary task. We comprised the paragraphs below into a few suggestions that will help you and your trading account survive big market declines like the one we just witnessed that wiped away 2000 points on the Dow, all of 2018 gains, in about 20 trading sessions.

Have long-term goals etched in the back of your mind. The one thing for certain we can GUARANTEE our followers is that regardless of what your stock holdings consist of, the stock market will forever experience volatile moves ups and volatile moves down. That is the main reason why it is important to keep emotions in check and stay focused on your long term trading goals. Having a buy and hold strategy and holding that course steady - despite short term choppy market moves, will most likely determine the difference between profits and losses. While the very opposite of  this strategy is to Day Trade stocks and try and figure out what the market will do today with in the next few hours. Bulls To Bears as well as most investment professionals will tell you it is very risky trading, not to mention if your predictions are wrong, it could cost you a lot of your money and you can miss out on a particular company's best days that are ahead.

 

Keep on top of your trading accounts and individual holdings. With all the wild events happening in the world today, almost on a daily basis, it should call attention to the importance of knowing where your assets are and keeping diligent observations. You must keep in mind that periods of falling prices are an integrated part of investing in the stock market. We guide our followers and help them to use a multitude of trading tools, to hedge against market declines like stock options, to assist their portfolios against sharp and unexpected drops in the stock market. Also, by making better stock trades one can constantly reevaluate what is happening while at the same time limiting overall risk to positions.

 

The Stock Market is a difficult ocean to navigate. We recommend talking with an expert. A professional trader will assist you and help separate you from emotion driven decisions and will prohibit you from making bad trades, that will deter you from your overall goals. Researchers within the investment field of behavioral finance have found that emotions typically lead investors to make very bad trades when those erratic unexpected daily events occur - even though those averse market events in the end didn't have negative long-term adverse consequences. With the aid of a financial professional, you can sort through these short term distractions, and you'll likely find out that if your investment strategy made sense to you before a particular event occurred and shifted the market, it will make sense afterwards when the dust settles as well. Panicking is not a very smart trading strategy!

 

At Bulls To Bears, we scan the market weekly for the emergence of meaningful discounts. We love when stocks sell off and turn pricey quality stocks into less expensive ones. Stock corrections help to keep valuations in line. These corrections do not mean the Market is going to zero. In rough times, if possible, get some cash and boost up your buying power. Or when the market is topped out and your stocks continue to hit record highs, take some profits off the table and build some cash reserves. You might also want to sell some underperformers for cash and when the market finally takes a big hit, use it to pounce on better bargains.

 

As a wise BullsToBears.com member, you will learn to actually welcome market sell-offs, because they provide an opportunity to pick up good stocks when their share price is lowered and on sale before they eventually begin to move in the right direction again, higher! By utilizing the market by buying stocks and selling others our program will help you keep a bit cash on hand, so you'll be ready to buy when other stocks go on sale. Thus turning a market drop into a good trading opportunity. So when the markets get slammed, great stocks usually get caught in the downturn and that is the time to swoop in a buy them.

We agree with Warren Buffett's overall investment strategy when he says: "Be fearful when others are greedy and greedy when others are fearful."

By and large, stop getting bent out of shape by stock market sell offs. Instead put together a diversified stock portfolio of quality stocks and options. Try and avoid purchasing to many speculative stocks, or investments with an uncertain future and low volumes. When you do that you will be less likely to panic during market routs with better stock portfolio holdings. Because of our 16 year track record, we are confident our members will survive, no matter what the economy or market throws at them. By continuing to place better trades - when sell offs occurred our existing clients thrived in good times and survived in bad.

 

To conclude, whether you are a day trader, swing trader, long term or short term trader, we encourage you to join Our Free Newsletter. As a stock trader you'll benefit from our wealth building information that could help you profit and protect your investments from the next stock market surge or sell off.

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Till Next Time.... Happy Trading!!!

Bulls To Bears: Investing and Cost Averaging

Cost averaging or "averaging down" is an investment strategy used by investors to accumulate shares of a stock strategically based on per share price. A investor purchases more shares to add to a position of existing shares when prices are cheaper or when prices are higher, whenever they add to their position either as prices are more attractive or if the stock price increases. 

