Secrets Traders 2010 PDF

The Secrets of
Successful Traders!
Turn $2000 into $1.7 Million in Roughly 1.9 Years!
This book is brought to you by
2StockTrading.cm
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Table of Contents
Introduction.................................................................5
The Game Plan..............................................................6
Why Trade In The Stock Market..8
Path To Profits......11
It Begins With You...........13
Roadmap To Profitable Trading...................18
Question Answer Session.......................................................27
How Stock Market Works................................................54
Some Key Terms You Must Know........59
Trading Secrets...............................................................66
Identify The Blocks of Winning Psychology.......................................71
Are You The Turtle Or The Hare?.....................................................77
Money Management.........................................79
Basic Stock Trading System........................................82
How to Select A Good Broker............................................................86
Its your money, take control..............................................................90
How to Manage the Highs and Lows in Trading................................96
INTRODUCTION
First of all, I would like to thank you for taking the time to download and read this E-Book and
secondly I would like to congratulate you.
What you are about to read might be the answer to help you to make more money in your life.
To make the learning process easier and more enjoyable, I've presented the lessons with the
help of examples and images. You'll find it more entertaining. If you are a quick reader, you
might read through the whole book in less than 4 hours.
Lot of people has the misconception that trading the stock is an easy task. The physical act of
trading is easy but making money consistently is not; otherwise everyone would be rich.
The tips we're about to give you probably won't make you millionaires OVERNIGHT. But They
WILL give you that tasty edge you need over your other traders.
Reminding You that "Knowledge Is Power"
A FEW ASSUMPTIONS ABOUT YOU

1. You haven't spent your last dime to buy this EBook. You will need some money (though
a lot less than any traditional stock trading system, say $1000) to trade in the stock
market following the strategies I am going to discuss in this EBook.
2. You need to have a burning desire to make money from the stock market. What you are
going to learn in this EBook is not at all complicated but it would require some
concentration and consistent effort.
If you make half-hearted attempt to complete to complete the tasks and small assignment then
please do not expect to get extra-ordinary results.
To your trading success
Anthony Green
THE GAME PLAN

The book is broken up in two sections. The first section is called Skills You Need and is made
up of all the skills you must have to be successful in the trading business. These include ideas
like setting and accomplish goals, skills you need to be successful and lot more.
This section is also going to reveal that killer strategy that youre going to use very soon to turn
your mere investment of $2000 into $1.7 Million dollars in roughly 1.9 years.
The second section is called Insider Secrets and is made up of trading secrets that Wall Street
people dont want you to learn. This section begins with the basics of stock market- how does
stock market functions and cover everything else you need to know about it.
SECTION # 1
WHY TRADE IN THE

STOCK MARKET?
Somebody has rightly said
If you don't know where you are going, you will probably end up nowhere.
So the question you should ask yourself is:
Why should I start trading in the stock market?
Is it the fun and excitement? Do you want to be rich? Perhaps you enjoy status of being a
trader? Do you want to do a part-time trading or a full time trading? Or maybe you just want to
secure your future.
For some traders, it's an escape. They hate the world around them - their job, their boss, their
spouse. No matter what is your reason behind trading, but trading has to be about only one
thing...
Making Profit
But making profit doesn't mean that you'll double your money every few weeks and start dating
Hollywood movie stars with your newfound wealth. If anyone tells you that, please laugh at him
loudly.
Trading is NOT A Get-Rich-Quick Scheme. It takes time to earn money and become successful.
The most basic problem that we have found most traders struggling with is lack of direction.
Traders come into the market hoping to make money, but without any strategy. Many traders fail
because their plan is too shallow or they don't even have a plan. Planning is a critical ingredient
in a successful trading decision.
It is being rightly said that -- failing to plan is planning to fail.

We know quite a few traders who have made a tremendous amount of money in the market, but
within a year or two, they lost all of it.
What Is The Reason...!!
These traders viewed trading as a "Get rich quick scheme" and not as a real business. Their
only true objective was to make as much money as possible, without any plan or consistency.
These traders believe that the "End justifies the means", which means that making money,
despite bad habits and reckless trading is good enough for them.
They end up losing everything
Trading is a perfect business. And the best part is you can do it full time as well as part time.
The choice is completely yours. But it requires a certain set of rules, strategies, mindset and lot
many things.
Trading is a perfect business. And the best part is you can do it full time as well as part time.
The choice is completely yours. But both type of trading requires a different set of rules,
strategies, mindset and lot many things.
We will talk about that in the later section of this book. But for now, you must decide-
Why do you want to trade?

I want you to do a little exercise here and please dont skip this. If it is here then it is important.
Close your eyes and visualize what being a successful trader means to you. See yourself doing
trading and making money consistently days after days and week after weeks.
Imagine the feeling of happiness it creates when you see money keeps on going to your bank
account. How does it feel getting richer every passing day?
This is really a great exercise and works in almost any situation. It helps you formulate a solid,
worthy, personal goal and keep you motivated and focused throughout this EBook.
Write down one primary goal you want to accomplish by trading in the stock market.
Take that goal and write it (It is important) on a 3 X 5 card and put it where you see it when you
wake up in the morning and before you go to sleep each night.
If you really want to burn this goal into your subconscious mind you should read it aloud each
morning and before you go to sleep each night.
Believe me, this technique really works. This is not some "corny" technique I am writing herethis is one of the key technique Napoleon Hills teaches in "Think and Grow Rich", the classic
book on how to turn your thoughts into riches.
So do you have your goal clearly stated and written down?
Good. Let's move on to the next part...
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THE PATH TO PROFIT

Recently we conducted a survey. We asked a very simple question to thousands of traders"What is the one thing you must start out with to become a successful trader?"
We got answers like - Good knowledge, Determination, Insider news, Patience, Technical
Analysis.... The answers are all on the target. But in trading to score big you need to hit the
bull's eye. And none of them did.
The bull's eye answer is
Sound Preparation
It is amazing to see how so many people think they can enter into this business and be
successful without any training, knowledge, or plan of attack. Think about it.
Can a person living next door just open up an office and be a successful doctor or an engineer?
Do you think he beat Ricky Ponting or Sachin Tendulkar in cricket without practice and lot of
hard work?
No way, it takes knowledge and training. Well, it's the same in trading stocks. So here's your
first very important trading lesson. In just seven wordsThe Path to Profit Begins With Preparation
There are a lot of people these days investing and making money in the stock markets all over
the world. It can really be profitable, safe, fun, very exciting and sometimes, it's almost
fascinating.
Trading in the stock market is the world's fastest route to freedom Yes, get it right and trading is
the world's fastest way for you to get rich and be free. Get up when you wish, go out where you
want. Meet up with friends or spend time with the family. You could just sit around and do
nothing!
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And that's just the start imagine all those things that you can achieve trading successfully.
But at the same time, trading could be the fastest way to go bankrupt. It should be no surprises
to learn that over 90% of the traders FAIL to make money from the stock market.
Reason.!!
Quite often, the problem begins with the preparation. Traders are so eager to enter the market
and make money; they sometimes forget one very important thing "sound preparation.
We have designed this book that will take you through the entire trade preparation process. This
book will provide you the enough information to put you into the top 10% of traders who
consistently make money from the stock market.
We can't guarantee that you will become an expert trader instantly after reading this book. What
we can guarantee is that if it's in here, it's important. Don't skip a line. Read the book online. Or
print it out. But either way, read it when you don't have a lot of other things to do and can
concentrate.
I am not saying that you have to read the whole book in one sitting. It doesn't matter how long it
takes you; what matters is that you do work through it, understand it and apply the lessons.
The fun and the cash come after the foundations are properly laid. The wrong mindset and lack
of preparation only leads to one thing...
FAILURE
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IT ALL BEGINS WITH YOU!!
Ready to start..?
Great! Let's get started...
Let me share this funny abstract from Norman Hallett's Mental Fitness for Traders. The story
given below may sounds little bit funny to you but this is how most of the traders trade in the
stock market.
I will also tell you the reason why I am sharing this abstract with you. But first, you go through
this...
A Typical Trading Scenario
You've done your homework.
Countless hours of seeking out the right guru (or piecing together your own system). Weeks of
monitoring your guru's daily trade picks (or paper-trading and back-testing your homemade
system)
No seat of the pants trading for you!
OK, now you're confident. It's time to put your money where your homework is. You've had your
coffee and your first trade signal is before you.
Confidence high. Trade made. First loss. Not a problem.
You understood before you started that successful traders both win and lose and "losing is part
of the overall winning". You've also heard more than once that "successful traders don't win on
every trade."
Moving on, still confident. Next trade made. Another loss, but...
This one hurt your pride a little because you got stopped out early in the trade, and then the
market rebounded and would have hit your profit target if you weren't stopped out.
You double check.
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Yep, you placed the stop where your trading system told you to place it. You kind of had a
feeling that the early weakness in the market was just profit-taking from the previous day's
trading, but you're trading a system and you must stick to it.
Wounded, but resilient.
After a good night's sleep and a few mouse clicks, your new daily trades are in front of you.
Hey, this one looks good! It's a little bit more risk than yesterday's trades had, but look at that
profit potential!
With a smiling face, the trade is executed. With a nice start to the trade, you're feeling good and
you've moved your stop to breakeven, just like your system said.
Surprise piece of news! Market reverses - blows through your stop an "unexpected" loss. Is
something wrong with the system? Has the overall market "personality" changed, affecting your
system to the core, rendering all your back-testing irrelevant?
Your confidence turns to doubt.
You decide to "watch" the next trade... I mean, isn't it wise to make sure the system gets back
on track before you "throw good money after bad?"
Isn't that what a conservative trader does?
Trade watched. It wins!
In your head, you beat yourself up a little because you know that when you started your "live"
trading, you made an agreement with yourself to take the first 10 trades "no matter what"... and
here you wimped-out and missed a big winner that would have gotten you even.
What's happening?
What's happening is that you are out of control. Your emotions are ruling your trading.
The above scenario plays out in every trader from time to time... newbie and veteran alike. The
winning trader senses what is happening and nips it in the bud. The winning trader spend time
EVERY DAY, working on the discipline of trading.
He/she reads a chapter in his/her favorite psychological trading book, scans the ten
commandments of trading that hangs on the wall over his/her desk, listens to his/her mental
training software for traders
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Something Every Day before trading begins.

There are many more losing traders than winning traders and its seldom about the trading
system. In my career, Ive come across at least 50 systems that I consider A+, yet I know for a
fact that MOST traders that have traded these systems have lost.
Why?
They were not in control of their emotions. Trading in the stock market doesn't begin with the
trading.
...It begins with you

You have to know yourself before even you think about the stock market. To become a
successful trader, you must have what it requires. There are certain qualities, which you need to
develop in yourself.
It's not talent, not luck that decides how much money you can make from the stock market, but
self-motivation, enthusiasm and discipline.
Any successful trader bound to have qualities like- focus, direction and commitment. To trade
like the professional traders, you are going to need all these skills.
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Do you have these qualities?
Determination
Enthusiasm
Focus
Adaptability
Discipline
Money Management
Self-Motivation
Patience
Commitment
Perseverance
Become successful is a major commitment. If you're afraid of long hours, hard work, hate risk,
aren't committed to doing whatever it takes to win
Do yourself a favor: Stop reading and send this book on to a friend. I don't know you, but I do
know one very important thing about you: You don't have what it takes. Face it, and get on with
your life.
But those who are still reading this book, here's some good newsYou can minimize the risk involved in the stock trading by following the advice in the book. Your
decision to become a successful trader indicates that you are determined to win. You are a
person with positive mind.
Successful trading requires all the above-mentioned qualities and you must acquire them in
order to come under the 10% category of the successful traders.
Remember, 90% of the traders fail to make money from the stock market.
Do not expect to be successful at trading instantly, you have to learn this business as well, the
same way you learn any other.
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Your attitude towards trading will affect your outcome.

Trading is a business, so treat it like one. Being over confident could cost you money, just as
being under confident could mean you miss opportunities.
Always remember -- when trading goes right, it can be a great feeling. When trading goes
wrong, it can be a nightmare
Fortunes are made in a matter of weeks and lost in a matter of minutes". Why the failure rate is
so high? Why can't we start trading without any planning and preparation and why 90% of
people fail to make money from the stock market?
And most importantly, is there any way to make Sure-Shot money from the stock market
without taking much of risk?
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THE ROADMAP TO
PROFITABLE TRADING
So let's begin our journey of knowledge and profit with a very simple question -- How much
money do I require to invest in the stock market?
Isn't it simple? But the answer is not that simple.
Do you know, thousands of people don't even invest in the stock market because they think that
to earn BIG you need to invest a lot of money into the stock market.
Let's take an example to get the better understanding of the concept.
Example
Suppose you want to earn $10,000 from the stock market. Now out of hundreds of companies
listed in the stock exchange, you found out one company that can give you 100% return on your
investment.
So what is the minimum amount you will have to invest so that you can make $10,000 even if
the company gives you 100% return on investment?
Yes. It is $10,000.
Sounds like TRUE???
But would you believe if I say that this is one of the BIGGEST mistakes you can ever make as a
trader.
Firstly, how many companies do you know that can give you 100% return on your investment?
Moreover, stock trading is always risky, no matter how well you trade. Majority of people end up
losing after an initial earning. You can lose your whole investment in the stock market.
So, wouldn't it be nice if you can start trading with a small amount of your hard-earned money
and can still make huge profit?
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Always remember, the more money you use, the more emotional fuel you are pouring onto the
fire. And as I already explained that to trade successfully you need to remove all emotional
influences. Any emotion that you have in the trading equation, spells bad news.
So what method can you use to reduce emotions in the trading?

