You must be wondering, will we see food riots in America? The answer is NO, because 1 out of every 6 of Americans uses food stamps!!! WSJ has a great breakdown of food stamp usage by state.

Discuss.

We’re a nation at war that is experiencing a sub-prime mortgage crisis, so it isn’t hard to see why the US dollar has tanked and a recession is around the corner. However, it isn’t just a growing deficit and countless home foreclosures that are affecting the dollar.

Below are five ways the currency is being affected that people rarely discuss. Awareness of these undercurrents could give you the upper hand when analyzing the market, as most people are obsessed with the usual scapegoats.

1. Petrodollars – The US dollars earned by a country when petroleum is sold, also known as petrodollars, can strengthen or weaken the currency. Since most of the world’s petroleum is dependant on dollars, each country will retain a reserve of the U.S. currency. However, when a country finds itself with a large surplus of dollars, those dollars are put back into the U.S. by investing in assets. What will become of the dollar if petroleum is largely dealt in with other nations’ currency? It could definitely happen and, obviously, that would also make a large impact.
2. Weather – Every natural disaster to strike the US can affect the dollar. Obviously, damage from a few tornados has a smaller effect than Hurricane Katrina did. However, anything that has a negative effect on a large area will impact the economy, particularly if it causes problems for the agricultural industry.
3. Wal-Mart – Is the destroyer of Mom and Pop stores everywhere a culprit? You betcha’. In fact, any stores that largely deal in foreign goods is adversely impacting the dollar. So, you can also blame yourself for the imported car in the driveway and all those toys in your kid’s toy box.
4. US Treasury Secretary – No, it isn’t just the wacky antics of George W. that affects the dollar. In fact, the federal official that affects the Forex market the most is the US Treasury Secretary. It is this person, after all, who represents the US in terms of currency.
5. Public Perception – It doesn’t matter if the public’s perception of the economy represents reality. If they are largely pessimistic or optimistic, then Forex traders are obviously going to follow suit and move money into or away from the dollar.

Mainstream news agencies don’t usually relate the above factors to Forex, so they may not be on the forefront of our thoughts. There are obviously countless undercurrents that change the market, but one needs to analyze more than the usual culprits when trying to predict the ebb and flow.

Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for best business credit cards and best business credit cards offers. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com

Texas Hold’em is inarguably the modern king of the casino. The game’s popularity has skyrocketed in recent years due to the increase in the number of tournaments, an explosion in the size of the events, and ubiquitous television of coverage of these contests. Many newcomers have taken up the game in the hopes of striking it rich and a lucky few have actually succeeded. Discovering the secrets of these poker savants will not only help you at the table, but could also lead you to an equally rewarding career as a forex trader.

Playing the stock market is a common pastime for professional poker players, but the forex market is where their Hold’em skills can really help you dominate the table. The forex market is the quick, agile, and often skittish cousin of the stock exchange, and it takes a certain mind-set and unique array of capabilities to master it. Take these six qualities from the casino to the forex markets and you’ll beat the house every time.

1. Maintain a long-term focus: Sorry to burst your bubble, but playing to get rich quick is not the way to succeed as a professional Texas Hold’em player. And unfortunately for those of you looking to retire tomorrow, the same goes for forex trading. Even small victories, if they are frequent and consistent, can help you pile up chips as well as pips. Focus on your long-term goals and you will be able to make a rewarding career out of either profession.
2. Develop an ability to cope with loss: Even the best poker players lose as often as they win, and professionals must learn to endure losing streaks that can last for months. In addition, one miscalculated bet or misread of an opponent can take a huge hit out of your stack. Forex traders, no matter how well-reasoned their decision-making process, can also endure significant damage to their finances when a currency pair bucks the trends and makes up its own mind to defy your predictions. Both card sharks and currency traders need to have confidence that their logic is sound and will eventually reap rewards, even as they fight their way back from a staggering blow.
3. Become a human rulebook: A Hold’em player must be able to recite the general rules of the game by heart and be well-versed in the specific regulations of any given tournament if they have any hopes of coming out on top. Likewise, a Forex trader must learn all of the regulations and techniques available to a currency trader, such as short selling or going long on a currency pair, in order to be successful.
4. Model yourself as the decider: An adept Hold’em player can think on his feet, applying knowledge quickly and making swww.thebulltrader.comfashion. Forex trading requires identical skills as bid/ask prices can change in the blink of an eye. Hesitate for just a moment, and you might soon be waving goodbye to a healthy profit.
5. Turn into a cocky bastard: Extreme confidence is required to go all-in with a couple of rags in the hole, but sometimes you must do so to steal a pot and turn the tide of a game your way. Texas Hold’em is not a game for the faint of heart, and neither is forex trading. Playing the currency markets requires guts and a firm belief in yourself. If you don’t have what it takes to risk riding your chosen currency pair to the brink of disaster, then you’ll be out of the game long before the big payouts arrive.

Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com .

Johns has been extremely busy with his new job, and thus I have volunteered to keep the blog rocking and rolling until activity kicks up on his end again. My name is Blain Reinkensmeyer, I am the President of the non-profit Falkin Investing Organization, and run my own blog, Stock Trading 101, which has a strong focus on stock education.

Other quick info: I am 21, started investing in the stock market at age 16 and have been in love since. I went to college for one year, but by the end of my freshman year I was spending more time daytrading in my dorm room than I was going to class (whoops). I developed a trading concept in my dorm room that year though which is now patent pending, and really just found that college wasn’t for me. I left to trade full time, launched falkininvesting.com, and here I am today.

Comments are the best way to shoot some lovin, but you can email me if you’d like, ” blain . reinkensmeyer AT gmail . com ” Charts coming soon, see you then :P .

Investors are taking pleasure from a bull market in stocks, and not just the one taking US blue chips to record after record recently. As the Dow Jones industrial average on November 16 made its 16th record high close since October 1, the MSCI All-Country World Index also touched its latest life-time high on the same day and caught the eye of the US hedge funds and other institutional investors.

According to Hedgefund.net, the total assets in hedge funds investing mainly in European markets rose an estimated 7.07% in the third quarter or $16.3bn including $12bn in new assets, to $247.34bn. Good returns have been the main attraction for hedge funds. To date this year, the Morgan Stanley Capital International All Country World Index comprising 48 global developed and emerging markets indices is up about 15%. The index�s average one-year returns are 20.1% whereas its cumulative returns for the two years ending November 15 are 30.14%.

According to Robert Adler, president of AMG Data Services, the markets are seeing the highest percentage of international securities holdings by domestic mutual funds and on record. Of the $5 trillion in equities involved in investing in equity funds, 17% sit in funds holding foreign equities. Adler said, �Investors see value in non-domestic regions especially with the dollar falling.�

The dollar has fallen 7.5% against the euro to date in 2006 which boosts European stocks since foreign companies get more greenbacks for the foreign currencies and more dollars mean more earnings. According to Virginie Maisonneuve, head of equity investments for Europe, Australia and the Far East at Schroders Investment Management, improving economies abroad have fueled the strength in corporate profits and operating margins. For example, the eurozone economy extended its strongest economic upswing since the turn of the century in the third quarter, reaching a rate of 2.6%. Virginie said her preferred stocks at present sport earnings-per-share growth approaching 20% and have a competitive edge in their respective industries.

According to Commodity Futures Trading Commission data, large speculators increased long positions in CBOT corn and soyabean futures and options, but trimmed longs in wheat in the week ended November 14.

There were quick demand from the export, livestock and ethanol sectors that fuelled bullish optimism in corn. This demand sent December futures to the highest level in the week ending November 14 in a decade for a lead month. That was followed by a downward correction but tight feed grain stocks kept on encouraging investment in corn, according to the traders.

Funds added not only 8,151 long positions in corn futures and options in the week, but also added 5960 shorts in the latest reporting week. In the previous week, they were net long 2,88,101 lots, up 2,191 from net long 2,85,910 lots.

Soyabeans drew some spill over support from the surging corn but also drew support from a growing soya oil market. In the previous week, large speculators were net long 45,291 lots in soyabean futures and options, up 2,912 from net long 42,379 lots.

