The Stock Market Timing Guide

In this post, we will be focusing on the stock market timing guide. Many people have debated over this issue since the emergence of the stock market. On one side, we have the value investors (the father of value investing was Benjamin Graham and is championed by Warren Buffett, the most successful of value investors and the CEO of Berkshire Hathaway) who did not believed in the concept of stock market timing guide. On the opposing side, we have the speculators (made famous by traders such as Gerald Loeb and is championed by William J O'Neil, a very successful trader in his own right) who believed that one can predict the market tops and bottoms with a certain measure of accuracy through daily and acute observation of the stock market movement.

So who is right? It is important to note that there have been value investors and traders who have made a lot of money using either ways, hence there is no right or wrong here. I mean, as long as you can make a lot of money, who cares right? Do choose a strategy you are most comfortable with. However, after having observed the stock market for some time already, I feel that concept the stock market timing guide does make sense to me and I have been able to stay out of some hairy situations since (A good example will be the recent bear market in 2010... on the overall I am net positive for the year from shorting the market).

What is the stock market timing guide all about? Essentially, the stock market timing guide is used to monitor any tops and bottoms that have occurred to signify the end of an uptrend as well as the beginning of a downtrend and vice versa. If we are able to do this, we will be able to stay out of buying stocks in a bear market and shorting stocks in a bull market. Thus, by swimming with the tide, we have a much higher chance of making money in the stock market.

Before we can elaborate on the stock market timing guide, let's go thorough some basic terminologies:

1) Accumulation - stock market goes up strongly with volume of stocks traded higher than average

2) Distribution - stock market goes down strongly with volume of stocks traded higher than average

The key to the stock market timing guide is to monitor the number of accumulation or distribution days within a certain time period, say six weeks or so. If the number of distribution days start to add up in an uptrend within this period, it signifies that the institutions are unloading stock and it might be time to sell shares also. This is a sign of a topping market as a number of distribution days can easily kill an uptrend and send the stock market into a correction mode. Conversely, if the number of accumulation days add up in a downtrend, the it signifies that the institutions are buying stock and it will be a wise choice to buy along with them as well so that the institutions can continue to push up the value of the stocks that you own. When the number of accumulation or distribution days add up, the stock market timing guide is providing a somewhat clear signal of what is going to happen.

In the event that the a series of distribution days are noted within a certain time period in a downtrend, it means that the current trend is strong. Similarly, when a series of accumulation days are noted within a certain time period, it usually means that the uptrend is still strong.


A caveat to the stock market timing guide: if the stock market is going insanely higher with strong volume within a very short period of time, it may signify a climax run. This happens when stock market participants become illogical and start buying stocks under the latest fashion they see. (A good example will the recent "dot com" craze that drove the NASDAQ to over 5000 points and back down again). Eventually, the buying power is exhausted and the stock market starts to top. It is at this time you will notice that the volume shrinks as well as all the potential buyers have bought and this should give you another indicator to escape with your winnings before selling starts to take over.

Do take note of the following:

1) Applying the concept of the stock market timing guide does not mean you will make a lot of money every time you invest/trade. However, it does help to reduce risk and hence you will save quite a bit from not losing money in the first place.

2) By using the stock market guide, we are attempting the determine the current health status of the stock market and not to predict what the stock market will do six months to one year from now. Remember that no one can accurately call the exact market tops and bottoms and hindsight is 20/20.

3) The stock market timing guide is not a buying and selling system by itself. Rather, it should be included in a part of your trading system where it is one of the factors to be taken into consideration.

It is always good to see numerous accumulation and distribution days happen as it means that there will be a change in trend and my buying / selling system can take advantage of it. As long as there is a strong trend, it is safer to invest/trade as you will not be swimming against the tide.

Using the stock market timing guide can involve a bit of work every day as you need to monitor the stock markets closely. Once you see the red (or green) flags, do not hesitate and take action accordingly.

