trading

Do You Have What It Takes To Be An Algorithmic Trader?

On the surface, algorithmic trading seems like the very definition of passive income. Imagine it. Entrusting your portfolio to a bespoke piece of software designed to buy and sell stocks based on algorithms that are designed to facilitate growth. It must be like having a tiny robot stockbroker in your pocket who never gets tired, never refuses to answer your call, never makes a human error and isn’t motivated by greed or self interest. WIth a tool like that in your pocket, you could sleep at night knowing that your investments are algorithmically primed for growth that will lead to lasting wealth.

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Well, if it were that easy, everyone would be doing it. Algorithmic trading is a complex enterprise and while it involves the use of automated processes, that doesn’t mean that your algorithms generate money for you day in and day out while you kick back and sip your latte. Like any form of investment, it carries with it an element of risk and unless you give it the effort and attention that it deserves, you could find yourself losing everything. If you find yourself frustrated by an inability to make your portfolio grow sustainably, algorithmic trading may be able to give you the boost you need.

What’s wrong with normal trading?

Absolutely nothing, and if you have a good sense of the markets and a finger on the pulse, there’s no reason why you can’t continue to grow your money. Some, however, turn to algorithms for a number of reasons. Algorithms can scan the markets much faster than any human being and while they may be fallible they’re far less prone to error than human investors who may be motivated by irrational factors like instinct or a hunch. Even veteran traders will inevitably miss out on dozens of fecund investment opportunities even if they spend their day glued to the screen.

Algorithmic trading is open to anyone

Algorithmic trading is nothing new. It’s been used by hedge funds and investment banks in some form or other for decades, but it’s only relatively recently that a subculture of mathematicians, programmers, and entrepreneurs have begun to develop their own trading platforms in order to grow their investments beyond the limitations of regular trading.

What you need

So, by now your interest in algorithmic trading is likely piqued and you’re wondering what you need to get started. Well, the first thing you need is patience. While algorithmic trading is fairly straightforward in principle (a robot does it), the enterprise is a very complicated one, and you can expect to spend a long while getting to know the process before you entrust your portfolio to it.

You may expect comprehensive coding knowledge is necessary and while it’s certainly advantageous it’s not necessarily essential. What you will need is significant time, money and resources to invest in buying or developing the coding infrastructure upon which to build your trading algorithms.

Start small

The first thing you need to do is understand the conditions that necessitate a purchase or a sale and this comes from parsing data from the markets. From a coding point of view your conditions provide the “ifs” to which your code provides the “then”. If a stock dips below a certain amount buy, if a stock tops a certain amount sell.

Your first step should be to create a flow chart of conditions and what how you would expect your algorithm to react to these conditions. Once you’ve done this, the next logical step would be to create a spreadsheet transposing the data from the spreadsheet as suggested here.

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Build or buy

Once you have a working understanding of how a trading algorithm would work, you need to make the decision whether to build or buy your own. Both require sizeable investment. While sole trading software like AlgoTerminal is traditionally intended for use by hedge funds and professional quants, individuals can purchase ready made trading platforms. Be advised, however, that they do not come cheap. Building your own algorithm requires extensive coding knowledge but it also affords you complete customization, allowing you to develop a platform that’s entirely tailored to your needs. If you are pretty code literate but don’t relish the idea of starting from scratch you can build on a free source like Quantopian.

A serious investment

Whichever option you choose, swimming in the waters of algorithmic trading requires a serious level of investment. Purchasing a ready made platform can be very expensive yet offer you quick market access while taking the time to build your own may prove a long drawn out affair. You can expect a serious investment in your time and resources… But one that may reap huge dividends.


Want To Start Trading Full-Time? Read This First!

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Going full-time with your personal trading operation obviously has its attractions. Aside from the perks of being able to work in your dressing gown with your favorite mug on your desk, full-time trading offers the possibility to make massive quantities of money with very little effort! If you’ve been trading on the side for some time, and you’re thinking about quitting your day job to go full-time, here are some crucial questions to ask yourself first…

Is Your Account Large Enough?

