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Author: narendra nainani

Bullet Advisory Analyses Indian Share Market Nifty Shares Future Options

Bullet Advice For Indian Stocks Weekly – market will follow global cues

BSE Sensex (15896.28) and Nifty (4711.70) closed  down  by  5.4%  and 4.75 % respectively  last week.Nifty Future November was quoting at 3.95 points discount.Nifty Call Option November 4900 was very active.Support for Sensex is at  15100. Resistance for Sensex is at 16620 .Crude oil was at 77.30 $.

RCOM,SBI,Hindalco,Unitech and Hindustan Unilever will unveils Q2 results next week.U.S.Federal Reserve meeting is scheduled on 3rd and 4th November 2009.

Ashok Leylandand Hindalco added Open Interest in November series.Huge position was build up at  Ispat Industries November Call Option Strike Price 22.5.Good build up was also seen at IFCI November Call Option Strike Price 50..

1)Ranbaxy(390.40) Lot Size-800

Buy One Call Option of  November Strike Price 390@ Rs.19.50

Sell One Call Option of  November Strike Price 420@7.90 Rs.

Premium .Paid=19.50*800=.15600.00 Rs.

Premium Received=7.90*800=6320.00 Rs.

Net Premium Paid=15600-6320= 9280.00 Rs.

Maximum Profit==420-390=30*800==24000-6320=17680.00 Rs.

Maximum Loss=9280 Rs.

Break Even Price=401.60

2)Ashok Leyland(45.95) November Future-Lot Size 9550 shares.

Buy One Lot November Future @45.95

Sell One Call Option of November Strike Price 47.50@1.35Rs.

Premium Received=1.35*9550= 12892.50 Rs

Maximum Profit=47.50-45.95=1.55*9550==14802.50+12892.50=27695.00 Rs.

Max Loss=Unlimited.

Trend of Major Stocks

STOCK TREND Days WeeklyTrend MonthlyTrend

  1. BHEL.NS       Bearish 9          Falling  Falling
  2. ICICIBANK.NS         Bearish 8          Flat!     Flat!
  3. INFOSYSTC.NS        Bearish 2          Falling  Falling
  4. ITC.NS            Bearish 2          Flat!     Flat!
  5. MARUTI.NS   Neutral 1          Falling  Rising
  6. SBIN.NS         Bearish 8          Flat!     Flat!
  7. TATASTEEL.NS         Bearish 8          Flat!     Flat!
  8. TCS.NS           Bearish 2          Flat!     Flat!

Technical indicators of major Stocks

MFI=Money Flow Index

RSI=Relative Strength Index

ADX=Directional Momentum Index

STOCK CLOSE MFI-21 RSI-14 ADX-14

  1. BHEL.NS        2217.8 51.76   33.41   25.19
  2. ICICIBANK.NS         790.8   57.28   37.21   31.64
  3. INFOSYSTC.NS        2206.2 37.94   46.15   17.6
  4. ITC.NS            254.8   61.5     55.58   37.88
  5. MARUTI.NS   1403.3 39.59   36.73   17.43
  6. SBIN.NS         2191.05           46.77   50.07   26.65
  7. TATASTEEL.NS         471.55 61.97   38.04   28.79
  8. TCS.NS           628.3   46.77   59.13   19.6

Trading Idea

1)FSL(34.70)Buy this stock in decline and trade.

2)GDL(123.15) Buy this stock in decline and trade.

By

Bullet Advisory Indian Stocks-India's Top Most No.1 Best Stock Market Advice Blog,Hot Stock Tips Calls by Expert Technical Analyst Narendra Nainani of India.Most Preferred and Successful  Paid Subscription Stock Tips Calls Website of India.Excellent Success Ratio of more than 90% with Superb trading ideas.Most Successful Intraday Stock Future Calls Provider Service Indian Share Market.

-+919898162770

Website   http://www.narendranainani.blogspot.com

Article Source: http://www.articlesbase.com/investing-articles/share-market-tips-1407699.html

About the Author

Narendra Nainani AHMEDABAD, GUJARAT, India Narendra Nainani is renowned technical analyst and stock market advisor of INDIA having experience of more than 26 years having excellent success ratio.Expert in Derivatives Products-Futures & Options,Intraday,Short Term ,Medium Term,Long Term,Portfolio Management,IPO & Mutual Fund Advisor.Covered regularly by E TV & Business Magazines like The Economic Revolution for Market views. India's top most no.1 best stockmarket advice blog hot stocktips calls by expert technical analyst of India.Most preferred paid subscription stocktips calls website India.Excellent success ratio of more than 90%.good superb trading ideas.M-9898162770 Website MostSuccessfulIntraDayStockFutureTipsProviderIndia.

