Canadian Dollar ETF Currency Trading Using FXC

Currency trading has become a big deal lately. I wouldn’t call it a fad but it sure feels like it with forex brokers springing up at every corner. If you’re going to be heavily involved in trading currencies, then a forex broker is certainly an asset, but most investors and stock day traders simply don’t need the hassle of opening up a new trading account if they want to just dabble a bit in currencies.

The Canadian Dollar ETF which is traded under the ticker symbol FXC is a pretty heavily traded ETF that can be the platform to enter the currency trading market. Why did I choose FXC? Well, one reason is because it trades very in tune with the natural resources market (being that Canada is blessed with many of these resources). Having a currency ETF trade with something tangible and something the average investor can grasp is certainly a good starting point.

Another reason why the Canadian Dollar ETF is a good trading vehicle is because the news that comes out of Canada is pretty easy to access and the economy is very stable for the most part. You won’t get any massive day-to-day swings like you would with some other wold currencies and that is certainly a positive when you are trying to learn how the currency market works.

Now, I’m not saying that trading the actual currency isn’t better after you learn the ropes, but when first starting out I’d definitely stick to a stable ETF. Trading currency involves massive leverage and even the slightest swing can put a big dent in your capital. Because the Canadian Dollar ETF is, well, an ETF, you’ll most likely only be able to leverage it 3 to 1 on margin. And the swings are pretty low (rarely does it move more than 0.75% in a trading day) that it can provide just enough “excitement” and chance for profit, but without the risk of getting shell shocked.

So in closing, I highly recommend the Canadian Dollar ETF for traders who want to dabble or learn about currency trading. As always, good luck!



How To Short Silver Using ETFs

The price of silver has been on a wild ride the last year. It rose sky-high before tumbling in very fast in May. This tumble took many traders off guard  and left many other investors asking, “how to short silver?”.

The price of silver seems to have stabilized since the abrupt fall in May but uncertainty still remains in that market so it’s probably a good idea for you as a trader to learn how to short silver using ETFs. This will give you another weapon in your trading arsenal to take advantage of sudden movements in the commodity.

The simplest and easiest way how to short silver is by using the iShares Silver Trust ETF which trades under the symbol “SLV” and the price of it correlates to the daily movements in the silver market. There are a couple drawbacks to shorting silver using  this ETF. The first of which is that your broker may not have the shares available for you to short. The second of which is that this method is a more safe platform to short silver and you will not maximize your profits during abrupt movements down in silver.

The latter drawback may not be one at all if you want to play it safe and trade slow and steady like many traders like and even should do. But if you want to maximize your profits should silver tumble, then you should look into trading the ProShares UltraShort Silver ETF which trades under the ticker symbol “ZSL”.

The ZSL ETF is a 2x UltraShort trading vehicle which means that the price of it will fluctuate twice as much as the daily percentage change in silver. So if silver goes down by 5% in one day, the ZSL ETF will rise 10%. This provides you with maximum leverage in shorting silver.

However, while the ZSL leverage is a nice way on how to short silver, it does have its own share of drawbacks. The biggest one being is that it gets reset daily so you may notice that the value deteriorates quite quickly should silver rise. This is something that should always be kept in mind when trading 2x or 3x ETFs.

I hope this article was useful and helped you learn how to short silver using ETFs. Good luck.



Making Money With Penny Stocks

Lots of people ask how can one be making money with penny stocks. It’s extremely difficult to trade penny stocks for a living because they are like firecrackers ready to explode in your hand. And chances are that every penny stock trader gets burned quite a bit. Trading penny stocks require a huge fortitude and a steadfast discipline that, I’m sorry to say, most traders who attempt to trade don’t have.

That said, there are ways that you can be making money with penny stocks but they are far from easy. The trick is to never fall in love with the hype and the “glorious” results or expectations about the company you are trading. There is a reason why these stocks are priced at a fraction of a penny, and it’s not because they are going to be multi-billion dollar companies. But the story these stocks tell, whether via their management, PR firms or investors is one which can lead many novice traders to believe that they’ve stumbled on the new hot thing.

