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Below are listed some of the more Frequently Asked Questions on ''how to trade?'' However, if you have any other queries, feel free to Contact Us.

Jim Berg has prepared a ‘Glossary of Stock Market Terms’ to help you understand the sometimes confusing 'jargon'. You can now download this Free Ebook with our compliments. 

Simply register (or login if you are currently a club member) at our Free Downloads section at this website

Many media and email promotions focus only on the positives of the stock market. They often make online stock trading and investing appear to be the road to ‘easy money’.

They fail to mention the large fail rate of beginning investors, particularly those who venture into leveraged products such as CFD’s, options and warrants - before they have developed the skills to profitably trade stocks or shares in various market conditions.

Intuitively we all know we should buy low and sell high. Yet many inexperienced traders, and even some seasoned traders and investors, manage to do it the other way round.

That’s why we believe the best way to get started is to find a mentor - someone who can take you step by step through the way they trade successfully.

So before you invest a single dollar of your hard earned nest-egg in the stock market, be sure to:

o   Educate yourself thoroughly

o   Learn their trading system completely and

o   Later, adapt it to suit your personality, lifestyle and circumstances.

Test their system thoroughly to make sure you can confidently make money on paper first, both on historic charts and in real time, then start really small.

More >> 

Beginning investors often have difficulty reducing the market to a manageable number of stocks to follow. 

Searching for trading opportunities by scrolling through hundreds of stocks on a daily basis is a waste of precious time – so ‘time management’ is a very important part of trading. You only need a handful at any given time to profit.

It is not necessary to have extensive lists of stocks when only one or two replacements are needed to complete a portfolio. It takes very little time to visually scan a short watch list of selected companies.

Jim Berg combines Fundamental and Technical analysis to help increase his potential for success in the market. As one of his starting points in creating his own Watch Lists, Jim uses recommended lists by “experts” / analysts / researchers.

He assumes they have applied their expertise to find companies exhibiting the sound fundamentals that they believe will enable them to outperform over the next twelve months.

However, we believe traders should respect the expert’s picks but should not trust that the selections would be ‘right’ for their portfolio at any point in time. For example, during the Global Financial Crisis, not one of the so called ‘Expert Picks’ met Jim Berg’s strict entry rules, so he stayed in cash, while the stock prices of most of these ‘Expert Picks’ continued to fall.

Such lists allow us to continually demonstrate how Jim’s rule based trading system may be simply used to effectively filter such watch lists to more easily manageable levels.

In the Watch List article in our Investing & Online Trading newsletter each week, Jim shows our Members how to use his 'Weight Of Evidence' Stock Selection Tool to test various series of ‘Expert Picks’ with his own strict ‘weight-of-evidence’ rules. The following week, Jim reveals the results of his own analysis, so you can compare results.

Click on the links below to discover more in-depth explanation on how you can use Jim Berg’s proven strategies to help create your own profitable Trading system:
 

  1. For Jim Berg’s latest information. on  WHICH stocks to BUY - Click Here Now 

  2. To JOIN OUR FREE CLUB

This is one of the two most commonly asked questions at this website. It’s always easier with hindsight to say if “I’d bought here and sold there I’d have made this much….”

Winners don’t focus on the past. Rather, they make their decisions now, based on current conditions. But where to start?

The first thing to realize is that you will never get it right every time. No one does. In fact, in his book ‘Better Trading’ Daryl Guppy says :

Armed with just a little knowledge, Trader Novice calls the direction of a trend successfully 50% of the time.

With more knowledge and skill Trader Average finds it relatively easy to boost the success rate to 60%. This means that for every 10 trades he enters, only 4 are losers or unsuccessful. There are a lot of traders in this grouping.

Getting from 60% to 70% is much more difficult. For every 10 trades, only 3 are failures. This success rate is sufficiently high for Trader Success to realistically consider trading as a full-time occupation.

To turn this sustainable trading into a major success we shoot for an 80% success rate to become Trader Superstar. This is like the top of the mast. Very few people make it to this level…….”