I hope the concept of the stock market timing guide has been useful to all you beginners out there. If you truly wish to be a great trader , taking this first step of observing the daily stock market movement is the key to success.

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics, stock market timing guide

Stock Market Trading Software: is it useful?

With the introduction of advanced home computers (thanks to Apple and Microsoft in the 80s) and programming languages, there is a large variety of stock market trading software that is available nowadays. Are they really useful for the retail investor or trader?

As in most things in life (nothing is really perfect), there are advantages and disadvantages in using stock market trading software. Let's list them out here by the way, you will have noticed by now that I like to list things out in point form so that it's simpler to read. It's a habit of mine and I hope that it helps you in your reading):

Advantage of using stock market trading software #1

Stock market trading software helps us to save time. In the past, investing and trading were extremely difficult and time consuming because investors/traders had to get their hands on the company's fundamentals or stock charts with indicators in order to have the data available to analyse the company or the stock so that they can make their decision on whether to buy the stock or not. These days, all you have to do is to let the stock market trading software update itself before it can show you what you want to know. Some of the stock market trading software are web based and the data is constantly updated so that every time you go to the website to log in, you can look for what you need straight away. What needed a few hours in the past can now be easily settled within a matter of minutes. It means that you will have more time for yourself to do other things in life. After all, life is not ALL about the stock market is it? I'm a disciple of the stock market, but I do have other interests in life too, such as family, friends, my job... you get the picture.

Advantage of using stock market trading software #2

A big advantage of using stock market trading software is that it provides almost real time data for the investor or trader. Day traders particularly need real time data to make on the spot decisions and timing is crucial (It is very important to them as buy and sell stock/options on the same day and do not hold anything at the close of the stock market...important point to take note: Never never day trade unless you are highly competent in trading first. You can easily lose your capital of you are not careful, will tell you more about this next time). Investors also need updated data, particularly on news about companies so that in the case of good or bad news, they can react and make their decisions quickly. Do take note that if you need real-time information (such as news reports), the software charges will be very expensive as usually only the Big Boys (see my post on Stock Market Basics 101 #1 )will buy it.

Advantage of using stock market trading software #3

Stock market trading software complements the system we have for buying and selling stocks. As mentioned in my previous post on The Ideal stock market course/ stock market courses / stock market training programs #3, you need a comprehensive system for buying and selling stocks in the stock market (Note that comprehensive does not complicated... in fact a lot of good systems out there have some simple and relevant indicators and guidelines that helps one to make money in the stock market). If the stock market trading software can be configured to meet your system's needs, your life as an investor or trader will be much easier indeed. Hence, make sure that if you really purchase a stock market trading software, make sure it has what you need to complement your tools in your buy/sell system.

It will be almost impossible to list out all the major advantages out there, so I have mentioned the ones that I feel are the most important. Next, I will like to touch on the disadvantages of using stock market trading software.


Disadvantage of using stock market trading software #1

A major disadvantage of using stock market trading software is the cost of purchase. Some software requires a lump sum purchase while some others come with a monthly subscription. Usually, the cost comes up to a minimum of few hundred dollars per year. For example, let's just say that it costs $500 a year. Now, it's not an issue if you are investing or trading a sum of at least $100 000 or more, as it will come up to less than 1% of your capital and will help you to make even more money if used properly. However, if you are investing or trading at a smaller scale, at say $10 000, the cost will come up to a whopping 5% of your capital. Good investors or traders make typically 20% or more compounded a year and this really equates to 1/4 of their potential profits! Unless you are confident of making the amount invested in the software and much more, retail investors or traders should not spend more than, say 2% (this is only my suggested guideline) of his or her capital on stock market trading software.

