dividend written with blue bars and numbers on the background

Top 5 Dividend Stocks to Invest in 2018

People who are coming into retirement look for income-producing investments. This is most especially true after 9 years of historically low interest rates that hurt conservative investors. If you plan on living for another 10 to 30 years, Treasury yields won’t just work. That is why you need are the top dividend stocks to invest in 2018.

each stacked coins are increasing gradually in each hour of the clock

If you’ve got no idea what dividend stocks are, you can read more about them in Dividend Stocks : Basic Terms and Strategies. After that, check out our Dividends: Knowing How They Work and Their Value.

Top 5 Dividend Stocks

Johnson & Johnson

yellow and organe baby shampoo products and powder products from Johnson & Johnson

You can begin investing with the archetypal blue-chip dividend stock Johnson & Johnson. There’s nothing better than having a more diversified and consistent stock on Wall Street like Johnson & Johnson. It’s a 132-year-old healthcare and consumer conglomerate that managed to outperform in about every mid- to long-term period.

This company has a 55-year streak of raising its dividend attests. Its stock could be a reliable long-term foundation of any portfolio.

Walmart

Walmart is the world’s largest retailer, with roughly 4,700 stores in the US.  This retail giant expects US e-commerce sales to grow 40% in the current fiscal year. The revamped website with a focus on fashion and home goods will drive the sales, according to the company. In addition, Walmart is investing heavily in its online grocery delivery service.

The company has been bringing meager penny increase to its dividend since 2014. That has been enough to maintain its 45-year streak of consecutive annual payout hikes.

JPMorgan Chase & Co.

JPMorgan is the most valuable bank in the US. It’s a proven blue-chip dividend stock that delivers investors profit when interest rates rise.

Back in November 2016, Donald Trump was elected president. Since taking office, Trump has replaced Janet Yellen at the Federal Reserve, slashed financial regulations, and pushed through tax reform. None of those factors had negative effects towards the bank. It has 2% dividend, systemic stability, and positive outlook. This makes JPMorgan one of the top stocks to buy for 2018.

Coca-Cola

a coca cola bottle is laid on ice

If Coca-Cola can quench consumers’ thirst, it certainly quenches investors’ thirst for income. The company has paid dividend since 1920, and that dividend has increased annually for the past 55 years.

Further, Coca-Cola knows how to keep up with the market when the US market for carbonated beverages declined for more than a decade. The soda giant added bottled water, fruit juices, and teas to keep the cash flowing.

Intel Corp.

Blue-chip semiconductor maker Intel is one of the top dividend stocks to buy for 2018. A 2.5% dividend and a 36% payout ratio shows that Intel can afford to not only sustain its dividend indefinitely but increase it in the years ahead.

It traded at a modest 15 times earnings, and exposed itself to high-growth areas like autonomous vehicles and artificial intelligence. Intel has successfully transitioned from the PC market to a diversified chipmaker with exposure to the future’s biggest trends.

Bottom Line

These are the top dividend stocks to buy right now in 2018. Though they are still more, these would be a great start when looking for investments.

These are the kind of stocks you can hold long-term and just watch the cash flow come flowing in. However, there are still mistakes you need to avoid. And you can read the article in our 4 Dividend Stocks Investing Mistakes You Need to Avoid.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

businessman holding a white card that says day trader

8 Day Trading Rules that are Proven Effective in 2018

If you’re planning to day trade, you need to have a set of proven day trading rules to effectively manage any given situation. And the most important thing is to have the discipline to follow these rules.

Furthermore, the most common trading mistake for rookie traders is throwing out their own rules during a crucial situation. Sometimes, they do things without considering the risk and the potential loss, which could lead to disastrous results.

Read more about Beginner’s guide to day trading.

Sure, these trading rules are not your obligation to follow. But they can certainly help you make vital decisions when needed. These are the most effective rules for day trading for beginners.

a male sits on a chair and works on his laptop and a cup and a phone are beside it on a wooden table

Effect Day Trading Rules

  1. Knowledge

Before picking forex or stocks, you should have knowledge about the trading procedures and tools. And information about the security you’re trading at, such as company financials, reports, charts, economies, and etc. are also important. You also have to know the latest in the stock or forex markets, or what events that affect the markets. In the absence of knowledge, day trading can take a huge toll on you.

