Shareholder Agreement - Foundation For A Fruitful Alliance

The most important treaty for any enterprise that comes up with partnership is share holder agreement. In fact, its importance is so immense that it can well and truly be termed as gospel; and why not? It after all comprises of such important information like the way company shares are divided amongst partners; the proportion in which they intend to share profit and losses; what happens to the company in case one or more partners decide to leave or die, etc. All these eventualities need to have answers beforehand so that the smooth functioning of the organisation is not affected in any situation.

It would be very childish to reach to a conclusion that if there are only two partners in an organisation then the importance of shareholder agreement is not that urgent. The truth, however, is that whether there are two partners or ten, the utility of shareholder agreement remains the same. It would not be a misnomer to state that a shareholder agreement is the guiding principle around which a company functions.

A question arises here. What is it that shareholder agreement contains that elevates it to such an important position? Well, a shareholder agreement contains such important information like the name of share holders, board officials, and other office bearers. It also includes steps which can be taken in cases where one or more partners decide to end their association with the company. And to top it all, a shareholder agreement can be prepared in a very small amount.

All the above mentioned reasons combine together to give a very important status to shareholder agreement. It is something which cannot be taken lightly. All these reasons are enough pointers to the fact that a considerable amount of thought must be spared at the time one is forming this document. Any laxity here can actually lead to the concerned people facing more and more complications later on, something that one can very well do without.

About the Author: The Author is an experienced writer presently writing on topic like offshore company formation for taking business services to form a company in the UK.

Article Source: http://EzineArticles.com/?expert=Ryan_Graff

Stock Market Trading Tip - How To Choose Which Companies Or Sectors To Trade

An investor can use a number of criteria when determining a sector from which to select prospective stocks. However, it is important to do your own sector research to avoid becoming trapped by "professionals" who have vested interests in the sector they are promoting. So, ask yourself, is the stock in a sector that you think will do well? What are your reasons for thinking this? Answer those questions with careful research before selecting stocks within the sector for prospective investment.

P/E (profits/earning) ratios are most helpful as a prospective tool when comparing stocks within the same sector. Stocks competing within the same sector have similar expenses and expectations. With the P/E ratio the general rule of thumb is the lower the ratio the sooner stock prices are expected to rise. The P/E ratio represents the stock valuation of the company.

Now that you’ve selected some companies you wish to research further, you should be able to answer the following questions:

How has the company performed so far? Is the company growing regularly, from year to year?

How much cash does the company have available? Having cash available details the company’s ability to pay its bills and generally can determine how well managed the company is. Look at financial statements that are required by law to be filed with the SEC.

Look at the volatility of the share price. Have there been wild fluctuations? Compare charts over different periods.

Finally, determine if the prospective company is geared for quick gains or as a long-term investment. Answering this question may have to do with the type of investor you are personally.

Once you’ve done the research you should be able to determine why you want to select a stock for investment. You can invest with confidence, knowing that you have the research to back up your prospects. The better-informed investor makes better decisions.

Discover the insider secrets to stock market trading tip and stock future trading when you visit http://www.tradingsphere.com

Article Source: http://EzineArticles.com/?expert=Mike_Ashley

Day Trading Stock Pick - How To Find Stocks Ready To Explode

How do you find the stocks ready to explode?

If you came looking for a way to really learn how to make a steady stream of really good profits then this article on Daytrading Stock Pick is the place to be. If you came looking for the "Holy Grail" this is not the article to read. Don't be fooled by those that claim to have found one when it comes to the market. That is not to say however, that there are not some great and very predictable tools by which to judge a stock that is ready to explode. I have been trading for quite some time and like most, I found a great deal of failure at the onset. That failure has turned around in a dramatic way and this is because of hard work and being a true student of the market. What I am about to share with you here is the result of countless hours and research. If you heed this advice and paper trade to confirm the veracity of the statement then you will be much, much further ahead than most traders. So let's get started:

What direction is the overall market heading in?