Disadvantage of using stock market trading software #2

There are some stock market trading software that acts as a black box and tells investors or traders when to buy and when to sell. While some of these stock market trading software really works, I feel that it does not really help us in the long run because we will learn nothing out of it. I will use an analogy here: If we are given fish instead of being taught how to fish, our bellies might be full for the time being but we are in fact helpless as we do not know how to feed ourselves. I am a firm believer of learning the skills that can allow us to make our own buy and sell decisions in the stock market because it will stay with us for life. In fact, I am even planning of passing the skills I have to my children so that they too, can make money in the stock market. However, if you are really pressed for time and do not have feel that it is not necessary to have the skills, you can think of purchasing a stock market trading software or service that can do the job for you. Just make sure that whatever you purchased works. Ultimately, is this an advantage or disadvantage? Only you can answer this question. :)

Disadvantage of using stock market trading software #3

Some stock market trading software are not programmed very well, as such it makes it very complicated for the user. Instead of saving time, this will waste a lot of time instead as the investor or trader will have to learn how to use the software from scratch. There are also some stock market trading software that come with very little support from the vendor in terms of educational material and tech support which wastes a lot of time for the user as well. In order to prevent this, ensure that the stock market trading software that you purchase are easy to use and comes with a lot of support online or through the phone.

Ok, my fingers are a little tired from all this typing already... However, it is all worth it dear reader if it has helped you in any way on whether to purchase stock market trading software or not.

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics, stock market trading software

The Ideal Stock Market Course or Courses or training programs to attend

In the midst of discussions with my friends about the stock market, I have often been asked this question by my friends "So what are the good stock market course or courses to attend for me to begin to learn how to invest? What is the stock market training like?" This is the topic I will like to touch on today.

Please take note that I will not be making any particular recommendations on any stock market course or courses or stock market training programs in this post. There are thousands of courses out there and I believe that some are actually pretty good, although most of them are crap. Instead, I'll touch what are the essential characteristics of a good stock market course, good market courses or stock market training programs that when put together, is comprehensive and touches all bases. In this way, you will be able to analyse what the different stock market courses or stock market training programs have to offer and make the best decision.

The characteristics are as follows:

The Ideal stock market course/ stock market courses / stock market training programs #1

The course should start from basics. There should be some time taken to allow the trainees to be familiarized with the fundamental knowledge that is required for the rest of the course so that they will not be confused or left behind when the important segments are introduced to them.

The Ideal stock market course/ stock market courses / stock market training programs #2

The course should offer educational material that is simple to read and understand and the trainer should seek to explain in the clearest and simplest way he/she can. Most of the people that attend the courses will not have rocket science degrees and are everyday joes and janes. As in any type of educational courses, the key is to make the concepts to be learnt as simple as possible so that everyone can understand what is being taught. What is the point of attending courses that you don't understand as it is too difficult? In that case, it will be a complete waste of money.

The Ideal stock market course/ stock market courses / stock market training programs #3

The course should recommend some type of practical system to allow you to invest or trade. While having knowledge is good, you will still not be able to enter the stock market to invest or to trade without a system (Remember my previous post about Stock Market Basics 101) Having a good system to buy or sell stocks is the key to make money in the stock market. However, having said that it is not easy to determine whether the system is practical or not... the best way is to get the trainer to apply it on previous and the current stock market scenarios and see how it will do. Also, do take note that if the same system is used by too many people it will probably not work as well. You might have to tweak it a little here and there to optimize it's performance.

The Ideal stock market course/ stock market courses / stock market training programs #4

The course should offer some psychological barriers that people often possess which get into their way of making money in the stock market. Emotions like fear and greed often rule the market and this should be introduced to the trainees so that they are consciously aware of it. Another example will be that investors and traders should be emotionless when they are in the stock market. No stocks should be seen as favorite pets or kept out of sentimental value. The only good stocks are stocks that are making money for you.

