NetTrade

• Introduction to the Commodity Market

  Trading involves many aspects. Trading in the commodity market is just one of the many other markets out there where traders actively try to practice their wares. The commodity market is basically a market where raw and primary products are being traded and exchanged. The commodity market is said to be one of the few areas of investment where traders with limited capital may have the opportunity to gain incredible profits in a relatively short period of time. Many people have become rich trading in commodity markets. But it may also be a case of easier said than done.

  History
  The roots of modern commodity markets today can be traced back to the trading of agricultural products in the past. Farm produce such as wheat, corn, and cattle were already considered as standard trading commodities in 19th Century United States. But the history of commodity trading can be traced way earlier during the time when cattle and other farm produce were being used as commodity money. Early Sumerians were using sheep and goats to trade for other goods while other cultures began using shell money. As this progressed, people sought a way to standardize this practice and trading commodities smoother and more predictable.

  The earliest evidence of standardizing the commodity trading practice can be found in ancient Sumer where small baked clay tokens in the form of sheep and goats were discovered. This has been considered as a crude form of using commodity money in trading. These tokens were found inside clay vessels with a number written on the outside. This was believed to be a form of commodity money which carries with it a promise of delivering a certain product or goods at a certain time and date. This early practice seem to be similar to the use of today’s futures contract.

  Advantages
  Trading in the commodity markets may have its own inherent advantages when compared to the other types of investment options. Trading in the commodity market, for one, may be the option for investors with limited capital. It takes quite less investing in the commodity futures than for one to start off trading in stocks.

  Another advantage of trading in the commodity market is that there are relatively lower commissions that investors have to pay. When compared to commissions on stock investing, the ones that investors pay for futures trading deal profit are way lower. What’s more, commodity trading may be relatively easier and simpler to evaluate than stock trading since there are only about forty futures markets to trade in as compared to thousands to choose from in stocks ad mutual funds.

  Posted in Trading

  June 12th, 2008 / No Comments

• How Traders Can Deal With Stress

  The trading market is just like a battle with warriors battling it out to get the best deals out there. And just like any battles, the warrior traders can be under a lot of stress most of the time. And in the trading battle, it is the strongest who always survive.Many traders have found themselves always stressed out eventually from the rigors on the trading floor. Most traders may not know it, but it is stress that is usually the biggest contributor to a substantial decrease in their performance which may further hamper their trading success. Being busy with all the work alone would not work at all.

  Sleeping only for less than eight hours daily would even eventually take its toll on the body. And the stress would pile up slowly until the busy trader begins to notice that he is getting tired and fatigued quicker and more frequently. Stress may then take its toll and affect trading performance. The longer the trader tries to delay dealing with stress, the worse the effects will be. Being able to cope up with the stress that comes with the job may do well to help traders keep their performance level up.

  The best thing that traders should do is try to understand stress and how it can affect an individual. First of all, stress generally affect everybody in a similar manner. There is always the stressor, which causes the stress reaction or response. There are two types of stressors- the negative and the positive. It is the negative stressor which usually can have a bad effect on the body. Negative stressors are always present in every trading market, with the positive ones following far behind.

  Dealing with the negative stressors may help determine how a trader may be able to cope with the effects of stress. There are various factors that may come into play. First comes the initial perception or reaction that a person has once a stressor or situation erupts. After that the stressor may then affect and display an emotional response to the perception. And once emotions come into play, the body becomes affected in reaction to the emotions displayed. Finally, the physiological reaction would bring about health consequences.

  Dealing with stress is all about the proper motivation and perception. And since the first reaction comes from the thought processes that come into play when one is faced with a negative stressor, so it is the ability to control what one is thinking that would help keep stress in check. Pushing positive thoughts would actually help keep stress from worsening.

  When in the trading arena, it is important that traders always try to psych up themselves before the start of the trading day. It can help toughen them up for the rigorous battle ahead. An idea of some relaxation techniques may also help a lot in dealing with the stress. The body may also require sufficient rest and the proper nutrition in order to help it cope better with the stress that comes with the job. There is no single answer to dealing with stress. It is always a combination of different things that would be effective in making the trader cope up better with it.

  Posted in Trading

  June 5th, 2008 / No Comments

• Common Mistakes New Traders Make

  Trading in any of the different markets is a high-risk deal in itself. New traders should especially bear this in mind. It can be easy for beginners in this field to get excited at the potential earnings that are placed before them. The huge gains that they can make can sometimes blind beginner traders to risk more than they could afford. In trading every decision can lead only to two things- either a trader enjoys success through profits earned or they suffer failure from huge loss on capital.New traders should realize early on that market trading is not all that easy. It is like a multi-dimensional puzzle that needs to be analyzed and assessed from different angles before coming up with the sound decision. Buying and selling might look easy for new traders but it actually requires a thorough understanding and experience of the market to make very sound decisions. These two things are usually what most new traders lack and may lead them to commit many mistakes if they are not careful. Here is a number of common mistakes that most new traders usually make.

  Taking Blind Risks
  Inexperienced traders are usually guilty of taking dangerous risks. Their inexperience tend to make them gamble too much on the market without taking time to analyze the market indicators or using common sense before making decisions. Many traders have lost a lot of money and failed just because they relied simply on too little information or from a juicy business rumor spreading. Market trading is always a risk, but the more experienced trader knows that there are certain levels to these risks. Making decisions based on more calculated risks wold allow more success in trading.