In order to figure this out we can observe many different directional indicators. A favorite of mine is the 200 day moving average which is also my tool for individual stocks. When the market is above the 200-day MA, it has historically been a great time to go long on our positions. When the market is below the 200-day MA, it has been a wise idea to begin locking in profits on the short side. One other popular method of testing the direction of the overall market is the VIX. Be very careful when the VIX is 5% above or below its 10-day MA. 5% below usually comes before a quiet/down market. 5% above often comes before a short-term rally. There is also the Put/Call Ratio which usually tells us about where the market is heading. Put/Call ratio readings below .50 are short-term bearish for the market, especially when it's below the 200-day MA. Put/Call ratio readings above .90 are usually bullish, especially when the market is trading above its 200-day MA. Lastly, you should try and pay attention to the Advancing Issues versus the Declining Issues. There are a whole host of other methods you can use to test the overall direction of the market. One departing tip for this part of the article and that is: Over the long run you will be a much richer trader if you consistently trade toward the trend of the market.

What sectors are hot and which ones are not?

If you know that you are in a bull market you jump into picking the big money stocks right? Wrong! You must carefully break down the tape further. You need to know what sectors are getting the money flow into them and which ones are not. This is not very hard to do and does not take that much time. Yahoo finance has an excellent section dedicated to investing and once you click on this section you will find an area dedicated to "Industries." You can get a nice read on what sectors are moving in an upward direction. Also, CNBC, MSNBC, as well as other financial websites perform similar functions. So now you know what direction the overall market is moving and you have your eyes on the hottest sector. Now, the next move is to hone in on individual stocks.

Look for trending individual stocks

It is a good idea to look for stocks that first are trading above (long) or below (short) the 200 day moving average. This is only step one in the attempt to find the hottest stocks. If you would like to find out more about this topic as well as profitable strategies you will find no where else check out the link below. You will find an offer for a professional trading coaching session free of charge. Check below.

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How I Make A Living Trading Stock - Part 2 - Positive Expectation

A common question among traders, new and experienced, is "how do you know if you have a good system?". Well one obvious answer is whether or not you're making money. But is there a more quantitative measure we can apply? Absolutely, it's called the expectation value of your trading system and it's crucial that you know it for a number of reasons. The first reason is that it tells you if it's possible to make money trading the system or not. The second reason is that it can help you evaluate your money management strategies.

If the expectation of your system is negative it will be impossible for you to make money. If on the other hand your system's expectation value is positive you can make money. Your expectation value will tell you the average amount you can expect to make on a trade over the long haul. But the interesting part is that once you have a positive expectation system it is money management that will be the biggest factor in how fast and how large your bankroll grows. If you have a high positive expectation but your account doesn't seem to be growing very fast then it might be a sign of poor money management. Having said that, it turns out, that even a system with a mediocre positive expectation can be turned into a money machine with the right money management techniques.

So how do we calculate expectation?

Here's the equation

Expectation = [1 + (W/L)] *P - 1

Where W = average size of a win, L = average size of a loss and P = probability of a winning trade.

So for example, if we've been tracking our trades for the past 100 trades (you do track the details of your trades don't you?) and we found the following

Average win W = $454
Average Loss L = $458
Probability Win = 63% (in other words 63 of the last 100 trades were winners)

Our expectation would be

Expectation = [1 + (454/458)]*0.63 - 1
Expectation = [1 + 0.99]*0.63 - 1
Expectation = 1.99*0.63 - 1
Expectation = 1.2537 - 1
Expectation = 0.2537

What this expectation is telling us is that with the system we used to get the results used in the example above, for every $1 we risk on the trade we can expect to be rewarded with a profit of $0.2537.

It's important to understand that this is not a predictive value, but a measure of past performance only. It tells us how our system has performed historically, not how it will do in the future. Also note that the calculation didn't have anything to do with how the trades were chosen. The only thing that matters is that the same system was used for all the trades involved in the above calculation. If at some point during our past trading we changed our system then we would need to begin new calculation using data from our new system.