Yes, I know it's not easy for beginners to start making money from trading stocks without any
knowledge. I know the frustration of losing because I was once a beginner and lost all my
money trading stocks.
In high school, I was interested in the stock market. But because I was an ordinary guy, without
any special advantages, I had no money to invest. I went through engineering school and I
invested my savings into the stock markets.
You know what; I lost all that hard earned money.
It wasnt a very good situation...
Newsletters, bulletin boards, books, courses, software, data services, tips and more. I tried
everything. Oh man, give it a rest!
I tried all trading strategies Day Trading, Swing Trading, Trend Trading etc. And the trading
results? Well if there had been an award for the world's worst trader, I would have got the prize
annually.
Week after week, month after month, I was losing all my money. In fact I was only days from
being forced to quit trading because my account was nearly dry. The stress was intolerable.
But then one day it happened, I made Money.
Yes, I have discovered a unique Fail Proof trading strategy and I started earning money
consistently. Within few months profits started rolling in. Initially few hundred dollars, then few
thousand and more.
It just kept on going - I was amazed and wondered where it was going to end. And all of this
from an account that was only days away from total wipeout.
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Can you imagine the feelings of happiness this creates?

Okay, No more suspense. Here is the secret of my success. Remember, it could be yours. But
you have to promise that you will not disclose this to everybody.
So here we go...
Earn only 1% profit on your trades on an average interim of 5 days

a week and you can-
SAFELY Turn $2,000 into the HUGE 1 Million in 5 years or Less

Stop!! Im not done yet.
Earn 1% profit every 3rd day a week and you can be a millionaire in just 5.7 years. But if you
can earn this 1% profit on your trade 7 days a week, you can
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achieve your target of 1 Million in JUST 1.9 Years

What do you mean by average interim?
Average Interim is the time gap between two profitable trades. For example, if you earn 1% on
Monday and another 1% on Thursday, then your average interim time would be 3 days.
Need Some Math Calculations?
Okay, lets do it.

Let's assume that the initial amount you want to invest in the stock market is $2,000.
Step # 1
Lets calculate number of times you need to earn 1% profit to safely convert $2000 into $1
Million. Open your windows calculator by clicking on Start > Programs > Accessories >
Calculator.
Now set your calculator on scientific view by clicking on the "View" tab at the top and then
"Scientific". (See Below)
Now the formula to calculate the number of times is given below:
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PROVEN FORMULA
Log 1,000,000 - Log 1,000
-------------------------------------------Log (1+0.01)
Please remember this formula. We are going to use it quite often. To calculate the logarithm of a
number, you need to enter the number and then press the LOG button in the calculator.
Log 1,000,000
Log 2,000
Log (1+0.01)
=
=
=
6
3.301
0.00432
Put these values into the formula and you will get number of times you need to earn 1% profit to
convert your initial amount of $2,000 into $1,000,000
6 - 3.3
= ----------0.00432
625 times with the initial capital of $2000
Just Imagine 1% return on your investment then re-investing it all over again and doing the
exact same thing for just 625 times can turn your little investment of $2000 into $1 Million.
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You can replace $2000 (your initial amount) with any amount of your choice. Increase the initial
amount to reduce the number of times you are required to earn 1% profit
For example, if you start with $3,000 instead of $2,000, then number of times you need to earn
1% profit would be:
Log 1,000,000
Log 3,000
Log (1+0.01)
=
=
=
6
3.477
0.00432
Put these values into the formula,
6 - 3.47
= -----------0.00432
586 times with the initial capital of $3000
STEP # 2
How long will it take to convert your initial amount into $1 Million? Well, that depends a lot on
your average interim. As I already told you, this is the time gap between two profitable trades.
Lesser the gap, sooner the target...
Number of days you are away from $1 Million can be calculated using this formula:
PROVEN FORMULA
Number of Days = Number of Times X Average Interim
Please remember this formula. We are going to use it quite often. We have already calculated
that if you are starting with $2000 then you need to earn 1 % profit 625 times in order to convert
that into $1Million.
Let's say your average interim time is 5 days. (By average interim time of 5 days I mean that
there is a time gap of 5 days between two profitable trades. Or in other words, you are earning
1% profit every 5th day a week).
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Therefore, number of days
=
=
625 x 5
3125 days or 8.5 years
CONGRATULATION!!
If you can earn 1% profit every 5th day, then re-invest it all over again and do the exact same
thing for 625 times. I guarantee...you will have $1 Million in your account after 8.5 Years.
And that's not all.
What will happen if you can earn this 1% profit every 3rd day instead of 5th?
Hummm.... Let's find it out.
Average Interim
3 days
Number of days
=
=
625 X 3
1875 days or 5.1 Years
Amazing. Isn't it?
What will happen if I manage to earn 1% profit every day?

Thats all right
Don't be ashamed. Little bit of greediness is acceptable. After all, you have just got an
amazingly powerful and proven strategy.
So let's try to find the answer for you.
You are asking, what will happen if you can 1% every day or 7 times a week. It means that now
your average interim is now just 1 day instead of 3 days.
Let's put the values into the formula,
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Average Interim
1 day
Number of days
=
=
625 X 1
The time you will take to become a millionaire is directly dependent on your average interim and
amount of money you are starting with. The more frequently you average those profitable
trades, the lesser time you will take to become a millionaire. Similarly, the more money you
begin with, the fewer the years.
Lets repeat the whole process again but this time you are starting with $1000 instead of $2000
or $3000.
STEP # 1
Calculate number of times you need to earn 1% profit to safely convert $2000 into $1 Million.
PROVEN FORMULA
Log 1,000,000 - Log 1,000
-------------------------------------------Log (1+0.01)
Log 1,000,000
Log 1,000
Log 1.01
=
=
=
6
3
0.00432
Put these values into the formula,

=
=
6-3 / 0.00432
694 times
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STEP # 2
Calculate number of days you are away from your $1 Million goal.
PROVEN FORMULA
Number of Days = Number of Times X Average Interim
Lets say, your average interim is 3 days. Put these values into the formula,
Number of days
=
=
694 X 3
2082 days or 5.7 year
If you start with $1000 and earn 1% on an average interim of 3 days, I promise, you will have $1
Million in your account after 5.7 years.
Remember, whether you do it not, these years are anyways going to pass away.
Let me give you an assignment now.

You want to start investing in the stock market. The initial amount you want to invest is $15,000.
Calculate number of years you are away from your goal of $1 Million if your average interim
period is 3 years.
I will give you the answer in the next lesson
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QUESTION SESSION
Okay, here's the answer to the question we asked in the previous question.
Number of Times
=
=
=
(Log 1,000,000 Log 15,000) / Log (1+0.01)

(6 4.17) / 0.00432
423.6 or 424
Number of Days
=
=
=
Number of Times X Average Interim

424 X 3
1272 Days or 3.4 Years
$15,000 To $1,000,000 in just 3.4 Years
But before we go further, I'm sure you probably have some unanswered questions and
concerns. And you want me to answer all of them one-by-one. So lets take your questions oneby-one and try to answer them.
I am slightly confused, Can you suggest me an amount I should start

trading with?
Well, if you ask me I would say you should always trade the amount you can afford to lose. And
thats not only me saying this. You go and ask any successful trader and Im sure, everybody
would be telling you the same thing.
The beauty of this system is you can actually get started with any amount you want and can still
make huge amount of money. With this trading method, it doesnt matter whether you have
$2000 in your trading account or you are starting trading with $50,000.
But this should be the money you can afford to lose. Never trade with the amount you cant
afford to lose. I recommend you to begin with a smaller amount until you build trust on this
system.
$2000 or even $3000 is not a very big amount of money that you cant live without. If you follow
this system correctly, you are bound to succeed. There is no way to fail. But if you happen to be
the most unlucky person in the world and you lost all of your money, it is after all only two
thousand dollars.
You can always earn it again.
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And if you cant afford to take this much risk, then you have no business trading stocks using
anyones strategy. Stock market is always risky, no matter how you well invest. Please
remember, whether you follow this method or not, these years are anyways going to pass away.
But there are two conditions you need to fulfill 1. You have to be consistent in making 1% PROFIT.
2. You cannot withdraw any amount from your account until you have reached your $1
Million goal. If you do that, the whole system will get disturbed.
What will happen if I start making 1% profit more frequently?

As I told you in the previous chapter as well, the time you will take to earn $1 Million will
depends upon these two factors1. The time gap between the two profitable trades.
2. Amount of money you are starting with.
Lesser the gap between two profitable trades, sooner the target of $1 Million
Similarly, if you are starting with bigger amount of money, then you need to earn 1% profit less
number of times and hence you can achieve the target of $1 Million in much less time.
For example, if you are starting with $10,000 then you just need to earn 1% profit 463 times.
And if your average interim time is 3 days, then you are just 3.8 years away from your goal. But
that doesnt mean, you cannot repeat the same result if you have less money to get started.
You can achieve even better results with the lesser amount but then you need to be little bit
more frequent in earning 1%.
Lets say, you are starting with $2000. So number of times you need to earn 1% is 625. Now if
you can earn 1% every second day a week, or in other words, if your average interim time is 2
days, then
Number of days
=
=
625 X 2
Isnt it interesting?
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Brokers like Ameritrade charges $20 as combined buy and sell

commission. If I start with $2000 and go for 1% rule, there will be
nothing left for me. What should I do?
Yes, it is true that there are some brokers who charges you $20 as a combined buy and sell
commission. So in order to get past your broker's commission either you sell you stocks at 1% +
Commission or you can start with any amount greater than $2000.
This is the reason why I recommend people to start trading with at least $2000 in account. But if
you don't have $2000 to start trading with, don't worry.
In chapter 10, I have given you a list of some of cheapest yet reliable brokerage firms. Their
commission rates are quite reasonable and some of them wont even ask you for any opening
balance. You can literally get started with no money - $0.00! This can be a standard interestearning trading account or any kind of IRA.
We have not considered the commission into the formula because it varies a lot. The day when
you are trading with $25,000 in your account, this $20 commission would be insignificant.
Forget about everything else. You just have to keep earning 1% or more...
Can I go for 2% profit instead of just 1%?

Yes certainly.
If you wish, you may definitely stay for 2% gain as well. In fact, it would be a better idea to
consider 2% return instead of 1% in the initial stage if you starting out with a low balance like
$2000 and wish to recover your commissions in order to meet the goals of the system.
Will this system really works?

This system is incredibly simple. Anyone can use it. You can get started with practically very
less amount of money and the risk is almost zero.
You don't need special training or even a high school education. It doesn't matter how young or
old you are and it will work for you at home or even while you are on vacation but there is a
catch....
It only works if you have an investment strategy that can produce 1% gains or more on a regular
basis.
29
I cannot make profit every time I trade. What to do?

You are absolutely correct. Nobody can make profit every time he trades. Thats impossible.
Profit and loss are the part of trading and you cannot avoid losses in any condition. No trading
system in the world can claim to be 100% profitable. And hence it is the average interim we are
focusing on.
Your focus should be on earning 1% PROFIT regularly as frequently as you can rather that
worrying about the losses.
It is the average interim of 3 days that is turning your $2000 into 1 Million in 5 years or less.
In the coming chapter, we will talk about how to minimize the loses, what is risk/reward ratio and
lot many things but for now just remember- It is the average that spells the future.
Okay, give me the proof that this formula is correct?

Good Question. Im glad, you asked this.
Okay, to find out the genuineness of this formula, lets take some help from Microsoft. After all,
they cant be wrong.
I want you to open Microsoft Excel Sheet. Now in the cell A1, I want you to enter the amount
you are going to start with say, $2000.
Now go to the cell B1 and type =1*A1/100 in the formula bar located just above that.
Note: 1*A1/100 is the 1% of whatever amount we have entered into the cell A1.
Go to cell A2 and type =A1+B1
Note: A1+B1 is the sum of the 1% of whatever amount we have entered into the cell A1 and
your initial amount. This will actually give you the amount you will get after adding 1% into your
initial amount.
Thats it. Now point your mouse cursor at the bottom right hand side of the cell A2 it should
change your pointer to + kind of symbol and drag it down the page (at least up to 630 rows
down).
Do the same with cell B1 - take your mouse pointer at the bottom right hand side of the cell B1
and drag it down the page (at least up to 630 rows down)
30
Now your next task is to locate the figure that says 1,000,000 in the column A. If you have done
everything correctly, then you should get this on the cell number A626.
Thats exactly we were looking for, This shows that you need to earn 1% profit for 625 times and
on 626th time you will have $1Million in your account if you are starting with $2000.
Note: You can replace $2000 with any figure of your choice. For example, if you wish to start
with $10,000, simply enter $10,000 instead of $2000 in the cell A1. Similarly, if you wish to stay
for 2%, type =2*A1/100 in the cell B1 instead of =1*A1/100.
So, what are you waiting for?