The Ideal stock market course/ stock market courses / stock market training programs #5

The course should include some practical work where the trainees are expected to apply what they have learnt. A good example will be to source for potential stocks to buy from the current stock market. Investment/Trading games are even better! I remembered that in one of the courses that I attended, I played a investment game where all the trainees pitched in about $200 each as part of the Grand Reward to be divided among the top 10 players with the highest net worth at the end of ten rounds. It was a fantastic as well as enriching experience as it kept me excited throughout and I actually felt the emotions that affect all traders/investors as they pull the trigger. It was made more intense as I could hear, see and feel the rest of the trainees buying, selling and trading stuff and I could feel my hands trembling. Fear and Greed ruled us as a crowd at different times and up till now, I am still appreciative of the things I learnt from the game (By the way, I was the champion and won close to about $4000 ;))

That's it for today, more from me next time. I hope by now you have a much better idea of what to look out for in a stock market course, stock market courses or stock market training programs. :)

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics, stock market course

Learning the Stock Market Movement

Everyday, I learn about the stock market movement in order to get a perspective of the current stock market situation. Is it on a uptrend, downtrend or not really moving anywhere? Coupled with the knowledge of how the stock market moved in the previous sessions, this helps me in my buys and sells as I will never go long in a stock during a bear market and will never short a stock during a bull market. The reason is simple: about 75% or 80% of stocks follow the market direction. Why bother to swim against the tide when it is so much easier go with the tide? That is why i have 2 systems in place: one to long when the market is deemed to be bullish and one is to go short (still in the process of fine-tuning the short system though, beware: shorting is not for the faint hearted) when the market is deemed to be bearish. In summary, learning the stock market movement is the key to grow wealth.

Hence, when you purchase a stock it is important for you to learn about the stock market movement first. What are the most important things to look out for daily? Two key factors: points and volume. There are eight possible scenarios:

Learning the stock market movement #1: Strong Trend, high volume
1) Stock Market trends up strongly for the day with high volume. This is the preferred signal for going long in the market as it tells me that the the buying power of the bulls is strong.

2) Stock Market trends down strongly for the day with high volume. This is the preferred signal for going short in the market as it tells me that the the selling power of the bears is strong.

Learning the stock market movement #2: Weak Trend, high volume
3) Stock Market trends up weakly for the day with high volume. This is an indication of churning, which means that the big boys are selling stock to the bulls and means that the market may topple soon.

4)Stock Market trends down weakly for the day with high volume. This tells me that neither the bulls nor the bears won today even though there was a strong buying and selling power. However, they canceled themselves out.

Learning the stock market movement #3: Strong Trend, low volume
5)Stock Market trends up strongly for the day with low volume. This tells me that there was weak selling power as the bears did not make their move. Take note that it does not mean that the buying power is strong. That is why it is important to monitor the volume traded as well.

6) Stock Market trends down strongly for the day with low volume. This signifies that the buying power is weak but it does not mean that the selling power is strong.

Learning the stock market movement #4: Weak Trend, low volume
7 & 8) This tells me little except that most of the bulls and bears were sitting out for the day.

Do take note that even though I learn about stock market movement daily, I do not form a conclusion straight away. It is just one of the tools I have in my toolbox. I will make the judgment call after going through all the tools I have selected for my stock selection system. Dear reader, you should get yourself a set of tools as well if you want to do well in the Stock Market. Before that, I strongly recommend that you take some time to educate yourself and learn about stock market movement. If possible, you might want to start monitoring the daily movement as well as volume traded. Learning the Stock Market Movement will help you to reduce risk in the long run , which leads to increased profits.

Remember that in the Stock Market, what goes up must come down eventually and vice versa. It is important the spot the warning signs and enter cautiously / exit quickly whenever necessary. As of now, I have spotted a bull signal yesterday but I will take some time to guage the strength of the market before making any move. Two other bull signals have failed in June already and the Stock Market seems to be whipsawing around with a risk of another major correction. The bear power seems to be strong indeed. Nevertheless, I will continue to learn the Stock Market Movement daily before making any further decisions.

Ok folks, that's it for today. Hope that you have learned some valuable pointers from here. Cya around!