In CBOT wheat futures and options, funds trimmed both long and short positions, but remained net long in the latest reporting week. The prior week, large speculators were net long 35,874 contracts in wheat futures and options, down 1,874 from net long 37,748 contracts.

In the latest reporting week, funds expanded long positions and trimmed shorts in soya oil futures and options. Speculation over rising demand for biofuels has prompted investment in soya oil. The soya oil is used to produce biodiesel fuel.

In soya oil futures and options, large specs were net long 64,341 lots, up 16,524 from 47,907 contracts during the prior week. Funds were net long 32866 contracts as of Tuesday in soyameal futures and options, up 2070 from net long 30796 contracts a week earlier.

There is anxiety in the industry that the US is losing its edge in world financial markets. More and more foreign-based companies are listing on exchanges closer to home. A fall in large US initial public offerings fuels the concerns.

Some analysts say what’s at stake is the US leadership position as the world’s largest and most prominent capital market. The focus, lately, has been the Sarbanes-Oxley (SoX) law passed in 2002 in the wake of corporate scandals to force more transparency and responsibility. The expensive and overly tiring requirements have prompted commissions
to be organized, town hall meetings called, studies conducted and much more.

Business and financial leaders count Treasury Secretary Henry Paulson as a supporter. John Thornton, former president of Goldman Sachs Group and Glenn Hubbard, a former White House economic advisor are serving to lead the effort. And while there are so many issues on the corporate enemies list, such as overlapping jurisdictions of state and federal securities laws, Sarbanes-Oxley is in competition.

The SEC and the public company accounting oversight board are reviewing the most complained-about provisions. Section 404, which requires external auditing of internal controls, gains much attention. Congress has also held hearings. While it is possible to overdo them, regulations and investors protections are one of the main attractions that US markets hold for companies considering where to list.

According to an Ohio State University study in 2005, investors are ready to pay as much as 31% more for stock in companies listed in a US exchange than those listed in places where the rules are slack. People trust such companies because they can see what’s going on in them. Reports of Charles Niemeier, a member of the Sarbanes-Oxley-created accounting oversight board, show that the US exchanges’ share of new listings began a steep drop six years before the law passed. Since 2002, when the law was passed, the decline has leveled out. Still those forcing to modify the US law have reasons of their own. They do show a weakened US supremacy in the listing of IPOs.

US Federal Election Commission data shows that Wall Street has shifted its allegiance in favour of Democrats in the 2006 election cycle by donating more to Democrats than Republicans who have been the investment banks’ usual supporter. Compared to the $21.7 million for Republicans, Democrats have received $23.8 million from the Wall Street. In the previous five election cycles, Republicans received 52-58% of the industry’s political donations. Data shows that five leading firms Lehman Brothers Holdings, Goldman Sachs Group, Morgan Stanley, Merrill Lynch & Co and Bear Stearns Companies have contributed $ 6.2 million so far to candidates, with about 52% going to Democrats.

The 2006 election cycle began in January 1, 2005. An analysis by the Centre for Responsive Politics, a nonpartisan group that tracks political contributions, shows that 2006 election cycle marks the first time in dozen years that securities firms’ donations have tilted leftward.

According to some analysts, the shift in overall contributions to Democrats is a reflection of loyalty to New York’s powerful Democratic senators, Hillary Clinton and Chuck Schumer. Clinton, who is seen as a leading candidate for the White House in 2008, is the biggest beneficiary. She has received $1.1 million during the 2006 election cycle. Schumer, who is chairman of the Democratic Senatorial Campaign Committee (DSCC), is using his home field advantage on Wall Street to take advantage over Republican fund?raisers. The DSCC has raised $81.3 million compared to $69.2 million by the National Republican Campaign Committee. Contribution of the industry to DSCC is $6.2 million compared to only $2.6 million for the Republican’s national committee.

Some analysts comment that despite being flooded in record profits, Wall Street executives, investment bankers, brokers and traders may be getting tired of Republican control. President Bush’s popularity is going down and growing violence in Iraq also weighs heavy on Republican leadership. Increasing US deficit under the Bush administration may also be a concern for Wall Street.