Choose any reputed broker of your choice and give him a cheque of $1000 or maybe $2000 to
start trading.
Just Imagine 1% return on your investment then RE-INVESTING it all over again and doing the
exact same thing for just 625 times can turn your little investment of $2000 into HUGE 1 Million.
Still not impressed?
Well, let me tell you initially even I wasn't impressed with a small 1% either. I wanted to make
"MONSTER TRADES", ones that would produce bigger returns like 100%, 200%, 300%, 400%,
even 500% or more.
But when I began to look much closer at the power of compound interest, I found it much easier
to earn 1 % return consistently instead of waiting for the stock to go up by 50%. Forget about
the huge returns, because the point I am trying to bring home here is...
You don't have to make the Monster Trades" to make big profits.
The greatest feature about this trading system is that you can make a one-time investment
payment into your trading account and never make another payment from your own personal
budget and you can still become a millionaire easily because of how this system works.
Even if you opened your trading account with as little as $2000 or as much as you want. Just be
consistent and keep locking in the small profits. Over time the power of compounding can
achieve some eye-opening results!
31
Can you suggest me a way to ADD some more spice into this?
Yes, theres even a better strategy if you are already trading into the stock market or if you wish
to divide your money in two parts.
You can divide your money in 2 parts. Follow this 1% rule with half of your money (or as much
as you want). Place the sell order above 1% as soon as your order gets confirmed.
This way you don't have to watch the stock market again for the whole day and you can get on
with your life. Actually many people find it difficult to watch the market for whole day due to their
jobs or studies...
Now the remaining half of your money can be invested in the stocks for swing trading or very
short term trading. Here you are looking for better profit margins of 5-15% with a holding period
of 1-2 weeks.
It is very simple. Nothing can be better than this. You are slowly but consistently increasing your
money using our 100% Proven and easy to implement 1% rule and at the same time, you are
making even more money using swing trading stocks.
So, how do I earn 1% or more profit EVERYDAY trading stocks?

Well, I want to be honest to you. Earning money is an easy task but earning money consistently
is NOT.
You will require a fail proof strategy to achieve the target of 1% profit on your trades
consistently. You cannot expect to become a professional trader just by reading this EBook. It
takes little bit of time, knowledge and practice.
But once you see how easy it is to make money from the stock market following our sure shot
method, you will not only use it but will also be telling everyone you know. Read all the steps
given below CAREFULLY.
Now I want you to have a look at the following chart. This stock was upgraded before the open
on 25th May. Now if you look at the stock carefully you will find one very interesting thing and
trust me, it is something that I found occurred in almost EVERY single stocks performance
chart that I examined (and I examined a lot) on the day the given stock is upgraded.
32
American Mortgage Acceptance Company (AMC)
Youll notice that the stock had closed the day before at about 9.9 (The dotted red shows the
Prev Cls line). Youll also notice the stock shot up to 10 on open in the morning. But then it gets
interesting: the price of American Mortgage Acceptance Company (AMC) dipped considerably
in the period between the open at 9:30 am and 10:00 am.
In fact, had you bought this security at precisely 10:00 AM New York time at about 9.9 dollars
per share, then set a limit sell order for just $10 per share, you would have had your sell order
filled in just about 40 minutes. A 1% gain. I did it. And you can probably guess where Im going
with this.
Virtually every upgraded stock, (with significant research qualifications in place), dips around
10:00 AM in this fashion. And if you can place an buy order at precisely 10:00 AM New York
Time and sell at 1% profit every third day, youll turn two thousand into one million in just 5.1
years.
The dip is caused, naturally, by intraday profit-taking. In fact, even when a qualified (and I will
explain these qualifications shortly) upgraded stock doesnt climb on open or appear to dip, a
10:00 AM purchase of that stock normally will net you your 1% profit anyway, easily within a 7
day period on average, sometimes in a day, and often in just minutes.
Now, this doesnt mean you can just plunge into any randomly chosen upgrade after you learn
about it on the Web as long as you buy into it at 10:00 AM and expect to see miracles happen.
There are a few pre-screening steps needed to ensure that your speculation is safe first.
33
Now I know there is one question that must be coming to your mind and you want me to answer
that as soon as possible. Well, lets do it.
How safe is it to put your whole account balance into one stock?
Okay let me ask you a question, how safe it is to invest in some blue chip stock for a year. You
see, one year is quite a good amount of time and anything can happen in between. You just
cannot predict the future and your investment may erode before their eyes.
But here in this strategy we are not going to buy any randomly chosen stock without doing
proper research. I will tell you all the necessary steps that you need to perform so that you can
choose that winning stock among all other losers.
And remember, one of the very important rules of trading is that- never to put money into a
trading account that you cant afford to lose. Im only recommending that you begin with $2000.
If the unthinkable happened and you lost it, you can decide that, well, it is after all only two
thousand dollars.
You can always earn it again.
If you find that attitude unthinkable, then you have no business buying stocks using anyones
strategy. The market is risky no matter how you invest.
How do I find the upgraded stock that will rise 1% from my purchase
price at 10:00 A.M?
I am glad you asked this question. Finding that winning upgraded stock would require little bit
research. This is accomplished by following these steps:
STEP # 1
Check upgrade / downgrade listing of the stock in MSN Money or any other
online financial website and make a checklist of the stock symbols.
34
One key condition of purchasing any upgraded stock is that another firm has not also
simultaneously downgraded it. Stocks that are both upgraded and downgraded the same day
make poor picks, and often fall.
Upgrade: A positive change in the rating of a security. For example, an analyst may upgrade a
stock rating from 'buy' to 'strong buy',
Downgrade: A negative change in the rating of a security. This situation occurs when analysts
feel that the future prospects for the security have weakened from the original recommendation,
usually due to a material and fundamental change in the company's operations, future outlook
or industry.
An analyst may downgrade a stock from a buy to a sell, after the company released information
about a Securities and Exchange Commission investigation into the company's operations.
I have taken MSN Money into consideration. You can also use Yahoo! finance or any other paid
service that can let you perform steps mentioned below.
The picture shown below is a snap shot of MSN Money for upgrade/downgrades. Here is the
URL that you can use for your purpose:
http://moneycentral.msn.com/investor/calendar/ratings/current.asp
Write down the symbols so that you can use it as a checklist in order to facilitate the elimination
of disqualified stocks. You can either use your computers notepad or a paper for this purpose
but I want you to keep these stock symbols available because we are going to need them very
soon.
35
Upgrades / Downgrade: May 25
STEP # 2
Determine one year performance chart of each and every stock available In
your checklist and eliminate those who do not meet our criteria.
Next, one at a time, copy and paste each of the symbols from your checklist into an online
financial website like MSN Money, Yahoo Finance! Etc. Heres the direct URL of MSN Money
where you can paste the stock symbol into the box and search for it.
36
http://moneycentral.msn.com/investor/research/welcome.asp
This snap shot will give you a better picture
Lets take BMC Software (BMC) to continue the process. We will paste the symbol, BMC, into
the Name or Symbol field and click on go. This is what going to come up.
Here, we need to look at the one - year performance chart of the stock. So well click on
SNAPSHOT which located at the right hand side of the page. (See Red Arrow in the above
shown picture).
Now as soon as you click on the Snapshot link, it will open a new page which would look like
this:
37
Following are some of the points that you must take into consideration while looking at the oneyear performance of the stock:
It should not be a low priced or a penny stock.

It should not be under-performing for a longer duration of time.
It should not be downgraded in the past week.
It should not be a highly volatile stock.
Lets have a look at the one year performance of some stocks to have a better understanding of
all the points given above:
38
RESULT: Doubt
REASON: The stock has started rising up recently but has not been performing very well for the
last one year.
ELIMINATE IT
RESULT: Pass
REASON: The stock has been an excellent performer over the last one year
TAKE IT
39
RESULT: Fail;
REASON: The Highly volatile stock
ELIMINATE IT
Repeat this step for each stock in the list and eliminate or disqualify the ones who does not
meet the criteria.
STEP # 4
Determine the stock ranking with the help of StockScouterRating
and eliminate the one who are below five.
Now your next step would be to check out the rating of the stock. Heres the snap shot of BMC
Software Scout Rating Summary:
40
You would also like to check for the recent headlines. Make sure that they are saying nothing of
a recent downgrade. Repeat the steps until you have left with just a few stocks that have not
been disqualified.
STEP # 5
Determine the Earning per share, P/E ratio, Earning growth
rates and Analyst rating for the remaining stocks.
Now, for each remaining stock we need to know just a few more things before making a
determination of which of the days upgrades are suitable, if any.
41
Earning per share & P/E Ratio
The P/E ratio is the Price to Earnings ratio, which tells us, in the example above, that BMC
Software stock price, is currently trading at 33 times its most recent earnings per share. This is
also called a stocks multiple.
If the stock had no earnings, the Earnings per Share would be zero or a negative number and
the P/E would read N/A or something similar to that.
If there are earnings shown, that is all we need to OK it. No earning shown means
DISQUALIFY THE STOCK.
Earning Growth Rates

Now, the next two tests are absolutely the most important tests you will perform. First, we need
to examine Earnings Growth Rates. This can be found using the Earning Estimates under
Fundamentals on the right hand side of the same page.
42
Look for the Earnings Growth table on the Research page. Make sure that the estimated
percentage figure is:
a. Not zero or a negative number
b. Greater than the figure presented for its Industry for the current financial year.
This helps ensure that the business is expected to perform at or above the expectations for its
competitors and that a subsequent downgrade or decline is less likely. The snapshot of BMC
Software Inc. from MSN Money will give you some idea about Earning Growth Rates. Please
have a look at that:
As you can see in the picture that earning growth rate of BMC Software Inc, is greater than the
respective industry growth rate and therefore we will keep this stock for the further
consideration.
43
The second thing we need to look at is Consensus EPS Trend which can be found on the
same page. Make sure that EPS Trend for this quarter from 90 days, 60 days, 30 days, 7 days
and current must be flat or rising.
Lets compare Eldorado Gold Corp. and Palm Harbor Homes, Inc. in order to have a better
understanding of EPS Trend.
RESULT: Pass
REASON: Consensus EPS trend is FLAT
TAKE IT
44
RESULT: Fail
REASON: Consensus EPS trend is FALLING DOWN
ELIMINATE IT
Analyst Rating
Next, (and on the same web page in MSN Money) take a look at the Analyst Rating. Here we
can see the rating given by analyst to any particular stock. Make sure that average brokerage
recommendation should be Buy or Moderate Buy.
45
RESULT: Fail
REASON: Average brokerage recommendation is HOLD
ELIMINATE IT
46
RESULT: Pass
REASON: The average brokerage recommendation is MODERRATE BUY.
TAKE IT
Disqualify a stock that is even or outweighed in the opposite manner, i.e. in favor of Hold,
Hold/Sell, and Sell.
Thats it!
Simply compare the equities on the list in these areas, and choose the one that wins. In every
case there are invariably items of criteria that cause one stock to be more valuable than
another. If you get to this point but have difficulty deciding on one over another, look deeper, if
you like.
Check recent news for any negativity in the stocks using the financial resource content provider.
Disqualify the one with the most recent mention of anything negative in its news stories.
The idea is to select the qualifying stock based upon these tests. It may come about that no
stocks that morning fit within the specified criteria. In that instance, simply sit out that sessions
trading.
47
This is not day trading; we do not gamble blindly on any stock which has seemingly favorable
news, or plunge in with an attitude that we simply must be in some security each day. We
carefully do the research.
The fact is, the upgrade behaves as a signal to us of two things. It tells us someone else,
hopefully more educated than us, has risked his or her reputation on improving the
recommendation rating of an equity, thereby producing in the marketplace an actual short-term
addition of value for the security, not just a positive news story open to interpretation which may
or may not already be priced-in.
And, it signals the possibility of a strongly valued stock in the long term, which we test for, and
which gives us the needed safety to risk going after the short-term gain from the stocks newly
upgraded status.
Where should I keep the stop-loss with your strategy?

We suggest our clients to keep the stop loss around 3-5% depending upon the overall market
volatility. In 90% of the cases even if the stock falls down, it quickly rises back to give you the
profit margin youre looking for.
Whats Next!!
Wait until exactly 10:00 A.M NYT before placing the buy order. You can also place the sell order
immediately above 1% + brokerage of your buy price. This way you don't have to watch the
stock market again for the whole day and you can get on with your life.
I cannot do that alone; can you help me with this?