  Jumping In Too Fast
  This is another mistake that new traders usually make. They wish on making a quick buck that they do not try learn more about the ins and outs of market trading. The lure of huge profits can lead new traders to jump into the trading waters without testing them first. The little knowledge that they have can become a burden that may lead to considerable loss of capital. It is better for new traders to try and get the feel of the market as well as to take time to learn about it first.

  Trading In The Wrong Market
  Inexperienced traders tend to believe that all trading markets are generally the same. In a way, they are in terms of buying and selling. But there are certain factors at work in these markets that may not be applicable in all of them. An experienced trader who have considerable success in a certain market may not be as successful in another. New traders should really take some time to assess which markets they should be concentrating on based on their own experience and strengths. Their knowledge used on the wrong trading market would only lead to frustration and failure and bad experiences.

  Posted in Trading

  May 29th, 2008 / No Comments

• Understanding Fundamental Analysis in Trading

  People involved in stock market trading have several tools that they can use to help them decide whether to buy or sell a certain stock and when. Most of these tools involve careful analysis brought by loads of background research. One of the methods used by most traders is what is known as fundamental analysis.

   

  What is fundamental analysis?

  In simple words, fundamental analysis is a method of investment strategy where stocks are evaluated by analyzing the financial and income statements of companies. The company’s competitors, competitive advantages and management are also analyzed in order for investors to make financial projections of the company as a whole and consider its effect on stocks. Fundamental analysis bases its evaluation on the historical and present data of a company to achieve a number of objectives.

   

  One of the objectives of fundamental analysis is to evaluate company stocks and predict how its price would be in the future. Another objective of such analysis is to make a projection of a company’s business performance. Still another important objective of fundamental analysis is to assess the company’s management and its ability to make internal business decisions for the good of the business. All in all, these objectives may help stock investors decide on what stocks to buy or sell.

   

  Basic Concept of Fundamental Analysis

  The basic concept behind the fundamental analysis approach to stock valuation is considering the different underlying factors that may affect a particular company’s actual performance in the business it’s in and how its potential growth can be projected. Investors using fundamental analysis in determining stocks to buy usually think of their investments as actually like trying to buy a business. By investing on stocks of a promising, well established and stable company, investors can look forward to future gains and profits.

   

  Advantages

  One of the advantages of fundamental analysis is that it can help uncover some of the hidden gems in the stock market. There may be a company that have valuable assets, stable earnings and a strong balance sheet and yet its stock price value may not yet reflect on its true capacity as a performer. Fundamental analysis may also help in predicting long term economic and demographic trends that may help investors find worthy stocks to put their money on.

  Posted in Trading

  May 7th, 2008 / No Comments

• Profile of a Stock Trader

  When you say stock traders, the image of a cluttered trading floor filled with people running around, shouting at each other, some talking in hurried voices, some looking nervously on their computer screen, while others chatted happily with probably one of their investors on their cell phones. My image of a stock trader has often been a man dressed in full business attire that has an aura of sophistication, aggressiveness, and competition.

  Technically defined, however, and we arrive at a description of a stock trader referring to either an individual, a group, a firm, or a company whose very nature involves buying and selling stocks or bonds in the financial markets.

  Make no mistake about it, stock traders are professionals. Their knowledge about the money market must be encompassing and up to date. They will need to know everything there is to know about investment funds, mutual funds, hedge funds, pension funds, or other equity investments, fund management, and wealth management.

  Stock traders have been trained to make quick decisions based on their own evaluation of risks and the present information available. Investors rely on their experience and knowledge to make sound decisions for them. And stock traders usually have huge financial incentives riding on each decision they make.

  Decisions need also to be consistent so as to reflect the abilities of a stock trader and gage his full potential as well . Having consistent and satisfactory results is good for the qualifications of a stock trader. It means that the combination of a trader’s gut feel, analytical skills, effort, logic, and ideas are quite good and works perfectly well.

  When stock traders fail, there’s no other person or thing to blame but the trader himself. You cannot blame the financial market, the competition, and the investors for the outcome. Stock traders should take responsibilities for their actions. The decisions they made and will make in the future are based on a planned programs or processes.

  However, with the growing popularity of online stock trading using the latest stock market software and real-time news services the image that I have of a traditional trader is no more. Today, a new breed of stock traders are slowly advancing at the forefront of the financial markets engaging in different kinds of stock tradings including but not limited to day trading, swing trading, market making, momentum trading, trading the news, and arbitrage.

  Not only are the new breeds of stock traders becoming stronger and taking jobs away from the traditional ones, the emergence of another factor in the financial market is beginning to make stock trading companies rethink their trading policies and techniques.

  Referring to a new, modern line of individual investors that chose not to take part in the world of staring-at-a-computer-screen day-long l trader’s way of life, the new breed of individual investors are as aggressive as the stock market itself. These investors explore an array of short-term investment strategies on their own and hope that their decisions will pay off in the long run.

  Posted in Stocks, Trading

  July 20th, 2007 / No Comments