Stock prices and the Treasury yield curve are two of the 10 designated leading economic indicators. However, what’s an investor to do when they’re predicting different outcomes?

The Dow Jones Industrial Average has touched its all-time high. Corporate profits stood at a 40-year high as a share of gross domestic product in the first and second quarters of 2006. With a good chance that second-quarter profits, at 12% of GDP, will be revised down based on upward revisions to personal income, it would be premature to conclude that the era of big margins is over and stock prices are just reflecting the optimism.

Then what is the reason of bond market being so gloomy? Long-term rates have been consistently below the federal funds rate for three months, an indication of bad economic times. The housing sector is past its prime. Corporate profits remain the dazzling spot of the growth and expansion. According to the Bureau of Economic Analysis (BEA), corporate profits increased 18.5% in the second quarter from a year earlier. Statistics show that since the fourth quarter of 2001, corporate profits have doubled while nominal GDP is up 29%. Profits for non-financial corporations decreased by 3.6% in the second quarter from the first. It was the first decline since the first quarter of 2003, excluding the Hurricane Katrina-related drop in the third quarter of 2005.

If the inverted yield curve persists for several more months, it would strengthen the idea of recession next year. The Fed is unlikely to cut rates in the next few months and an increase in long-term rates still remains a forecast. Many analysts dismiss the yield curve signal. They claim that it’s different this time. Asian central banks, recycling dollars into safe-haven Treasuries, it’s still a case of more entities wanting to save at any interest rate than they did before. And that’s not stimulative.

The Dow Jones Industrial Average has finally crossed its previous record closing high of 11,722.98, reached on January 14, 2000. In May, the index came within a hundred points of its previous high point. However, concerns about inflation and rising oil prices drove it back down at that time. Since then, the Dow was flirting with the old record.

Some will complain, because of the way it is constituted, the Dow fails to give a true reflection of investors’ sentiments. They will say that the S&P 500,which perhaps provides a better measure, is only at a five-and-a-half year high. And though the Dow is surging, one might reasonably ask what traders are so happy about.

The Dow is a powerful symbol in a country that seems worried about the recession. GDP growth rate was just 2.6% in the second quarter. Though it is a healthy rate by European standards, but still dull compared with America’s recent record. Consumer confidence, which peaked in April, has since fallen back. Orders for durable goods unexpectedly fell for the second month in August. The unsettled state of the housing market is more worrying. Analysts see the long boom finally coming to an end. US now seems to be paying out significantly more to foreign creditors than what it is getting from foreign investments.

However, not all the news from economy is bad. Oil prices have fallen considerably. Lower prices should benefit America’s soaring current account deficit. Fears of inflation are also lessening. The credit goes to a steady increase in interest rates by the Federal Reserve. The stock market is also enjoying. Economic news from abroad is also rosy. Japan is getting up some speed and European markets are also looking brighter. Forecasters are expecting the productivity growth to stay strong for some time, which will increase the pace of growth without triggering inflation.

Analysts expect that it is going to be very tough for small stocks to have any momentum as the economy is expected to slow down. Weaker economic growth will make earnings increases harder to achieve. As a result, shares of smaller US companies may end a seven-year streak of beating their larger peers.

Recently, James Furey, a Los Angeles-based strategist at Lehman Brothers Holdings conducted a survey. About forty percent of the investors expect fourth-quarter profits at so-called small cap companies to miss analysts’ estimates.

The Russel 2000 index has yet to recover from a slump in May and June. The members of Russel 2000 index have a median market value of $616 m. In the past two quarters, the index trailed the Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 Index. Microsoft and General Motors have escorted the Dow average to a 9.1% gain from this year’s low, set on June 13.

Since 1999, the Russel 2000 has performed well each year in the S&P 500. It has risen 72% during this period, beating the S& P’s gain of 8.7%. The Russel 2000 had its second-biggest loss ever when the US economy fell into a recession in 1990.

The 30-stock average, which is dominated by the biggest US companies, gained 1.5% to 11,679.07, during the week Sept 25 – Sept 29, exceeding its January ’00 record close of 11722.98 in intra-day trading. Intel and General Motors led the Dow’s advance.