So if it's not predictive what good is it? We'll nothing is "predictive" in the markets since we don't know the future, but having an expectation based on past performance can still give us an idea of the probability that our system will perform for us in the future. So obviously the more historical trades we have the more comfortable we can be that our system will perform with a "similar" expectation in the future.

Knowing the expectation of our system allows us to do a few things. We can determine if it's possible to make money or not. If it's positive we know we can make money (assuming it's positive enough to overcome commissions and slippage), if it's negative it will never make us money in the long run.

Also, knowing the expectation value of the past X number of trades we can now go back and experiment with different money management techniques to see how it would have affected our overall account balance. Even with a positive expectation, different position sizing choices can produce very significant differences in account balances over time due to the effects of draw downs and the compounding of our returns. The expectation value along with the probability of a winning trade can be used to go back and perform money management experiments to help us understand the effects of money management on our bankroll given the system we're trading. You can learn more about this in the Trader's Guide To Money Management at the end of this article.

Lastly, knowing the expectation value of more than one system allows us to make a quantitative comparison of historical performance between systems. This can help us decide when it's time to change systems or troubleshoot our existing one.

So what's the next step? Find or develop a trading system with a positive expectation and then focus on money management. Of course developing a system with a positive expectation isn't exactly trivial so if you can find one that's already been developed then by all means use it. In the end, the expectation of the system you trade is indifferent to who created it. If it's positive and you apply good money management techniques then you're on your way to some serious money.

As a trader I believe it's important to focus on your strengths and delegate your weaknesses. By using the Doubling Stocks newsletter to provide me with stock picks that have shown a high positive expectation I can focus on money management where I can make the biggest difference to my bankroll.

If you want to know what a high expectation system looks like then check out my review of Marl the stock picking robot and the Doubling Stocks newsletter.http://www.MrAutomate.com/DoublingStocksScam.html

Want to learn how you can use money management to put your bankroll into exponential growth? The Trader's Guide To Money Management (a.k.a. Doubling Stocks Bonus Pack) will show you the techniques I use to make a living trading stocks. http://www.MrAutomate.com/DoublingStocks.html

Tom Sanders
http://www.MrAutomate.com

Tom has a degree in physics with a minor in computer science and has been developing automated trading systems for nearly a decade. Tom currently trades for a living from his home on the west coast of Canada.

Article Source: http://EzineArticles.com/?expert=Tom_Sanders

Investor Relations, Optional Chaos And Institutional Selling

Today, we'll concentrate on what happened last week when the markets were shelled by broad-based institutional selling. Our sample data showed anonymous electronic order flow accounted for 42% of all trading Nov 5-9 and an astonishing 69% of volume on Nov 8.

What happened, why does it matter, and what's to be learned, IROs?

Looking first at what happened, we believe institutions abandoned the orderliness of prime brokerage relationships where broker-dealers employ technology, access to liquidity and their own capital to control execution costs for clients and effect minimal impact on market structure. Instead, it appears that institutions connected directly to the markets in a nearly desperate effort to reduce exposure to equities. Whatever the reasons, the astounding role of anonymous execution platforms like Archipelago on Nov 8 was indisputable.

Why did it happen? Two reasons: First, we can't overlook fear. Quantitative and fundamental investors alike are trading in four or five-day increments and making swift changes. Second, options set to expire this Friday, Nov 16 include currency and treasury futures as well as security futures.

With concerns ranging from the real impact of credit issues, to currency disparities, to geopolitical mayhem potentially rendering forward risk-management derivatives wildly out of whack versus underlying assets, institutions pared back the asset base. By forcing down stock prices through the simple act of selling, forward risks were alleviated because leverage relative to puts and calls ratcheted down. Interestingly, the REAL quad-witching next month on December 21 won't include currency and treasury futures because they expire on Dec 14. So we had an unusual, but telling, day in November.