If your trading account isn’t large enough, you’re going to have a very hard time making the leap to full-time trading. When you’re assessing the state of your account, you also need to take your historical performance on board. How much money can you realistically generate per year through trading alone? After pinning down these important figures, you can work backwards to figure out how large your trading account needs to be in order to support yourself on it. A big part of successful trading is dealing with the unknown. While you may have a proven track record and a fairly large account, you’re going to have months where you simply can’t generate any income at all. With this in mind, it’s highly recommended that you set up different accounts for your saving, spending and trading.

Are You Well Equipped?

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While you may be able to manage your part-time trading fairly well through an app on your computer or smartphone, if you want to go full-time with it, you’ll need to have a proper set-up. The main investments here are likely going to be several monitors, and an upgrade to more comprehensive and responsive trading software. However, the largest and most important cost you’ll need to account for is a new trading computer. Modern PCs and Macs can help you get by when you’re trading on the side, but purpose-built trading computers are absolutely essential for anyone hoping to make trading their full-time source of income. If your computer has limited screen space and struggles to run the platforms you use, it’s time for an upgrade. You can learn more here: http://tradefromhome.org/why-falcon-trading-computers-are-simply-the-best-tradingcomputers

Will You Have to Withdraw Every Month?

Take a moment to think about the way you structure your trading account, your savings and your personal spending account. The frequency with which you withdraw from your trading account often limits how much it can grow. If you’re making $5,000 per month through trading alone, but you’re withdrawing $4,500 a month just to maintain your comfortable lifestyle, then there’s very little wiggling room for growing your operation in the future. As you’ve probably heard before, compound interest is the holy grail of trading, but if you’re making withdrawals too often, it can minimize the positive effects of compounding interest massively. If you want to assure a lot of exponential growth, and let your capital work for you as efficiently as possible, you need to be able to leave your trading account alone for fairly long periods of time. You can find out more at http://www.learntotradethemarket.com/forex-articles/simple-guide-to-growing-your-trading-account.


What Makes FOREX Trading So Popular?

What Makes FOREX Trading So Popular?

If you are not investing on the FOREX market yet, you’d better get started– there are countless moneymaking opportunities everydaywith FOREX, the largest and most liquid market in the world. Today, around 5 trillionAmerican dollars are traded every day on the FOREX exchange. There are numerous playersin this market: large banks, central banks, multinationals, hedge funds and private investors.

So, why has trading currencies become so popular?

What is the FOREX Market?

FOREX stands for Foreign Exchange and is where market participants can buy and sell currencies. Depending on the country’s currency, you can find different types of currency pairs: majors, minors, and exotics.

Brokers, like UFX.COM, often apply different spreads depending on the liquidity and volatility of the particular currency pair you’re trading. It’s thus always better to know in advance the trading conditions with whichthe broker you’re using can provide you (spread, margin, leverage effect, etc.).

Why is this market so popular?

  • Flexibility: The FOREX market is open from Monday to Friday, 24 hours a day. It’s thus very convenient, as you can trade whenever you want.
  • High leverage: When investing on currencies, you are using a leveraged account, which allows you to open trades worth more money than you’ve actually invested.
  • Size of the position: Many brokers offer different lotsfor trading currencies, depending on the size of the position you wish to open. 1 standard lot is 100,000 units. A mini-lot is 10,000 units, while a micro-lot represents 1,000.
  • Liquidity and Volatility: This is one of the most volatile and liquid markets around. A well-informed and experienced trader can take advantage of a sizable profit, thanks to volatilityover short periods of time.
  • Scalping and Day Trading:For private traders,trading currencies is often done with the short term in mind, as it’s easier for a day trader or a scalper to make money on short price movements and have all their positions closed at the end of the trading day.
  • Advanced platforms and trading tools:The increasing accessibility of platforms and state-of-the-art tools help inform your trading decisions. You can really profit from everything that your brokers put at your disposal.

TFS Closed End Fund Strategy

The strategy seeks to create portfolios of Closed End Funds (CEF’s) which provide a high level of current income with the potential for capital appreciation.The strategy will invest in CEF’s which are trading at significant discounts to Net Asset Value (NAV) and provide high levels of current income. These portfolios will primarily invest in the following CEF’s sectors: Emerging Market, High Yield, and Energy/Resources. MLP’s and REIT’s may also be used.

