Secret Guide to ForexTrading

You are now versed in the functionality of the stock market
and have decided that you are willing to accept the risk
factors involved. However, you want to know everything
you can about balancing that risk with intelligent investment
options. How can you be sure that the risks you take are
more likely to be rewarding in the long run than destructive?

Long and Short:
One of the most important parts of making money on the
stock market is to determine your position. The long
position is basically the purchasing position – you are about
to take on a long-term commitment for ownership of some
stock, security, or other traded commodity. The short
position, by contrast, is the selling position – you are shortly

going to dispose of the same sort of ownership and any
responsibility toward it.
The best time to take up the long position is when stock
prices are low. This will get you into the market at a
reasonable price and increase your chances for profitability
as new offerings go up in price and older investment options
recover or rebound. In fact, as others take the long position
and purchase at the same time you do, this will actually
drive the value of securities up through the standard rule of
supply and demand, causing the beginning of what could be
a bull market.
You may equate this with the end of the month at a car
dealership. The prices tend to drop on any cars left on the
lot for sale, and the dealer is more often willing to bargain
because he or she wants less inventory on the lot. Likewise,
when stock prices are low, some will panic and dump all of
their holdings at these low prices, thinking that their shares
will never recover the value. This can only be of assistance
to you.
When prices are high, it is likely time to turn around and sell
your shares to bring in a profit, not losing anything on
unrealized gain (profit that cannot be counted in liquid
assets or cash because it is still invested in a volatile stock
option). You should never sell for a price that is below your
cost, as this brings negative equity and loss of funds. You
should always sell for the greatest amount of profit that you
feel is safe.
In other words, if you buy a security at fifteen dollars per
share, and it quickly rises to twenty-five dollars per share,
you may very well feel that it could hit thirty dollars per
share within a week. However, you must determine if you
are willing to risk losing your already secured earnings of ten
dollars per share to wait that long, should the price actually
fall, so you may decide to sell at the current high price.

Market-Makers And Selling Short:

What if the stock values are up incredibly high, but you did
not get in on that particular commodity and own no shares?
Your first step should be to visit a market-maker or to make
a deal with a broker for a short sell. A market-maker is
literally a stockbroker who purchases keeps a certain
amount of shares of several securities or stocks on hand,
which are purchased during a time when the market rates
are low.
The firm will then turn around and sell those shares to an
individual at that low price, regardless of the market rate, in
effect making its own market (thus the name). The
individual who purchases from the firm can immediately sell
the commodities on the open market at market rate (which
is higher), making an incredible amount of profit in a short
period of time.
A short sell is another option for a quick profit. In this
scenario, you will borrow a particular number of shares from
a stockbroker to sell when the market value is high. Your
job is to then wait for the stock price to go down, purchase
the same quantity of stock, and return the holdings to the
broker, keeping the profit from the sale, minus the broker
fees.

The way that a car dealer works with trade-ins is very
similar. They will purchase the car from you at a very low
price, then turn around and sell it on the lot for a high profit
margin.
One of the most positive aspects of a short sell is that you
never actually take possession of the stock, meaning that
you are never in a position to lose money. Because you
have sold shares for a high price, you have already profited,
and in the worst-case scenario, the particular stocks will not
drop in price. Rather than return the stocks to the broker
from whom they were borrowed, you can simply pay back
the amount for which they were originally purchased, along
with the premium.
How can you be sure that you will not overshoot the best
price options or miss a good rate because you are
unavailable to place a buy order or sell order with your
broker? Is there a way to set limits on your trades? Next,
we will discuss ways to protect your investments and limit
your risk factors