I mentioned in a recent article that one of the things I like best about Amibroker is the ability to import data sets from various sources and use it to create indicators.
In this post, I show how to import TED spread data and import it into Amibroker. I then build a simple economic indicator that uses the TED spread for market timing. Read more »
In the classic trading book, Reminiscences of a Stock Operator, Jesse Livermore spoke a little bit about a professional gambler called Pat Hearne. Pat would treat the markets like a casino game (such as roulette, faro or blackjack) and his strategy was to make a series of calculated bets, always looking for small, sure wins. Read more »
Traders tend to focus too much on fine-tuning their entry rules and choosing between stocks. Picking the right exit can be just as important, if not more important, than picking the right entry. After all, it is the exit that locks in your profit (or loss) and ultimately impacts the equity in your trading account. Read more »
I never recommend trading off tips. It doesn’t matter whether it’s your next door neighbour or Warren Buffett, if someone tells you to buy a stock you should always do your homework first before you put any of your own money on the line. Read more »
On the whole, it’s better to avoid trying to pick market tops and bottoms. If you try and pick the tops and bottoms every single day you’re going to get frustrated very quickly and wind up losing a lot of money.
Monte Carlo analysis involves the use of algorithms to generate random repeated sampling of results. Typically, Monte Carlo is used to run a large number of simulations in order to find the likely probability distribution of an unknown event.
Building an intra day trading system for trading futures, stocks, or forex is no easy task and many would say that in today’s markets it’s simply not possible.
For one thing, the markets are not at all like they used to be.
Trading in the financial markets is not an easy thing to do but it is something that I decided I would set out to achieve many years ago when just a young man. Besides, finance is a passion of mine and I like nothing better than fiddling with trading systems and scouring various stock charts. Along with music and travel, it’s one of the things that I’m most interested in and it’s been that way since long before I even got a job in the industry.
It’s because of this passion that I decided to put together my own course on stock market trading but this wasn’t an easy decision at first. You see, at first I worried about giving away my knowledge. I worried that if I gave away all my trading systems (and code included) that it would be harmful to me and that people would get all this knowledge for just a tiny cost.
You see, in the past, traders have been extremely secretive about giving away their systems but what I have found is actually the opposite. In fact, I’ve found by giving back to the community I’ve become a much better trader myself. I now have a responsibility to provide students with the right information and that gives me the motivation to learn even more about trading.
Small cap stocks, or stocks with low volume, can be attractive for some traders who are looking for companies that the rest of the market might be ignoring. If a stock has low volume, it can often be near a reversal point as buying or selling peters out.
Similarly, small cap, micro-cap, and penny stocks are attractive because they’re not followed by most investors. Banks and funds focus on large cap stocks as these are more able to absorb large investments. As a result, it can take very little to push a smaller stock up to new highs, or down to new lows.
Of course, this also means that smaller cap stocks are more illiquid and therefore dangerous. High spreads mean that you’ll need a bigger percentage move in order to break even while it’s also harder to exit trades.
Online education seems to be a rapidly growing movement. Indeed, massive open online courses (or MOOCs) are a brilliant thing as they allow people from all over the world access to high quality education for little or no cost. Here are six free stock market courses for beginners that you can find online:
Designing a trading system is about following the right processes and being conservative in your assumptions. I have already talked about the pitfalls of selection bias and I’ve spoken of the importance of stress-testing a trading system thoroughly. Now I shall answer the question ‘what is slippage’ and how does slippage affect trading system performance.
Sometimes when creating content for this blog, I like to look at the Google Keyword Tool to get an idea of what people are searching for. It seems that every month a fair amount of people search for the phrase ‘how to trade stocks online free’ or some other variant.
In my view, this is quite amusing since I highly doubt that there is any stock trader who became successful without spending any money first.
Instead, most traders undergo a lengthy process of buying books, software, courses and other products. Many of those products may be useless or even worse, scams. Rarely, they may be very valuable indeed.
And of course, once a trader has spent money on books and what not, there is usually a period of losing money to the market.
In short, learning to trade is a very expensive process. Spending a bit of money in the beginning on some good quality learning tools can actually save you a lot of money in the long run.
Nevertheless, this is the age of the Internet, and information has never been so easily obtainable. Learning how to trade stocks online, for free, is not easy but it is not necessarily impossible. So here are some ways to get started:
Get the basics right
First of all, if you are a complete beginner I would suggest heading over to a site like Investopedia or Baby Pips as they have a large amount of content for beginners.
I would also suggest you learn about trading costs before you do anything else. You must know the impact of trading commissions and you must understand the bid/ask spread as this can seriously affect which stocks to trade and how much money can be made. At the very least you want to start trading on a level playing field.
For example, if a stock has a bid/ask spread of 5%, not uncommon in some smaller stocks, then you need to make at least 5% just to break even. On top of that, there are commissions to trade, which can be hard to overcome for smaller sized accounts.
Build a list of free resources and blogs
Next, I’d suggest going through my trading resources page. There’s a tonne of books, links, and blogs on there that are really helpful for beginners that don’t want to spend any money. OK, the books all cost money but why not print off a list and head down to your local library? Chances are good that they will have at least a few.
Or, you could check out one of the many book swapping sites like Read It Swap It. I actually swapped a cookbook once for a Jim Rogers classic 🙂
It’s also a good idea to bookmark some of the sites and blogs that you like. Use a free RSS reader like Digg and you’ll be able to see new content from all your favourite blogs as soon as it appears. Going through free content takes time, but there is no better way if you don’t have any money to spend.
Free courses & communities
Likewise, it’s a good idea to sign up for an account at a learning platform like udemy. True, a lot of the courses on udemy cost money but new courses are often offered free for a short amount of time, in order to gain favourable reviews.
Similarly, sites like Reddit are excellent places to meet other traders without spending a dime. As are other trading forums like the Trade2Win forum.
Utilize Google search
Finally, you should learn to utilize Google search more efficiently. Searching for ‘learn how to trade stocks online free’ for example, probably won’t get you very far. Whereas, searching for ‘profitable trading strategies’ in Google Scholar could yield much more interesting results.