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Closed End funds have similarities to exchange?traded funds. They are launched through an initial public offering. The proceeds of the offering are invested by the fund manager according to the fund’s strategy. The CEF is then configured into an equity security which trades on an exchange in the secondary market. Investor activity takes place in the secondary market and has no impact on the underlying assets or NAV of the fund. An ETF, on the other hand, has a market maker which can either create more shares or redeem shares to keep the value of the ETF close to its NAV. A CEF does not have this mechanism. This leads to periods when the market price of the CEF may differ substantially from the NAV. This tends to occur during periods of extreme volatility and investor sentiment in the marketplace. CEF’s are frequently leveraged into “little income producing factories”. This leverage typically may be 25%?35% of the assets of the fund.

Gold_InvestmentThe CEF is a relatively complex investment vehicle which makes it less liquid and more volatile than ETF’s or mutual funds. The dealer community does not normally follow CEF’s and the market is too small for institutional investors. This makes CEF’s a retail product which is followed by a relatively small group of sophisticated investors. This frequently creates opportunities during periods of extreme negative market sentiment when investors are desperate to liquidate their holdings.

We monitor the CEF universe for funds with high levels of current income which are trading at deep discounts to their NAV using a measure called the z?statistic to determine the relative attractiveness of the discount. When the Z?stat is ?2 it means the funds discount is 2 standard deviations from its average. We like to look at this measure for differing time periods such as 1, 3, 5, and 10 years. When this measure is ?2 or less it is considered statistically “undervalued.” This is not a common occurrence, but does happen during market extremes. After we determine a fund meets these criteria we then take into consideration the following in our bottom up analysis: Morningstar ratings and reports, the people involved in the management of the fund, the process the fund manager employs, the positioning of the fund, the risk & return characteristics of the fund, fees, and leverage. We employ top down analysis to determine which category and style to emphasize. For example, we may choose to overweight emerging market fixed income because we feel they are attractive and will outperform high yield funds. Diversification among funds is not a primary concern.

The best use of the strategy is to build up the income component of the portfolio while waiting until the CEF’s return to more normal pricing. The best time to invest in CEF’s is when market sentiment has been very negative and these funds are trading at deep discounts to NAV. Since this only happens occasionally, it is difficult for money managers to develop an ongoing stand?alone CEF strategy. We believe the best use of CEF’s is to augment existing portfolios with CEF’s when opportunities present themselves.


A History of currency and its trade

Trade has always been part of civilised societies. At first, people used bartering to get what they wanted. It was a very simple system: goods were traded for others goods or services. However, this system showed its limits when civilisations became sedentary. Villages changed into towns and exchanges were more and more common and complex. Because bartering was a limited solution to exchange, people looked for other ways to trade. Some objects were used during the Antiquity for trading such as shells but they were not really convenient for large transactions. In 600BC, the Kingdom of Lydia minted the first coin. It is considered as the first “official currency” ever created.
The first banknote

Paper note was created in China, under the Tang dynasty (618AD-907). At first, it was mainly used by merchants but gained popularity among common folks during the 11th century. Marco Polo introduced this concept to Europeans after his travel to China but paper note only started to be used in Europe several centuries after: the first bank note was produced in Sweden, in 1661.


The Gold Standard

The development of currency and economy of European countries during the 17th century led to the creation of the first ForEx market in Amsterdam. Later in 1875, the Gold Standard Monetary System was introduced to regulate currencies. Basically, this system forbade countries to print more money than their actual gold reserve. Moreover, currencies were not suffering from gold price variations anymore as a fixed rate was established to regulate currencies. But this system fell down during the First World War as countries involved in the war were printing more money than their real gold reserve.

Bretton Woods

After the Second World War, in 1946, the Bretton Woods System was introduced to regulate currencies. Currencies were exchangeable either in gold or US dollar. However, as countries preferred to exchange their currency in US dollar rather than in gold, the US dollar became too strong and investors flew away from the United-States to look for other countries with lower currency rates. The Bretton Woods System officially ended in 1973 and European countries launched the European Monetary System (EMS) in order to have a better control over European currency variations. However, EMS did not bring the intended effects which led later to the creation of a unique European currency: the euro.

What’s Next?

Nowadays, ForEx markets attract many people as, thanks to recent technological improvements, trading is much easier than it was a couple of decades ago. People are also starting to get into other kind of currency such as cryptocurrencies – especially BitCoin – as they are free from any governments regulations. Only the future will tell us if these virtual currencies will take more and more place in our lives but one thing is certain: we will always find new ways of trading.