Knowing this from the outset, here are a few ideas to increase your success rate to know WHEN to buy:

  • Find a successful trader who you can trust as a mentor to show you what works and doesn’t work from their experience.
  • Minimize the amount of ‘white noise’ input from broker alerts / newsletter recommendations / analyst reports – it gets too confusing
  • Don’t look for excitement or ‘idea of the week’. Rather, find ONE method of trading or investing you relate to, and do that over and over until it becomes boring -- but importantly very profitable
  • Never expect to buy in at the absolute bottom and sell at the absolute top of a trend. Rather, winning traders and investors are happy to ‘walk a mile with the crowd and then step back’ i.e. they grow their portfolio by successfully taking pieces of the available pie instead of attempting to have it all.
  • Don’t ‘chase after the train after it has left the station’. A very common mistake is to worry about missing out after you see a stock has rocketed in price.
  • Keep it simple – don’t get into analysis paralysis with charts overloaded with too many indicators. 
  • Rather, take the time to understand and learn how to identify a rising trend and to use Jim Berg’s unique JB Volatility signals to know precisely when to Buy  - to improve your probability of success.
  • This will allow you to board the train before the whistle blows -- and put the balance of probability in your favor

Click on the links below to discover more in-depth explanation on how you can use Jim Berg’s proven strategies to help you create your own profitable Trading system:
 

  1. For Jim’s latest info. on WHEN to BUY stocks - Click Here Now

  2. To JOIN OUR FREE CLUB

 Most beginners in the stock or share market spend the majority of their time looking for WHICH stocks to buy and when to BUY.

In contrast, experienced stock market traders and investors know it is far more important to:

1. Manage their money and risk, then

2. Closely monitor their open positions & concentrate on when to SELL.

Two major psychological mistakes made by many losing stock market participants:

1.     Attachment - they become ‘married’ to their stocks (e.g. due to the Company’s ‘story’), even though prices may be falling and their portfolio value/wealth diminishes as a result.

2.    The urge ‘to be right’ – they insist their view is the right one -- even though the stock price and market may be going in completely the opposite direction.

Once you have made your selection and bought your stock you have no control on future price activity – it is in the hands of the market – the only control you have is when you sell your stock ….. and that is totally up to you.

Winners decide to take responsibility for their actions.

A number of factors can influence your decision to sell. Remember that you must make the ultimate decision.

Jim Berg has a set of structured and common sense rules for precisely when he sells his stocks.

One of the keys he has used to survive in the market for over 30 years is to know, BEFORE he enters a new position, exactly where to exit if the trade goes against you i.e. he sets an ‘Initial Stop’ and is prepared to cut his losses quickly if his stock selection does not go the way he expected.

Each week Jim Berg shows Members of our 'Investing & Online Trading Newsletter' how, once prices have moved in his planned direction, he progressively raises his JB Volatility Trailing Stop to a level sufficiently below current price action but high enough to lock in open profits if prices reverse.

Click on the links below to discover more in-depth explanation on how you can use Jim Berg’s proven strategies to help create your own profitable Trading system:

This article ‘3 Steps to Successful Stock Investing’, was originally featured in the ASX Investor Update newsletter

To Download your FREE MP3 AUDIO of this article and more, simply Login/Register at our Free Downloads webpage.

Jim Berg explains how a solid Trading Plan combined with sound fundamental and technical analysis will help beginners on their way to successful investing.

Intuitively we all know we should buy low and sell high. Yet many inexperienced traders, and even some seasoned traders and investors, manage to do it the other way round. They get caught up in the irrational exuberance of the market. They end up buying near the top, then holding as prices fall, finally selling somewhere near the bottom when the ‘pain’ gets too hard to handle.

Key factors in long term successful investing are a set of rules or trading plan and the discipline to follow that plan. The market is no different. Success in the market starts with having the discipline to protect hard earned capital and survive, through learning how to minimize losses. The next step is to thrive by growing a portfolio through protecting profits and continuing to minimize losses.

Step 1 - Borrow a Trading Plan

One of the easiest ways to develop a trading strategy is to ‘borrow’ a system from another trader such as an established author or educator. The borrowed system is used as a base to test and eventually build a trading strategy that suits the investor’s personality and trading philosophy.

Without an experienced guide, learning to trade the share market can be very expensive. It is much easier to learn from others’ experiences than having to repeat their mistakes yourself.