Some other surveys are also indicating that the economy is losing momentum. Based on a survey by Bloomberg News, economists expect the Institute for Supply Management to announce that its indexes of manufacturing and services fell in September. However, based on the estimates compiled by Thomson Financial, analysts forecast stronger earnings growth for smaller companies in ’07.

The team at High Chart Patterns, a stock picking newsletter, wrote in with their thoughts on trading.

When I woke up this morning I realized I had dreamt about my set-ups last night. Or I think I did anyway. It’s drizzling a bit but I quickly take my dog out for a walk to clear my head before starting the day. It’s still dark here as it’s 5:30AM – the life of a West-Coast trader (also the rain of course). I enter my office and am actually looking forward to the trading day today. Last night my trading partners and I finally found some decent set-ups after a mini-drought of having very few that we liked all week. Usually, when we find a few set-ups we like the night before for our readers, it means that the next day will be a busy one. The Nasdaq is opening up weak – and we’re looking at 3 longs and 1 short for the day. Great. I hate going against the trend but I always trust the charts first, and everything else second. I sit down and see that my trading buddies are all on IM conference and busy chatting away. I don’t really read the news in the morning and CNBC is never on; in fact, I moved the TV out of my office last year because I found it too distracting. We don’t trade off news anyway, so it’s not too relevant. Not that you could trade off the news from CNBC anyway – by the time they cover it the move is usually over.

I, like my partners, almost always only trade from the lists that our subscribers receive. This includes stocks with set-ups, stocks that are forming, and leader momentum stocks that are always on our lists (like GOOG AAPL SNDK GRMN NTRI SHLD for example). STLD is coming close to our alert price of 49.5. We IM that to each other almost at the same time. The whole sector looks weak. STLD makes me nervous, she’s a commodity stock, after all, and they don’t always trade off the charts. What I mean is that she can be much less predictable than my favorites like NTRI or GRMN. Volume is good, and we’re all going to take the trade if she breaks. I set my order up, usual size, and watch my screens. The IM conference goes quiet as we’re all stalking our stocks. STLD breaks 49.5, and confirms our number 49.42 short. We’re all in — and the market hasn’t even been open for 30 minutes yet. We ask each other where we filled and we tease the one with the worst fill (that’s me unfortunately). She’s acting great, hovering right around our number. I set my hard-stop in (different places but around 49.7 for the most part) and try to relax a bit. She touches 49.51 but quickly heads back to the lower range. I don’t like it when they poke their head above the pivot price, but she’s acting pretty well and I try to relax. I get an IM from a guy I haven’t talked to for months asking me what I’m up to – I really should try those stealth settings Yahoo has…

STLD sure is taking her sweet time breaking, isn’t she? Hmmm… the steel sector seems to be bouncing. For a second I contemplate just covering break-even. Just stay in the trade and let it unfold, I tell myself. Stop acting like a hummingbird. I need some coffee.

STLD dips down and I’ve got over 1% profit from my entry. I cover some and move down my stop now to 49.5. Another one of our selections is coming close to our number. FMCN alert is 60.5 which already went off at the open. She acted wild right after but she’s calmed down a lot. “Volume is really good,” I type to my buddies. I set my order and soon enough she fills. It’s now 10:30AM EST and I’ve got two positions on. I set my hard stop in FMCN. They’re both acting great. FMCN is showing really impressive relative strength as she keeps hovering around the high of day while the Nasdaq keeps hitting new lows. Being in FMCN long and STLD short is not my idea of fun, as I don’t like either of these stocks but so far so good. Neither am I crazy about being in a long and a short simultaneously. I tell myself it’s tempting just to exit everything here for a nice profit and start the weekend early. I let myself think these thoughts – kind of an escape mechanism – but I rarely act on them. Every day I want to be the most disciplined I can be. I want to trade the way Data would. Who’s Data? As my trading buddies know too well, he’s the android from Star Trek. Cool guy.