Our strategy is extremely simple as it does not involve any chart reading, technical skills or
complex mathematical formulae. It may look like a lot of work but trust me, it is extremely
SIMPLE. Do it yourself for couple of times and I am sure you will find it very easy and
interesting.
But if you should find the analysis portion of the system daunting, you can dispense with it and
instead simply get my own incisive daily pick on 2StockTrading.com each business morning.
Get easy access to the 'Secrets of Successful Traders' Pick of the Day
with Online TipSheet
48
You can literally "watch over my shoulder" as I personally place and recommend trades each
business day in accordance with the Secrets of Successful Traders rules.
Each business morning, the web-based TipSheet scans hundreds of stocks against each
criterion explained in the Secrets of Successful Traders eBook to filter out the pick of the day.
This carefully crafted distillation consists of a timely and incisive recommendation so you can
virtually "watch over my shoulder" as you witness just which move I'm making each morning.
You'll be given an access to my exclusive member only area that would be updated
automatically as soon as I spot out the winning stock.
You can login at any time to check out the new and existing trade alerts. We generally update
the members area an hour or the night before the trading session.
The best part is that it is extremely easy...
I will take all the pain and do the research work, you just need to follow my recommendations. In
fact, if you had followed my stock picks from January 2009, you'd have
turned your...
$2,000 into $2,190,266.95 by the end of 31st December, 2009
Get your subscription to the TipSheet and enjoy the unequalled ease
of daily research prepared for you with full application of the Secrets of
Successful Traders principles to ALL of the day's Upgrades, in timely
fashion.
You get to "watch over my shoulder" each morning as I place and recommend trades in
accordance with the Secrets of Successful Traders rules. The subscription also includes free,
friendly e-mail support when and as you need it.
Only $69.97 to subscribe!
This is a one-time subscription amount which will secure your spot in TipSheet for as long as
the newsletter continues. You'll never be charged again.
Moreover, I want you to rest assured that I offer my fullest support for the users of the TipSheet.
You can reach me by e-mail up to twice daily, and you have my solemn promise to assist you
with tips, answers, or even just encouragement, to the best of my ability.
I am always there for you!
49
Let Me Make You an Unusual Guarantee...

I guarantee you will produce a profit of more than 200% within a month following my
recommendation. If I fail to do this, I will return every penny of the $69.97 you spent to subscribe
to the "TipSheet"
Will TipSheet really help you? Will my stock picks can help you turn $2000 into $1.7 Million in
roughly 1.9 years? Heres how you can find out without risking a single penny...
...Try TipSheet Absolutely FREE For 8 Weeks!

Listen, I know it's hard to believe a "measly email-a-week" could be worth $69.97. So how can I
convince you of this? Ive thought about this a lot and this is what I came up with...
If you decide to pay via check. I insist you postdate your check for 8 weeks in advance. Or if you
decide to pay with credit card... Your card wont be charged for 8 weeks.
As soon as I receive your order, I will immediately contact you by email and send your "welcome
package". The very next day you will receive your first stock trade.
After that, you've still got 7-1/2 more weeks... before I can even cash your cheque or charge
your card... to place the trade and see for yourself if it is as profitable as I say it is.
If it isn't, you can simply stop payment on your cheque or, call me... and... I will be happy to
send back your un-cashed cheque or destroy your credit card details. This way...
You Will Have Lost... Nothing!

Have you ever heard of anything like that before? There are just too many times in life when
people are NOT willing to hold themselves accountable for their own services.
How many people have a stock broker who will guarantee he will make you money... or... he will
refund your investment? Is there an attorney who will guarantee he will win your case... or... he
will refund your money? I am thoroughly willing to make such a statement... and... more than
willing to back it up.
Finally, Let Me Make a Prediction...
50
I predict that many hundreds of people reading this letter will not take TipSheet 8 week trial
Simply because theyre suspicious. "Theres got to be a catch," theyll say. Be the judge of this
yourself and read the summary of my offer below:
From what I have described above. You have 8 week risk free trial where you may test TipSheet
service. Within those 8 weeks your card will not be charged.
Furthermore if you decide to request a refund. I will even let you keep the "Secrets of
Successful Traders" eBook. That way, whatever the outcome of this you'll profit.
Want to Try "TipSheet" Risk Free?
$69.97 - One-Time Fees

Including an 8 Week Free Trial...
There is a true limit on the number of subscribers I can accept. If all spots are gone at the time
of your order -- I won't be able to reserve your spot right now and email you if a space becomes
available in future.
51
Quick Recap of the Strategy

Lets review all the above mentioned steps; so that youll have clear idea about the entire
concept and the way youre going to perform all the steps one-by-one:
1. Check upgrade listing

2. Make a checklist
3. Find out one year performance chart
4. Eliminate unqualified stocks
5. Scout rating
7. Determine EPS and P/E ratio
9. Earning growth rates
11. EPS trend
13. Check out analyst rating
15. Place the buy order at 10:00 AM NYT
16. Place the sell order at 1% plus brokerage
17. Sit back and relax
52
SECTION # 2
53
HOW DOES STOCK

MARKET WORKS?
Well, I am in no mood to write 100 pages just to tell you how the stock market works. I think 1020 pages would be sufficient to give you the clear picture. So let's not waste time...
Let's imagine that you want to start your own pizza shop. Now starting the pizza shop would
require some investment.
For example, you would be investing in equipments, land, furniture, food supplies etc. All the
money that you invest to start your pizza shop business is called as capital. Let's say, you would
be requiring the investment of $2000 in order to start your pizza shop business.
But what will happen if you do not have the investment of $2000 in order to start your pizza
shop? In that situation, you have 2 options.
1. You would take a loan from somebody that need to be paid with interest. Or,
2. Issue stock (or share the ownership in the company) to people who may be willing to
invest in your pizza shop in return for a proportional share of profits that your pizza
generate.
Okay, let's take both the situations one-by-one and find out the advantages and disadvantages
with them.
Take Loan from Somebody

Disadvantages
It is not very easy to take loan. In our example, if we want to take loan from anybody,
then the first thing we would be doing is to convince the person that his money is safe
and we will be able to return his money back. The person who is giving us loan would
certainly be interested in knowing about the future plans of the business and lot more
things.
Next, we will have to return all the money that we have taken as a loan with interest.
This interest would increase as the time passes. The more time we take to repay the
principal amount, the more interest we would be paying.
54
Advantages
You do not have to share the ownership of the company.
Issuing Stocks
Advantages
A company can raise more money than it can borrow.

You do not have to make periodic interest payments to your creditors.
And you do not have to make the principal payments.
Disadvantages
You have to share your ownership with the other shareholders

Your shareholders have the voice in companys policies that affects the company
operation.
So we can say that...

Companies sell stock (pieces of ownership) to raise money and provide funding for the
expansion and growth of the business. The business founders give up part of their ownership in
exchange for this needed cash.
The total number of shares will vary from one company to another, as each makes its own
choice about how many pieces of ownership to divide the corporation into.
One corporation may have only 2,500 shares, while another may issue over a billion shares
such as IBM and Ford Motor Company. The very first sale of stocks to the public is called Initial
public offering (IPO) and occurs on primary market.
I know there is one question coming to your mind and you want to know the answer before you
go ahead.
55
Why would anybody invest (or buy stocks) in my pizza shop? What if
my company fails?
Your question is quite right. Why should anybody invest in your company?
Advantages to Shareholders
When you buy stock in a corporation, you own part of that company. So as a part of a
corporation, shareholder will be entitled to share the profits of the company.
Now all the shareholders can be benefited by 2 ways:
When a company pays out profits to the shareholder, the money received is called a
"dividend". The corporation's board of directors chooses when to declare a dividend and
how much to pay.
Or when performs well, the stock price will go up and shareholders can sell their stocks
at a profit. This will happen when more investors want to buy stock in a company than
wish to sell.
So if someone sees a good future of your pizza shop and they can expect that their money is
going to grow with the company, they won't mind investing in your pizza shop.
For example, if you have invested $1000 to buy 100 shares of a company at $10 each and the
share price rose to $13 each, you would gain $300. That is equivalent to 30% return.
Why People Sell Stocks

There can be so many reasons behind that. A person may just need the money. He or she may
have watched the stock price go up, and have a feeling that this is the right time to get out of the
trade and lock in some profit.
Any bad news about the company or the industry, or a disappointing company's earning report
can also motivate him to sell the stock. He may also sell stocks because he sees a better
opportunity in some company.
For example, one may sell IBM shares, which is not moving, because he thinks he can make
better profit in Microsoft.
Most of time, investors sell the stocks because they have watched the price fall and in panic,
they just want to get out of the trade before they lose even more.
56
The Process of Issuing Stocks

Corporations sell stock to public as one way to raise capital. They are not allowed to sell shares
of stock on the open market without the approval of the Securities and Exchange Commission
(SEC).
A 20 days wait is required before it can sell the stock.
Companies may make their statement public with a preliminary prospect called "Red Hearing".
Basic information about the new offering is provided including how many shares are being
offered, which brokerage company will distribute the stocks to the public.
Now the company cannot sell the stock directly to the company. So they hire an investment
banker to help it sell its stocks. The process is called "Underwriting". The investment banker
works as a intermediary between the company and the public.
In most cases, underwriter purchases the stocks from the company for resale to the public at
higher price.
The difference between the price the underwriter pays and the price the public pays is called as
"Underwriting Spread".
A stock issue can be underwritten by several methods.
The underwriter can act as an agent, in which it tries to sell as much of the issue as it
can at market prices. This is a best effort arrangement.
The issuing company can also agree to issue new stock on the condition that all of it is
sold. If all of the stock is not sold, then it will withdraw the issue. This is an all-or-none
arrangement.
A negotiated underwriting is when the issuer and the corporation negotiate the terms of
the issue, the price, the size and other details.
The issue may be subject to competitive bids from investment bankers. The top bidder
underwrites the issue and resells it to the public.
When a public company issues more of its stock, it must first offer that stock to existing
shareholders; that is their preemptive right. A standby is the public sale of whatever
stock the existing shareholders have not yet purchased.
A firm commitment arrangement is when an investment banker buys all of the stock from
the corporation and then resells it to the public at a higher price.
A private placement is an offering in which the company sells to private investors and
not to the public. Private placements do not have registration fees.
57
The Prospectus
Prospectuses are legal documents that explain the financial facts important to an offering. They
must precede or accompany the sale of a primary offering.
The law requires companies selling primary offerings to send prospectuses to anyone who
wants to buy a primary offering. Customers should read a prospectus carefully before
purchasing any primary offering.
Prospectus must include but are not limited to the following:
Offering Price
Legal Opinion about the issue
Underwriting Method
The history of the company
Other costs related to the investing

in the stock
The management Team
The handling of proceeds
58
SOME KEY TERMS YOU

MUST KNOW!!
Ask
The lowest price a seller is willing to accept when selling a security (stock). This is the opposite
of bid, which is the price a buyer is willing to pay for a security, and the ask will always be higher
than the bid.
The terms "bid" and "ask" are used in nearly every financial market in the world covering stocks,
bonds, currency and derivatives. An example of an ask in the stock market would be $5 x 1,000
which means that someone is offering to sell 1,000 shares for $5.
Bear
An investor who believes the market as a whole or a particular stock will decline. Bears attempt
to profit from a decline in prices. Bears are generally pessimistic about the state of a given
market. A bear is the opposite of a Bull.
Bid
An offer made by a trader to buy a security. The bid will specify both the price at which the
buyer is willing to purchase the security and the quantity to be purchased. This is the opposite of
the ask, which stipulates the price a seller is willing to accept for a security and the quantity of
the security to be sold at that price.
An example of a bid in the market would be $25 x 1,000, which means that an investor is willing
to purchase 1,000 shares at the price of $25. If a seller in the market is willing to sell that
amount for that price, then the transaction is completed.
Book Value
The Book Value is simply the company's assets minus its liabilities.
Book Value = Assets Liabilities
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In other words, if you wanted to close the doors, how much would be left after you settled all the
outstanding obligations and sold off all the assets. A company that is a viable growing business
will always be worth more than its book value for its ability to generate earnings and growth.
Broker
A person that buys or sells an investment vehicle for you (securities, bonds, commodities, etc.,)
in exchange for a fee, which is called a commission
Bull
An investor who believes the general market or a particular stock is going to increase in price.
Buy Back
The buying back of outstanding shares (repurchase) by a company in order to reduce the
number of shares on the market. Companies will buyback shares either to increase the value of
shares still available (reducing supply), or to eliminate any threats by shareholders who may be
looking for a controlling stake.
Cash Dividend
Money paid to stockholders, normally out of the corporation's current earnings or accumulated
profits. All dividends must be declared by the board of directors, and are taxable income to the
recipients.
Long-term investors who want to maximize their gains should consider re-investing the
dividends. Most brokers offer a choice as to whether you wish to reinvest or take cash
dividends.
Closing Price
The final price at which a security is traded on a given trading day. The closing price represents
the most up-to-date valuation of a security until trading commences again on the next trading
day.
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Dividend
A portion of a company's income that is paid out to shareholders on a quarterly or annual basis.
The Board of Directors declares dividends. Dividends may be in the form of cash, stock, or
property. Most secure and stable companies offer dividends to their stockholders. Their share
prices might not move much, but the dividend attempts to make up for this.
Earning Per Share (EPS)

Suppose there are 2 companies- A and B. Both earn $100, but company A has 10 shares
outstanding, while company B has 50 shares outstanding. Which company's stock do you want
to own?
It makes more sense to look at earnings per share (EPS) for use as a comparison tool. You
calculate earnings per share by taking the net earnings and divide by the outstanding shares.
EPS = Net Earnings / Outstanding Shares
Using our example above, Company A had earnings of $100 and 10 shares outstanding, which
give an EPS of 10 ($100 / 10 = 10). Company B had earnings of $100 and 50 shares
outstanding, which equal an EPS of 2 ($100 / 50 = 2).
So, you should buy Company A with an EPS of 10, right? Maybe, but not just on the basis of its
EPS. The EPS is helpful in comparing one company to another, assuming they are in the same
industry, but it doesn't tell you whether it's a good stock to buy or what the market thinks of it.
An important aspect of EPS that is often ignored is the capital that is required to generate the
earnings (net income) in the calculation. Two companies could generate the same EPS number
but one could do so with more equity.
This tells investors that the company with the most equity is less efficient at using its equity to
generate income. Investors also need to be aware of earnings manipulation that will affect the
quality of the earnings number. It is important not to rely on any one financial measure but to
use them in conjunction with statement analysis and other measures.
Earning Yield
The earnings per share for the most recent 12 months divided by market price per share.
Earnings yield is the inverse of the price-earnings ratio.
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Face Value
The nominal value of a security stated by the issuer. For stocks, it is the original cost of the
stock shown on the certificate.
Initial Public Offer (IPO)