One of the best day trading tips is to do your homework. Keep yourself informed about the selected companies. There are numerous resources out there to take them as your advantage.

  1. Enter, Exit, and Escape

This is not only a rule, but one an essential day trading strategies.  You must have an enter price, an exit price, and an escape price in case things go bad.

In other words, before entering a trade, you must know when to get in, when to get out, and what to do if your position moved against you unexpectedly.

Moreover, having an escape price, also known as a stop price, is vital if you want to minimize losses. Determining when to  get in or out will help you lock in profits, and save you from potential disasters.

  1. Use Limit Orders, not Market Orders

A market order tells your broker to buy or sell at the best available price at the time of execution. However, best doesn’t always mean profitable.

A market order doesn’t have a price guarantee, but a limit order does guarantee the price, but not the execution.

Having a limit order gives you control over the maximum price you’ll pay or the minimum price you sell. It’s recommended to have a limit order so you can set the parameters.

  1. Be Realistic

As you’re getting ready for a trade, ensure that you don’t lose out on decent gains in the greed for more. The markets are unpredictable and it’s ideal to settle down for a smaller profit than losing heavily.

Additionally, don’t regret losing out on a chance. Remember, every small profitable trade will help boost your confidence. It will also give you a chance to try out the strategy again.

Being realistic also applies in having an enter, exit, and escape prices, and having limit orders.

  1. Set an Amount Aside

As a beginner, you have to understand that day trading is risky. Set aside a number of funds that you can trade with and prepared to lose. Don’t include the money that fills your need such as basic living, expenses, and whatnot.

  1. Avoid Margin Trading

Margin is borrowing money from your broker to finance your trades. When used properly, margin can leverage potential returns.

Margin helps to amplify your trading results. However, it’s not just profits but of losses as well if a trade goes against you. If you are just starting in trading, you must first learn how to day trade without using margin.

Learn more about Getting to Know Leverages and Margins.

  1. Avoid the Rush Hours

Traders placed many orders as soon as the markets open in the morning. Therefore, they contribute to price volatility. The first 15 minutes are often panic trades or market orders placed the night before.

You should avoid this time period while also looking for reversals. If you want profits, it’s best to wait until you’re able to spot profitable opportunities. Though the rush hours offer opportunities, it’s better to avoid that time as a novice trader.

  1. Control your Emotions

There will always be a time when the markets test your nerves. Whether they are confidence, greed, hope, or fear, you must learn how to control them. Only decide with logic and not emotion. It may be difficult at first, but only someone who can learn this can be successful. A great way to practice is trading with a demo account.

a man holds his cup of coffee while holding a tablet and looking at a chart on it and a laptop and a pair of glasses are on the table

Read more about 5 Emotions that go against trading.

Further, at the first hint of losses, don’t panic. This is a common problem for beginners as they end up making impulsive trades that cost them huge money. For you to become successful, you must accept and willing to lose before you win.

Bottom Line

Anyone can be a day trader, but only a few are successful. But as long as you follow these day trading rules, you’ll always be on the right track to becoming successful trader.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

a thumb pressing a mobile phone that is showing a stock quote and a technical graph

7 Easy Ways to Find the Best Day Trading Stocks

The stock market is huger and it’s overwhelming to see thousands of stocks to choose from especially when you’re strategy is day trading. And what you need is an easy way guide on how to find day trading stocks.

To know more about easy day trading, you can learn day trading with our Beginner’s guide to day trading.

a blue bubble that says day trading and a finger pointing at a mobile device

What Day Traders Look For?

Some traders look for new stocks every day to trade. The might look for stocks that are showing unusual patterns or the most volatile. Other traders find for stocks that are consistently volatile. They trade these stocks for weeks to end.

Additionally, some other traders would trade the same day stocks all the time. This is ideal for day traders as they don’t need to constantly find new stocks.

What to look for day trading stocks?

Volume

A day trader needs sufficient stock volume to enter and exit trades on demand. The higher the volume, the easier it is to enter or exit positions with little or no slippage.