Gold & Silver: protect your wealth from the ravages of inflation

Author: Rampart

"Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights." - Alan Greenspan

Think that $20 bill in your pocket is money? Think again... it isn't! Real money has three very distinct attributes:

* It must be fungible
* It must be divisible
* It must be a store of wealth

Lets look at these attributes one at a time.

To be "fungible" an asset must be exchangeable for another of equal value. The best example of a fungible asset is gold. My 1 oz gold bar is worth exactly the same as your 1 oz gold bar. The same goes for silver bullion bars. Why not use diamonds or some other gem stone? Simple - diamonds are a product of nature, and come in many different qualities. Diamonds have different colors, flaws, clarity, etc.... An ounce of gold, on the other hand, is minted to a specific weight and purity.

Divisibility is another important aspect of money. True money must be divisible so that you can make small purchases. Through out history, silver coins have fulfilled this role. While gems have value, it is not practical to use them for daily business activities. You can't buy a loaf of bread and expect the seller to make change for a diamond.

Last - true money must be a store of wealth. The dollar in your pocket has lost 97% of its purchasing power since 1913, the year the Federal Reserve took over our banking system. Here is a frightening fact: The current rate of real inflation is about 6% a year. If you have 100k in the bank right now, it will only be worth 53k 10 years from now. Clearly, the dollar is not a store of wealth.

How did paper money lose it's ability to be a store of wealth?

Prior to 1971, our currency was backed by gold. In theory, one could go to the bank and exchange paper money for gold or silver. (Private citizens lost that right in 1933. After that time, only foreign creditors could exchange paper for gold). In order to preserve the nations gold hoard, President Nixon closed the gold window. Now, paper money was not backed by anything at all... this paved the way for inflation through reckless money printing. Since it was no longer exchangeable for gold, the government could print as much money as it needed. The flood of new money in the market place drove up prices. Homes, cars, and everything else became more expensive.

The dollar in your pocket no longer money - it is fiat currency. Fiat is a Latin term that means "by decree". That bit of colored paper only has purchasing power because the government decrees it. The longer you hold it, the less buying power it will have.

Now lets consider the purchasing power of gold. Soon after Nixon closed the gold window, the price of gold averaged $42.02 per ounce. To buy a brand new 1976 Cadillac Eldorado (retail price $7,546) would have cost you 179.58 ounces of gold. Years later, in 2006, a similar car would cost $77,295. The price of gold averaged $443.60 at that time. For the same 179.58 ounces of gold, you could buy an XLR and still have $2,367 left over to buy 739 gallons of gas!

Lets look at this another way. Rich Uncle has 2 nephews. In 1976 he spends $420 to buy 10 ounces of gold for one of his nephews. For the other boy, he places $420 in an envelope. He spent the same amount of money on both boys. Now, in September 2010, the price of gold is hovering around $1,250 an ounce. One boy has an inheritance worth about $12,500. The other boy has $420. Which would you rather have?

While it is true that the price of gold and silver has daily price fluctuations, it still the best store of value on the planet. Do not loose your wealth to mounting inflation - choose the hard assets that have stood the test of time.

 
Silver Bullion Bars   PAMP Gold Bullion

Article Source: Thomas Delgato - RampartSilver.com

 

 

Article Source: http://www.articlesbase.com/investing-articles/gold-silver-protect-your-wealth-from-the-ravages-of-inflation-3195386.html

About the Author

Rampart Silver is dedicated to helping Americans preserve their wealth from the ravaging effects of inflation.

Silver Bullion Bars

PAMP Gold Bullion

The N420 billion Nigeria Bank Stimulus: Some Economic and Financial Implications

Author: Shafii Ndanusa

THE N420 BILLION NIGERIA BANK STIMULUS: Some Economic and Financial Implications

Written By: Shafii Ndanusa MBA, ACCA, FAAFM

Nigeria and in fact the entire world economy has in the last five weeks witnessed the spectacle of the unfolding drama in the nations’ banking and financial landscape. A major stabilizing decision that was taken in the wake of the Central Bank of Nigeria’s intervention is the injection of some four hundred and twenty (420) billion Naira into the five hitherto unhealthy commercial banks.  This rather humane and socially-responsible action itself has elicited a wide range of reactions from a cross section of the populace. Although, there appears to be some balance of reporting in terms of those who favor and those who oppose the CBN intervention. My personal view is that Nigeria is a developing country. More than ever before, this is the time Nigerians should pay great attention to facts, truth and objectivity. Based on the above criteria, people should then decide where to pitch their tents in matters of critical national importance. The era of primitive sentimentality, blind accusations and ill-informed contemplation clearly belongs to the dustbin of history.

My favored approach to a lot of issues is to ask questions myself. Perhaps this is because of my willingness and openness to new perspectives of thought and action. To this end, the following is considered pertinent.

1. How is the 420 billion Naira stimulus package being made available to banks? Is it solely in cash or a combination of cash and financial instruments?  Note that attention has to be paid to the impact of cash injection to the overall money supply of the Nigerian economy and its attendant effects on interest rates.

2. Is there any possibility of excess liquidity being created as a result of the intervention? How much liquidity injection can the system comfortably cope with without adversely affecting the local and international value of the Nigerian currencies?

3. What effect could the more money in circulation lead to in terms of Retail Prices Inflation? What additional monetary policy measures are required both in the short and long term to stabilize the undesirable economic effects of this injection?

4. Noting that the 420 billion Naira stimulus was not created as a result of any real economic activity, what measures are required to ensure that the money created is given true economic value through its judicious application?

5. How is the N420 billion being administered by the regulator? The administration system must be transparent, accountable and fair to all the parties concerned. The system itself must also be capable of meeting the stiff and thorough tests of public accountability. Every aspect of the administration must be fully, properly, accurately and completely documented for posterity.

6. What are the rules for access to the bailout funds by the famous five banks? Are the rules fair and competitive? Do the rules encourage performance or over-reliance on the regulator?

7. What close monitoring mechanisms have been put in place to ensure that the bailout funds are not abused by the recipient organizations?

8. What is the short, medium and long term plans for the administrative and operational turnaround of these institution?

9. Regulators are expected to maintain arms-length relationships with operators within their industry. Having radically altered the competition dynamics in the industry, what measures are being taken by the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation and the Nigerian Stock Exchange to ensure that undue favor and privilege is not given to the five banks taken over? Note that this action is necessary to create an environment of fair play and healthy competition.

10. For regulation to be effective, the regulator must be ahead of the operators in all the key areas of regulatory interest. How much regulatory reform is required in terms of internal systems, structures, skills, staffing and strategy to ensure that future problems are not allowed to escalate before remedial action is implemented?

Mr. Shafii Ndanusa is a Certified Chartered Accountant (ACCA) and Fellow of the American Academy of Financial Management (FAAFM). He wrote from Abuja. Nigeria.

Article Source: http://www.articlesbase.com/banking-articles/the-n420-billion-nigeria-bank-stimulus-some-economic-and-financial-implications-1258246.html

About the Author

Certified Chartered Accountant (ACCA, U.K.) and Fellow of the American Academy of Financial Management (FAAFM, U.S.A.). He holds a Bachelor of Science degree in Accounting and an MBA with specialisation in Finance. Emails: shafii@accamail.com, shafiie@hotmail.com Mobile:+2348033713910

Market Trends

Author: MTnews

Daily Market Commentary for July 29, 2008 from Millennium-Traders.Com

For rookies in these markets, it’s impossible to guess what the markets will do, one day to the next. Unless you have a crystal ball, any trader and day trader will merely, go with the flow of the markets and not try to go against the trend. (read more)
http://www.millennium-traders.com/news/newscommentary.aspx

Hot Stock pick on the move today for day trading: United States Steel Corporation (NYSE: X) which soared higher on the day trading session posted a double digit gain for the stock price. Second quarter net income doubled, per U.S. Steel at $688 million or $5.65 per share compared to year ago income of $302 million and $2.54 a share. Analysts estimates were $5.9 billion and $3.91 earnings, per share. Gross margin rose from 15 percent to 18 percent. Reported income from U.S. Steel operations soared  to $954 million from $391 million and sales jumped to $6.74 billion from $4.23 billion. U.S. Steel foresees earnings improvement during the third quarter which will be assisted by price increases. "We recorded the highest quarterly sales and net income in U.S. Steel's history during the second quarter as all three reportable segments posted record results," CEO John Surma wrote in a press release, adding that the company expects "another excellent quarter" for the period that ends September 30. Surma raised steel prices in June as demand has been booming around the globe. At the closing bell, U.S. Steel had a trading range for the day of 12 points with a gain of over 20 points with a closing price for the trading session of $165.76.