Why do these things matter, IROs? Because the chaos potential inherent in the equity markets' great fascination with leverage these days may render fundamental factors like solid financial performance, new-product introductions, and whole-honed investor messaging impotent. Then you're stuck explaining to management why your stock traveled the opposite direction of all your effort.

In short, today you need to know about these matters, and prepare to help marketing and operations teams adjust their timetables for better results from efforts. Sorry folks, as the old saying goes "it is what it is."

One last note: a debate rages about whether economic or market peril looms. We do not deign to claim any expertise in economic data. We just look at trading data, because it's the ultimate measure of investor sentiment. Pundits are reactionaries, while algorithms are real-time reflections of the mindset of the people behind them. We continue to have concerns about the role of short-term tactics in the markets - and the correlating risk to underlying equities if those hedges must suddenly and radically be reset.

Tim Quast is a fifteen-year Investor Relations veteran and founder and managing director of ModernIR.com, which parses and categorizes over a half-billion shares per week with its trading intelligence systems. Want more information? Check out our Frequently Asked Questions or visit modernir.com.

Article Source: http://EzineArticles.com/?expert=Tim_Quast

Example Quantitative Stock Analysis

I work every day as a programmer on a quantitative stock analysis team that manages billions of dollars in assets. That position has given me a lot of insight into how such a professional quantitative stock analysis process works.

There are a number of distinct steps involved in getting a quantitative stock analysis model running.

Start with a list of stocks. This is the entire domain of stocks that you'll be considering so you might want to include the entire NASDAQ. There are a number of considerations when choosing the stock list. First, the more stocks the longer it'll take for the computer to calculate everything. Second, there are differences in behavior between for example large cap and small cap or between different sectors that make it hard to treat them all the same.

For each stock in the stock list selected the second part of the quantitative stock analysis process is to load all the data you can about them into a database. Some basic information might include price, earnings, forecasted earnings, cash flow, assets, and debt leverage. The more information you can get the potentially more thorough the quantitative stock analysis will be.

Third, with all this basic information about every stock the next thing to do is to calculate indicators. These are usually basic ratios, so from price and earnings you can get the Price-Earnings Ratio, or EPS Yield. If you're maintaining this information over time then you can calculate things like price momentum. This is a vital step to the effectiveness of any quantitative stock analysis model. Tweaking these indicators can have a huge impact on the outcome of the process.

Next there is a mathematical process. Since we can't directly compare price momentum to EPS yield there is an intermediate step that puts everything into standard deviation space. For each indicator we have to calculate it's standard deviation from the mean over all the stocks. This should result in numbers that are roughly within the range -3 to +3. With this calculation done it's possible to compare very different indicators.

Getting close to the end of the process is another very key part of the quantitative stock analysis calculation. To get one final number for each stock you take some weighted combination of the standard deviations of the indicators. It doesn't necessarily have to be a linear calculation. This function decides the importance of the different indicators in the overall analysis. At this point it is also possible to split out a few different final analyses using the same inputs. For example a growth strategy would be heavily weighted towards the growth indicators, and a value strategy would be weighted towards value based indicators. This formula requires lots of back testing to get just right and should be revised from time to time to deal with changes in the markets.

The final step is to rank each stock. Simply sort the stock list by the number that came out of the previous step. The result should be a list of stocks in which the ones at the top are probably the best buys, and the ones at the bottoms are probably the best to short. It's important to remember that the analysis is only as thorough as you make it so if you haven't accounted for things like merger speculation or growth through acquisitions then you may want to do some further checking before placing any orders.

The final list is very valuable and can be used for different strategies. There's still a question about how much of each stock should be bought or sold or whether or not to short the worst ranked stocks. Every investor should decide how to do this on their own based on a lot of back testing.

