Day Trading Blog

Welcome to Day Trade The World™ day trading blog. Please click on an article to read it.

Communication Post 11 agosto

Malaysia Market Is Back 

Day Trade The World™ is proud to announce the release of the Malaysian equities market tonight for trade date August 11, 2017.

The gateway fee for Malaysia is 16.42 BP, and Head Office will cover entitlements for the market until end of year 2017.

Remember to tell your traders about the opportunity to trade Malaysia tonight.

If you have any questions or comments, please create a mojo.

Il blog dell 11

A Guide to Value Investing for Traders

A Guide to Value Investing for Traders – Introduction

In many of my previous articles, I have asked traders to set part of their accounts to long-term investments. In short, I have asked traders to have two sets of accounts; one for trading and the other for investment. In the first account, the trader should spend time coming up with short term trades and benefitting from short-term swings. In the latter, the trader should create a portfolio and monitor it periodically. In this article, I will focus on the long-term investment account.

There are many ways of investing for the long-term. First, you can use arbitrage investing where you invest in similar assets and benefit from the spread. An investor who has benefited from this strategy is Ray Dalio who runs Bridgewater Associates, the biggest hedge fund in the world. The second way you can do it is special events where you wait for events like mergers and acquisitions to happen. The third way is value investing which has been advocated for years by people like Warren Buffet. As you know, Warren Buffet likes buying companies and holding them for decades. How then do you become an incredible value investor?

First, you should identify companies to invest in. As you already know, there are tens of thousands of companies that are public around the world. These companies are in different industries like technology, industrial, and utilities. You should first identify the industry you are interested in investing in. You can decide to focus on one industry or a combination of several. Ideally, I suggest investing in companies that are in different industries. This is because doing so protects you as it protects you from putting all your eggs in one basket.

Second, you should conduct in-depth research. Research is important because it helps you identify companies that are undervalued. Valuation is important. This is because you don’t want to buy a company that is already overvalued. For example, when you go to a market, you expect to pay an item at the lowest price. You should never buy something that you believe is very overvalued. This research should involve looking at the company’s valuation, its business, and its management team. You should also sit back and look at the future. Here, you should look at the next ten years and ask yourself whether the company and its products will still be relevant.

For example, 20 years ago, a company like AT&T was one of the largest company in the United States because of its wireline technology. Homes and offices relied fully on wired telephony services. However, today, most people have mobile phones, the industry has changed, and companies like Apple have become bigger than AT&T.

Today, you can look at it in terms of electric vehicles and crude oil. Tesla became the first large company to come up with electric cars. It is in the process of releasing electric vehicles for the mass market. It is therefore evident that in the next ten years, electric cars will replace the oil-powered ones. In fact, some countries have started to phase out gasoline powered cars. Therefore, if you are investing for the long-term, you should look at companies that are pioneering the new phase of electric vehicles. The same analysis is true even in other fields like beverages. In the past, people loved Coca-Cola. Today, most people in the U.S are trying to avoid Coca-Cola because of its impacts on health.

To be a long-term investor, you must be visionary. You must be look forward and imagine how the world is changing. Look at the millennials and the young people and see their behaviors. Look at how fast they are changing and the interests that they have. Then, invest in these companies and the trends that will change the future.

A Guide to Value Investing for Traders – Useful tips:

Crisis Blog del 11 agosto

Top Lessons from the 2008 Financial Crisis

Top Lessons from the 2008 Financial Crisis – Introduction

We are at an inflection point in the financial market. The stock market is an all-time high. The global instability is increasing from the threat of ISIS and North Korea. There is also a threat of protectionism especially with Trump’s America First policy and Brexit. The United States is going through a period of deregulation, larger than what happened during the Reagan years. For sure, this has played a big role in pushing the market higher. However, there are huge risks that we need to look at. In this article, I will go back to the 2008 financial crisis and look at what we can learn from it.

The 2008 crisis was caused by a combination of factors. In the period of George Bush as president, he removed many financial regulations. As a result, banks had a frenzy. They created financial instruments known as CDOs (collateralized debt obligations) and MBS (mortgage backed securities). These instruments allowed people, even those who had a bad credit history to take mortgages. In 2008, the house prices started coming down and people started defaulting on their obligations. Banks like Lehman Brothers, Merrill Lynch, and Bear Sterns were the most affected. They had given out so much loans. When the crisis started to unfold, Bear Sterns was bought for pennies while Lehman Brothers collapsed.

These banks were insured by AIG, then, the biggest insurance company in the world. When the banks collapsed, the company also suffered but it was saved by the taxpayers. At the end, many Americans and many money managers went bankrupt. People like Ken Griffin and David Einhorn lost billions of dollars.

