Five Ways to Reduce your Trading Risk

September 30th, 2015 by VantagePoint Software

reduce yout trading risk

Good trading isn’t about always picking the right stocks, or the right prices. It’s as much about managing your risk, and integrating a strong risk management philosophy into your trading strategy. Here are five ways to reduce your trading risk and grow your profits.

  1. Avoid the Herd Mentality

Winning traders avoid common thinking. Common thinking begets common results. Common results in the markets mean that you will likely lose money. Here are a few examples of common thinking: “Let’s put in a stop loss one tick below yesterday’s low” and “Looks like the market wants to go higher, so I think a long position might be a good idea.” But what does “looks like” mean, and how does the market know what it wants to do?

Proper risk management comes from sound technical strategy which requires top notch technical tools. VantagePoint Software can help you control your risk by giving you the next day’s predicted high and low as a guideline to set your stops. Instead of getting stopped out with the crowd, you have a predictive indicator that gives you a higher probability of staying in profitable trades longer.

  1. Be Wary

Avoid trades that scare you. If a trade frightens you, there is a message. That message: You should not take the trade. You may think that trading a certain market offers huge profit potential, but it scares you because of the possible loss due to market volatility. If it scares you, then it is not right for you. If all trading scares you, then trade down to an “unscary level.”

  1. Split your Position

Rather than engaging in the common behavior of taking profits at a target for the entire position, allow part of the position to ride a profit. There are several effective and objective ways to do this. One way is to use a trading software like VantagePoint with indicators like the Predictive Neural Index. Traders can use this leading indicator as the primary “signal” for an impending change in the trend of a market since it predicts whether a market will move higher or lower in the coming two days. It compares two three-day simple moving averages to one another – today’s actual three-day simple moving average with a predicted three-day simple moving average. Since it’s a binary index, when the reading shifts, this is a good indication to reduce your risk and take off part of your position.

  1. Be discerning

Be careful what you believe. A plethora of useless, subjective, deceptive and misleading information is out there. And it is getting worse all the time. Take due diligence in checking the accuracy and efficacy of the tools or you may end up practicing improper risk management disciplines or worse.

VantagePoint software’s 80% plus accuracy comes from numerous independent tests including multiple PhDs since 1991. By having confidence in a software’s proven accuracy, you can stick to your risk management plan and not stray the course

  1. Use Leading Technical Indicators

Technical Analysis is simply a reaction to past price action, and by using traditional lagging indicators such as Moving Averages, there’s the risk of “arriving to the party too late.” Using a predictive trading software like VantagePoint that uses leading technical indicators helps you get into trends earlier, and therefore you can improve your risk to reward ratio.

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Molson Coors Brewing Stock Forecast from VantagePoint

September 24th, 2015 by VantagePoint Software

molson coors brewing stock

We’d like to take a second to raise our glass and send a big cheers to all the smart traders who followed our recent forecast and thus benefited from substantial gains in Molson Coors Brewing ($TAP.)

See, last week we shared a video (you can watch it here and skip to around 3:30) that showed VantagePoint forecasting for this stock to go up back on Sept 4th. At the time of the recording the stock was up 6.2% or around $4 per share. Not too shabby, right?

The very next day it nearly quadrupled. No, you aren’t reading that through beer googles – those are real numbers. See the latest in our video below.

Of course, this activity could be credited to the recent news around the possible acquisition by Anheuser-Busch. However, traders relying on single market, lagging indicators would have reacted too late to this news, causing them to get in AFTER this spike. GULP.

As of last night, this stock is up 21% since VantagePoint indicated upward momentum.

That’s the kind of accurate and consistent profit that will leave traders with an overflowing sense of joy (and money!)

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How the Pros Handle After Hours Trading

September 23rd, 2015 by VantagePoint Software

It is often assumed that the professional traders will buy and sell in the pre-market and after-hours trading sessions because they want to be able to react quickly to news announcements that may occur when the regular market is closed. But is there really an advantage to trading during off hours?

after hours trading

Stock prices change – sometimes moving quite rapidly, forming price gaps – for a given stock when the company’s management team, stock analysts and others release new information. These gaps are particularly dramatic during earnings season when companies are disclosing their financial performance for the previous quarter and their outlook for the coming year.

Sometimes these important news releases occur during regular market hours; but, most of the time important news releases are issued during pre-market and after-hours trading sessions.

New traders often assume that since price gaps most commonly occur between one trading day’s close price and the next trading day’s open price that they will be able to buy, or sell, the stock somewhere in the middle of the gap either after the market closes or before the market opens the next trading day. However, that is usually not the case.

Unfortunately there are very few things that provide a true ‘edge’ for short term traders. Trading during off hours can provide a slight edge from time to time but it also comes with some potential risks.