That's a very high level over view of how a quantitative stock analysis could work. Of course there are many potential variations. The work involved in getting something like this set up for personal investing is probably prohibitive. Check out my website for some ideas about how to start using a quantitative approach today. Click here

Matt Warren,
Computer Programmer and Stock Market Enthusiast,
http://quantitativestocksecrets.com

Article Source: http://EzineArticles.com/?expert=Matt_F_Warren

System Stock Trading

What is the basis of the stock trading system? Is stock trade meant for you? Can it be used as a steady source of income? Well let us deal with the questions one at a time, starting with the first one first.

Imagine that a company wants to expand its business. It needs money for the expansion. This is the time when the company floats shares in the stock market . If you expect the company to succeed in the future, you will buy some of the shares, thus investing in the company's business. This gives you a kind of partnership with the company, and also with its profit and loss. This is stock investing.

Now, since different companies have different success and popularity levels, even their shares differ in their demand among the buyers. Which company would you like to invest in - a company that is renowned and sees a bright economic future or a struggling company with an uncertain future? Obviously, you would like to go for the former one. . This will cause more people to get interested in investing with the former company. Such a high demand among people would result its share prices to climb up. Conversely, the stocks of a company with low demand will see their prices drop. Not only this, the varying performance of a company in the market also causes constant fluctuations in its stock prices. This rise and fall in the prices form the base of the trading. The stock trader buys the stocks and expects to sell them when their demand, and hence price, increases. This low buying and high selling gives him a profit whereas loss is resulted when the reverse occurs. This entire process is stock trading.

Is it meant for you?
Well it is always a good way of earning money unless you are in debt. If you are in debt, it is often not suggested to invest in stocks. The debt will cost you a 15% interest rate. If you pay it back, it means you are saving the 15%, which is as good as earning it. However, if you are free from debts and have money to invest, stock exchange is one of the best ways to earn. Since stocks come in all prices, almost anyone can invest in them. And if you are a little careful and make well-informed decisions, the stock exchange can pay you huge profits.

Can it be a steady source of income?
If you are a beginner and have another job, it is not advisable to leave your job and take stock market as a full-time source of income. It was a bit hectic to consider stock investing as a part-time earlier. In the present days, however, this is possible through the online stock brokers. They also operate at very low commission rates, thus optimizing your profit. If you have a computer connected with the Internet and registration with one of the many online stock brokers , you can start trading from any corner on the globe. Perhaps its ease of operation is the reason for a large number of people are flocking into online stock trading. Just connect to the online stock market whenever you find time and you can start trading , without having the need to leave your full-time job.

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Stock Market - Know The Market And Invest Accordingly

Stock market in the present scenario has been flourishing to a new height. As a result, regular market investors are gaining maximum profit in this sector. Although, more focused to the business world, stock market of late has also become a part of every common investor. And why not, with online stock trading system, anyone can start investing in stocks.

If you are also willing to invest in stocks, the most common suggestion you might get from your friends and relatives is that you need a lot of research about the flexible market trends. In fact, it's a sound advice, but your research should be in the appropriate direction. There are several stock trading firms, Websites, and various online information that you can access through the Internet. Being a new investor, there are several questions that may arise in your mind like how to find the best online trading company, what procedure to be followed for purchasing shares, how to deal with brokers, etc.

Knowledge and intelligence is all that you need to apply before you make up your mind to invest in stocks. As far as knowledge is concerned, there are various Websites you can browse to gain knowledge about the market and stock trading companies. Share prices can also be found out either through newspaper or online sites. However, it is also important to know about the company before buying shares. The reason is quite obvious, because, as you buy a company share, you actually buy some ownership. And, the growth of that industry will directly influence your investment and profits associated with it.

Though big companies should always be the first priority, there are several small and growing companies where you should also keep an eye. In the present marketplace, these industries are sure to add profit in your investment plan. Once you buy shares from different companies, your first aim would be to gain maximum profit. Here, you experience the need and the role of online brokers.