STLD is bouncing a bit. That POS. I try to send it “Down baby down” thoughts. PCLN now is getting close to our spot. Great, nice red day in the Nasdaq and I’m going to have more longs than shorts. I type to my buddies, “is that volume correct?” I’m showing massive volume on PCLN, like 800% of its 90d average already. Yes, they write back. This is a nice set-up on PCLN. She seems to care less about the Nasdaq tanking. On volume like this she can do whatever she wants, I guess. I set up my order for PCLN. Why isn’t FMCN ripping? “I want two points already in her,” I write to my buddies and they laugh since we’re all actually a bit red in the trade – but she’s acting really well and not even close to my stop. I try to relax. I buy PCLN through 34.36 and put my stop in (34.1). Man, when’s the last time I traded PCLN? This little has-been stock is baaaack. PCLN is going up quickly. “Sweet,” writes one of my partners. I exit for 1%. That was nice. STLD is behaving and FMCN is finally lifting up a bit. I know I shouldn’t but I let go some FMCN and cover some STLD. So much for trading like Data. As a rule, we tell each other everything, so I have no choice but to tell my buddies. They call me names which I can’t repeat in this public forum (my mother reads this blog after all). Why do we tell each other? Probably a check mechanism. If we are thinking of doing something really stupid, the possibility of the others ridiculing us keeps us in check.

It’s so easy to find excuses and justify everything. Too easy in this career. So now I have half FMCN and just a little bit less than half STLD left. I’m going to put up some orders and walk away for a bit. My eyes are tired and my back aches and it’s not even 12PM my time. I’ve put a piece of tape on my screen to mask my p/l. Of course I keep taking it off and looking.

I come back after 10 minutes. I can never stay away too long when I have positions on – not sure whether that’s a good thing or a bad thing. FMCN is dipping with the market. Wonder if she’ll stop me out. STLD is acting great. Almost have a point on her now. Why the hell did I cover so much already? Data. Data. Trade like Data. Nothing to do now but let the trade unroll towards its destiny. I start the newsletter for Sunday and tell my buddies what I want to write. Lazy buggers just agree to everything and let me do all the work. I think one of them has fallen asleep. So far it’s been a good, smooth day and we’re all in a good mood, joking around a lot.

I look at PCLN and see that she has sold off and has gone below my entry price. Ha – great exit I tell myself. Nice exit I write to my buddies. “So far,” one of them responds. Right he is, as later on she rallies another point. I don’t mind – I would have been stopped out anyway before she started ripping. You can never get them all – just follow your rules and you’ll still carve out a good career. I cover the rest of my STLD for over a point and sell the rest of FMCN. I’m pretty happy – nice easy trade to manage. I’m wondering how many of our readers were involved with these trades. Were we too negative in the newsletter last night? Lots of thoughts going through my brain.

Of course I realize that I covered too soon as STLD keeps falling and falling. But it’s Friday, I’m tired but happy, and greed definitely is not my middle name. Three triggers, three wins. Like most traders we’re all pretty superstitious, and we rarely get cocky. Trading gods wouldn’t like that. Good day though. Looking forward to the weekend. I say good-bye to my partners, and shut off my computer.

The team at High Chart Patterns, a stock picks newsletter, wrote in with this article on trading.

“We have written extensively on what we believe traders should do in order to become successful. Today we are going to focus exclusively on what you should NOT do.

1. Join a Chat room: We are strong advocates AGAINST chat rooms. Why? Because it’s a distraction. In order to become a successful trader you must treat it as a business, not as a hobby. The typical chat room filled with hundreds of traders with different styles calling out trades every two seconds are not conducive to making money. But, you ask, what about the idea, the more eyes the better? Our answer, don’t be so lazy! Do the homework the night before, set up your own stock lists, and focus on those stocks instead of waiting for some guy living in his parent’s basement (no offense to anyone living in their parent’s basement) to call out a possible trade for you. If you pick out the cleanest charts every night, then most likely you will have plenty of work ahead of you the next day. You might miss some moves, but the point of trading is not to be involved in every great stock move, but rather to grind out a profit in a consistent manner. However, we do like the idea of trading buddies — for example, 3-5 people who trade in a similar fashion as you. That is an asset. Chat rooms are not.

