Welcome ... Day Trade The SPY Live with Market Trader Tao

The Market Trader Tao
NeboXian's Day trading journal
is updated live during NYSE market open with observations , technical analysis and trades as they happen.
Log in early and follow along.
Click Here
**under construction**

________________________________________________________

Thursday, September 13, 2007

Dont Get All Tangled Up!

[Badetag.jpg]



There are many places you can make it fast or lose it faster

Options, Futures, E-minis, Forex...all these
products work great!
But jumping into the
water to soon could easily produce an outcome

we can only imagine in this picture.
These products have GREAT potential
to make money in the
skilled traders' hands.

With Common Stock one can purchase and walk away for
months or in some cases years and can return having a
reasonable expectation of all the money plus growth will
be waiting.


On the other hand, the above mentioned trading instruments
are not designed the same way. They are heavily leveraged
Instruments as much as 200 to 1.

This 200 to 1 leveraging can work
with you or against you in equal magnitude!


Many new and some older investors don't really
understand the concept of leveraged Instruments.
But they will try to trade the market and very quickly
realize the market is cruel.


To give you a better picture of this, lets look at the house
equity you
used to leverage your home loan.

To keep it all simple, the value of your house drops and
the bank calls your loan in.


There are three options.

1. Come up with the cash to cover the difference.
2. Put up other property of equal value.
3. They take your house.

Imagine how this would play out if your house house
value dropped from $300,000 down to

$150,000 in a few months?

Leveraged Stock market Instruments can do this Quite
often and in fact do.


The old mind set of buy'm and hold'm Will NOT Work
with many leveraged products.


If you're not able to hover over the trade like an
Eagle, ready to pounce at any moment, then most
leveraged investments will in most cases become
a big disappointment.



Market Trader Tao

"The Wise trader walks the path easily seen.
It is best to learn the potential of the Lion
before stalking, to prevent becoming the prey."
NeboXian



No comments: