Saturday, September 29, 2007

7 Profit Multiplying Trading Strategies of Successful Traders

Would you like to see your trading profits multiply? Are you struggling to squeeze out small profits and reduce losing trades? Here are some tips to help you make better decisions each and every time you trade.

One of the first and foremost strategies of the successful trader is actually having a strategy in the first place! Many new investors mistakenly make decisions based on one day of trading or the release of just one economic indicator report. The more successful traders develop a long-term strategy for their investments and trade only when certain criteria are met. Traders who go back and forth from one strategy to another are sabotaging their chances for success. These erratic changes make it much more difficult to analyze which strategy works and when.

To boost profits, you must employ careful research and long-term planning. Just because the strategy is long-term does not mean you cannot participate in day trading or swing trading. The long-term strategy means developing investment goals and making sure that each trade adheres to these goals. You will also want to develop specific criteria for your trades. Use historical prices as a starting point in developing when you will buy and sell. Write down your entry and exit strategies. Then stick to them at all times and track your results. Lastly, modify the plan as needed to produce the greatest percentage of winning trades as possible.

Successful traders analyze the level of risk that they are willing to assume and their trading strategies are built around this risk level. Evaluate your individual financial needs. A 25-year-old male is much more likely to be willing to assume a higher level of risk than a 40-year-old female with two children to support. Determining the level of risk you are willing to undertake will keep you focused when developing your trading plan.

Research is another power tool in the successful stock traders arsenal. These traders utilize stock charts, press releases, news articles, and other sources to detect trends in various industries as well as to make individual stock predictions. They also do not make their trading decisions based on biases. Make sure that you are relying on solid financials, from a reputable source.

Successful investors stay smart by being aware of the trading scams that abound on the net. From bogus stock purchase programs to promises of doubling or triple digit returns, there are always dishonest people willing to use the allure of huge profits against you. Dont get scammed out of your hard-earned money. Make sure to avoid any site selling or relating to high yield investment plans, or HYIP for short. If it seems too good to be true, it most likely is.

Finally, understand and being able to utilize current technologies that will help your bottom line in the trading game. New online software and systems can give your trading strategy a boost. If you refuse to learn how to use this technology and availability of information, you are undercutting the profits you stand to make. You could buy many trading courses and still be ahead if you found just one that enables you to multiply your profits and become a successful trader. Keep in mind that the ones that dont work for you will most likely have a money back guarantee.

Lastly, making investment decisions based on emotions is one of the poorest decisions a trader can make. Dont let the emotions surrounding a loss keep you out of the game. If you are truly interested in investing to make a profit, suspending your emotions and making fact-based trading decisions that follow along with your set trading plan. If you dont stick to your plan, then how can you determine whether it was faulty and a new plan should be formed?

About The Author:
Jeff Fairchild is the publisher of which provides reviews of trading systems and software. You can view a review of favorite stock trading software here: or a review of the ebook trading for beginners here:

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Taking Profits and Setting Exits

Most investors and many more market pundits continually talk about setting stops; they range from physical stops to mental stops to trailing stops to support stops to retracement stops or even moving average stops. It is easy to set a stop before you enter a position based off of your money management rules such as position sizing and expectancy. If you have a $25,000 account and want to risk 2% of the account on a $50 stock with an 8% stop; we know that the trade will allow you to buy 125 shares with a worst case scenario sell stop of $46.00 (assuming a 1-R risk of $4). This is wonderful but what should a trader do once the position gains 20%? Where should the stop be placed at that point to eliminate the chance of losing that quick 20% gain?

Several books attempt to explain how to take profits and many traders of the past have offered advice in books but most of it is fluff and subjective to opinion. I have heard people claim that they take a third of the position down after making a 20% or 30% gain while other traders take down half the position once a gain reaches 50%; but is this the correct way to manage money and positions? I thought so several years ago but have developed a more mechanical system that gives me precise exits at any time during an up-trend. It is a combination of a trailing stop and a retracement stop based upon the actual gain at any point in time. In a bull market, I will allow the system to loosen itself so I can handle a healthy pull-back without selling before a possible large move. For now, let me focus on my method for locking in profits without giving back too much.

For the sake of this article, I will continue to use the trade suggested above as the round numbers should be easy to follow.

Account Size: $25,000

Risk: 2%

Stop Loss: 8%

Share Price: $50

Shares to Purchase: 125 or $6,250

Sell Stop: $46.00

Worst case loss: $500 or 2%

If you are unsure how I came up with the numbers in this example, please go back and read my article on position sizing.

We buy the stock and it is up over 20% after the first three weeks of trading. What should I do to protect the profit I have already made?

Scenario #1: At $60, I will set a stop based on a 30% profit retracement.

To do this, you need to multiply the profit of 20% (or $10) by a 30% stop: $10*30% = $3

At this point in time, I will look to close the position and lock in gains if the stock drops more than $3 from the $20% threshold ($60 in this case). My trailing stop is now $57 which guarantees me a total gain of 14%.

Scenario #2: At $65, I will set a stop based on a 25% profit retracement. As my profit grows, my stop tightens so I dont give back too much. Again, this can loosen in bull markets and is also subject to longer term support and/or resistance lines. For the sake of this article, we will ignore all other variables.

To do this, you need to multiply the profit of 30% (or $15) by a 25% stop: $15*25% = $3.75

At this point in time, I will look to close the position and lock in gains if the stock drops more than $3.75 from the $30% threshold ($65 in this case). My trailing stop is now $61.25 which guarantees me a total gain of 23% if the trailing stop is violated.