Step 2 - Combine Fundamental and Technical Analysis

Some investors rely on a company’s fundamental performance to make their investment decisions. Other traders ignore fundamental analysis and rely completely on charting and technical indicators. Technical analysts reason that everything worth knowing about a company is reflected in the current price action.

My personal trading system combines both fundamental and technical analysis. This helps improve the balance of probability of success by finding fundamentally sound shares which have been rising and timing the entry to buy after the share has recently dipped and then resumed its uptrend.

I find fundamentally sound shares from broker recommendations, newsletters, internet, media and specially designed software. My strategies add some science to the well worn cliché of ‘buy on the dips’ through the use of easy-to-follow indicators. This results in me reacting to a move in the market rather than trying to predict a bottom from an oversold condition.

I find this common sense approach helps those inexperienced at trading shares to understand the share market and take the first steps to investing successfully.

Not all trading systems are necessarily trend following, but I find the advantages of following the trend is significant as it increases the possibility of ‘being right’.
At any given time there will always be markets that are in a rising trend. Identifying markets that are reversing trend and those that are already in a trend is an important part of my trading strategy.

This big picture view of the market is done with weekly charts. A market can trend for weeks, months or years before reversing direction. I can’t predict when a trend will end so I trade with the trend until technical weight-of-evidence produces enough warning signals to shift my attention to other, more favourable, markets.

Chart 1 above is an example of a share in a rising trend based on a weekly chart. This share met my software fundamental criteria:

·       Market capitalisation greater than 250 million

·       P/E Ratio less than 25 or PEG Ratio less than 1

·       Return on Equity greater than 8%

·       Earnings per share growth greater than 5%

·       Net Profit margin greater than 0.01%

In Chart 1 above:

Prices are making higher highs and higher lows and the closing price is above a rising moving average.

The rising market condition is established with analysis of the sector and the share using weekly charts. My entry point is based on a volatility move from the recent low and in the desired direction.

Chart 2 above is an example of a volatility entry signal.

Within a rising weekly trend we have a retracements in January and February to an oversold 'JB Alert' level.

An entry signal occurs when prices resume the rising trend. The amount of the move needed to trigger an entry signal is based on a multiple of price ranges over a set number of days.

The volatility entry signal is designed to:

- Enter rising markets at time of low volatility
- Enter before next move up on rising volatility
- Enter near recent low
- Protect against entering during times of high volatility

Technical and fundamental weight-of-evidence is combined in both types of setups.

Inexperienced traders need to understand that a trading system is more than just a method of deciding where to enter the market. Knowing where to get in is important, but not as important as knowing where to get out.

Nor is the entry point as important as risk management, position sizing or understanding trader psychology. Each one of these is an important component of a comprehensive and disciplined trading system. By mastering these, investors and traders increase their chances of long term survival and profitability in the market.

In summary:

·Borrow a trading system that works and which suits you

·Change it to suit your personality and trading philosophy

·Back-test the system to determine if it works on historical data

If it fails to make money historically, change indicators, alter parameters and re-work the system until you are confident it will generate profits. A system that is unable to make money on historical data is unlikely to make money in real time.

Step 3 - Practice

When you are confident in your trading system, trade it in a virtual competition such as those provided on the ASX website. In a competition you risk no money but experience many of the emotions you will experience when risking your hard earned dollars in real time trading.

You will feel and learn to control the stress and anxiety of trading caused by indecision, fear, greed, anger, denial, hope, and revenge. A virtual trading competition will prove an invaluable experience while causing no damage to your equity balance.

There are complete books written on the various topics presented in this article. For many inexperienced traders, this is the first step on a journey that will include exploring each of these topics in greater detail when it is more appropriate and convenient.

It is a journey that will never end as it is not possible, or necessary, to know everything there is to know about the markets and trading. It is a never-ending quest for knowledge that will, for most investors, prove the saying ‘the journey is as important as reaching the destination’.

Click on the links below to discover more in-depth explanation on how you can use Jim Berg’s proven strategies to help create your own profitable Trading system:

  • For Jim Berg’s latest information. on how to get started successfully or how to improve your current performance in the market - Click Here Now

  • To JOIN OUR FREE CLUB

The ability to gain sufficient education to create and stick to a successful Trading Plan is a vital key to profitability and longevity in the stock market.