It stands for Initial Public Offering. An IPO is when a company sells stock in itself for the first
time.
Joint Stock Company

An organization that falls between the definitions of a partnership and corporation. This type of
company issues stock and allows for secondary market trading; however, stockholders are
liable for company debts. This is a type of company that has access to the liquidity and financial
reserves of stock markets, but also has the restrictions of a partnership.
Market Capitalization
A company's market capitalization (or "market cap") is calculated by taking the number of
outstanding shares of stock multiplied by the current price-per-share. It is the amount of money
you would have to pay if you bought every share of stock in a company.
Market Cap = (No. of Outstanding Shares X Current Price) / Share Purchase Price
The price that an investor pays for a security. This price is important, as it is the main
component in calculating the returns achieved by the investor.
For example, if an investor buys XYZ at $35, then this would be the purchase price. When
looking at the return on the investment, the investor would compare the purchase price of $35 to
the price the investment was sold at or the current market price for XYZ.
Share
Certificates representing ownership in a corporation. Shares are also known as stocks or
equities.
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P/E Ratio
The P/E ratio is how much money you are paying for $1 of the company's earnings. If a
company were currently trading at a P/E of 20, an investor would be paying $20 for $1 of
earnings
The P/E looks at the relationship between the stock price and the company's earnings. You
calculate the P/E by taking the share price and dividing it by the company's EPS.
P/E = Stock Price / EPS
In other words, if a company is reporting a profit of $2 per share, and the stock is selling for $20
per share, the P/E ratio is 10 because you are paying ten-times earnings
[$20 per share dividend by $2 per share earnings = 10]
In general, a high P/E suggests that investors are expecting higher earnings growth in the future
compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story
itself. It's usually more useful to compare the P/E ratios of one company to other companies in
the same industry, or to the market in general, or against the company's own historical P/E.
It would not be useful for investors using the P/E ratio as a basis for their investment to compare
the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has
much different growth prospects.
Price / Earnings To Growth - PEG Ratio

A ratio used to determine a stock's value while taking into account earnings growth. The
calculation is as follows:
PEG Ratio = Price to Earnings ratio / Annual EPS Growth
PEG is a widely used indicator of a stock's potential value. It is favored by many over the
price/earnings ratio because it also accounts for growth. Similar to the P/E ratio, a lower PEG
means that the stock is more undervalued.
Keep in mind that the numbers used are projected and, therefore, can be less accurate. Also,
there are many variations using earnings from different time periods (i.e. 1 year vs. 5 year). Be
sure to know the exact definition your source is using.
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Short Selling
The selling of a security that the seller does not own, or any sale that is completed by the
delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy
the stock at a lower amount than the price at which they sold short.
Selling short is the opposite of going long. That is, short sellers make money if the stock goes
down in price.
Stock
Stock is ownership. A business is divided up into shares of stock and parts of the company (the
shares) are sold to investors to raise money. A holder of stock (a shareholder) has a claim on a
part of the corporation's assets and earnings.
In other words, a shareholder is an owner of a company. Ownership is determined by the
number of shares a person owns relative to the number of outstanding shares.
For example, if a company has 1000 shares of stock outstanding, and one person owns 100
shares, that person would own and have claim to 10% of the company's assets.
Stock Signals
These are recommendation given by the experts about any stock. Various types of
recommendations are given below:
Strong Buy: Very high recommendation given by the analyst to purchase a specific
security.
Buy: A recommendation to purchase a specific security. "Buy" is better than neutral but
worse than "strong buy.
Buy and Hold: A passive investment strategy in which an investor buys stocks and
holds them for a long period of time, regardless of fluctuations in the market.
Hold: An analyst recommendation to neither buy nor sell a security. The hold rating is
right in the middle of the rating system. It means that if you own a security you still
shouldn't sell, but you also shouldn't buy the security if you don't own it already. Also
known as neutral.
Sell: A recommendation to sell a particular security. This rating is generally worse than
neutral, but better than strong sell.
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Stop Limit Order

An order placed with a broker to buy or sell at a specified price (or better) after a given stop
price has been reached or passed. This is essentially a combination of a stop order and a limit
order into one order and allows the investor to better control their entry or exit price of a
security.
A stop order is an order that becomes executable once a set price has been reached and is
filled at the current market price. A limit order is one that limits the entry or exit price to a set
price or better. By combining the two orders it prevents the stop order from being executed at
the market price which could be much different then what the investor originally wanted by
putting a limit on the price.
For example, lets assume that ABC Inc. is trading at $40 and an investor has put in a stop-limit
order to buy at $45. If the price of ABC Inc. moves above $45 the stop order to buy the security
becomes executable but because there is also a limit order attached it limits the price that the
shares can be purchased to $45 or less.
In terms of buying a stock it allows investors to buy when the stock has upward momentum
behind (moving from $40 to $45).
Stop-Loss Order
An order placed with a broker to sell a security when it reaches a certain price. It is designed to
limit an investor's loss on a security position. This is sometimes called a "stop-market order".
In other words, setting a stop-loss order for 10% below the price you paid for the stock would
limit your loss to 10%. It's also a great idea to use a stop order before you leave for holidays or
enter a situation in which you will be unable to watch your stocks for an extended period of time.
Under performed
An analyst recommendation that means a stock is expected to do slightly worse than the market
return. Also known as market under-perform moderate sell, or weak hold. Exact definitions vary
between brokerages
Upgrade
A positive change in the rating of a security. For example, an analyst may upgrade a stock
rating from 'buy' to 'strong buy'.
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TRADING SECRETS
Although I can't discuss in very detail because of time and volume constraint, but for those of
you who are either considering starting, or have already started trading in the stock market I
would like to share few very essential elements of trading.
To begin with, let's me ask you againWhy few people always make money in the stock market?
These people have few unknown amazing secrets of successful traders. In this chapter, I am
going to disclose all those secrets. So keep reading...
The secrets are trading psychology, proper money management and basic stock trading system
(entry, exit & trading rules). If you can master these three techniques, money will surely flow into
your hands.
I call them secrets NOT because very few of us are aware of them, but because very few of us
use them. Have a look at the pie chart given below.
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It has been found that the entire trading process can be divided into these 3 elements.
Trading Psychology
Money Management
Basic Stock Trading System
I am going to reveal these secrets one-by-one. And I want you to pay some special attention
here.
Let's begin with Psychology...
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Trading Psychology - Knowing yourself is the key!

Let me share a story with youThis story is about two young men. Both of them graduated from the college on the same day.
Both of them have a passion towards stock trading, both were intelligent, both of them were full
of aspirations and wanted to become successful in the stock market.
Both of them started trading at the same time. They started trading with same capital, same
type of trading software and tools along with the same type of trading system with the precise
rules for entry and exit.
But after one month, there was a difference in the amount they have earned during that month
trading stocks. After one month, one trader gone broke and other returned with 25% returns on
his investment.
Any guess work???
What makes this kind of difference in their trading results?
Do winning traders have some special talent...? Do they have some inside knowledge of the
stock market that is not available to others...? Is it that they have some kind of positive winning
attitude...? ...a better computer and software?
It's none of the above!
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The difference lies within you. Psychology plays a very important role in your way to trade. It is
the relationship between your thoughts and actions that will determine how successful you are
as a trader and ultimately how much money you make.
Your feelings have an immediate impact on your account equity. You may have a brilliant
trading system, but if you feel frightened, arrogant, or upset, your account is sure to suffer.
When you recognize that a gambler's high or fear is clouding your mind, stop trading. Your
success or failure as a trader depends on controlling your emotions.
When you trade, you compete against the sharpest minds in the world. The field on which you
compete has been slanted to ensure your failure. If you allow your emotions to interfere with
your trading, the battle is over.
You are responsible for every trade that you make. A trade begins when you decide to enter the
market and grids only when you decide to take yourself out. Having a good trading system is not
enough. Most traders with good systems wash out of the markets because psychologically they
are not prepared to win.
You must win the BATTLE WITHIN YOURSELF first, before you can win in the markets.
50% of your trading depends upon your psychology. As traders we have to realize that we have
no control over the market and we cannot influence the direction of the market.
You must develop the mindset (and the true understanding) that you are a winning trader
whether you are experiencing a run of losing trades or winning trades.
Treat yourself as a professional trader. Know what motivates you, understand your limitations
and become familiar with your strengths. This will help you to move smoothly through losing
streaks so you can be there for the winning streaks.
Most new and "intermediate" traders do NOTHING about their mental trading fitness. And this is
how they trade in the market:
"My god, Here I go again ! Can't I do anything right ! What will my wife say if I lose this one !
They are willing to spend thousands of dollars on "use-less" systems and out-of-town seminars,
but are totally neglecting mental conditioning.
You should be training as hard on your mental fitness as you do on preparing your trading
signals. Don't get emotional about trading. Always remember, the current trade is only one of a
long series. You are in this business for the long term.
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Remember that and don't, ever, get too attached to any one trade.
It is highly unlikely that you will become a successful trader if you allow your emotions to control
your trading decisions.
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IDENTIFY THE BLOCKS TO

WINNING PSYCHOLOGY
The most destructive emotions leading to poor trading decisions are greed, fear & pride. Lets
talk about them one-by-one:
GREED
Greed tends to keep a trader from closing out a
position when a reasonable profit has already been
made, in the hope that the stock price will go
even higher.
Its very easy to be greedy in this business. You
always want more. If you have made 100 points profit in
a trade, you want 200.
And the moment you have 200 points profit, you start
looking for 300. This lack of satisfaction is one reason why some people get themselves in
trouble.
So how would you avoid this feeling of greediness?
To avoid being greedy with your trading, you may want to know the reason behind that- why is it
so easy to be greedy with the trading?
Greed stems from a belief that theres never enough and there wont be enough. A greedy
person will never be satisfied; he will always look for more no matter how much he already has.
It seems that the reason people are greedy when trading is because they take non- market
factors (like how badly they want money, why they want it, can they afford to risk etc.) and apply
them to the market and their trades.
But it makes no sense because your non-market factors will NEVER decide that which way
market should move. So your non-market decision like I want to buy a fancy watch from this
trade is not at all going to change the market direction.
Market will move the way it wants to move.
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So when you cannot change the direction of the market, dont let your non-market decisions
make you greedy. Your greed makes you want more than the market may be offering and it
certainly influences you into not acting in your own best interest.
Always Remember
Wishing and hoping is never going to take you anywhere. Be practical. Do what market is telling
you to do
Staying in the market for too long (hoping for a huge windfall) is a strategy that backfires more
often than not. Greed also tends to result in rash or impulsive trades.
FEAR
Fear will have traders selling existing positions too soon or avoid buying a stock that should be
bought. In other word, fear leads to trading decisions becoming "paralyzed".
Mark Douglas's four fears are:
Fear of Loss
Fear of being wrong
Fear of missing out

