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Short-term trading vs long-term trading

People always want to find the best type of trade to invest in. This particularly holds true for short-term and long-term trading. This decision, however, varies from person to person. Ideally, the trader must decide on a trading type that best suits his/her personality.

Let’s us take a closer look at short and long-term trading to gain some insight.

Short-term trading 

When the duration between buying and selling ranges from a few days to a few weeks, it is considered as short-term trading.

Pros of short-term trading

Faster means of making money: The benefits of a trade can be realized in a short period through this method. You can earn profits within a day by investing in intraday trading.

Short-term risk: If you discover that a wrong decision was taken on a trade, you can free up the capital invested and reinvest it in fresh stocks. This is because capital is at risk for a shorter period.

Cons of short-term trading

Volatile market: There are chances that you may lose a significant amount of money while indulging in short-term trading due to the volatilities in the share markets.

Stress: The unpredictability of the share markets makes it difficult to figure out the future status of your capital. This, in turn, increases your stress levels.

Time-consuming: Short-term trading demands a lot of attention. You need to continuously check the market in order to make buying and selling decisions.

Long-term trading

When the duration between buying and selling ranges within a few months to a few years, it is referred to as long-term trading.

Pros of long-term trading

Less stressful: There is no need to constantly follow the market when trading long-term. You can ignore the current market conditions and focus on future market conditions. Put simply, you don’t need to babysit your stock.

Time-saving: You can dedicate the time saved from constantly following the market on other productive activities. You can study other stocks and do thorough research before making buying or selling decisions.

Compounding: Long-term trading helps you take advantage of the power of compounding. You will be able to invest the dividends back in the market to earn more profit.

Saves taxes: Long-term trading also helps you save taxes. Most short-term traders need to pay around 20%-30% whereas long-term trading activities are charged f only at 5%-15%.

Cons of long-term trading

Chance of missing out: Long-term trading requires you to invest your capital for a long-term, and you might miss out on a volatility in the market to make money.

In-depth knowledge: Long-term trading requires you to have in-depth knowledge of the sector or stock you are investing in. You just can’t make decisions based on certain news or hearsay.

Homework/Research: You need to do your homework if you are going to trade long-term as you just can’t rely on graphs or charts to make a trading decision.

Patience: Long-term trading requires a lot of patience and the failure to meet it will create problems for the trader in the long run.

For Best Signals and Tips in Forex, Stock and Comex visit our website www.equidiousresearch.com

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Forex Trading, fundamental stock analysis, investment, TRADING, Trading Strategies

Forex Insights- 24 May,2018

The Forex Insight for 24th May for major currency pairs are as follows:

equidious research currency pair

EUR/USD

  • The EUR/USD pair held on to its modest recovery gains above the 1.1700 handle.
  • The ongoing US Dollar profit-taking slide, triggered by a dovish assessment of Wednesday’s FOMC meeting minutes.
  • USD showed little signs of easing amid a sharp retracement in the US Treasury bond yields and following an unexpected rise in the US initial weekly jobless claims.
  • The pair would need to advance beyond 1.1790 to gain some further upward traction and retest the weekly high at 1.1829.

GBP/USD

  • GBP/USD: bulls capped by the 100-hr SMA, but if that were to give, opens risk towards key 1.3450 (50-W SMA).
  • GBP/USD is trading at 1.3387, with a high of 1.3422 and a low of 13349.
  • The technical readings lean bearish and are stacked up against the bulls. However, 1.3301 comes as the Dec 14 low and a potentially strong level of support.
  • 1.3040 is a key downside target as the Nov 3 low. On the upside, a break of the 100-hr SMA at 1.3410 eyes for a test of 1.3450 (50-W SMA) and that would open the scope towards the 10-D SMA at 1.3478.

USD/JPY

  • USD/JPY recovers after the slide that followed Trump’s announcement.
  • US President canceled a meeting with the North Korean leader and triggered risk aversion.
  • The USD/JPY pair dropped to 108.94 after US President announcement, reaching the lowest in two weeks.
  • The yen is rising for the third day in a row against the US dollar. From the weekly high USD/JPY lost more than 200 pips.

AUD/USD

  • The AUD/USD pair rose further during the US session and printed a fresh daily high at 0.7580.
  • The Aussie was unaffected following US President Trump cancellation of the meeting with Kim Jong-un.
  • AUD/USD continues to move with an upside bias supported by an uptrend line. If it manages to end the day at current levels it would be the highest close in a month.
  • To the upside, resistance levels might be seen at 0.7590, followed by 0.7605/10 (May 22 high) and 0.7650. On the flip side, supports could be located at 0.7545, 0.7530 (uptrend line from May 9 low) and 0.7490/95.

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BASIC TYPES OF FOREX ORDERS

Different market entry and exit orders are being required for different trading scenarios and Forex Trading. The following are some basic types of Forex Orders:

Equidious Research-TYPES OF FOREX ORDERS

Market Order 

This is the simplest way to enter the market, whether you are going long or shorting. By taking a market order, a trader enters the market at the best possible price at that given time. The order is filled straight away.