Further, majority of day traders trade stocks with at least 1,000,000 in daily volume. One good example is the S&P 500 SPDR, which is an ETF.

Volatility

A common approach for day traders is trading a stock with strong movements throughout the day. Each stock is unique. On average, it might move 0.5% per day, 1% per day, or even more than 5%.

Moreover, when choosing a stock, make sure to consider your trading personality, trading style, reflexes, and broker.

To learn more about volatility, check out How to Conquer a Volatile Market.

Trend or Range

The trend or range is another aspect to look for. These 2 aspects are useful if you are utilizing a certain strategy. But if you like trading ranges, only trade the ones which have a tendency to range. Similarly, if you use a trending strategy, only trade stocks that have a trending tendency.

How to look for day trading stocks

a black wall street sign with an exchange written on a building on the background

Find Stocks with pre-market movers

Pre-market is one of the financial world’s favorite ways to fake you. A stock can rose 6% in pre-market only to open up 2% after the opening bell. The reason for this is because of the thin volume.

To avoid this, here’s what to look for when looking for stocks during the pre-market session:

  • Stocks greater than $5
  • Volume needs to be heavy. No exception for a stock that rose 20% on 200 shares.
  • When you see a stock that meet the 1st two requirements, check the volume average for the last 30 days. You’ll filter out the stocks that normally trade thinly which are not good for day trading.

Only trade stocks with high volume

Just as mentioned above, you only need to trade stocks with a higher volume. If you have a broker account, the brokerage must have a list of the most active. Look for stocks that can provide you opportunities, but are not being tracked by investors.

In addition, find stocks that are rising on high volume relative to themselves. If your platform doesn’t give you a good list for high volume stocks, there are other great resources available on the internet.

Watch the earnings calendar

Reporting of earnings is an event that can bring a significant amount of increase in volatility. Keep track of which stock is up for the week. That way, you can start to monitor how the stock is trading going into the announcement.

Furthermore, you can also make use of social media or news sites to see which stocks are trending. However, don’t let this be your basis if they’re good for day trading.

Social media only serves you to see which stocks are worth monitoring.

Focus on few stocks

If you find it tiring to look, watch, and react quickly on different stocks on a daily basis, then you might want to focus with one or two stocks.

When choosing a stock to trade, you have two ways on how to approach this. The first one is selecting the most popular stock. The second is picking your favorite stock based on your past trading performance.

Here are the top 10 best day trading stocks.

Stock Average Volume
1.       S&P 500 128 million
2.       Apple 53 million
3.       Facebook 50 million
4.       Micron Technologies 34 million
5.       Microsoft 33 million
6.       General Electric 31 million
7.       Micron 30 million
8.       Ford 27 million
9.       Tesla Motors 10 million
10.    Google 6.6 million

Read more about the different types of Stocks and their Classifications.

Final word

There are a lot of ways to select the best stocks for day trading. And along the journey, you’ll surely find other ways that are suitable for you. Just remember, don’t try to figure it all out in one day. It might take time to master the ways of day trading, but it’ll all be worth it at the end of the day.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

hands holding a mobile tablet that shows mutual funds and a pair of glasses and cup on a table

What are Mutual Funds: A Quick Guide for Beginners

It’s easy to feel overwhelmed when there are so many investment vehicles available in the market. One of them is mutual funds. And when you hear this words and nothing comes to mind, this would lead as to the question: what are mutual funds?

As this is your mutual fund investing for beginners, we’ll help you set up a foundation you need to know about mutual funds. And hopefully, answer your question.

a lens of a glasses focused on the words mutual funds written on a paper along with a bunch of other data

What are mutual funds?

Mutual funds are probably the easiest and least stressful way to invest in the market. But before you dive into the pool and start investing, you should know exactly what they are and what do they do.

Mutual Fund Investing Basics

Mutual funds are an investment vehicle that consists of a pool of money collected from individual investors, companies, and other organizations. The purpose is to invest the money in securities such as stocks and shares, bonds, and other assets.

In other words, these will allow you to pool your money together with other investors to purchase a collection of securities that might be difficult to create on your own. This often referred to as a portfolio.

Read more about Building the ideal investment portfolio.

Furthermore, a fund manager is hired to invest the cash the investors have contributed. The manager’s goals depend on the type of fund.