Fear of leaving money on the table
I was once sitting in a room and trading futures. There I met a guy. I noticed that he was very
unhappy and distressed. I asked him the reason. He had bet the farm shorting a strong bull
market. He said"I don't know why I just didn't cut the position
earlier; anyone would have seen the strength why didn't I?"
I never saw him again.
That is the effect of fear - it drives out knowledge;
it leads to shortsightedness, it immobilizes us and
leads to inaction.
Let me share an example offered in
The Discipline Trader.
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A child bitten by a dog would quite often associate all dogs with the threat of pain, and
consequently generate an intense fear or even terror whenever he encounters any dog in the
future.
The childs fear of all other dogs other than the one that bit him is real. He has no way of making
a distinction between a friendly and a dangerous dog because his personal experience leads
him to believe that all dogs are dangerous.
However, the truth is something elsenot every dog is dangerous. In fact, some of the dogs are
quite friendly and wants to play with the child.
But the child has no idea about that and his fear continues to grow even further whenever he
encounters any other dog. He thinks that the source of his fear lies in the outside world.
But thats not the case here. His fear actually lies within himself.
He has a wrong perception that all dogs are dangerous.
The same goes to stock market. We could experience the similar fear during trade.
When we focus on our losing trades, mistakes, etc. we give our subconscious mind powerful
direction. We could then end up with those same loses that we are trying so hard to avoid.
Winning and losing are the part of the game. If you fail to make money once, it doesnt mean
that you not make money from any stock you trade in the future.
This type of feeling makes no sense and you can get yourself in trouble while trading.
PRIDE
Pride tends to keep a trader in a losing position for too long because of unwillingness to admit
that the original trading decision may not have been the right one.
Let's take an example to have a better understanding of Greed, Fear and Pride.
Our Trader Harry is an inexperienced trader like most of the traders in the stock market. He is a
kind of trader who wants to earn money from the stock market but he doesn't have proper
knowledge, equipments, tools and strategies.
The figure given below illustrates the way our trader Harry follows while trading in the stock
market
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Behavior of an Inexperienced Trader
The typical inexperienced member of trading Harry enters the market at point A. At the point A,
the price of the stock is increasing and due to this increase in the price; he buys it and wants to
earn some money out of an ongoing rally.
Once a trade is entered, stock immediately moves strongly in his favor. Harry will suddenly start
seeing a villa in the sun or a new sports car flashing before his eyes.
This trade is going to the moon so he removes his price target and decides to let it go.
Greed has now completely taken over his trading decisions and the previous plan (if any) is
ignored. Of course, markets rarely move in one direction for long so trade starts moving against
him because experienced traders start to cash in (Profit booking) on their profits and the rally
quickly starts running out of steam.
When the market turns, the greed turns to fear as the dream slips away and Harry tries to hold
on until the price gets back to where it was. The daytrade becomes a position trade...
Now Harry will fear that he has made a mistake. He fears making loss so he waits and hopes
that the market moves back in his favor.
The fear of taking loss now controls his trading decision. He is expecting that market will bounce
back and he refuses to get out of the trade
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- the day trade becomes a position trade of a few days and then it becomes a long term 'buy
and hold' strategy.
When the stock declines to the point where Harry cannot take any more pain he gets out at
point B, just before the stock finally hits its bottom. If for some reason he didn't exit at point B,
he will most likely exit at point C being happy to recover some of his losses.
Our trader Harry is exactly the kind of "herd" trader that successful traders prey upon.
On the other hand,
The successful trader will have tested their strategy extensively and will be aware that a losing
is also a part of the game. They will also measure their success on whether they place the trade
according to their system rather than whether it is purely a winner or a loser. The fear is
removed from the trade because they know that several losers in a row is to be expected.
The successful trader has set a target, either a certain price or a timed exit and will stick to it. If
the trade only takes 5 minutes then that's just great, there's plenty that won't.
To trade successfully you need to remove all emotional influences.
Here's a little exercise for you and believe me it can do wonders.
So read it carefully.
At the start of each trading day, before the market opens, take a few minutes for yourself. Close
your eyes. Start visualizing the market. See the real time chart on your computer screen.
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Watch as the price goes up and down.

See yourself entering the trade. Notice you feel relaxed. You are alert but calm. Completely
non-emotional. Observe how the price moves after you enter.
How it comes close to your stop loss.
Mentally place a number of trades. Follow them through. You get a losing trade. Notice you see
the big picture. You are unemotional. Completely calm
You put on another trade. Again, another smaller loss. You are still calm. Next a winning trade.
Again, you are relaxed. It's all part of the job.
This takes practice. And you must do it regularly to get the maximum benefit. Try it every
morning, and any time you even begin feel stressed or you lose you focus.
The advantage of this technique is it's FREE. And payoff is excellent.
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Are You The Turtle

Or The Hare?
Let me share one more abstract from Norman Hallett's Mental Fitness for Traders. What would
you rather have the perfect trading system or the perfect soul-mate?
Dont answer that out loud!
I would venture to say that most traders are so into their trading that they would hesitate and
ponder that question.
By the way, the answer is the perfect soul-mate. Thats because there is no perfect trading
system.
The perfect trading system is the right system for YOU.
Lets assess.
Are you the Impatient Type?
Let me stress here that by impatient, I mean that you dont like the notion of waiting more than,
say, a day, to see your trade results.
You use logic like I dont like to stay in a trade overnight, because thats where the risk
isanything can happen in these crazy times. Or
My signals are just as valid with a 60 second chart as they are with a weekly chart and Id
rather be able to keep adjusting.
These things that you say to yourself (valid or not) come from your inner-self trying to move you
to comfort.
Are you the Position-Trade Type?
You say, The market can be controlled short-term, but eventually the fundamentals come home
to roost. Or
Im not looking to eat up my capital in transactional costs. As far as Im concerned, the trend is
your friend and Ill stick with a trade.
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Are you the Where The Action Is Type?

You tend to think, A signal is a signal, whether its on a 2-minute chart or a monthly.
When my signal sets up, I GO! You add, Sometimes I dont even know which (stock /
commodity / currency) Im looking at.
That really doesnt matter to me. I just care about the technical pattern.
I wont bore you with more types, because they are unlimited. In my coaching of traders for
years, these above types were the predominant ones.
There is no right and wrong type.
There is only assessing which type you are comfortable with perceiving yourself as and then
committing to a trading system that reflects that type.
There are plenty of winning trading systems, of all types, that can be very successful. The best
way to have a good system work for you is if you can follow its signals without hesitation.
You are more likely to follow your trading signals if the system agrees with you. Now look
inside yourself. Then commit to following what your tested system tells you to do!
You must win the BATTLE WITHIN YOURSELF first, before you can win in the markets.
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MONEY MANAGEMENT
Money and portfolio management is one of the most important parts of successful trading. In
this eBook we are only going to touch upon money management.
Let's first define money management:
Money management evaluates the risk and reward of a trade and determines the best use of
investment money. It tells you how many shares to purchase and how much money to place at
risk.
It is the difference between great trading performance and poor performance. It will make the
difference between making money and going broke. Smart money management doesn't just
involve risking the right amount on every trade; it also involves managing a winning trade from
start to finish.
This is an important part of any good trading methodology that is often overlooked by beginning
and expert traders.
One of the main ideas behind money management is to preserve capital so as to enable one to
live to trade another day. Before you ever enter a trade, the first thing you should ask yourself:
How much money am I risking here and can I afford to lose it?
The first goal of money management is to ensure survival. You need to avoid risks that can put
you out of business. The second goal is to earn a steady rate of return, and the third goal is to
earn high returns- but survival comes first.
Attempting to get the big win may be exciting, but failure in the attempt can wipe you out.
You have to know in advance how much you can lose - when and at what level you will cut your
loss. Professionals tend to run as soon as they smell trouble and re-enter the market when they
see fit. Amateurs hang on and hope.
"What do I do after I enter a trade and it begins to make money?"
You hear so-called experts often make general comments such as "Don't let a winning trade
turn into a loss," "You'll never go broke taking a profit" or "The trend is your friend" and other
similar remarks.
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These general pieces of advice can do more harm than good because -THEY ARE TOO
GENERAL!!!
A beginning trader cannot be left filling in the blanks. Everything must be defined. That is why a
complete trading strategy must include specifically how winning trades will be managed until the
position is closed.
Believe it or not, many people have trouble closing-out a profitable trade. It is a greed problem.
If you are showing a large profit and you are a beginner, you got lucky. Go ahead and take the
profit! To wait, just to see the profit disappear, is a classic beginner's mistake.
Don't end up saying, "I should have sold when I was up".
One of the most common mistakes new and inexperienced traders make is that they start
trading without any planning.
They don't have any clue about the amount of money they can afford to lose if the trade does
not go in their favor. There is a term associated with the money management called "Risk /
reward ratio", which plays a very important part in your trading.
Risk / Reward Ratio

Risk / reward ratio is a measure of reward obtained from the trade compared to the amount of
risk taken for the trade. Let's take an example to understand the concept of risk / reward ratio.
Example
Harry purchases 100 shares of a company "A" at $10. His initial stop on this trade was set to
$9.5 which means that, he will sell all his shares if the price of "A" drop to $9.5.
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Hence, Risk
=
=
=
Cost Price - Selling Price (Stop Loss)

(10 X 100) - (9.5 X 100)
50
Therefore, the amount he is risking on this trade is $50. Now suppose, the trade goes well and
he sells all his shares in the company "A" at $12.
Hence profit
=
=
=
Selling Price - Cost Price

(12 X 100) - (10 X 100)
200
Therefore, his reward for this trade is $200.

To calculate the risk / reward ratio, we will determine ratio of risk taken in the trade to the
reward.
Risk / reward =
=
50 / 200
1/4
This means that for every $1 risked in this trade, he was rewarded with $4.
The conventional wisdom is that you should only take trades that deliver a risk/reward ratio of
1:3, or in other words, reward should be 3 times a risk.
This is a BIG NO in today's trading scenario.
The trouble with that approach is that in the real world of trading, such trades are usually only
successful less than 35% of the time. That means 65% of the time the trade is a loser and that
the probability of losing 5 trades in a row is about 11%.
On the other hand, our 1% rule follows the strategy that delivers at least a 1 to 1 risk / reward
ratio. This strategy has the potential to be profitable about 65% of the time.
In this scenario, 35% of the trades will be losers and probability of 5 losing trades in a row is
only about half percent (0.5%). Most traders would be happy to win 65% of the time with 1 to 1
risk reward ratio with little chance of an extended losing streak.
You should understand that every time you enter a trade you take a certain amount of risk. A
prudent approach to trading is to identify this risk before the trade is entered. This will help you
to place the stop loss and preserve your capital to make sure you can trade another day.
We will talk about the Stop loss later.
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BASIC STOCK TRADING

SYSTEM!!
A well defined trading system is essential in trading. Trading system can be divided into 3 parts:
Entry, Exit and Stop Loss
Entry and Exit
Without a specific entry & exit system, traders are like soldiers without a mission. The system
has to specify when to get in and when to get out of a position. Taking a loss can be emotionally
hard, but taking a profit can be even harder.
The outcome of every trade is dependent on the exit.
If we enter in a timely fashion and then exit poorly, the trade is likely to be a loss. If our entry
happens to be poor but our exit is good we might still save some profit. You can take a small
loss automatically if you have the discipline to set a stop the moment you enter a trade.
Taking a profit requires more thought. When the market moves in your favor, you need to
decide whether to stay put, get out, or add to your position.
An amateur can tie his mind into a knot trying to decide what to do about a profit. He multiplies
the number of ticks by their dollar value and feels a surge of greed: Let the trade run, make
even more money. Then the market ticks against him, and he is hit with a jolt of fear: Grab that
profit now, before it melts.
A trader who acts on his emotions cannot make rational decisions.
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Always remember, you can go back to the Greed and Fear example we have discussed earlier
if you need a quick revision.
One of the worst mistakes of traders is counting money while they have an open position.
Counting money ties your mind into a knot. It interferes with your ability to trade rationally. If you
catch yourself counting paper profits and thinking what you can buy with them -get rid of those
thoughts!
If you cannot get rid of them, get rid of your position.
If a beginner cashes out too early, he kicks himself for leaving money on the table. He decides
to hang on the next time, overstays a trade, and loses money. If a beginner misses a profit
because of a reversal, he grabs the first profit on the next trade and may well miss a major
move. The market tugs on the amateur's emotions and he jerks in response.
A trader who responds to his feelings instead of external reality is certain to lose. He may grab a
profit here and there but will eventually bust out, even if his system gives him good trades.
Greed and fear destroy traders by clouding their minds.
The only way to succeed in trading is to use your intellect. The exits, not the entries, determine
the outcome of our trades. Bad exits can make a good entry look bad and good exits can make
a bad entry look good.
...Always have a proper Entry and Exit prices before even entering the trade.
Stop Loss
This is the point where you admit you were wrong. No one can pick winning stocks 100% of the
time. Accept this fact. You can only play the odds. In trading, a stop loss is a must. Before
entering a trade, the trader must know precisely when he is getting out if the trade goes against
him. A trader has to be very disciplined about this.
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Trading without a stop is like walking down Fifth Avenue in Manhattan without pants on. It can
be done, I have seen people do it, but it is not worth the trouble. A stop will not protect you from
a bad trading system; the best it can do is slow down the damage.
Example
Let's say Harry buys a stock at $20 with the plan that it will go up to $24. Now he has to decide
what to do if the stock does not go up, but suddenly start falling.
He decides that if the stock moves below $19, he will accept that he was wrong about the
direction of the stock, sell the position immediately, and take a small loss. By taking small
losses, he preserves his trading capital, which allows him to trade again tomorrow.
In other words, setting a stop-loss order for 5% below the price you paid for the stock would limit
your loss to 5%.
Finally, always remember that if the trade is not going in your favor, there is only one thing to do
- Get Out!
You can't win every time. As a reminder, a big and costly loser usually starts-off as a small one.
Generally, if you are out more than one point you are in real trouble. Some people dont like
using Stop-loss when trading. For some strange reasons, they get caught up in thinking that the
market will hit their stop order and then immediately starts moving in their direction after theyre
stopped out.
You know what, this will happens sometimes. But I still insist you to use stop loss. On the other
hand, there are few people who like to place mental stop-loss. They think, they can call their
broker and get out of the trade if it starts moving against.
There is nothing wrong in that but you have to stick to that. Ive found thousands of people
feeling hesitant to call their brokers and get out of the losing trade. t usually cost them lot of
money as they do not act in their best interest.
The biggest reason people dont want to use stop order is because they fail to accept that
THEY WERE WRONG.
There is nothing wrong with having a manageable losing trade. The difficulty comes in when you
have an unmanageable losing trade. This can easily happens because if you take too much risk
on a particular trade by not using a protective stop order.
Dont let a losing trade turn into a HUGE losing trade.
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Breakeven Order
The first few days in a trade are the hardest. You have done your homework, found a trade, and
placed an order. It has been filled, and you placed a stop-loss order. There is not much else you
can do-you are like a pilot strapped into his seat for takeoff.
The engines are blasting at full power, but the speed is low, and there is no room to maneuverjust sit back and trust your system.
As soon as prices start to move in your favor, move your stop to a breakeven level. When the
takeoff is completed, your flight is at a safer stage. Now you get to choose between keeping
your money or gaining more, instead of choosing between a loss and a gain.
When you move a stop to a break-even level, you increase the risk of a whipsaw. Amateurs
often kick themselves for "leaving money on the table." Many amateurs allow themselves only
one entry into a trade.
There is nothing wrong with re-entering a trade after getting stopped out. Professionals keep
trying to get in until they get a good entry, using tight money management.
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HOW TO SELECT A
GOOD BROKER!!
Investing in the stock market can be complex sometimes. The assistance of a good stock broker
can be an essential element in your stock market success. A stock broker is an employee of a
brokerage firm.
Most markets require that all traders must place their trades through any brokerage firm. So
your broker is the one who will trade on your behalf. And since you cannot sit in front of the
stock market terminal in order to watch your trade, a good broker can play quite an important
role in your trading success.
Types of Brokers
There can be two general categories of the brokerage firms1. Full Service Brokers
2. Discount Brokers
Full Service Broker