This Article was brought to you by Hantec Markets


Forex: How to Refine Your Trading Strategy

For the inexperienced trader, forex is a good way to lose money. To be successful on the foreign markets takes a great deal of skill, many hours spent researching and learning about the field, and a well-honed and cleverly executed trading strategy. It is, ultimately, a tactical game, and if you want to come out on top, you need a plan that will maximise your chances of success. Here are just a few tips to help you formulate one…

Make Plans and Stick to Them

When you begin trading, it’s important to take the time to sit down and think about what you’re hoping to achieve. Although forex is a risky game and things might not always go as planned, it’s important to be specific, so write down exactly what you want to accomplish, and a timeframe to go with it. Make sure that you define what constitutes success and failure for you, in terms of achieving your end goal. When you’re planning your timeframe, don’t forget to add in a period for finding your feet in the markets, as well as factoring in how many hours a day you’ll actually be able to devote to trading. Once you have a clear vision of exactly what you want, you can start taking steps to achieve it.

Choose an Appropriate Trading Package

The broker you choose is likely to have a number of different account packages available to you. These various options will offer a variety of tools and leverage ratios, and it’s important that you spend some time working out which one will best complement your style of trading. These accounts are likely to cater to different levels of experience, so consider how much handholding you’re really going to need before committing to a broker and package. Many, like Oanda, will offer demo accounts for you to test their facilities, so take advantage of these wherever they’re available.

you2Stick with What You Understand

One of the most common reasons for investors to lose money is their overestimation of their own abilities. If you don’t understand what you’re doing, then don’t throw money at it. Every time you consider a trade, ask yourself these simple questions: is there a solid reason for effecting it; would you be able to defend your decision if asked against critics? If the answer to either of these questions is no, then don’t do it. Be sure, too, that you never commit to a trade without fully understanding both the potential positives and the losses that may result, weighing these up, and even after doing so, feeling confident that you ought to go ahead.

Study Both Your Successes and Your Failures

No matter how experienced a trader you become, remember that there will always be room for improvement. Being analytical will be vital to making successful trading decisions, and this doesn’t just apply to your analysis of charts and price trends, but also to the strategy underlying them. When things go wrong, don’t despair, but instead work out why your methods failed. When they go right, do the same. This self-evaluation is the best way to teach yourself what does and does not work, and should be instrumental in refining your trading tactics.

Image Credit: http://www.dailyfx.com/forex_forum/active-trader-strategy-lab/65728-short-term-trading-strategies-using-market-depth.html


Three Top Tips for Forex Traders

For all of the risk and uncertainty attached to trading forex, it is a science. There are formulas and rules and methodologies that can help you to understand it and, perhaps more importantly, increase your chances of getting the desired result.

Here are three of the most important to get you started…

1: Choose a Trading Style that Suits Your Goals

forex-analystThere is no use beginning a journey without a destination in mind – not in the world of forex, at least. One of the most important things to remember is that you need a goal in order to have any hope of achieving it. It is only once you have this that you can find the trading style most likely to complement it.

Start by thinking about your risk profile – how much are you prepared to lose in order to profit? Consider, too, your strengths and weaknesses, the tools you favour, the factors you’re comfortable analysing, and so on. Write these points down, if it helps, and then compare them to the different trading approaches open to you.

Does the one that you wish to choose complement your goals? If the answer is no, then either find one that does, or consider whether they’re really the right goals for you. Once you find a combination that suits your strengths, you’re already well on your way to success.

2: Choose a Broker That Suits Your Trading Style

One of the most important considerations when choosing a broker should be whether their trading platform allows you to perform the analysis you require. Your broker must meet a number of criteria, of course, such as reputability, experience and affordability, but there are many who will, so finding the one who’s the right fit for you is the most important of them all. Take the time to really research your choices before committing to anything, ensuring that you know their policies inside out and are happy with them before your final decision is made. If you have the opportunity, be sure to take advantage of demo accounts to make sure that you’re satisfied with how the platform works and how easy it is to use. If you have any doubts at all when you’re assessing them, then they’re not the broker for you.