For instance, a fixed-income investing fund manager would strive to provide the highest yield with the lowest risk. While a long-term growth investing manager will try to beat the Dow Jones or the S&P500 in a fiscal year.

Learn more about mutual funds in A quick overview of mutual funds.

How to Start Investing in Mutual Funds

A mutual fund is both an investment and an actual company. For example, when you buy a stock, you are buying part ownership of the company and its assets. If you’re a mutual fund investor, however, you are buying part ownership of the mutual fund company and its assets.

Every fund has a certain investing strategy, style, or purpose. Some would invest only in blue-chip companies, while others invest in start-up businesses.

Additionally, finding a mutual fund that absolutely fits your requirements and style is extremely crucial. If you don’t know anything about automobile, you must not invest in an automobile fund. Choose an investment that you know and understand.

Planning to invest? Read more about our Investment Plan: A Simple How To.

How do I invest in mutual funds

You can purchase mutual fund shares if you already have a brokerage account. Otherwise, you can visit a fund’s website or call them to request information and an application. They have a minimum initial investment that can range $25 – $100,000, with most in the $1,000 – $5,000 variations.

Best Starter Mutual Funds

a jar full of coins and other coins scattered on a table with mutual fund written on a black canvas

Here is your quick guide of which best mutual funds you can start as a beginner.

  • Vanguard Total Stock Market Index Fund
  • Vanguard Total Bond Market Index
  • S&P 500 Index Funds
  • Dodge & Cox Stock Fund
  • Rowe Price

The Best Mutual Funds to invest in

  • Vanguard 500 Index
  • Vanguard Mid-Cap Index
  • Fidelity Select Consumer Staples
  • Vanguard Health Care
  • Vanguard Energy
  • Hussman Strategic Total Return
  • Loomis Sayles Bond

Conclusion

Lastly, we hope that this article was able to help you answer your question: what are mutual funds?

You can learn more about mutual funds by checking out our Mutual Funds: Advantages and Disadvantages and the 4 Fund Categories you should know.

In summary, be sure not to complicate things about mutual funds. Sometimes, just getting started is simply the best way to learn more about them.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

A jar spilled coins on a wooden background

8 Types of Investment: What are they and how they Work

People generally think of stocks and bonds when they’re thinking about investing. But the truth is that there are different types of investment to choose from.

Think of investment as your tool to reach your financial goals as this one of the objectives of investment. Each type of investment has its own set of aspects and risk factors to consider. These are the best investments for the best return on money.

To learn more about risk in investments, read about the 10 Types of Investment Risk

Here the 8 types of investment

Ownership Investment

These are the investments that come to mind for most people when they hear the word “investment.” Having an ownership investment means owning a particular asset. In addition, they the most volatile and profitable, and that’s something that needs to be expected.

Stocks

An equity, stock or share are the same. A stock provides you a stake in a company and its profit. Meaning, you get partial ownership of a public company. Generally speaking, all traded securities, such as futures, forex, etc., are ownership investments, even if it’s a contract.

Thinking about investing in stocks? Read our guide: How to Choose the Best Stock to Trade?

Real Estate

Houses, apartments, and whatnot that you buy to rent out or repair then resell are investments. But the house you live in doesn’t fit the category since it provides you a basic need.

coins stacked in an ascending order and a house at the end and a finger about to put in a coin

Business

The money you put into a business is an investment. As entrepreneurship is one of the hardest investments, it still has an extremely large potential returns. Creating a product or service and selling it to people can make huge fortunes.

Precious Objects

Precious metals, collectibles, art are an ownership investment if the intention is to resell them for a profit. However, precious metals and collectibles are not a good investment for many reasons, but they are still an investment. Like a house, damages can mean physical depreciation. Hence, they are required upkeep and storage costs that cut into eventual profits.

hands holding a bag with the dollar logo and wooden background

Lending Investment

A lending investment is like being the bank. You buy a debt that’s expected to be repaid. Basically, these are low-risk, low-reward investments. Therefore, they are much a safer investment, but the return is low.

Bond

Buying a bond means loaning money to an entity, such as a company or the government. The entity will pay you back over a set period of time with a fixed interest rate.