A full service brokers not only trade on your behalf but they will also recommend specific
securities that suits your financial situation. These brokers begin with financial assessment of
your personal situation to determine your needs and suitability of various investments.
Full service brokers charge you on the basis of number and size of transactions in your account.
This service is good if you don't have time or not following any trading system. But If you are
following your own trading system, such broker may create confusion for you.
Discount Broker
On the other hand, discount broker is an order taker. He does not give you any trading advice
and you will trade yourself. You only need to call your broker and tell them what to buy, when to
buy and how much to buy and they will execute your order.
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You can place your order either online or phone. Since discount brokers are not doing any
research work and not recommending any stock to you and hence they charge lower
commission than full service brokers.
Find out how reliable is your broker

Ask your family, friends, relative and business associate for the names of brokers they use. This
will help you to find out the track record of your broker.
Do your own research

Interview perspective brokers and firms. Do not go with the first broker you interview because
your broker will be working for you and you will be paying him. Compare the features and
commissions of various brokers before finalizing the deal with anyone.
Check out the broker and the firm. Ask for their track record. How long has the firm in business?
What is the background of the broker? How about the complaint against the broker and the
firm? You can also get the official report on the firm and the broker at www.nasd.com
Check out their current clients

References are important. Ask the broker to give you the names of 10 current clients. Call them
all. Ask a lot of questions. Good brokers will provide references.
Find out their commission rates

Commissions count. Ask for the total fees and commissions you will be paying before you invest
in anything. Advertised rates for the companies may vary. It is better to know everything before
you start trading with the broker.
Are there any extra fees?

Many companies charge extra "Hidden" fees which can add significant cost to each trade.
These hidden charges may be transferring fees, insurance, administration charges, late
payment penalties and many more.
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Do you need to start with large deposit?

This is very important to find out the minimum amount of money you are required to open an
account. Check out different brokers and compare which suits your need. I have located 10
brokers who will establish your account with no money - $0.00! This can be a standard interestearning trading account or any kind of IRA.
MB Trading - MB Trading provides services for clients who demand the highest level of
reliability, speed and order execution.
http://www.mbtrading.com/
Muriel Siebert & Co., Inc. - Commissions as low as $14.95 for up to 1,000 shares. 1.5
cents per share over 1000 shares
http://www.siebertnet.com/index.html
Fidelity - Fidelity, a mutual fund powerhouse, offers a variety of brokerage services.

Commission of 2 cents per share over 1,000 shares.
http://www.fidelity.com/
Brown & Co.- Brown & Co offers $5.00 per trade for up to 5,000 shares.
http://www.brownco.com/
Charles & Schwab - Charles Schwab offers a wide array of brokerage services.
Commissions as low as $14.95 for active traders, or $29.95 over the internet for normal
trading.
http://www.schwab.com
Investrade - Trade online for as little as $7.95 per trade (unlimited shares).
http://www.investrade.com/
E*Trade Securities - E*Trade offers trading in stocks, options and mutual funds.
Commissions as low as $14.95. Power E*Trade is also available for active traders.
http://www.etrade.com/
Scottrade - Scottrade has 75 local offices, commissions as low as $7 for online trades.
http://www.scottrade.com/
TD WaterHouse - TD Waterhouse offers commisssions as low as $9.95. Free research,

quotes and more.
http://www.waterhouse.com/
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Important Note
We do not attempt to represent any brokerage firm. The list of brokers given above is just for the
informational purpose and you must do the research yourself before applying for their services.
Commission offered by the brokers were applicable till the time of writing and may vary from
time to time.
Do you need to pay extra to trade over the phone?

Most of the brokers give you both the features; you can either trade online or use your phone.
But some firms may charge you extra if you want to place the trade over the phone, using live
broker.
In some cases you are forced to so because of the poor internet connection. So look into this
matter carefully before selecting any broker.
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Its your money,

take control...!
.
As you already know, 90% of traders fail to make money from the stock market. But those 10%
who consistently make money from the stock market have one thing in common.
All of them are disciplined and follow their set of rules
Trading gives you a lot of freedom. You can get in whenever you want. You can get out
whenever you want. You can add and subtract to your existing trade. Or you can simply stop
trading whenever you want.
The only thing that could stop you from participating is lack of money. But with our trading
method that is no longer a problem now. I mean, you can now start with as much money as you
want.
Not many businesses give you a freedom to enter and exit whenever you want. And since there
are literally no rules in the trading, you have to create your own set of rules. Yes, you need to
make your own set of rules. I can just give you some guidelines.
Freedom is good but excess of anything is not good. So you need to have a structured freedom.
Trading rules will help you to be more consistent with your trading.
The 15 trading rules given below are not a "Get Rich Quick" scheme. They are a set of guiding
principles that will help you learn how to save, invest, make money and to achieve your financial
goals.
I cannot guarantee that they will make you a millionaire overnight but I promise you will not be
successful if you decide to trade without any trading rule.
Over time you will quickly see the benefits of these rules and your financial prosperity
will grow SIGNIFICANTLY !!!
In my twenty-one years of trading experience I have found these 15 rules of Investology to be
an invaluable way of keeping me focused on the trade
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1. TRADE WITH A PLAN

Set objectives before you ever buy. Define all outcomesnot only what you will do when it goes
right, but what you will do if you are wrong.
Determine the amount of capital you are willing to lose and conversely, define when you will
take profits. Letting the market take away your profits by holding on to a losing trade is not a
good strategy. Write out a trading plan on paper and follow it. Do not become a causality of
emotionally involved buy or selling. Trade with a plan.
2. SCREEN YOUR TRADES

To select trading vehicles you must have a predefined method. Select a method based on price
momentum and trend. Dont guess what the future is going to be, trade the current trend
direction. Your method must consider your individual time frame and risk tolerance. Always
address liquidity, sector rotation, and technical factors when screening stocks.
3. ALWAYS LOOK AT A CHART

Never buy a stock without looking at a chart of the stock first. Look at the one-year trading
range. Ascertain where you currently are in the trend and what that trend is. Also determine if
the chart reflects a stock split. Never trade against the trend. Buying and selling decisions are
technical in nature. Fundamentals will never tell when to buy or sell a stock. Always look at a
chart for entry and exit timing decisions.
4. STAY WITH A TREND

Your probabilities of success are far greater if you stay with a definable market trend.
Statistically, these trends provide better profit potential with a lower amount of risk. A good rule
of thumb is to watch a 50-day exponential moving average of the close.
This moving average represents the intermediate trend of a stock. A 12-day exponential moving
average represents short-term trend. The use of these two moving averages should yield
excellent results in keeping you in the trend. If you perceive the trend beginning to change, act
accordingly by taking profits or placing stops to protect your capital and locking in a profit.
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5. USE MONEY MANAGEMENT TECHNIQUES

Determine the probable dollar losses of your trading plan or investment style based on your
trading record for the current year. Then devise a way to generate income through passive
sources.
Cutting a loss quickly is the best money management you can have. Too many times traders fall
in love with stock, holding on as the stock begins to decline. Never use a hedging strategy, such
as options, to justify holding on to a losing position.
The use of money market, bond, and stock dividend income to offset losses in your trading
portfolio is an excellent technique. Covered call options may be an appropriate way to generate
income for your portfolio to offset losses. Be careful here because you can write covered calls
into oblivion. If the stock is going against you, sell it.
If you are going to hold a trade overnight, never risk more than 3% of your available capital. If
you are going to day trade, an excellent rule of thumb is to only risk 1% of your capital in any
one trade.
6. BUY AND SELL ON CONFIDENCE

Many times you wont feel quite right about a buy or sell decision. If this feeling persists after
you have done all your research and you have followed the rules to this point, dont take the
trade. Too many times individuals try to rationalize a decision. Dont try to find a good reason for
making a bad decision. Your decision must be a confident one.
7. BUY ONLY LIQUID STOCKS AND LIQUID MARKETS

Stay with major markets and stocks with millions of shares in the float. Make sure the average
trading volume is enough for you to sell all of your position on any given day. By following this
rule you should be assured of a reasonably good execution of your trade.
Dont buy stocks trading at the lower end of the price range. Generally speaking, do not buy
stocks that dont have good trend characteristics or predictability. True professional traders
avoid them and so should you.
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8. DO NOT DOLLAR COST AVERAGE

If your timing decision was wrong on an aggressive stock, dont make the problem worse by
trying to buy a stock that is going lower. The probability is that you will only compound the loss. I
call this technique disaster cost averaging.
Dont buy a stock until the trend is evident. Dollar cost averaging is good for your broker, but if
you continue this technique, the broker you will become.
9. NO ONE WINS 100 % OF THE TIME

Many people enter the stock market focused only on the profits and do not consider the losses.
If you think for one minute you are going to win one hundred percent of the time, you are wrong.
Losing is just part of the cost of doing business. Your goal is to make sure you control the risk
and not blindly put your money at risk, like a buy and hold investor. You must come to the
realization that you will never learn how to win until you first learn how to lose.
How you handle loss psychologically is truly the difference between an amateur and a
professional. Professional traders dont react the same way as an amateur to loss. When a
professional trader loses, he or she simply says next. They dont take the loss personally.
10. ALWAYS USE STOPS

The proper use of stops will protect profits and limit your losses. Look at stops as profit and loss
insurance. When you enter a trade, you place a stop to limit the loss in case the trade goes
against you. When the trade becomes profitable, you use them to lock in a profit.
Anyone who would argue against risk control by discouraging the use of stops is a fool indeed.
In effect they are saying you should put your capital at unlimited risk.
Does this make any sense to you? Of course not, but that is exactly what a buy and hold
investor does all the time. Most investors do not use stops because they are afraid of being
stopped out.
This is a psychological problem of not wanting to be wrong, or having to admit to yourself you
lost on a trade. It certainly isnt based on logic or strategy. Remember, always use stops if you
are carrying a trade over night.
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11. I DONT HAVE TIME

Make the time or suffer the consequences. If you are too busy to manage your money, maybe
youre too busy. Take a look at your portfolio and if you lost half of your money without knowing
it, you can congratulate yourself on being too busy.
Was it worth it? Probably not. It doesnt make much sense to work yourself to death and have
nothing to show for it. You must take time to educate yourself and take control of your future.
12. BE PATIENT AND LET TIME BE YOUR FRIEND

Making money safely takes time. The only time to hurry is when youre in trouble. Remember,
Everyday is not a trading day. Only trade when the sector, market, and the correlating stocks
are in trend. Just because you want to trade doesnt mean you should. Only trade when the
probabilities are in your favor, and let the market come to you
The market is going to do what it is going to do and what you want is irrelevant. Dont become
addicted to the action. You are not an action junky. You are a high probability trader. Profits are
made the old fashioned way, one trade at a time. Be patient and make time your friend instead
of your enemy.
13. LEARN FROM YOUR MISTAKES

The most successful traders and aggressive investors learn from their mistakes. Many even go
as far as writing down what went wrong and analyzing the problem. Mistakes can be costly, so
use them as learning experiences and dont make the same mistake twice.
Unfortunately a large number of people are doomed to make the same mistakes over and over
again. This behavior is usually a sign of emotional reactions to price momentum and the
absence of any well thought out strategy.
My father once told me that the best education was to learn from the mistakes of others. Most
people fail in the market not because of technology or a lack of information, but because of
emotional reactions, and never learning from their mistakes and the mistakes of others.
14. KNOW HOW TO SHORT STOCK

Markets do not go up all the time, a painful lesson some have learned over the last three years.
From the year 2000 to the present time, we have experienced one of the most agonizing bear
markets in the last 70 years.
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Does this bear market mean that you cant make money? No. What has the trend been for most
of the last three years? The obvious answer is down. Common sense says you are to follow the
trend. So if the trend has been down, why havent you been shorting stocks? The reason is
sadly fear and ignorance. Only 2 % of the American public ever shorts a stock in their lifetime.
This is shocking when you understand that markets and stocks fall 67% to 80% faster than they
rise. In other words shorting stocks tends to compound money faster than buying a stock to go
long. Plus, if you can make money when the market is going down and when it goes up, what is
it that you have to be afraid of?
Professional traders have made millions the last three years. You must learn to short stocks if
you are to have any chance of being successful in todays markets. Fear and ignorance must be
overcome because you must know how to short.
15. FOLLOW THE RULES