3: Choose a Methodology and Stick With It

Before you invest any money in the world of forex, you should already have selected an appropriate methodology. You need to know prior to entering any trades how you will make the decisions needed to execute them, the information you’ll require, and how you’ll decide when it’s time to enter into and exit from them. There is no right or wrong answer when it comes to deciding; you simply need to find the method that works best for you. However, there is still one golden rule that you must not flout; always be consistent in your application.

 

Follow these rules, and you may very well find yourself on the path to forex success.


How to Invest With Less Stress

When it comes to managing investments, retail investors have more options at their fingertips than ever witnessed in human history. The internet has increased accessibility while decreasing the barriers to participation that once existed. For instance, trading in foreign exchange used to be exclusively the tools of multi-national corporations, banks, and financial firms. With the introduction of online brokerage and leverage, these instruments became readily available to the retail investing public for trading. This wave of opportunity has also created a more competitive environment amongst financial services providers which has driven down the costs for investors, namely for spreads and commissions. However, with the spread of technology and financial market accessibility, came certain risks for investors that did not conduct proper due diligence. These pitfalls include unregulated brokers, promises of profits, and advice from non-advisory entities.

An Industry Built on Evolution

Despite all the problems assoForex Trading Systemciated with the industry, there have been a multitude of positive developments. One suchevolution to come from these vast changes in the financial market structure is the proliferation of money management solutions that were once only available to sophisticated investors with millions of dollars in capital. Successful money managers have recognized the potential for unlocking vast sums of money from retail investors whom were previously untapped. This has caused the popularity of managed forex accounts to soar, with many options out there for investors who want to take a more hands off approach to fund management. While there is no such thing as a risk-free approach to investing (no matter what anyone tries to convince you of), this is one mechanism that is effective for diversifying a portfolio and picking a strategy that matches the risk-reward profile of an investor.

Depending on the services provider, the benefits can be numerous. Besides the obvious benefit of not having to micromanage trades all day, there is transparency to track performance in real-time and ability to pick strategies that matches investing goals. Traders operating proper managed forex accounts, aside from being licensed by the proper regulatory authorities, will also be able to provide an audited performance history to confirm accuracy of results. Good providers will not just highlight profits, but also not be afraid to offer more in depth statistics like drawdowns. Aside from performing proper due diligence on the trader, it is important to make sure the trader is utilizing a regulated broker with a solid reputation. Assuring safety and security of funds will add to the confidence of choosing a professional money manager.

Pick the Right Strategy

A successful investor understands the difference between needs and wants. In an industry that is dominated by promises of high rewards, it is imperative to look through the sales pitch and create achievable goals. Promises of get-rich quick opportunities should be met with caution. If it seems too good to be true, it probably is. Some providers offer 1000% returns to bring clients in the door only to later squander all the trading funds. While 1000% annual returns are possible, they are not very feasible, and typically require risking the entire value of an account. The search should instead focus on fund managers that are providing reasonable rates of return by taking a reasonable level of risk.

Finding the right strategy for a portfolio is paramount to picking the right managed forex accounts. For instance, in the case of a retiree, the strategy is typically more risk-averse and geared towards generating income, not capital appreciation. On the other hand, a younger investor that is not dependent on investment income could choose to focus on more high risk strategies that provide higher returns but also have substantially more risk. One suggestion is to pursue strategies that are not correlated to major market benchmarks like the S&P 500 or FTSE 100. Buy and hold strategies are typically the main retail investor tactics, meaning that performance is linked closely to broader market performance. Choosing uncorrelated strategies is beneficial because it means that in market downturns, positive investment performance is still possible.

In all, managed forex accounts provide a great means to diversify and complement existing investments. They provide a solution for investors seeking less investment risk and stress from the day-to-day management of trading accounts. While there can be pitfalls, proper due diligence and reasonable performance expectations can make this approach very beneficial for retail clients looking to have funds professionally managed.


Get Complete Information On Day Trading

Sellers and buyers participating in day trading are known as day traders. In normal practice, traders close the trading positions by end of same trading day. In case the trading depends entirely on the strategy for specific day. You will find traders who actually focus on short term trading. They will finish their trades in matter of minutes or few seconds.