You can read more about bonds here in Basic of Bonds Explained.

Certificate of Deposit (CD)

a bank that issues a promissory note in exchange for your money is a CD. It’s almost a savings account, but instead of taking your money out at any time, you commit to leaving it in the account. As a return, they’ll offer a higher interest rated depending on how long you invest in them.

Savings Account

Essentially, you are lending money to the bank. It will dole out in the form of loans, and the return is currently quite low. However, there’s no risk because of the Federal Deposit Insurance Corporation.

Cash Equivalent

Cash equivalents are investments that are as good as cash, which means they’re easy to convert back into cash. An example of this investment is a simple savings account, or a money maker fund.

Money Market Funds

money market funds’ return is very small for a 1% to 2%. Consequently, the risks are also small. Moreover, these are also more liquid than other investments. That means you can write checks out of many market accounts just as you can with checking account.

Conclusion

Earning cash through investing requires research and evaluating an investment opportunity. Make first an investment plan and you could check out our low risk investments with high returns guide.

With so many types of investment, knowing which exactly to invest can get quite complicated. Hopefully, this reference will help you which investments to start. And as you make your way up, you might have to consider portfolio diversification.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

forex market hours differ based on different sessions.

Forex Market Hours: Best Times to Trade Currencies

The forex market is the largest financial market in the world. It trades of about $1.5 trillion each day. Meaning, there are so many people buying and selling currencies all over the world.

But why is that?

That’s because the market is open 24 hours a day from 5 pm EST on Sunday until 4 pm EST on Friday. It’s one of the basic things in forex trading. And learning the forex market hours is important if you want to trade in this area.

Find out what makes The Forex Market Unique with our previous article.

the map of the world of each country's respective currencies

Currencies are in high demand. It’s one of the reasons you should know about in forex trading. And the concept of currency trading is that there are always traders across the world who are making and meeting demands for a certain currency.

The availability of the forex market for 24 hours is one of the greatest advantages of currency trading. It provides countless opportunities for traders to trade at any time of the day or night despite a busy schedule.

However, it still doesn’t mean it’s always active the whole day. You could make money either the market is moving up or down. But you’ll have a difficult time trying to make money when the market doesn’t move at all.

Forex Market Hours

The beauty of the forex market is when one major market closes, another one opens. Let’s take a look at the schedules of each major session.

Approx. April – October

  • Sydney session 6:00 pm – 3:00 am EDT
  • Tokyo session 7:00 pm – 4:00 am EDT
  • London session 3:00 am – 12:00 pm EDT
  • New York session 8:00 am – 5:00 pm EDT

Approx. Oct – April (Daylight savings)

  • Sydney session 4:00 pm – 1:00 am EDT
  • Tokyo session 6:00 pm – 3:00 am EDT
  • London session 3:00 am – 12:00 pm EDT
  • New York session 8:00 am – 5:00 pm EDT

Best Forex Market Hours to Trade

The best time to trade is when the market is the most active. Therefore, it has the largest volumes of trades. Actively traded markets will provide a good chance of trading opportunities and profits. While calm and slow market would only waste your time and money.

Overlapping sessions

  • New York and London – between 8:00 am – 12:00 pm EDT
  • Sydney and Tokyo – between 7:00 pm – 2:00 am EDT
  • London and Tokyo – between 3:00 am – 4:00 am EDT

Overlapping sessions have more volume when two markets are open at the same time. With that, these sessions are the most active and busiest times during the trading day.

If you take less active period between 5 pm – 7 pm EST, after New York closes and before Tokyo opens, Sydney will open for trading.

The Sydney session will have more modest activity than the 3 major sessions. Consequently, less activity means less opportunity.

If you want to trade the most popular currency pairs like EUR/USD, GBP/USD, or USD/CHF, you can find more activity between 8 am – 12 am when both London and New York are active.

the globe with a dark blue background and symbols of the US dollar

Conclusion

Trading during the best forex market hours is not the only way generate opportunities. You should look out for the release times of government reports and economic news.

To learn more about this, you can check out our article What Makes the Forex Market Move?