Some people are doomed to make the same mistakes over and over again. Using this set of 15
trading rules, which has been compiled from over 20 years of experience, should keep you from
making many common mistakes.
If you follow these rules of Investology, you have a much better chance of success than
someone who doesnt. Always remember, there is never any guarantee of success. But if you
are properly educated and develop the correct mindset, you have a major advantage.
Dont become one of the sheep led to the slaughter by media nonsense. You must make your
own fortune and control your financial destiny. Always remember, its your money. Take
controland follow the rules.
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How to Manage the Highs

and Lows in Trading
In order to manage your emotions effectively when trading, you need to create a written plan
that you can review regularly to stay focused on your goal of trading success.
By writing down your plan, you put yourself in the top 3% of individuals who have written goals
and plans, giving you an immediate edge on most traders. Make sure you have answered these
questions:
1) How will you enter trades? The key to good entries is putting on trades where there is
relatively low risk compared to much higher reward. You should also write down a clear
catalyst for the expected stock move.
2) How will you exit trades? You should define an initial stop point for your trade, at the
point where the trend is invalidated. You will also need a trailing stop technique to
protect your profits.
3) What type of orders will you use to enter and exit? When entering, I like to use limit
orders, good for the day only, while exits are often market orders. Why? Because limit
orders allow me to define my risk and reward clearly on the entry of a trade, while when I
need to get out, market orders allow immediate exit compared to the risk of missing my
exit with a limit order.
4) How much capital will you need to trade successfully? There are economies of scale as
you increase the amount of capital you trade with. Costs related to commissions, quote
systems and equipment begin to diminish as the percentage of capital invested goes up.
5) What percentage of your capital will you invest in each trade? The amount of capital I
typically use is 10% per trade in my own accounts. I know traders who commit anywhere
from 5% of their account per trade, to 20% of their account per trade. Your goal should
be to keep portfolio risk per trade at less than 2% per trade. For example, if you invest
20% of your portfolio in a trade, a 10% loss on that position would lead to a 2% loss on
your portfolio.
6) How many positions will you focus on at once? I like to concentrate my portfolio on my
best ideas, plus I like to stay focused on how each stock is acting. If my portfolio is too
big (Id say more than seven stocks is too many to focus on), then I will lose focus and
invariably miss an exit on a trade that I should have previously exited.
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7) What will your Trading Journal look like? In my Trading Journal, I note daily
observations, particularly related to my ability to execute my trading plan. I also commit
to doing a post-trade analysis every month. I note what I did right and wrong, and seek
to learn from mistakes to minimize future errors in similar circumstances, while also
looking for winning patterns where I seek to repeat big successes.
8) What is your Position Review process? I suggest you have an end-ofday routine to close
your day. Review your trades, and assess if you followed your plan. Keep a log of all
your trades, and make comments on each position.
9) What is your Preparation process before trading? You need defined time to prepare for
the next trading day and build up your trading confidence. I prepare after the close for
the next days trading, which allows me to formulate a plan of action BEFORE I get into
the heat of battle. This keeps my trading proactive instead of reactive.
10) What broker will you use? Most traders mistakenly think that commissions are the
number one factor they can control. In reality, commissions are a small cost compared to
the brokers effectiveness at executing your trade. Your focus should be finding a broker
who gets you speedy and fair execution of your orders. Once you have defined these
facets of your trading plan, you are in an excellent position to have a strategy to control
your emotions when trading. Make sure to review your plan on a regular basis to create
effective trading habits.
Psychological Issue #1 in Trading: Perfectionism

Why do we let losses ride and cut profits short? Perfectionism tends to keep traders from taking
their losses quickly, as they are too concerned about looking good to others and not wanting to
admit they are wrong. This leads to the dreaded hope for a return to breakeven, to get out
without a loss.
But does the market care about where you bought the stock? NO! The market is going to go
wherever it wants to go, and your job is to see that trend, recognize when you are not in tune
with it, and get out of such trades. We all have this tremendous desire to prove ourselves right.
But in the markets, we should concern ourselves more with making money than the amount of
times we are proved right. This means winning ideas need to be ridden longer than average,
while losers need to be cut short quickly. Our school training says there is one right answer, but
in the markets there are many ways to win.
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Perfectionism cannot only keep you hanging on to losers too long, it can also keep you out of
the best performing stocks. On stocks that rally sharply, I sometimes have to fight the feeling
that Ive already missed out on the move. In retrospect, many of these stocks go on to much
bigger gains than the initial gain I missed.
Traders tend to desire a perfect entry, and this leaves them on the sidelines during major
trends. It is these huge trending trades that carry my portfolio historically, so I have to make
sure I am participating in these big moves.
Ironically, perfectionism does not lead to higher performance or greater happiness.
Perfectionism can destroy your enjoyment of trading. Focusing on flaws and mistakes depletes
energy. This may escalate to panic-like states prior to making the trade, impairing objective
performance.
At some point perfectionist standards get set too high, and life is measured in units of
accomplishment. The drive to be perfect becomes self-defeating, as the individual often places
the intense pressure on himself, which can become crippling.
Perfectionists share a belief that perfection is required to be accepted by others. The reality is
that acceptance cannot be gained through performance or other external factors like money or
social approval. Instead, self-acceptance is at the root of happiness.
Ultimately you must be the one who must live with yourself. If others think youre perfect, but
you yourself are never happy, then perfectionism is not helping you to grow and develop to your
fullest potential.
One way to be less of a perfectionist is to set one goal and make it process oriented, instead of
being focused on the outcome. If you achieve the goal to improve your trading via that goal, you
win no matter the outcome.
Perfectionists often seek to control uncontrollable factors in a trade. For example, waiting for all
the risk to be out and everything to look perfect (the quality of the fill on the exit especially),
hoping or willing a better outcome by doubling down on a loser, etc.
When a trader focuses on these uncontrollables, he is more likely to tighten up and resist
pulling the trigger and exiting a losing trade, or hell miss out on a new winner that has moved
too far.
By focusing on a process that you can control (such as to focus on only five stocks at a time, or
work on implementing your entries and exits consistently with a small amount of money to
improve your ability to execute trades, or another process-oriented goal), you build confidence
in your ability to execute your trading plan.
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Based on these perfectionist tendencies, I recommend the following entry strategy for
perfectionists. Enter half a position as soon as you see an opportunity that generates at least
three times the reward for the risk at the current market price.
Then place the remaining half at your desired perfect entry price. For exits, always place
market orders, as the tendency for the perfectionist is to try to get a better exit price with a
limit, which often results in missing the exit on the way down.
Psychological Issue #2 in Trading: Fear

One of my subscribers, Vince, recently wrote to me:Your commentary is truly excellent. And
your batting average has been exceptional during this most awful market that I have ever seen.
Do you have any general advice that you would be willing to offer on a very serious problem that
I and perhaps many others am experiencing in recent weeks?
The length of this bear market and the substantial financial damage that its inflicted on me at
my age (51), has seriously damaged my investment psychology.
Consequently, while I read and believe your judgment calls, I havent been able to get myself to
actto pull the trigger, to try to begin to rebuild from the carnagefor several months. So, I
guess you might say Im suffering from the deer caught in the headlightssyndrome. Which
results in experiencing losses, and not experiencing the gains.
These violent moves in both directions, changing on a dime without notice, with an overall 2 1/2
year huge down-move cumulative, have left me at sea. How does one begin to work oneself out
of this state of mind after what we have been through?
Vince is suffering from the fear of trading that, after a string of losses, many traders experience
at one time or another. The reality is that human beings tend to do things that either maximize
pleasure or minimize pain. Not pulling the trigger on trades becomes a way for traders to
minimize pain, because mentally, the thought is that we are not causing ourselves any more
damage if we do not trade. The problem is that we then remain stuck in a state of fear until we
can TRUST our method again and start taking trades. This is why its so critical to have a
trading plan that is tested, one well be able to stick with it.
Heres a game plan for getting yourself back on track:
1. Define Your Trading Plan If you already have a plan, reexamine it. Are you following your
rules for entry, exit and money management? Does your plan still have an edge in the current
market conditions?
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2. If In Doubt, Get Out Who says you have to trade every day? If you are not pulling the
trigger on your trades, it is because you lack confidence in yourself or your plan. Try taking a
step back for a short while. Consciously decide not to trade real dollars, but work on paper
trading your buy and sell signals.
Sure, its not the same as trading real dollars, but this step allows you to work on executing your
trading plan. I have found systematic trading to be much easier than discretionary trading,
because it helps take my ego out of the equation. I focus instead on the execution of buy and
sell signals, as opposed to my ego wanting to be proved right. Paper trading will allow you to get
refocused on execution of your ideas.
3. Measure Your ResultsToo often traders may have a good plan, but then lose sight of
measuring their results on a regular basis. What happens is that 90% of your trades may be
done properly, but it is those 5-10% of your trades that eat you up with big losses. If you monitor
your results closely, you should start to develop a Success Profile which defines what your
best trades look like.
Once a trade doesnt fit this Success Profile anymore, you should look to exit whether at a
profit or a lossas your edge no longer exists.
Psychological Issue #3 in Trading: Lack of Confidence

In trading as in life, how you think determines the results you achieve. Many traders are filled
with doubts and a lack of self-confidence, so you need to coach yourself through tough times
with positive and self-motivating beliefs. Check to see if you possess the traits and beliefs of
winning traders, including:
1. My trading objectives are perfectly clear, and I truly believe I will achieve these goals. If you
have the belief that you will win, you increase your chances of trading to win. In order to have
this level of conviction, you must have a thoroughly tested plan. You also must have a clear
vision of how you will proceed with your plan in order to reach your goal. The more you can
visualize your goals being achieved, the more you will strengthen your internal belief and
confidence that you will reach your goals.
2. I have created a plan to achieve my trading goals. Im sure youve heard the saying I didnt
plan to fail; I failed to plan.Without a plan, your results will tend to be mixed and uninspiring.
Commit to writing down your trading plan and reviewing it regularly.
100
3. I prepare my plan before the trading day starts. If you dont have a plan of action once the
trading bell rings, you are moving from the proactive mentality into a reactive approach. I
contend that the more reactive you become, the more you will get in late to market moves and
dramatically diminish your reward-to-risk ratio. I prepare after the close for the next days
trading, seeking to stay proactive and a step ahead of the rest of the crowd.
4. I regularly monitor my trading results to measure my progress toward my goals. Trading
results tend to follow a zig-zag approach similar to how a plane is guided to its destination. At
periodic steps along the way, if a pilot is off course, he will set a new course towards the target.
This is called course correction. Once you have defined your trading target, your periodic
evaluation should lead you to assess what is taking you off course and encourage you to make
the necessary corrections to get you back on target.
5. I quickly discard negative emotions that can hurt my trading results. When you lose, learn
from the experience and put it behind you. You cannot afford to dwell on a loss once the trade is
complete. You have to have total focus on the new moment and forget about the past, save for
the time you allocate to evaluating past trades (which should be done outside market hours).
6. I am focused on the market during the trading day, and not easily distracted by non-market
activities during trading hours. This can be a tough one for many traders who have many
responsibilities. If this is the case, define the time you will be focused on the market and make
arrangements not to be interrupted.
101
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The Secrets of

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A FEW ASSUMPTIONS ABOUT YOU

To your trading success

THE GAME PLAN

WHY TRADE IN THE

It is being rightly said that -- failing to plan is planning to fail.

Why do you want to trade?

THE PATH TO PROFIT

IT ALL BEGINS WITH YOU!!

Something Every Day before trading begins.

...It begins with you

Do you have these qualities?

Your attitude towards trading will affect your outcome.

So what method can you use to reduce emotions in the trading?

Can you imagine the feelings of happiness this creates?

Earn only 1% profit on your trades on an average interim of 5 days

SAFELY Turn $2,000 into the HUGE 1 Million in 5 years or Less

achieve your target of 1 Million in JUST 1.9 Years

Okay, lets do it.

625 times with the initial capital of $2000

Put these values into the formula,

586 times with the initial capital of $3000

Therefore, number of days

Amazing. Isn't it?

What will happen if I manage to earn 1% profit every day?

Put these values into the formula,

Let me give you an assignment now.

(Log 1,000,000 Log 15,000) / Log (1+0.01)

Number of Times X Average Interim

$15,000 To $1,000,000 in just 3.4 Years

I am slightly confused, Can you suggest me an amount I should start

What will happen if I start making 1% profit more frequently?

Brokers like Ameritrade charges $20 as combined buy and sell

Can I go for 2% profit instead of just 1%?

Will this system really works?

I cannot make profit every time I trade. What to do?

Okay, give me the proof that this formula is correct?

So, what are you waiting for?

So, how do I earn 1% or more profit EVERYDAY trading stocks?

American Mortgage Acceptance Company (AMC)

Upgrades / Downgrade: May 25

It should not be a low priced or a penny stock.

Earning per share & P/E Ratio

Earning Growth Rates

Where should I keep the stop-loss with your strategy?

I cannot do that alone; can you help me with this?

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Quick Recap of the Strategy

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HOW DOES STOCK

Take Loan from Somebody

You do not have to share the ownership of the company.

A company can raise more money than it can borrow.

You have to share your ownership with the other shareholders

So we can say that...