One thing that can give traders an edge is anticipating big moves before they happen and being on the right side of trends. With VantagePoint, you can often catch the overnight gaps in stocks and other assets because the software gives advanced warning of changes in market directions.

VantagePoint uses neural network technology to analyze the data to find the twenty-five related markets that most affect prices of your target market, quantifies the degree of influence these related markets have on your market and then uses that information to forecast trend direction, market strength and daily trading ranges in a simple-to-read chart and report. You have a complete forecast for the market you are trading in less than five minutes the night before so you can be prepared to profit from the after-hours trading sessions.

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How the Fed’s Announcement on Interest Rates Could Affect the Markets

September 16th, 2015 by VantagePoint Software

The chatter of China and Greece seems to have subsided as the focus is now on the Fed’s announcement on interest rates. While volatility has definitely settled, the real question is – how is this decision affecting the markets?

The Federal Reserve

If we’re talking interest rates then it only makes sense to look at markets we know have a direct correlation with interest rates such as Gold, the Treasury Bond and the Vix.

In the video below we give you an inside look into how VantagePoint’s Neural Networks are using the short term conditions with interest rates as well as predictive market data to produce forecasts that are up to 86% accurate.

These forecasts afforded traders the ability to capitalize on the following:

  • $3000 gains in gold in just 2 positions over 8 days
  • $2687 per contract in the Treasury Bond in 12 days
  • over $10.00/share in 18 days trading the VXX

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Market Analysis – Technical vs Fundamental

September 11th, 2015 by VantagePoint Software

market analysis

A few weeks ago, the VIX posted its largest-ever weekly jump of 118% and then continued to be extremely volatile. Say goodbye to the investor complacency of the past three years, and hello to a new stretch of up-and-down trading.

When this type of two-way volatility appears in the stock market, it tends to stick around for longer than a few days. It also tends to leave traders befuddled and searching for direction – but what kind of market analysis is going to be best suited for today’s trader: technical or fundamental?

The Case for Technical Analysis of Stocks

Technical analysis is the practice of gauging a stock’s future price fluctuations by analyzing past activity. This method involves looking for specific chart patterns and examining other historical data related to price and volume. The field of technical analysis is based on three assumptions:

  1. The market discounts everything.
  2. Price moves in trends.
  3. History tends to repeat itself.

However, this can be problematic when markets are making outlier moves and the validity of previous technical price patterns needs to be questioned.

How Fundamental Analysis Works

Fundamental analysis is a method used to determine the value of a stock by analyzing the financial data that is ‘fundamental’ to the company. That means that fundamental analysis takes into consideration only those variables that are directly related to the company itself, such as its earnings, its dividends, and its sales. Fundamental analysis does not look at the overall state of the market nor does it include behavioral variables in its methodology. It focuses exclusively on the company’s business in order to determine whether or not the stock should be bought or sold.

If the recent markets are any guide, it’s easy to see that individual stocks are impacted by a variety of forces well beyond the company’s fundamentals.

VantagePoint’s Intermarket Analysis Solution

With these huge market swings, a confluence of factors comes into play and it’s really difficult to make a case for using just one strategy to trade. What you really need when markets are in a constant state of flux is a comprehensive analytic framework that accounts for both the fundamental factors and the technical price levels.

This analysis must include the interplay of global market forces because the recent drop in U.S. equities has been tied to the price of oil, the price of the Chinese stock market and a confluence of other market forces. The challenge is finding trading tools that keeps pace with the ever shifting intermarket realities to help predict market trends. Most trading software ignores these important intermarket relationships, and those that do aren’t updating their parameters to forecast new trends.

VantagePoint employs a sophisticated neural network process to identify which markets have the most influence on a target market, then produces a set of intermarket data to generate predictive indicators for short-term price trend forecasts for today’s volatile markets.

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Coal Companies Predicted to Increase Prior to George Soros Investment

September 2nd, 2015 by VantagePoint Software

coal

If you trade energy stocks then you’ve probably heard the latest buzz with billionaire George Soros’ recent investments. In late August Soros bought up a bunch of stock in Peabody Energy Corporation ($BTU) as well as Arch Coal Inc ($ACI.) Surely, news like this would cause these stocks to show some momentum. Traders looking to gain on the upward movement could have bought in during the uptrend and would be sitting on a decent win right now.

But what about those few traders who actually knew that these stocks would be rising in price – before George Soros made any sort of investment? How would they know you ask?

These traders are using a predictive trading software called VantagePoint. Watch the video below to see that VantagePoint actually forecasted these markets to go up before any investments were made by Soros.

The big benefit, of course, is that these traders were in position before the trend took off meaning that they capitalized on even more profits. As of today Peabody Energy is up 38.94% in just 9 days and Arch Coal is up 292% in 14 days.

These returns are absolutely possible if you have the right information available.

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