Lets do this one more time with a 40% gain:

Scenario #3: At $70, I will set a stop based on a 20% profit retracement. As my profit grows, my stop tightens so I dont give back too much. As you can see from the three scenarios, my profit retracement has dropped by 5% as my profit has risen by 5%.

To do this, you need to multiply the profit of 40% (or $20) by a 20% stop: $20*20% = $4.00

At this point in time, I will look to close the position and lock in gains if the stock drops more than $4 from the $40% threshold ($70 in this case). My trailing stop is now $66 which guarantees me a total gain of 32% if the trailing stop is violated.

Please understand that I use these numbers since I like the separation of advances to be at least 10% from one retracement stop level to the next. Any investor or trader can substitute the numbers with something that makes more sense based on your own system and money management rules.

Outside of these selling rules, I also employ additional selling rules that use the long term 200-day moving average and long term support levels and trend lines. In a bull market, I will loosen the tight stops and look for longer term sell signals such as the moving average, a channel breakdown or even strong volatility movements that dont agree with the overall pattern (these may be obvious reversals on the daily and/or weekly charts). Other times, I have a specific price objective when placing the trade and will close the position if the objective is reached (even if the trend is still higher). A great example of this are the options I purchased in Tenaris (TS); I sold at $45 per call contact, yet they are now trading at $80 per contract. I bought above $10 per contract and had an objective to sell when the stock reached $145 which it did, so I sold my calls and moved on. Looking back, I got out much too early but didnt violate any of my rules which is more important than the additional gains. If I violated them on this trade and it worked out; what would stop me from violating them in the future and getting slammed with a heavy loss. I hope you get the point.

Chris Perruna -

Chris is the founder and president of, an internet community that teaches you how to invest your money with solid rules. We offer an extended no obligation monthly trial period starting immediately with two free weeks. We don't stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.

Do You Want to Learn FOREX Trading?

The Foreign Exchange Market (FOREX) has no central exchange location yet it is the largest financial market in the world. It is over 3x's the size of the stock and futures markets combined and operates via an electronic network of a banks, corporations and investors.

Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:
1. USD - United States Dollar
2. EUR - Euro members Euro
3. JPY - Japan Yen
4. GBP - Great Britian pound
5. CHF - Switzerland franc
6. CAD - Canadian dollar
7. AUD - Australia dollar

There are 2 types of investors involved in the FOREX market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes FOREX trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.

Currency prices fluctuate due to a variety of economic and political factors. The major factors are:
1. Interest rates
2. International trade
3. Inflation
4. Political stability

There are many reasons investors take a great interest in FX trading Some of the major reasons are:
1. No fees
2. No middlemen
3. No fixed trade sizes
4. Low transaction cost
5. High liquidity
6. Instant transactions
7. Low margin / High leverage
8. 24 hour market
9. Online access via online trading platforms
10. Always good opportunities to trade, unlike the stock market the market is never bullish or bearish.
11. No one entity can control the market
12. No insider trading can occur

To begin trading in the FOREX market, an investor only needs a computer, a high-speed internet connection and an online trading currency account. A mini account can be opened for as little as $100.

Find out why FOREX Trading is becoming a popular form of investing for all types of investors.

How To Get Tax Sale Lists for Free

Once you know when the tax sale is coming up in your area, you need to get the list of properties that are in the sale. I use to find tax sale property lists online for tax lien and tax deed sales. This only works for counties that have this information online. For counties or states that do not have this information online, you can either call the tax collector and ask how to get the tax sale list or you can buy the tax sale list from a tax sale list provider. To find out which counties have tax sale information and tax sale lists online, you can consult my State Guide.

To go to the countys web site, first go to and click on the link to find a county. This will bring you to a page with a map of the United States. Click on the state that you are interested in and youll be taken to that states web page with a list of all of the counties in the state. Find the county that you are interested in and click on that link. You will be taken to the NACO page for that county. Click on the link to the county on the top of the page and you will go to the countys web site. Note that this will only work if the county has a web site.

Once youre on the countys web site, look for a link to the department or county office that is responsible for conducting the tax sale. For most states, this will be the county treasurer or county tax collector. If youre not sure who is responsible for the tax sale in your state, then consult my State Guide. Once you get to the web site of the person or department that conducts the tax sale, look for a link to a list of tax sale properties. For larger counties, you can usually find this online. The exception to this is the counties in the Northeastern states. A lot of the Northeastern states do not have county tax sales. Instead the tax sales are conducted by the municipality, so instead of looking for the county web site, in Vermont, New Hampshire, Maine, Rode Island, Connecticut, Massachusetts, and New Jersey, look for the municipal tax collectors web site not county web site. New York has both county and municipal sales in some counties.

If you cant find the tax sale list that you want online, you can always buy a list from a tax sale list provider. Even if you can find the tax sale list online for free, you still may want to purchase the list from a tax sale list provider. Thats because the list that you get from the tax collector does not always have the information that you need. Frequently it will only have a parcel ID number, owner name, and amount due. What you want to know is what is the address of the property, what is the assessment and value of the property, what type or class property is it, and how big is the property. All of this (and sometimes even more information) is included in the detailed list that you can get from tax sale list providers. I talked about some different tax sale list providers in the last podcast episode, How to Find Out About Tax Sales. You can listen to that episode to get the names and urls of tax list providers for different areas of the country. Purchasing a detailed tax sale list from one of these companies will save you a lot of work in doing your due diligence.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady's State Guide to Tax Lien and Tax Deed Investing, available at

For more tips on investing in tax lien certificates send an e-mail to