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics, stock market movement

Stock Market Basics 101

In order to be able to make loads and loads of money in the stock market, a beginner has to master the stock market basics 101 (or commonly known as stock market 101) first. It is akin to flying a plane, you certainly don't want to fly a plane without knowing how to operate it in mid-air, otherwise... BOOM! It is not easy money and you do have to sacrifice your time and put in effort into it, but the fruits of your labour are sweet indeed...

So what are the few stock market basics 101 that you, as beginners need to know?

Before we start, do take note that I will not be discussing the standard facts of the market (i'll leave these to the "experts" out there) as you can easily get those information elsewhere. I'm more interested to share with you about the things you don't commonly hear about.

Stock Market Basics 101 #1 : Be Prepared
The Stock Market movement is dominated by mutual funds and large institutions (An example will be the trading divisions of the Banks) as they have billions and billions, and thus with the strongest purchasing power. They are run by Fund Managers (strongly supported by analysts, computer trading systems etc etc) who are able to have move the market up or down, particularly if most of them are skewed towards the long side or the short side. In the recent years, ETFs (Exchange Traded Funds) have made themselves a force to be reckoned with. There is a rumour going around that the recent "Flash Crash" (where there a HUGE drop in the Dow, SNP500 and the Nasdaq Composite) was caused by the re-balancing of ETFs. Retail or individual investors/traders/speculators (Example: Me)can only go along for the ride. Think about this, as individuals what chance do we have against the big boys if we are not well prepared? Thus, it is imperative not jump into the stock market if you are not ready. Will you go to war without a weapon by your side if you see the enemy is armed to the teeth? I'm sure you get the picture. If you have been reading up till now, you have taken the right step to learn about the stock market basics 101... keep up the good work! ;)

Stock Market Basics 101 #2 : Big Brother (aka Stock Market) is always right.
Many clever and intelligent people, including "experts" have attempted to predict how the stock market will behave in the future and are totally convinced by their ideas. (Have you heard of Dow 30000?) They also try to influence everyone else besides them with the force of their convictions. When the stock market turn against them, they argue and still feel that they are right and things will turn around soon as their "thesis" cannot be wrong.

If you are one of them, I've got news for you: the stock market doesn't care what you or I think or believe. It doesn't even care whether we exist. Life goes on for it as per normal. There's only one way in the stock market, and it is the way it is moving now. If you choose to form your own opinion, good luck to you my friend. All the best, you'll need it.... A LOT.

Stock Market Basics 101 #3 : Always keep a close watch and maintain a healthy respect for the Stock Market.
A good analogy to illustrate this will be the use of fire. Fire helps us in a variety of ways (Example: Getting our food cooked, keeping the bed warm) but if we are not careful, it can turn us around and bite our ass... HARD (Example: A strong Forest fire kills everything in it's path, a good fire can burn down your home). Essentially, fire makes a good servant but a bad master. As such, be very careful of the stock market when your money is in it. DO not ever think that you have mastered the stock market already, especially when you have not made mistakes before and have a lack of experience. Why? I'll explain next time.

Ok, I find myself late for work already, so I'll stop here for today. We can discuss more about the Stock Market Basics (or stock market 101)in the future. Bye!

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics

A Stock Market blog for beginners... by a disciple

Welcome to the Stock Market Blog for beginners! This is not one of the usual sites that promotes their "never fail" systems and strategies, mainly because I am not an "guru"... I consider myself a Stock Market disciple who has started from the beginning like you are now and have learnt the hard way to have achieved a certain measure of success. I will share what I can in the future posts.

Disclaimer: I do not guarantee that anyone who reads this blog can make a lot of money and become an expert in a short time. Investing is a skill that can be learnt but it takes a lot of hard work and time to become really good and there is no one in the world that can tell you he/she can make money consistently over decades without doing much. Even experts make mistakes sometimes when they get too caught up by their emotions. However, I am sure that beginners in the stock market can learn some useful stuff to help them in their journey to become good or even great investors. :)

Tags: stock market, investing, trading, make money, stocks, finance, wealth building, stock market basics