Knowing when to trade in the forex market hours already gives you the advantage. And pairing your knowledge with various trading strategies will double your benefits. If you truly want to be a successful forex trader, always be one step ahead of the game.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

visual concepts of pips in forex trading

Pips in Forex trading: What you need to know

As you start trading in forex, there’s no doubt you’ve heard of pips getting thrown out every now and then. But as a beginner, we can’t blame you for finding it hard to make sense of all these confusing words.

But there’s nothing to worry about. We’ll help you to understand what you need to know about pips. It’s one of the most basic concepts that have hidden complexities that every trader must know.

Before proceeding, it’s important to know the basics of forex trading. Read what is forex trading and what you should know about it.

What is a pip forex?

Pip is an acronym for “percentage in point” or “price interest point.” Traders often use pips to reference gains or losses in forex.

Still confused?

Let’s try to make it simpler.  Pips represent the smallest movement that a currency pair can make. Usually, it is $0.0001 for US-dollar related currency pairs, which is referred to as 1/100th of 1%, or one basis point. Let’s say if a pip was 10 basis points, a one-pip change would cause greater volatility in currency values.

various currency pairs are shown with their respective quotes

Read: Top 3 Most Popular Currency Pairs

A pip measures the smallest price change of any currency can make. Most pips are equal to a 0.0001 price change.

If EUR/USD moves from 1.2278 to 1.2279, that 0.0001 USD rise in value is one pip.

However, there is an exception.  Where a currency has a low unit value, the price is quoted to 2 decimal places. For instance, a pip is 0.01 instead of 0.0001. The best example for this is the USD/JPY pair. If the pair increases from 106.16 to 106.17, the rise of change is one pip.

The value of a pip

In every trade, there comes a risk. It’s important to know the pip value of each position in the currency of your account. This way, you can manage your risk more effectively.

Read more: Proper Risk Control When Forex Trading

Here’s how you can get the pip value.

(Pip in decimal places x Trade Size) / Market price = Pip Value

Imagine you’re trading EUR/USD with a trade size of 100,000 and the exchange rate at 1.13798.

(0.0001 x 100,000) / 1.13798 = 8.78750]

With this result, we can say that each pip is worth 8.79 euro.

Of course, you don’t have to calculate this yourself. Brokers can do this for you, or you can use forex pips calculator that are widely available on the internet.

Pips and Spreads

Every time a currency pair is quoted, there are two prices. The first is the bid price. This refers to how much is being offered for the currency pair. The second is the ask price, which refers to how much sellers are asking. Spread is the difference between the two, and measured in pips.

Buy orders are executed at the higher ask price, and sell orders are executed at the lower bid price. So, if you buy and then sell immediately, you will always lose the amount of spread.

That is why forex traders look for few spreads, since the spread is like a tax, except on a private one.

The money you lose on spreads will then go to the market maker or broker. This is how they make profits. This is also the reason why forex trading doesn’t involve commissions, since the broker’s profit is already built into each trade.

Conclusion

Pips are very useful in forex trading. Sometimes, you don’t have to calculate for the pip value, but it’s still worth knowing how to determine them. With that, you can utilize pips in different trading styles you can apply.

After reading this article, You can check out our article on How to be successful forex trader as your guide for a successful trading career.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Man working on his laptop as Day Trading is shown on screen

3 Effective Day Trading Strategies

Every trading day is always different. There’s not such a thing that two days in the market are exactly alike. However, there are still patterns that occur over and over as they’re hidden beneath the random daily price movements. This is where day trading strategies come in.

Day trading is the buying and selling of a financial security on the same day, or multiple times in a day. It involves in taking advantage of small price moves. Usually, all positions are closed before the market session ends.

Read more: Beginner’s Guide to Day Trading.

Traders who use day trading pick a trade at the beginning of the day. They would act on their bias, then finish the day with either a profit or a loss. In addition, they never hold their traders overnight.

A trader showing a fist as he's looking at his phone and a computer with charts on the background

Day Trading is suited for forex traders. If you have enough time throughout the day to analyze, execute, and monitor a trade, then day trading might be for you.

Read more: What is forex and you should know about it.

Here the three effective day trading strategies in forex.

Trend Trading

One of the most effective day trading strategies is trend trading. It involves looking at a longer time frame chart, and finding an overall trend.