Dollar Cost Averaging is highly successful stock trading strategy that allows an investor to put additional money into a particular company to build a larger position over time. The purpose for this method might be to lower the total average cost per share of an investment, giving the investor a cheaper overall cost per share on the investment  by adding more money to previous purchased shares.

 

This strategy is actually a very smart one and can be a great method to earn big profits, but requires some discipline on the part of the investor. The “cost averaging” part of the equation is mostly a byproduct of market volatility: investors are able purchase less stock as prices go higher, and more as they go lower, therefore averaging down on the cost per share at the correct times when it occasionally dips could be extremely beneficial when the investment rises and having owned those addition shares.

 

Another positive aspect of DCA is that it allows investors to avoid investing too much into a stock when it is priced too high and helps traders add to a position when the stocks price is lower, thus reducing overall price per share. However, this method of trading ignores simple logic, common sense would suggest it's better to invest it all at once. Fortunately, smart investors and advisors do not always base their decisions on logic or evidence. However, when it comes to trading the stock market investors emotions usually plays a far greater role in decision making than logic.

 

Dollar cost averaging is an important trading strategy, but it should never be viewed as the only way of maximizing profits, nor does it suggest that you never invest a lump sum as part of your investment game plan. Relatively, it should be regarded as a solid risk reduction strategy suited for investors who are normally cautious in regards to a long term investment approach, because of the fear of market instability.

 

When markets are weak and sinking it can be difficult to foresee a clear path to take. Sensibly, people get worried when experiencing a big decline in the value of their holdings, but by staying focused and maintaining your trading strategy and averaging into your current investment can be intelligent valuable decision.

 

The main reason we tell our subscribers to average down is when they can bring down their average cost of a stock they are holding quite substantially. Assuming of coarse we believe the stock will turn around, this decision will ensure a lower break even point for the stocks position and could result in much higher gains in dollar terms, than would be the case if the position was not averaged down, in the event that stock surges in price.

 

When averaging down works, it's because the investor is willing to hold that stock long enough for it to bounce back. And therein lies the secret to Dollar Cost Averaging. You must have the backbone to hold on long enough for that stock to recover without losing your patience or your shirt first.

 

Below is an example of how dollar cost averaging could be successful when used correctly. Let us use XYZ Inc. and a purchase of 1000 of XYZ at $20 then in 2 weeks the stock falls to $10 by averaging down on XYZ by purchasing an additional 1000 shares at $10 and adding to the other 1000 shares at $20, you can bring down the breakeven point (or average price) of XYZ's position to $15 dollars:

 

•1000 shares xyz $(20) =    $20,000
•1000 shares xyz $(10) =    $10,000
•$2000 shares xyz $(15 avg) =  $30,000

 

No let us pretend that now XYZ stock starts to trend higher and a few weeks later it trades at $18 per share, the investor now has a potential gain of $6000 with an average price per share of $15 on 2000 shares (despite the fact that the stock is still trading below the initial entry price of $20):

 

Had the investor not brought the average cost down when the stock dipped to $10, the potential loss on the position (when the stock is at 18 would be -$2000). So if you’re a novice investor new to the stock market, go ahead and try dollar cost averaging. You might have success with it!

 

Remember, before averaging down on any stock position, it is very important that the company as a whole and its statistics be fully assessed. A trader should make sure whether a significant decline in a stocks price is a short term miscorrelation or a symptoms of a deeper issue at hand. At the very least, many factors need to be assessed - like the company's competitive standings, future earnings outlook, financial stability, and corporate structure.

Bear in mind, at any time you can tilt the odds of success in your favor by adding BullsToBears.com to you trading arsenal. With our trading program you can achieve the best possible results with the least amount of effort by following our stock alerts and proven trading methods. Benefit from our low-risk approach that will leave you no reason to worry. Have more time to yourself to live a more meaningful life.

 

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Till Next Time... Happy Trading!