What do you mean by day trading?

imagesDay trading is known to be a process where buyers and sellers get involved in financial market. You need to participate in different types of short term trading that includes stock option trading, currency day trading, stock trading etc. The traders have the option of buying and selling trades several times and it can consist of high volumes. They are quite popular among brokers who can certainly reward them along with big discounts on commission.

You can get involved in process of buying and selling financial tools that includes bonds and stocks. Day trading system makes use of the earning guidance which is known to be a source for signals. The investor takes initiative to decide on the stock where you can invest to make profit. Through day trading system it is possible to move your stock only 20% of the time. But, it is quite difficult to say about the movement of security in case of the trading system.

But, how can you make a good start with day trading?

  • Need to make right mindset: This is an important part of trading. But, before participating in trading process, you need to keep in mind that there is a possibility of experiencing loss in forex trading market. If you are having a bad trade, then just release it from mind and finally move on to next. This will help you win in process in spite of experiencing losses in last five trades.
  • Need knowledge on trading: before entering into market, you need to have sufficient knowledge that can finally be implemented in process. There are lots of resources that you can find online which can act as a beneficial tool. You can also listen to audio to gain knowledge that will help you grasp the trading process. If you are serious about trading and want to evolve as experienced traders, then you need to have good information about foreign exchange market.
  • Decide on the strategy for trading: You will come across with varieties of ways through which you can certainly trade the stock market. There are different ways to make money and you should decide which fits best from traders. You can get involved in short-term trading and it involves quick trades that is designed to make sure you gain profits.

Day trading has the facility of holding stock for a single day. Once the stock market gets closed, the traders will have no stock in hands. Swing trading will help you hold the stock for few days and so as traders you have opportunity to wait for best price so that your stock has best value.

Emma Gibson is a talented writer. She takes the advantage of writing about forex market which can help you gain profits through stocks.


Why You Should Know These Basics Before Trading In Stocks

Why You Should Know These Basics Before Trading In Stocks

Are you interested in trading stocks? If so this is the article written just for you. Many people have made the decision to trade in stocks, as it is a fun way to produce massive profits without a lot of effort or time involved with the process. However, it is only those who are knowledgeable in stocks and all things related that produce those types of profits. There are many things that you should know before you start trading in stocks, including the following basics:

What does Trade mean?

Trading stocks means that you are buying or selling stock. More than one billion stock market trades are made on a daily basis. Trades can be made on the exchange floor as well as by electronically means. The most common trading market is NASDAQ, but there are several others as well.

What is the Exchange Floor?

The exchange floor, or the NYSE, is the most common of exchange floors. Once you tell your broker how many shares you want to buy, an order is sent to the floor clerk who then finds a floor trader to help find someone find you those desired shares. A price is negotiated and the deal goes through once the broker calls you back. This is a simple trade.

What is an Electronic Exchange?

An electronic exchange is one that is performed via electronic means. Computers are used to find buyers and sellers and there is no human contract with another person required. You can buy and sell stocks from any location, at any time of the day, with instant confirmations. It is one of the easiest ways to trade stocks.

Do you need a Stock Broker?

A stock broker is someone that you will always need. although you can handle stocks on your own, or use a company, a stock broker has the knowledge, experience and dedication that will make all of your transactions much easier. Always consider hiring a stock broker, especially with larger trading shares going on.

What type of Trading do you want to do?

There are several different trading styles that you can do. This includes day trading, short-term trading, weekly traders and more. You can change your mind later if you determine that it is not suitable for you, but you want a clear idea of the various types of trading and how to choose the one that you like the most.

Use Low Risk Trading methods

There is always some risk involved with the stock market and trades that are being made, however, some of them are riskier than others, and it is important that you identify and use the most low risk methods that are out there, especially when you are just starting out in trading.

Trading Stocks is Right For You

If you want a good return on your investment, using these tips can certainly help you attain great things in the stock market. When you do not understand the stock market and how things work you can make many bad decisions that end up costing you greatly. There is risk, yes, but when you go in with a clear head and the knowledge that basic stock trading requires, you can get more bang for your buck.4

Know When it is Time to sell

Sometimes you need to sell stocks because there is going to be a big decline in their value or for other reasons. It is essential that you let go of those stocks quickly. Thus you should know when it is time to sell and act upon that as soon as possible.

This article is contributed by Ajit Panchal who is an independent financial consultant working in Delhi. He likes to write about investment tips.


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