Buy Limit 

This order anticipates a bounce in an upward direction from the current down-trend. Therefore, an entry point is created below the current market price.

Once the entry price is reached the order is triggered to go long. The stop loss is below and the profit target is above the entry level.

Sell Limit

Opposite to the Buy Limit, this order type anticipates the market to bounce downwards from the current up-trend. An entry point is created above the current market price.

Once that price level is reached, the order is triggered to go short. The stop loss is above and the profit target is below the entry level.

Buy Stop

This type of order anticipates the current up-trend to continue rising. Therefore, an entry point is created above the current price. The stop loss is below and the profit target is above the entry level.

Sell Stop

This type of order anticipates the current down-trend to continue falling. Therefore, an entry point is created below the current market price. The stop loss is above and the profit target is below the entry level.

Stop Loss(SL)

This is the point at which the market proves you are wrong – no matter what type of order you are using. Traders should always trade with a stop loss. If a trade is wrong and the market goes in the opposite direction of the trade, it is the safest and quickest way to stop any further losses.

Profit Targets

This is the end point for your order i.e. the point at which you have made the required profit and you are closed out of the market.

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Trading is an art of making handsome amount.

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CURRENCIES, Forex Trading, investment, TRADING, Trading Strategies

Useful Basic Terms of FOREX

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Basic terminologies are really helpful to understand the concepts of Forex Market. The following is a list of basic terms widely used in Forex Trading:

Exchange Rate

An exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in relation to another currency.

For example, if GBP/USD is 1.34170, 1 GREAT BRITAIN POUND is worth US$1.34170

stock to buy today

Cross Rate

The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U.S. dollar, regardless of which country the quote is provided in.

For example, if an exchange rate between the British pound and the Japanese yen was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the pound or the yen is the standard currency of the U.S. However, if the exchange rate between the pound and the U.S. dollar were quoted in that same newspaper, it would not be considered a cross rate because the quote involves the U.S. official currency.

Pips

pip is a standardized unit and is the smallest amount by which a currency quote can change. The actual cash amount this represents depends on the pip value. For currency pairs displayed to 4 decimal places, one pip = 0.0001. Yen-based currency pairs are an exception, and are displayed to only two decimal places (0.01)

Forex currency concept-EQUIDIOUS RESEARCH

Leverage

Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account.

Margin

The deposit required to open or maintain a position. Margin can be either “free” or “used”. Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions.

The major Forex pairs and their nicknames:

USD- US DOLLAR
EUR- EURO
JPY- JAPENESE YEN
GBP- BRITISH POUND
CHF- SWISS FRANC
CAD- CANADIAN DOLLAR
AUD- AUSTRALIAN DOLLAR

Equidious Research-MAJOR TRADING CURRENCIES

NICKNAME:

EUR/USD- EURO
USD/JPY- DOLLAR YEN
GBP/USD- CABLE or STERLING
USD/CHF- SWISSY
USD/CAD- DOLLAR CANADA
AUD/USD- AUSSIE DOLLAR
NZD/USD- KIWI

Major Currency Pairs

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Key Fundamentals To Check Before Long Term Investment In Stock Market

If you are an equity investor what would you typically rely on? You would rely on a research report or on technical calls. Let us leave out technical calls for the time being as our focus is more on long term investments. Long term investing is based on a research technique called fundamental analysis. What fundamental analysis does is to project the cash flows of a business and then discounts these cash flows backwards to arrive at a valuation. The fundamental analyst not only looks at financials of a company but also at non-financial items like the company’s reputation, its brands, its management quality and the unique business advantages that it has created. As an investor, it is not just enough for you to get a fundamental report on whether the stock is undervalued or overvalued. You need to ask some probing questions because it is your money after all!

What are the prospects of the company’s line of business

When you buy a company’s stock you buy for the future. That means you are more interested in the prospects of the company rather than what it has done in the past. Does the company operate in a high growth business or is it a stable business? Does the company make products that have cyclical demand or round-the-year demand? You pay a premium for growth and your stock price appreciates if the company can show growth in the future. That is what matters, first and foremost.

Company growth is fine, but is the company profitable and how are the cash flows?

Growth is not very meaningful if it is coming at a huge cost. Take the case of many ecommerce companies. They are buying market share by giving huge discounts which are being funded by global investors. Obviously, this cannot go on forever and the eyeballs and footfalls must translate into profits for the company. That is what will determine the future value of the company. Gestation is fine, but there is only so much you can afford to wait. Also, profits are not reflective of the actual cash flows of the company. You also need to check the cash flow statements of the company to reassure that the positive cash flows from operations can finance the investments needs.

What is the market perception of the company’s management

This is slightly qualitative in nature but if the company has been around for a long time then the quality of the management is out there in the open. Big Business groups enjoy a premium image in the market because they have taken pains to ensure that their companies maintain the highest standards of disclosure, transparency and corporate governance. This is a key driver of valuations.

What are the risks to the business in terms of competition

Competition can arise in a variety of ways. There is product competition that can arise from better and cheaper products in the market. Alternatively, it could be disruptive products.