Jim Berg says: “The easiest way to learn to trade is to have someone take you, step by step, through a series of trades. You then learn their complete trading strategy, entry, stops, exits and why and how they act/react to price moves."

In his ebook The Stock Trading Handbook - Fundamental and Technical Analysis Combined' Jim wrote: 

“There is a well worn cliché “If you fail to plan then you’re planning to fail”. Unfortunately for far too many traders and investors, this is very true.

We cannot emphasize strongly enough the importance of having a Trading Plan which, at the very minimum, should list how an investor will:

o   Evaluate market conditions

o   Choose investing and trading strategies

o   Select which share, fund, index etc to buy

o   Detail precise methods for:

o  Entry and exit conditions 

o  Money and risk management, including Position Sizing

o  Stop Loss calculations

o  Protecting profits

o  Setting profit targets

Trading Plans must be written down, kept in a prominent position and most importantly, followed with discipline. In his books, Dr Alexander Elder emphasises the importance of keeping accurate records of all open and completed trades.

These can then be used as a basis for reviewing the success of the Trading Plan and for subsequent updates.

Many readers may already be aware of their need to have a Trading Plan but may be wondering how to start or update their current plan.”

So what are the consequences of not developing and sticking to your Trading Plan?

We warn that you will probably lose overall - and maybe lose in a big way……….

……… It’s only a matter of time.

For example, as a complete novice without any prior trading education, John Atkinson, Co-editor, with Jim Berg, of our weekly newsletter, experienced the cruelty of the stock market first hand, so now warns Members how to avoid the pitfalls of the market. 

 John says:

" Without a structured Plan, sooner or later you may change from being a conservative investor to trying to ‘overplay’ the fast track of speculative or leveraged trading …….. or may be overexposed in one sector…… or be holding too many positions …….. or too large a position ……and the market suddenly turns or, worse still, crashes.

Or maybe you will ignore your stop losses (if you’ve set them in the first place) and go into the BHP approach (Buy, Hope and Pray).

Or maybe you will listen, as we did at the start of the tech stock crash in 2000, to a licensed broker at a large Institution who advised us:

“It’s not a loss unless you sell it” and

o “If it’s broken today, it’s fixed tomorrow” (meaning wait for prices to “come back”) and

o “Sell anything that’s even money or better” - which means you end up selling your best performing stocks and holding on to your losers.

I apologize for being brutally honest, but my reason is to help save you from yourself. Believe me it can happen. It did happen…… as a result …… after doubling on paper a large portfolio in only six months, we then lost our Sydney Harbour waterfront home in 2000 and were set back over 15 years financially …… plus went through terrifying emotional turmoil and stress.

I therefore write from real life experience in the school of hard knocks. We now know that if we had developed even a simple Trading Plan and had stuck to it with discipline - then we would not have been set back financially over fifteen years - let alone the emotional terror and distress experienced personally and by our family.

So it is with the utmost conviction that I now urge you to not only read this ebook, but then to take the time to sit down and actively create your own Trading Plan. Build it step-by-step using this Template, together with any other information you may have accumulated.

Take your time. Believe me it will be worth your effort. It will probably be the most valuable research time you ever spend in the market……………”

*********

The above text is an extract from the co-authored ebook at this website:

“ How to Write Your Own Stock and Futures Trading Plan”

 which includes a detailed workbook and template of 50 questions to help you create your own personalized Trading Plan

Experienced traders agree that creating, testing then using a proven Trading Plan with discipline is absolutely vital for long term survival and profitability in the market.  

To download your own personal copy of this ebook, either:

i) Order it directly. To discover more - Click Here

OR

ii) You can claim it for FREE today as part of your Free Bonus welcome package when you
Become  a Member of the 'Investing & Online Trading' mentoring-style Newsletter Click Here Now

 

Direct investing in the stock market can result in financial loss. The information in this website is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have not been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs before acting on this general advice. Jim Berg and John Atkinson are Authorised Representatives (AR Nos. 37724 and 1251439) and ShareTradingEducation™.com Pty Ltd (CAR No. 322726) is a Corporate Authorised Representative of Longhou Capital Markets Pty Ltd. (AFSL No. 292464).