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There once was a trader who adopted a trend-following, position trading approach and was quite successful. His approach was to generate a trading order for the next day after the close of trading each day and to always follow his system. Although he was not a day trader, he obtained real-time quotes from his data vendor, ostensibly to keep better track of his successes. One day, in the midst of a strong intermediate-term rally, he was long four contracts of Lumber with an order to sell short at 4080. In the opening minutes of trading his order was hit and he was reversed into a short position. A few minutes after that a report came out that caused Lumber to soar higher by almost its full daily limit. Suddenly this trader was down $3,712 on four contracts in just a matter of minutes. Completely distraught he tried to figure out what to do. Should he cover his short position immediately in stock market? Should he hold on? What is the proper course of action? Fearing that the stock market would “lock” limit higher, he covered his short position and went flat. Would it surprise you to learn that by the end of the day, Lumber closed back down exactly at the price at which he had shorted it earlier that day? The next day Lumber opened sharply lower and just kept sinking. Instead of losing a little on the first day and holding a profitable short position the next, our trader suffered a loss of $3,712 and could not bring himself to get back into the short position, thereby missing out on a subsequent $10,240 profit. His momentary lack of discipline cost him $13,952. Ouch! Where did this trader go wrong in stock market? Two things come to mind. First off, if you have made the decision not to be a day trader, then live quotes can be a very dangerous thing in stock market. To the undisciplined trader a quote machine can be the equivalent of a slot machine. You see the opportunities flashing before your eyes and you feel compelled to play. Also, based on his trading approach, by all rights the trader in this example should not even have been aware of Lumber’s intraday gyrations. Had he been off reading a good book instead of staring at his quote screen he would not only have saved himself a considerable sum of money, but also all of the emotional angst that went with watching the stock market move sharply against him, arbitrarily deciding to bail out, and then watching the stock market move back in the right direction without him being on board. The second error this trader made in stock market was in failing to adhere to his approach. His system told him to be short, but he  Read more...

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 It is very difficult to guess when the housing market will start to turnaround and recover.  Right now, the crisis is still raging and homes foreclosures are still accelerating.  Because of this crisis home values continue to depreciate everyday and foreclosed houses are being sold at bargain prices.  In fact, banks are slashing the prices of foreclosure homes by as much as 20% less than their original values just to remove these properties off their books.  That is why you can take a profit by buying cheap foreclosures for sale and selling it at a much higher price.  

The first thing you need to do is to find suitable foreclosure homes being sold at bargain prices.  You can find great deals from real estate website with online listing of foreclosures for sale.  It is also best if you can look for properties in states that were hit hard by the housing slump.  Banks in these states are more than willing to part with foreclosed properties just to liquidate these assets.  You can get good deals from these banks and buy homes at rock bottom prices.  You can sit on these foreclosures for sale and wait for the right buyer or you can look for a buyer first before you close a deal with the bank.  Either way, you can get a decent profit from your house flipping efforts because you can buy foreclosure homes cheap and sell them with a markup.   Read more...

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