In the online stock market trading, there are several benefits you get. As, it is the simplest mode of investment, with time the procedure has also changed a lot. All you need is to open an account online and after account activation, you can manage your funds as per your wish. But your online broker does half of the work - that is from buying and selling of stocks to market updates, etc. Therefore, it becomes inevitable to choose the best online brokerage company that can offer impeccable services at affordable price rates.

Once you get the best stock company for your investment plan, half of your work is done. You can easily handle rest of the work. Always keep you updated with latest market news and also about the company shares. Once you understand the functionality, you can easily handle the whole procedure with a few clicks of the mouse button. Look for different trading stock options and invest accordingly.

It is always beneficial to check the stock regularly. For new investors, it is always the best practice to discuss with financial experts about your investment plan. Focus on the market shares where you are more interested. Select some major companies; buy shares and soon you will reap the benefit.

Pricing and Features for Sogoinvest Investment Packages: online investment
Sogoinvest Interest Rates and Fees:
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Article Source: http://EzineArticles.com/?expert=Micheal_James

Factors Affecting Share Prices

Like any other commodity, in the stock market, share prices are also dependent on so many factors. So, it is hard to point out just one or two factors that affect the price of the stocks. There are still some factors that are that directly influence the share prices.

Demand and Supply – This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling he stock, the price of that particular stock falls. Now it is difficult to predict the trend of the market but your stock broker can give you fair idea of the ongoing trend of the market but be careful before you blindly follow the advice.

News – News is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. Having said that, you must always remember that often times, despite amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in a volatile market or when there is mixed reaction about a particular stock.

Market Cap – If you are trying to guess the worth of a company from the price of the stock, you are making a huge mistake. It is the market capitalization of the company, rather than the stock, that is more important when it comes to determining the worth of the company. You need to multiply the stock price with the total number of outstanding stocks in the market to get the market cap of a company and that is the worth of the company.

Earning Per Share – Earning per share is the profit that the company made per share on the last quarter. It is mandatory for every public company to publish the quarterly report that states the earning per share of the company. This is perhaps the most important factor for deciding the health of any company and they influence the buying tendency in the market resulting in the increase in the price of that particular stock. So, if you want to make a profitable investment, you need to keep watch on the quarterly reports that the companies and scrutinize the possibilities before buying stocks of particular stock.

Price/Earning Ratio - Price/Earning ratio or the P/E ratio gives you fair idea of how a company’s share price compares to its earnings. If the price of the share is too much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way too much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point.

Before we conclude this discussion on share prices, let me remind you that there are so many other reasons behind the fall or rise of the share price. Especially there are stock specific factors that also play its part in the price of the stock. So, it is always important that you do your research well and stock trading on the basis of your research and information that you get from your broker. To get benefit from the effective consultancy service it is therefore always better from professional stock trading companies rather than getting lured by discount brokerage advertisements that you must be coming across everyday.

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Article Source: http://EzineArticles.com/?expert=Amit_Malhotra

How I Make a Living Trading Stock

People are always asking me how I make a living trading stock. To be honest the question gets a little old, but whenever I meet someone new and they learn this about me it always piques their interest and they inevitably ask the question. I understand why since so many people have tried yet so few seem to succeed. Most successful traders, myself included, were in this spot at one time and it's because we asked those who had already succeed that we're now successful ourselves so I try not to seem annoyed when answering them. This article is part 1 of a series of articles titled, "How I Make A Living Trading Stock".

Although I have a strong background in mathematics and computer science and have spent nearly a decade programming trading systems, the truth is, most of the trading specific knowledge that I consider to have made the most difference for me came from a handful of books. Here is my required reading trader bookshelf

1. Market Wizards: Interviews with Top Traders, by Jack D. Schwager
2. The New Market Wizards: Conversations with America's Top Traders, by Jack D. Schwager
3. Trade Your Way to Financial Freedom, by Van K. Tharp
4. Safe Strategies for Financial Freedom, by Van K. Tharp

These books truly changed my life and have allow me to make a living trading stock. Of course my actual bookshelf has another hundred or so books on trading and the markets, but these I consider the bread and butter of what I do. The Market Wizard books are classic interviews with some of the true legends of trading and are both insightful and inspiring. It was Ed Seykota's interview in the Market Wizards that inspired me to make a career developing automated trading systems. He's considered one of the pioneers. But without any doubt I can honestly say that the two books by Van K. Tharp are responsible for 90% of my success. These two books are about risk management, money management and trader psychology.