Bulls To Bears: Trading and Stop Losses

A stop-loss is a commonly placed market order that's entered to help protect investors by triggering a sale on a stocks position once it reaches a certain price. Today we are going to let you in on a little trading secret. We are going against the grain here and try to explain to you why stop losses are the single biggest factor why most novice and inexperienced traders lose money in the stock market.

The reason behind why most stock losses probably occur, is before a stock trends higher, it typically takes a dip and trends  lower and nervous people sell. It is important for you to grasp that market makers, specialists, and experienced traders are out to make money for themselves or their firms. They are out searching to make money from your inexperience and they all have access to resources, tools and information that you don't.

Now listen, these sharks see your open positions sitting out there and they know that you are willing to sell to them at your stop price (the order is in) and they are searching for these easy pickings, to stop you out and make money from your mistakes. More often than not if they are planning on taking a security higher - they will drop the bid first scooping up your stock taking you out at that stop price. They want to buy it cheap and they know where to get it. Then they will proceed to move the stock much higher and are happy to own your shares that you were offering up for sale. And guess what? Now your out of that trade, with a realized loss!

So, the lesson here is, If your frightened about a trade or scared to lose your money or just uncomfortable with that trade then "sit it out" don't do it. We see this scenario take place time and time again. So, it is better that if you feel the need to have a stop-loss in place, put a looser stop-loss of maybe 30% to 35%, as to not make it too tight so your easily stopped out. There are people out there who are looking for people with tight stop losses. These professionals know the stock market very well and are scouring it looking for tight stops and looking to capitalize off of it. We tell our subscribers to generally try and keep stop losses on the looser side when possible.

Using a stop loss is like going into a casino sitting at the poker table and showing everyone at that table your cards, including the dealer. So don't use a tight stop loss. It is the easiest way to ensure that a wall street professional trader will pick your pocket. We see this scenario time and time again. It is paramount that you understand that a majority of your losses are coming from stop losses that you have in place right before the stocks begins to go higher and you are the loser. I'm sure this has never happened to you?

In our opinion the best stop loss that you can make for yourself are mental stop losses. But you must be diligent and stick to your trading parameters. We will go on the record here and tell you that tight stop losses are the single biggest mistake novice traders make when they start trading stocks.

I will stress it again, market makers have a lot more data and tools at their disposal than retail traders do. They are able see your order entries and they have the power to move the markets against you. Not to mention stop losses can’t guarantee you complete protection against even market losses. But they do increase the odds you will miss out on the upside all together, plus they increase trade costs. Also, there is no evidence to support claims that they produce better results, but there’s plenty of evidence to the contrary. It is better to start to think of stop losses by their contrarian name that describes them better " stop-gains." 

In addition, because stock prices tend to fall so rapidly, most stop losses entered can't be filled quickly enough and many investor's stocks are sold out at prices well below their triggered stop price. We see it often enough, that most stocks will then rebounded quickly, making the situation even more painful for the traders who are stopped out at the bottom.

Another major worry in regards to stop loss orders is once your stop order is triggered, it turns into a market order. In a volatile quick moving market, the stop price could be acquired and the next offer price could be executed substantially well beneath that stop price and it will result in larger losses than initially expected, which is exactly what you were trying to avoid in the first place by using the stop order.

To recap, try to avoid getting stopped out prematurely, you always want to give yourself some wiggle room in regards to your stop loss entries. Otherwise you risk getting stopped out and missing the move entirely, even worse, handing yourself a realized loss costing you money.

That's all for today! Remember you can subscribe to our FREE investment newsletter here that is geared to help traders of all types, both large and small. If your a day trader, swing trader, or short  term investor you'll benefit from the opinions and advice we provide, as well as free tips, offers and up coming promotions.

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Bulls To Bears: Stock Trading and Politics

Politics, news and market moves. Whether it's a terrorist attacks abroad, threats of war from foreign leaders, elections or acts of mother nature, there are many unexpected news events that have preceded huge sell offs in the stock market. In the face of much of this distressed news throughout the past decade, the Dow has continued to soar and make higher highs. How was that possible? There is a intertwined correlation between political situations and the stock market. Sometimes politics seems to have a direct impact on the market movements, other times none whatsoever.