The first lesson is that nothing is permanent. This is I believe one of the most important lesson anyone needs to learn from the crisis. Lehman Brothers was once one of the largest banks in the United States with more than 20,000 employees. It had iconic buildings and prestige. However, at the final day, the company collapsed with international media watching. We watched its employee pack their belongings and go home jobless. As a trader and as a human, you need to realize that nothing you own or a situation you are at is permanent. You might be doing so well but one day, you might be at a loss. Therefore, live your life knowing that.

The second lesson is on the bullish and bearish markets. As a trader, you need to realize that bear and bullish markets never last forever. They come and go. Before the crisis, the market was on an uptrend with records being shattered every month. As a result, most investors decided to put their money on the long trades. Then, when the crash came, they lost money. A good look at investors who made money during that time shows that none of them were long-only investors. A person like Jim Simmons of Renaissance made more than 70%. He made his money because of his long-short strategy where he buys undervalued companies while shorting those he believes are highly valued.

The third lesson is on who you listen to. There are many investment analysts today; the so-called sell-side analysts. Before the crisis, many were interviewed by financial media and supported the financial organizations. Jim Cramer, a person who is highly respected promoted Lehman Brothers, a week before its collapse. Therefore, as a trader, I recommend that you only use your research before you buy and sell financial instruments.

Top Lessons from the 2008 Financial Crisis – Useful tips:

Blog dell 11 agosto

The Need To Protect Your Trades In The Current Market Conditions

The Need To Protect Your Trades In The Current Market Conditions – Introduction

On Monday, Donald Trump had a meeting to discuss the opioid epidemic in the United States. After the meeting, the press got an opportunity to ask him several questions. One of them was on North Korea. As you already know, North Korea presents a threat to global peace through its development of nuclear weapons. Donald Trump’s response was that North Korea would be met with fire and fury. Soon after, North Korea responded, saying that they would attack United States’ territory of Guam. The market reacted angrily. The indices which were touching their all-time highs dropped for two days consecutively.

Sadly, these are the times we are currently living. Periods when no one can accurately state what will happen in the next minute. Therefore, for traders, you need to always protect your trades. Every time you open a trade, it is important that you protect them. There are several ways to achieve this. First, you need to always have a stop loss for all trades you get involved in. A stop loss stops a trade when a certain level is reached. Second, you can hedge the trades you open. One way to hedge is to do what is known as Pairs Trading. In pairs trading, first, you find two currencies or commodities that are perfectly correlated and then buy one and sell another using different volumes. In such a case, you will make money from the spread. Another way to protect your account is to trade in small volumes.

The first reason why you need to protect your trades, especially these days is that we have a United States president who is not convectional. In the past, U.S. presidents were highly convectional. We knew what they were to say before they opened their mouth. This is because their words were well-calculated. Today, this is not the case. Trump is not your ordinary politically correct president. He is a prolific Tweeter who says things no one expects. There are also huge number of leaks in his administration. Therefore, no one really knows what will happen in the next minute. No one knows whether or when he plans to bomb North Korea. This is very relevant because of the power of the United States which is the most powerful country on earth.

Secondly, you should always make protecting your trades a norm. As a trader, no matter what your research tells you, no one can guarantee that your trades will go your way. A good example is what happened recently. Nvidia is one of the best performing stock today. It has gained by more than 50% this year. On Thursday, it released its earnings that beat analyst estimates. Its projections were also good. However, during extended hours, the company’s stock tanked by more than 10%. Apparently, investors were looking at its segment’s performance and its growth. Therefore, investors who had not protected their trades suffered from this.

Third, as I have mentioned before, we are in a low volatility environment. Money moving to passive investments has increased significantly. Apart from the North Korean issue, there is no other geopolitical issue that is affecting market volatility. In fact, the VIX index which measures volatility in the market has been at the lowest level in years. In such periods of low volatility, it is important for you to always be protective of your account. Also, be prepared to take profits, no matter their size.

The Need To Protect Your Trades In The Current Market Conditions – Useful Tips:

Communication Post del 8 agosto

GOOD NEWS: Entitlements Promotion Policy Extended

Please be advised that we are updating our entitlements promotion policy for new traders.

Effective immediately, Head Office will cover all entitlements costs for new traders for up to one year until they reach US$200 in profit. Previously, the policy limited the promotion to four months.

For new traders, Head Office will pay for all entitlements for the first 12 calendar months or until the new trader earns the equivalent of US$200 in profit in a month—whichever comes first. The trader is responsible for entitlements in the same month that they reach the US$200 threshold.

For more information, read the Entitlements Promotion Policy.

If you have any questions or comments, please create a mojo.

Tell your traders to take advantage of this promotion today!