At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the session on the world market as well as the emerging markets including the stock market closing bell price:
DOW (Dow Jones Industrial Average) triple digit gain of 267.30 points on the day to end the trading session at 11,398.38
NYSE (New York Stock Exchange) triple digit gain of 159.01 points to end the trading session at 8,419.20
NASDAQ gain of 55.40 points to end the trading session at 2,319.62
S&P 500 gain of 28.80 points to end the trading session at 1,263.17
FTSE All-World excluding - U.S. gain of 0.54 points to end the trading session at 223.08
FTSE RAFI 1000 triple digit gain of 131.67 points to end the trading session at 4,942.14
BEL 20 (BEL20) loss of 8.6 points to end the trading session at 2,991.17
CAC 40 (CAC40) loss of 3.96 points to end the trading session at 4,320.49
FTSE100 (UKX100) gain of 6.6 points to end the trading session at 5,319.20
NIKKEI 225 (NIK/O) triple digit loss of 194.33 points on the day to end the trading session at 13,159.45

New York Stock Exchange (NYSE) stock market indicators for the day:
Advanced stock prices 2,399; declined stock prices 780; unchanged stock prices 78; stock prices hitting new highs 19 stock prices hitting new lows 72.
NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: CME Group Incorporated (NYSE: CME) stock price gained 22.20 points on the trading session, high on the trading session $374.18, low on the trading session $350.40 for a closing stock price at $373.50; Mosaic Company (NYSE: MOS) stock price shed 0.30 points on the trading session, high on the trading session $124.71, low on the trading session $117.52 for a closing stock price at $122.36; Rio Tinto plc (NYSE: RTP) stock price gained 7.08 points on the trading session, high on the trading session $420.24, low on the trading session $402.70 for a closing stock price at $409.76; Walter Industries Incorporated (NYSE: WLT) stock price gained 12.98 points on the trading session, high on the trading session $99.58, low on the trading session $90.04 for a closing stock price at $99.26; XTO Energy Incorporated (NYSE: XTO) stock price shed 2.06 points on the trading session, high on the trading session $47.93, low on the trading session $45.71 for a closing stock price at $46.05; Patriot Coal Corporation (NYSE: PCX) stock price shed 6.75 points on the trading session, high on the trading session $130.60, low on the trading session $122.00 for a closing stock price at $127.95; United States Steel Corporation (NYSE: X) stock price gained 20.43 points on the trading session, high on the trading session $169.48, low on the trading session $157.08 for a closing stock price at $165.76; Continental Resources (NYSE: CLR) stock price shed 7.94 points on the trading session, high on the trading session $61.51, low on the trading session $53.18 for a closing stock price at $55.78; AGCO Corporation (NYSE: AG) stock price gained 6.58 points on the trading session, high on the trading session $61.97, low on the trading session $56.40 for a closing stock price at $58.88; Whiting Petroleum Corporation (NYSE: WLL) stock price shed 4.53 points on the trading session, high on the trading session $88.75, low on the trading session $82.95 for a closing stock price at $84.60; Potash Corporation Saskatchewan (NYSE: POT) stock price gained 4.34 points on the trading session, high on the trading session $203.09, low on the trading session $195.26 for a closing stock price at $202.99; Monsanto Company (NYSE: MON) stock price gained 1.19 points on the trading session, high on the trading session $116.35, low on the trading session $113.40 for a closing stock price at $115.70; Kaydon Corporation (NYSE: KDN) stock price shed 7.64 points on the trading session, high on the trading session $51.90, low on the trading session $47.13 for a closing stock price at $48.31; CONSOL Energy Incorporated (NYSE: CNX) stock price shed 0.88 points on the trading session, high on the trading session $85.69, low on the trading session $78.00 for a closing stock price at $81.50; Petroleo Brasileiro SA (NYSE: PBR) stock price gained 0.39 points on the trading session, high on the trading session $54.44 low on the trading session $52.84 for a closing stock price at $54.00; ULTRASHORT Financial Corporation (NYSE: SKF) stock price shed 18.47 points on the trading session, high on the trading session $144.62, low on the trading session $123.32 for a closing stock price at $123.69; Mechel OAO (NYSE: MTL) stock price shed 0.89 points on the trading session, high on the trading session $19.70, low on the trading session $16.73 for a closing stock price at $18.61; MasterCard Incorporated (NYSE: MA) stock price gained 8.40 points on the trading session, high on the trading session $263.53, low on the trading session $255.03 for a closing stock price at $262.10.