I’ll tell you this. Making money with penny stocks involves not falling in love with penny stocks. You need to ride the wave up and get off at the first sign of trouble, which is usually the breaking of support. Only the “hot” penny stocks should be traded on any given day. The others don’t get much movement and you may end up sitting with one in your portfolio for weeks on end before any movement happens.

Finding the “hot” penny stocks involves scanning through the % gainers and volume leaders on any given day. This will help you prune your trading list to a few stocks that you can keep an eye on and go from there. Always remember to exercise discipline when getting involved with this type of stock. The people who trade these and the companies that market them have only one goal: To separate you from your money.

Making money with penny stocks is not impossible but it certainly isn’t the get-rich-quick dream that many of these marketers try to sell the public.



Will The Stock Market Crash In 2011? Probably Not!

With the recent downturn I’ve been hearing a lot of chatter about a possible stock market crash in 2011. This is to be expected with people still having the crazy price action of 2008 in their recent memory. But the fact remains that a quick and heavy crash like we saw in 1929 and 1987 probably won’t happen in this day and age. I would venture to guess that if the market is doomed, it will go down over a the span of a few months (with flash bounces mixed in). This is more in tune to what we saw in 2008.

Many people like to point to the fact that computer and algorithmic trading makes up such a huge part of the daily volume traded and that in turn could result in a massive crash. While I’m far from an expert of the subject of computerized trading, I would venture to guess that this same software that’s set to sell at certain points is also programmed to buy. Granted if a stock market crash happens, these programs may not register buy signals but neither you nor I know that.

Another thing to keep in mind is that the government plays such a big role in today’s stock market that it will probably step in to stem any stock market crash that is happening. Say what you want to say about their actions in 2008/09 but the government’s interference with the free market system did place a safety net below the stock market.

A stock market crash makes for a good story in the media and in 2011 we have so many different sources in our ears that the hype of crash rumors can spread like wildfire but it’s important to remember that hype is just hype, and more often than not, it doesn’t live up to expectations. As a stock trader you should always have an exit plan but it should be based on your own trading strategy not some crazy stock market crash rumors and hearsay. Also, it’s important to keep in mind that massive declines in a day or two are quite rare. But if the fears of such an event keep you up at night, maybe it’s better to lighten the load in your portfolio and take a more defensive stance, at least until you start feeling about about the market’s future.



Day Trading Income Expectations – Some Examples I’ve Seen Online

When most people think of day traders, they have a movie-like view of their day trading income. While this view may be true of some of the upper-tier traders, the reality is that many day traders struggle to turn a profit on a consistent basis.

Over the years, I’ve read many stock blogs where the writer shared his trading profits and losses with his/her readers. And let me tell you this: most of their day trading income wouldn’t even cut it when it came to paying the bills and living comfortably. I’ll share some of these I remember from memory with your right now.

The first day trader I ever came across was a fellow who traded out of a prop firm. He was a scalp trader and was battling with the markets on a daily basis. His usually day trading income on a monthly basis ranged between $3000-$5000 most months. He did have a few months that were below $2000. I’m not sure what happened to him as he quit writing his blog but he did seem frustrated with the way things were going.

Another day trader I followed was a young guy who was in college and was learning trading on the side. His day trading income ranged between a profit of $300 to a loss of $300 most days.  He ended up quitting after a year or so after he couldn’t get into the black consistently.

The third trader I followed traded out of a prop firm. He also posted results from other traders in the office. Now, the trader himself usually made about $5000 a month in profit after all was said and done. The crazy numbers were posted by his office mates. There were a few of them that made 6 figures a month easily. On wild market days, I also saw him post that some traders made $50,000+ in one day. That’s far from the norm, though.

I’d say that the average trader, who knows what he is doing and has a mid-figure account to trader with, should be able to net $5000-$10,000 a month. Starting out, though, your day trading income expectations should be much more tame. If you net a $1000 or $2000 a month in your first year of trading, then you’d be making more than the average day trader starting out.

 



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