You may notice there are no books on technical or fundamental analysis on my list. I understand this may seem like heresy but let me explain. It's not that I don't think these are important because I do, in fact it's crucial to the success of any system. Nearly all of the automated trading systems I've developed over the years are based on technical analysis. It's technical and fundamental analysis that gives me the signals that tell me what to buy, when to buy it and when to sell it. But the reason these books are not on the above list is that I seldom actually pick my own stocks these days.

I've been getting my stock picks from the Doubling Stocks newsletter which is based on an automated trading system, or robot, named Marl. Every week I receive an email with some penny stock picks that I then trade. This might sound too simple to be true but it is. The stock picks Marl comes up with have a very high rate of moving in the right direction, but more importantly, the system has a positive expectation. Obviously not all picks will be a winners, but when you look at all the winners and all the losers, as well as the average size of the winners and losers you can come up with a number called your expectation value. If it's above 0 (positive) you're can money in the long run, if it's below 0 (negative) it will be impossible to make money in the long run. As an example, if my system has an expectation value of 0.25 that means that in the long run I will earn $0.25 profit for every $1 risked.

That's not entirely true. The expectation value of the trading system needs to be high enough above 1 such that you can also overcome commissions and slippage. The Doubling Stocks newsletter provides pick with just such a positive expectation.

So now that I have a stock picking system with a positive expectation my only job is to focus on money management and risk management. The reason I believe the Van Tharp books are so significant to my success is because it was his first book, "Trade Your Way To Financial Freedom", that really made me understand that once you have a positive expectation, money and risk management is by far the most important aspect to success. It's proper money management that truly makes you money as a professional trader. In fact, even with a positive expectation you can still find yourself losing all your money if you don't know how to manage your money and your risk.

Too many people spend all their time trying looking at chart patterns, various indicators, entry and exit signals and place too little emphasis on money management. If you're trading more than one stock at a time then this can actually start to get fairly complicated since your money and risk management now involve portfolio management as well. My advice for most struggling traders is to spend more time studying risk and money management and how it effects your bankroll. If your position sizing is off then you're going to have trouble making money even with a positive expectation system.

The final piece to the puzzle is trader psychology. Having the discipline to do what you know you're supposed to do is an obvious requirement for success. Unfortunately I can't comment to much on this since everyone's psychology is different and I'm certainly not a psychologist, but Van Tharp is! It's actually one of Van Tharp's strong points. He's been a trading coach to some of the most successful traders in the world. He knows what he's talking about so I'm simply going to defer to him and his books on this issue. The point is that understanding why I would break my own rules and failed to have the discipline I needed was a crucial step in becoming a successful trader and allowing me to make a living trading stock.

1. Find a system for choosing stocks that has a positive expectation. I highly recommend the Doubling Stocks newsletter based on Marl the trading robot
2. Understand that position sizing and other money and risk management techniques will have the next most significant impact on your bankroll and is crucial for any hope of success. I recommend the two Van K. Tharp books previously mentioned
3. Discipline. Mastering you trader psychology. If you play poker you probably know what I'm talking about. Again, I recommend the Van K. Tharp books

So now when people ask me how I make a living trading stock I can simply point them to this article. If you're a Doubling Stocks newsletter subscriber you may want to check out the Doubling Stock Bonus Pack where I help Doubling Stocks users make the most of the stock picks they receive.

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thanks,Tom Sanders
http://www.MrAutomate.com

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