National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators today:
Advanced stock prices 2,030; declined stock prices 878; unchanged stock prices 123; stock prices hitting new highs 29; stock prices hitting new lows 75.
NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: Zoran Corporation (NasdaqGS: ZRAN) stock price shed 1.44 points on the trading session, high on the trading session $8.74, low on the trading session $7.92 for a closing stock price at $8.15; Cognex Corporation (NasdaqGS: CGNX) stock price shed 4.15 points on the trading session, high on the trading session $18.71, low on the trading session $16.57 for a closing stock price at $17.78; Google Incorporated (NasdaqGS: GOOG) stock price gained 5.99 points on the trading session, high on the trading session $487.26, low on the trading session $478.00 for a closing stock price at $483.11; First Solar Incorporated (NasdaqGS: FSLR) stock price gained 5.76 points on the trading session, high on the trading session $281.26, low on the trading session $261.79 for a closing stock price at $272.66; Sohu.com Incorporated (NasdaqGS: SOHU) stock price shed 3.34 points on the trading session, high on the trading session $79.11, low on the trading session $72.41 for a closing stock price at $75.26.

Market trends on the American Stock Exchange (AMEX) and stock market indicators for today:
Advanced stock prices 680; declined stock prices 506; unchanged stock prices 102; stock prices hitting new highs 11; stock prices hitting new lows 45.

Chicago Board of Trade Futures Market activity for the day, at time of this posting for September 2008 Contracts:
E-mini S&P 500 (ES) end of day price 1,262.00, change 27.00
E-mini NASDAQ-100 (NQ) end of day price 1,843.25, change 29.50
E-mini S&P SmallCap 600 (SMP) end of day price 373.10, change 9.20
$5 DJIA (YM) end of day price 11,371, change 235

World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:
Euro 0.641 to U.S. Dollars 1.5601
Japanese Yen 108.15 to U.S. Dollars 0.0092
British Pound 0.5048 to U.S. Dollars 1.9809
Canadian Dollar 1.0269 to U.S. Dollars 0.9738
Swiss Franc 1.0445 to U.S. Dollars 0.9574

Commodity Markets:
Energy Sector: Light Crude (NYMEX: NYM) shed $2.54 on the day for a closing price of the range of $122.19 a gallon ($US per barrel)
Heating Oil (NYMEX: NYM) shed $0.09 on the day for a closing price of $3.50 a gallon ($US per gallon)
Natural Gas (NYMEX: NYM) shed $0.07 on the day for a closing price of $9.13 per million BTU ($US per mmbtu.)
Unleaded Gas (NYMEX: NYM) shed $0.06 on the day for a closing price of $3.01 a gallon ($US per gallon)

Metals Markets:
Gold Market Price (COMEX: CMX) shed $11.40 on the day for a closing price of $926.40 ($US per Troy ounce)
Silver (COMEX: CMX) shed $0.09 on the day for a closing price of $17.38 ($US per Troy ounce)
Platinum (NYMEX: NYM) shed $31.30 on the day for a closing price of $1,745.40 ($US per Troy ounce)
Copper (COMEX: CMX) shed $0.02 on the day for a closing price of $3.59 ($US per pound)

Livestock and Meat Markets (cents per lb.):
Lean Hogs (Chicago Mercantile Exchange: CME) shed 1.10 on the day for a closing price of 72.30
Pork Bellies (Chicago Mercantile Exchange: CME) shed 0.40 on the day for a closing price of 72.05
Live Cattle (Chicago Mercantile Exchange: CME) gained 0.80 on the day for a closing price of 105.60
Feeder Cattle (Chicago Mercantile Exchange: CME) gained 1.55 on the day for a closing price of 112.65

Other Commodities (cents per bushel):
Corn (Chicago Board of Trade: CBT) gained 12.25 on the day for a closing price of 613.50
Soybeans (Chicago Board of Trade: CBT) shed 5.00 on the day for a closing price of 1,391.00

Bond Market:
2 year bond shed 4/32 on the day for a closing price of 100 6/32 with a Yield of 2.64, Yield Change +0.07
5 year bond shed 13/32 on the day for a closing price of 99 28/32 with a Yield of 3.39, Yield Change +0.08
10 year bond shed 21/32 on the day for a closing price of 98 21/32 with a Yield of 4.06, Yield Change +0.06
30 year bond shed 1 1/32 on the day for a closing price of 95 9/32 with a Yield of 4.64, Yield Change +0.04

Access scheduled economic data every market morning by viewing the Daily Market Report from Millennium-Traders, free access to visitors on our website.

