Is Recession Over? Does It Really Matter?

One of the things, which you should not be concerned about when you are a Contract For Difference Day Trader or Spread Betting is the State Of The Economy i.e. whether we are in a recession or otherwise.

Presuming you have already read other posts on this site, you will remember that I have already pointed out that when you are Online Share Dealing using Contract For Difference or Spread Betting you should make money under any market condition - whether the market is identified as a BULL MARKET or a BEAR MARKET should not make a difference in your overall performance as a TRADER.

When you think the likes of Goldman Sachs and J P Morgan have spent millions of dollars to implement software codes, which are capable of trading at the speed of light it would be absurd to try to work out when the economy falls into a recession or recover from it -- trading in the 21st Centaury is a far cry from the times that the likes of Warren Buffet & Co used to make their money! -- So the sooner you will adapt your ways to make money in very short spans of times the more successful and nimble trader you may become in the long run - true this way of trading may be more stressful for some but the odds are that you will be more likely to sleep better at night when your profits are banked under your pillow!

Don't Be A Standby Trader

The attraction of using a leveraged share trading account such as a Contract For Difference (CFD) or a Spread Betting account is that it is far more flexible than if a trader was using the normal way of purchasing or selling shares in a company. Considerable profits and losses can materialise when an investor uses derivatives for the purpose of profiting from the stock market fluctuations.

One of the phases, which most traders tend to go through is that after a while they seem to confuse "Building More Discipline" with being "Extremely Overcautious" with their trading, to the extend that they reduce the number of times they are prepared to trade drastically and become virtually idle or Standby Traders!

Stock Markets are there to be traded and skilful experienced traders would not do their bank balances any favours by just being market watchers - in my experience once a trader has worked out that he has an advantage over the stock market, he should not hesitate too much to press the Buy or Sell button and this together with a bit of money management strategy should stand a frequent trader on a healthy and wealthy financial position in the long run for many years to come.

Stay A Daytrader

With the new year started already, I am sure we will be hearing from lots of Stock Market Experts that this year is going to be a good year for the Stock Market and there are going to be lots of bargain shares (stocks) to be had if we do our homework properly.

Well, the opportunities may exist or they may not!

The essential thing to keep in mind is if you are a small investor (trader) you cannot really risk or tie down your small capital on looking weeks or even months ahead -- Instead as a small trader (investor), you would want to employ your funds in something, which would give you nearly an instant return on perhaps daily or at worst weekly basis.

So to achieve the above, you would really want to be a Daytrader and if you happen to have a margin account such as a CFD or a SpreadBetting account, you have the added advantage of both shorting the market or going long as and when you find the right trading opportunities - With short-term trading or daytrading you could virtually close your positions as soon as your initial capital or investment has shown a profit. In other words the flexibilities that daytrading offers you as a trader, should not be overlooked easily.

To stress the nicety of daytrading, let's take trading the Dow Jones Industrial as an example:

We all know that lots of professional traders trade the Dow Jones to make a good living out of .... and we also, know that on most trading days the Dow travels up and down on a certain range -- so if we got ourselves stuck on a long term position, we would consequently be missing on a lot of points which we would be making had we employed daytrading as a means of making our initial investment grew.

Happy Daytrading for the New Year.

Preserving Your Capital

A Good Stock Market Trader not only knows when to trade but he or she also knows when to stay on the sidelines. Undertaking the latter route is far more important than actually a lot of traders give it credence.

With the huge and unprecedented ups and downs that the Stock Markets across the world have been going through lately, the notion of Capital Preservation must be heeded more than any time before.

Full-time stock market traders are particularly at risk in such market conditions for the simple reason that a lot of them solely rely on trading to make a living for themselves and their families. So it is highly advisable to make sure that they tighten their discipline and stick to their money-management systems more religiously than ever before.

The amateur stock market traders who trade on leverage are particularly advised to be extremely cautious before they commit themselves to opening any trading positions. They at least must make sure they have devised a working strategy for this type of market environment before entering the trading arena and they ought to stop chasing their losses once they realise their trading plan has stopped being effective.

Do Not Get Margin Calls

Due to the financial "Bailout" uncertainty that has been going on for the past few days in America, STOCK MARKETS across the world have been having the biggest degree of volatilities that has ever been recorded in the history of the Equity Markets -- traders have got to be extra cautious if they intend to stay active in this type of environment. Already, some traders have incurred heavy losses and some have gone completely bust as a result of the markets wild swings within the past few days. Remember Stock Market will take no prisoners!

Good traders will always try to adopt the following rules if they want to stop getting "Margin Calls" from their brokers
or getting wiped out completely:

• Do not be tempted to open large positions if you can help it.


• As soon as your position is in profit, move up your stop losses accordingly.


• Do not add to your losing positions.


• Stay away from the markets, if you have not traded in such environments before.

Lehman Has No Brothers

With the collapse of Lehman Brothers and the search for more funding by the American giant insurance company, AIG, the stock markets throughout the world have been having one of its worst moments of its recent times as regards to daily losses they have encountered. The "Dow Jones Industrial" lost a massive 504 points (more than 4%) last night during the market hours and a further 100 points when the Asian Markets were going through their "free fall parachuting".

However, if you were lucky to be a very experienced trader then you would definitely be able to take advantage of such market volatilities. But my advice to inexperienced and newbie traders would be, in such market environments, simply try to be an observant rather than a participant of the market -- this type of market, when it happens, does offer an "Excellent Opportunity" for the "Novice Players" to take in, what really can happen when markets go through wild swings -- if you can fight the urge from trading by opening a hasty position based on compulsion, then as an amateur trader you will be quids in and at the same time you will be extremely happy with yourself afterwards that you did not gamble your money away in an irresponsible manner!