Does the company speak the truth about its performance

This is partially covered by the point on management quality but this also pertains to the actual executive management of the company. You surely do not want to invest in a company that can throw up negative surprises at you in the future.

What is the moat that the company has created for itself

Moat is a sustainable advantage. It can be in the form of high margins, unique patents or even in the form of market leadership. Moats are important because they ensure that the company is able to hold on to its growth and its operating margins even in tough market conditions. Generally, companies with a moat get a more attractive valuation in the market.

How will the company finance its future outlays

This is especially true for companies that have massive plans for expansion or diversification in the future. The question is how would these programs be funded? If the funding is through equity then you need to be prepared for dilution of earnings. If we are looking at funding through long term debt, then we are looking at financial risk. Remember, expansion and diversification is integral to growth. What you need to ensure is that it can generate cash flows to justify these decisions.

Are the company’s customers individuals, corporates or government

You may wonder why this important but it determines your payment cycles and the promptness of payments. Therefore it is crucial to your working capital cycle. For example, individual customers are broadly upfront customers and hence cash flows are not a problem. Credit terms become relevant when you have corporate and institutional customers. If it is a power stock that has government clients then normally government problems tend to get transmitted. Customer profile matters a lot!

How much of the promoter’s stake is pledged

In the last few years we have seen sharp correction in stocks due to this very reason. When a large percentage of shares of the promoter are pledged, they make the stock vulnerable to bank selling in the event of a margin call. Always prefer companies where the promoter pledges are low.

Does it fit into my long term goals

Finally, ensure that the stock fits into your goals and your equity/debt mix. If the investment in a stock is skewing your portfolio profile or adding more risk than warranted, you can just give the stock a miss. If the stock does not into your long term goals then the stock is not for you.

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Uncategorized

THE 6 STAGES OF SUCCESSFUL TRADE

#1 ANALYTICAL STAGE

  • Analyse the CHART.
  • Look out the worthwhile OPPORTUNITY to take a trade
  • Identify the LEVEL of entry with a good risk reward ratio

#2 TRADING PLAN DEVELOPMENT

  • Create a trading PLAN.
  • A Buy or Sell ORDER will now be executed.
  • Bring the TRADING PLAN into existance.
  • Adhere to your trading principles.

#3 TRADE ENTRY

  • EXECUTE the trade.
  • A high probabilty trade entry with the aim of achieving optimal profits with good risk to reward ratio.

#4 TRADE MANAGEMENT

  • MONITOR the trade.
  • Absorb all the market information that is being presented in the chart.
  • Minimize the risk and Maximize the profits.

#5 EXIT THE TRADE

  • Releasing the Profits and rolling in the pips.
  • Closing the trade.

#6 REFLECTIVE PROCESS

  • Reflect the whole process.
  • Reflect it stage by stage for maximum learning experience.
  • Look out for area of improvement.
  • Learn from your trade.

Come Out of your losses in Forex Market/Stock Market/Comex Market. Talk to our Experts.Give us a Missed Call @ (347)434 9044. Visit Us: http://www.equidiousresearch.com

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The Psychology of Forex Trading

The Psychology of Forex Trader-Equidious Research

Emotions should you watch for in yourself while trading:

1.Greed: Traders are greedy when they don’t take profits because they think a trade is going to go forever in their favor. Another thing that greedy traders do is add to a position simply because the market has moved in their favor, you can add to your trades if you do so for logical price action-based reasons, but doing so only because the market has moved in your favor a little bit, is usually an action born out of greed. Obviously, risking too much on a trade from the very start is a greedy thing to do too. The point here is that you need to be very careful of greed, because it can sneak up on you and quickly destroy your trading account.

2. Fear: Traders become fearful of entering the market usually when they are new to trading and have not yet mastered an effective trading strategy.Fear can also arise in a trader after they hit a series of losing trades or after suffering a loss larger than what they are emotionally capable of absorbing.Fear can be a very limiting emotion to a trader because it can make them miss out on good trading opportunities.

3. Revenge: Traders experience a feeling of wanting “revenge” on the market when they suffer a losing trade that they were “sure” would work out. if you have risked too much money on a trade (starting to see a theme here?), and you end up losing that money, there’s a good chance you are going to want to try and jump back in the market to make that money back….which usually just leads to another loss (and sometimes an even larger one) since you are just trading emotionally again.

4. Euphoria: While feeling euphoric is usually a good thing, it can actually do a lot of damage to a trader’s account after he or she hits a big winner or a large string of winners. Traders can become overly-confident after winning a few trades in the market, for this reason most traders experience their biggest losing period’s right after they hit a bunch of winners in the market.

How to obtain and maintain an effective trading mindset

It’s not necessarily difficult to achieve, but if you want to develop an effective trading mindset, you have to accept certain facts about trading and then trade the market with these facts in mind. Always follow 4 golden rules:

  1. Build and follow your trading strategies.
  2. Do proper Risk analysis and Risk Management.
  3. Don’t Overtrade.
  4. Be Realistic.

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Trading is an art of making handsome amount.

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