Visitors may subscribe to our free Weekly MarketNews for a review of the previous weeks trading news plus, view upcoming economic data scheduled for the week ahead.

Review current edition as well as, archives of the News & Commentary plus, view complete details of calls made in our Trading Rooms and stock picks from our Swing Trading services. Traders should review our FREE Monthly Trading Lesson posted on our website.

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Article Source: http://www.articlesbase.com/day-trading-articles/market-trends-501538.html

About the Author

Buy and Hold is Dead – a Simple System Used by a Multi Millionaire Trader That Beats 95% of the Professionals

Author: Vince Stanzione

If you follow the advice of many financial professionals they will tell you that buying and holding quality shares over the long run is a sound investment. Whilst this may be true over 25 or 50 years, the last 10 years have been dead money for anyone tracking the markets. In fact cash on deposit would have produced better results with a lot less risk.

Let’s use the S&P500 which is still the world’s best benchmark to track as an example. If you had invested in November 1998, 10 years on you would be sitting at a loss.

So whilst Buy and Hold has not worked over the last decade we also know that most short term traders don’t make money. It’s a fact that most fund managers and hedge funds cannot beat the index over the long term.

Also getting in and out of markets although cheaper than in the past still costs money. Not just commission but the spread (difference between buying and selling price). Also active trading can affect your tax rates.

So what’s a good solution?

Here is a very simple trading system which keeps you in during the good periods and gets you out during the poor months and years.

This system requires no complicated software and will only need around 10 minutes per week to operate.

Using a Moving Average

This one tool has made me (and saved) more money than any other. It's hard to trace the origins, however, one of the pioneers was Richard Donchian who was a great pioneer of systematic trading in the 1950’s and 60’s. The systems he created over 40 years ago are common place in today’s trading world and are the basis for many of the complex systems used by the world’s best traders.

The dictionary quotes an average as "the quotient of any sum divided by the number of its terms" so if you were working out a 10 day moving average of the following 10, 20, 30, 40, 50, 60, 70, 80, 90, 100 you would add them together and divide them by 10, so the average would be 55.

Now when tomorrow’s price comes in, let's say 105, you remove the oldest number and 105 is added so the average is 64.5.

Every charting software page carries moving averages as it is the grandfather of trading. You will also find it on the various charts on internet sites. You don't need to worry about working it out.

There are five popular types of moving averages: simple (also referred to as arithmetic), exponential, triangular, variable, and weighted. Moving averages can be calculated on any data series including a security’s open, high, low, close, volume, or another indicator.

My favourite is no surprise, the Simple Moving Average, while some have tried to be clever changing the calculations stick to simple.

When using software or the internet it is often abbreviated to (SMA).

Just using a simple 20 month moving average, 420 days (21 trading days roughly per month)

So when the S&P500 closes below its 20 month SMA you would sell, when it closes above you would buy.

Based on this you would have been out of the market in January 2008 and would still be out, saving you a lot of pain. You would have bought in June 2003 and stayed with the up move until January 2008. It’s going to be a long time before you get a new buy signal on this trading system, I cannot see a buy signal until at least the end of 2009. More aggressive traders can of course also short when the 20 month SMA is broken. This can be done using inverse Exchange Traded Funds such as Proshares Ultra Short SDS which goes up x2 as the S&P500 falls.

Summary

 

Don’t just buy and hold shares, at the same time active trading is not for everyone. Use the 420 day SMA as a line to decide when to be in or out of the S&P500. Traders can also look to trade short when the market falls below the 420 day SMA


Vince Stanzione has produced a home study course to teach private investors how to benefit from Making Money From Financial Spread Betting, trading ETFs, Fixed Odds and Financial Futures. For more information please visit www.fintrader.net

 

Article Source: http://www.articlesbase.com/investing-articles/buy-and-hold-is-dead-a-simple-system-used-by-a-multi-millionaire-trader-that-beats-95-of-the-professionals-701329.html

About the Author

Vince Stanzione is a self made multi-millionaire based in Europe. Started at a junior at the age of 16 for Nat West Foreign Exchange in London he worked his way up in before leaving to start up his company. He has been involved in various companies including mobile communications, premium rate telephony, Interactive gaming, publishing and television and financial trading. He now lives most of the year between Spain and Monaco and trades his own funds mainly in currencies and commodities. As well as trading he also teaches a small number of students and produced the best selling course on Financial Spread Betting. He is also the author of “How to Stop Existing & Start Living” to learm more go to www.fintrader.net

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