Take the “Trump Tsunami,” for instance, when the stock market exploded and skyrocketed immediately after President Trump won the 2016 presidential election. In general though, politics has very little effect on the stock markets long term movements, other than short term spontaneous pop and drop reactions.

When considering whether politics has impacted the market or not, it is important to differentiate between causes and effects. Investors are sometimes pumped up by an election of a particular candidate, such as Donald Trump, who seemed to have effectively shifted the political wind of the international order. The current state of the modern media environment mutes much of the impact of most events in the market. There is so much biased news today put out by certain media outlets that the market doesn’t seem to be impacted by a majority of it. By learning to tune out the noise from what's relevant is an important skill to have to becoming a great trader and investor. I also need to remind you that the financial media's main mission these days is not the quality of the news to help you succeed as a trader or investor, but instead to generate as many digital clicks or ad sales they can get.

One thing we know for sure, the stock market does not like a lack of confidence and the market been hammered many times amid a series of potentially volatile political events, including the debates over raising the debt ceiling, possible government shutdowns, developments over trade and, factors other than political ones are always at play. Among the many factors that influence stock market pops and drops are company earnings announcements, interest rates chatter and miscalculations on the world's economy.

It is prudent to stay aware of the reasons for a markets pop or drop, and not attribute too much meaning to a single particular event. Again, the real mover of markets are revenue and a companies earnings growth, If big corporations continue to move the needle forward and continue to grow their revenues, the market will trend higher.  We view corporate earnings as a bullish or bearish indicator. If they are better than anticipated the markets will move higher. Not so good, it will trend lower. However, smaller traders shouldn’t get too caught up on every pop and drop of the stock market, instead they should look at the big picture and keep their overall investment strategy in focus, continue to practice good and prudent trading habits, while you weather market shifts and political whirl winds.

We tell our members not try to political proof their portfolios. If you think about several political crisis over the last few years - like debt ceiling negotiations between political parties, when you take a closer look you'll notice they much of it turned out to be non-events for the market. No matter who is in the White House, there are plenty of stocks at any given time that are good, worthwhile investments. We advise our subscribers to remember that it is earnings, not politics, that moves the stocks. The few times politics really affected the ebb and flow of the markets, was when it modified the economic landscape where corporations were doing business. So, as a rule of thumb - it's not until the political policies materially affects the way a particular company or sector does its business is there a cause for great concern. Investors just need to learn to put all the short term noise on the back burner.

Yes, sometimes politics does affect the stock market, but the real reason for the political effects of the market is when politics and the stock market are economically related, like when the tax cuts were announced, it was positively related to the markets move higher. It is pre and post elections, like in todays environment, that investors must keep a wakeful eye on breaking developments. For many stock investors, politics still remains a huge factor in their investment making decisions.

We  should  all keep in mind that political shifts can move markets, but even under booming economic conditions and vigorous fundamentals the market regularly experiences 2 to 3 corrections a year. So, remaining diversified in the correct stocks is always the best method to help ride out the inevitability of a large swing in the market. As a stock trader you need to follow your convictions. But, your opinions and beliefs need to be able to change in the blink of an eye, if need be. Will Congress or state legislatures pass a law that will have a negative impact on a particular stock owned?...an industry, a sector, or the economy as a whole?

In a nutshell, politics is growing more personal, polarizing and insidious. This will likely get worse before it gets better and as the Republican and Democratic mid-term elections get under way, get ready for an ugly scene. The campaigns may be interesting to watch, but they not going to be pretty ones. How will these political adjustments impact the stock market? If you have a solid investment plan in place, like the methods we are executing for our members, with adequate diversification, we say that you make no moves based on supposed election theories. We are in uncharted political territory these days. So, sit back relax and watch the spectacle unfold, but hold on tight! Outcomes and predictions based on political shifts this fall are just pure speculation.

As we previously mentioned,  we embolden you to Join our FREE E-Newsletter and we will give you our trading perspective that will help you outperform the stock market and place better trades. Again, take advantage of our 14 Day FREE Trial  and get 2 weeks worth of FREE trading signals on stocks that are poised to move higher.

Until next time... Happy Trading!!!