When the overall trend is set up, you move to a smaller time frame chart. Then, look for trading opportunities in the direction of that trend.

Find out more about the Underlying Principles of Trend Trading.

Further, you can use indicators on the shorter time frame chart. This will give you an idea when to time your entries in positions.

Counter Trend Trading

Counter trend trading is also known us pull back trading, reverse trading, and fading. It’s one of the worst day trading strategies, especially for inexperienced traders.

This is similar to trend trading. However, once you find the overall trend, you look for trades in the opposite direction. The goal here is to determine the end of a trend, and jump in early as soon as the trend reverses. It’s among the day trading strategies that is a bit riskier, but can generate huge profits.

A reverse trader has to determine potential pullbacks with a high probability, and to be able to predict their strength. Further, this strategy requires a lot of market knowledge and practice.

On the other hand, you can consider the Daily Pivot strategy as a special case of reverse trading strategy. It specializes in trading the daily low and daily high pullbacks and reverse.

Breakout Trading

Breakout day trading is about looking at the range a pair has made during certain hours of the day. After that, place trades on either side, hoping to catch a breakout in either direction.

This is most effective when a currency pair has been in a tight range. This is an indication that the pair is about to make a big move.

In this day trading strategy, you determine a range where support and resistance have been holding strongly. After this, you can set entry points above and below your breakout levels.

The general rule here is that you want to get the same amount of pips that makes up your determined range.

Read more: The basics of support and resistance indicators.

Conclusion

This kind of trading is considered to be one of the most challenging styles of trading. This is why it’s important to jumpstart your career with day trading strategies.

Moreover, there are more day trading strategies out there you could try. While it’s not a secret that day trading is difficult to master, it still can provide huge rewards. If you have the time, skill, and discipline, you can significantly improve your chances of becoming a successful forex trader.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Disadvantages of Index Funds

4 Disadvantages of Index Funds Investing

Index funds are created to mirror the investment results of a specific market index. It can consist of either stocks or bonds in its portfolio, and these mutual funds differ in the strategies that they use to achieve returns parallel to their chosen index. Index funds oppose with non-index funds, which seek to improve on market returns instead of aligning with them.

There are advantages and disadvantages of using stock indexes and the index funds that trace them. An index fund is an imagined portfolio of securities signifying a specific portion of the wider market. It is typically made using the shares of leading companies in the economy or in a particular area of the economy. Today, this article will be tackling some of the disadvantages of index fund investing to help you widen your knowledge about this type of investing.

Index Funds on Keyboard

  1. Absence of Drawback Protection

The stock market has ascertained to be a great investment in the long run, but over the years, it has had its fair share of ups and downs. Investing in an index fund, such as one that traces the S&P 500, will give you the advantage when the market is performing well, but also makes you totally exposed to the drawbacks. You can decide to limit your exposure to the index through shorting the index, or buying a put, an option contract providing right to the owner to sell a specified amount of an underlying asset at a set price within a specified time, against the index.

  1. No Huge Gains

An index fund doesn’t have the ability to outdo the market the way managed funds do. This means that if you invest in an index fund you are disregarding the possibility of a huge gain. The top-performing non-index funds in a given year work better than an index fund in a year. However, the top-performing non-index funds may differ from year to year, so that under-performing years can stop the over-performing ones, while index fund’s performance remains more stable.

  1. No Control Over Holdings

Indexes are set portfolios. If an investor purchase an index fund, he or she has no control over every holding in the portfolio. You may have certain companies that you want to own, such as a favorite bank or food company that you have found on the net and want to purchase. Likewise, in daily life, you may have events in your life that lead you to believe that one company is notably better than the other, maybe it has the best brands, management or customer service. As a result, you may want to invest particularly in that company and not in its rivals.

  1. Reduced Personal Satisfaction

Investing can be distressing and nerve-wracking, especially during times of disorder. Choosing a certain stock may leave you constantly looking after quoted price, and can keep you awake at night, but these situations will not be prevented by investing in an index. You can still find yourself constantly checking on how the market is performing and being worried sick about the economic landscape. Above all these, you will lose the satisfaction and excitement of creating good investments and being profitable with your journey.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!