2. Overtrade: Over-trading is possibly the single biggest mistake that traders make, hopping from one trade to another like a bunny rabbit, without waiting for the initial trade to work itself out.
There must be a reason for every single trade. Become spiritual about it: every trade is sacred. Treat every trade as a business-man (or woman) would a business transaction. To relate this to the previous point, chat rooms naturally cause one to over-trade as one is anxious to be involved in multiple calls. Do not be greedy — wait for the set-up, if the conditions you seek are fulfilled, pull the trigger, and then wait for the trade to develop, be it in a stop-loss or in a profit.

Always try to make today your best day by being faithful to your system, your rules, and more than anything else, dedicate yourself wholly to a trading regime at the Altar of Discipline. Discipline is the thin blue line between making it, and blowing it.”

The team at High Chart Patterns, which writes stock picks newsletters, wrote in with their thoughts on getting to know your stocks.

"Without a doubt one activity that many professional traders share is that they get to know their friends.  Stock friends, that is.   One of the most valuable things that we have learned over the years is how important it is to become familiar with the behaviour of your stocks.

For example, you have been watching stock HCPG for a break of 50 for over a week, 50 representing new highs.   For days you have followed the stock approach 50 from different angles, with different volumes, at different times of the day, only for it to be rejected near the buy point.   The next day HCPG is sitting at 49.5 in a flattish market.  Then, however, you notice the way she starts to climb up towards 50 this time is somehow different — this time you know that most likely it will successful.  How do you know?  Because you have become familiar with your friend and you note a behavior change.    At some levels it has to be sub-conscious; if a buddy sitting beside you asks what exactly was different, often it's difficult to pin down.  But from our own experience, we have no doubt how well it works.

This is the reason that we also place stocks whose patterns are not completely formed or are too far away, in the "secondary list" of our High Chart Patterns; so that subscribers can start watching them days before and familiarize themselves with the stock's behavior.  It is also the reason we like to stick to a core group of stocks, around 200 of them, instead of scanning each night through a 1500 stocks looking for patterns.  As a rule we never trade a stock that we are not familiar with.  If there is a new stock that is gaining attention from momentum traders, we immediately add it to our core group of stocks so that it too can become our friend."

A few weeks ago, I was provided with the opportunity to review a stock trading book called "Entries & Exits: Visits to 16 Trading Rooms," by Dr. Alexander Elder.

The book is a must read for stock traders who are just starting out. In the book, the author profiles the stock trading systems of 16 different professional traders. Each of these traders has a different style of trading, and it is important for novice traders to understand that they must find a trading style that best suits their personality and risk management. Although I've already found a trading system that matches my risk profile, it was nice to read about other people's trading style because it gave me some new ideas and techniques on how to improve on my trading system. Novice traders who read the book will be able to pick out a trading system that they feel comfortable with, and start out from there.

This is how "Entries & Exits" is structured. First, the author introduces you to the trader with basic background info. Then, he provides you with two chart setups. Some of the traders do stocks while others do futures, but regardless, technical analysis works on any kind of chart. The trader then explains to the reader the buy/sell signals that s/he sees on the chart, and outlines the strategy on how to approach and manage the trade. These discussions are the best part of the book. They give you insight on the exact decision making processes of a professional trader. On the next page are the result of the trades. One trade is successful and the other trade is a loser. The book then discusses what went right and what went wrong.

I give the author credit for presenting losing trades. A lot of books out there focus only on successful trades. However, in reality, all successful traders must be aware that there WILL be losers out there, and that it is important to understand how to deal with losing trades.

Also, the quality of the book is outstanding. It is hardcover with great looking colorful charts. They definitely didn't cut any corners on this one. It is a great addition to a trader's library.

The team at High Chart Patterns, which offers stock trading newsletters based on stock chart analysis, wrote in with their thoughts on trusting their trades.

One of the most important and difficult things to learn as a trader is simply to trust yourself. By this we do not mean that you should be stubborn when a position goes against you, or heaven forbid, average down. Once you enter a trade then all opinions, feelings, instincts, et cetera, must defer to simple risk management and profit-taking rules. What we mean by "trust yourself" is something that is critical BEFORE you enter a trade.

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