Forex Word PressIntegrated Forex Experiences And Forex Information That Useful In Trading

You might be wondering why we need to take a detour to discuss The Sentiment Cycle. Surely mechanical trading is designed to do away with emotions

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If you put 10 different day, swing and trend traders on a panel, then ask them, one by one, about the advantages of using limit, market and stop loss orders, you would probably end up with a lively discussion. If I were on this hypothetical panel, I would add to the liveliness!

I am a day trader by orientation. In a day trading context, the best time to enter a trade can be measured in seconds.

Limit Orders

Limit orders are precise. You enter at the price you specify or better or you do not enter. One disadvantage of a limit order over a market order is that a limit order takes extra seconds to prepare. These extra seconds can cause you to miss a sharp run. If you miss a sharp run, you can mentally zone out. You can peevishly feel that if the run "won’t let you enter" then "to heck with it". You can end up standing on the sidelines. (This has happened to me…I do not think I am the only trader who has sidelined him or herself this way.)

Suppose you are in a position and the price runs against you. If you try to use a limit order to exit, you can end up chasing the price and deepening your loss. If you fail to "catch the price", you can peevishly lose interest in exiting and ignore your deepening loss. (I have experienced this.)

Market Orders

Market orders are quick. If you see a good trade, according to your trading system, do not over-think your order. Do not second-guess or doubt yourself. Place a market order! The moment you place the order, it will usually be executed immediately. What are your objections? Are you thinking, "Market buy orders get filled on the ask. Market sell orders get filled on the bid. I leave myself open to getting hammered by the spread."

Think on this: When you place a limit order, your order will only be filled when the ask hits your buy price or the bid hits your sell price. You do not escape the spread by choosing a limit over a market order. I will talk more about limit orders later.

Stop Loss Orders

What about stop loss orders? Again, I bring a day trader’s bias. One disadvantage with a stop loss is that you can fixate on the price you set. You can develop "tunnel vision". This is the phenomenon of ignoring all other price activity in related markets. All you can see is the market you are in and the price at which you have set your stop loss. (I have experienced this, too.) I will talk more about stop loss orders later.

Limit Order or Market Order…When Is a Good Time to Use Them?

Here is an example of a well-timed market order: The clock shows 3:50 p.m. Eastern. The New York Stock Exchange will close in 10 minutes. Earlier in the afternoon, during the 1:00 to 3:00 p.m. time period, the S&P 500 attempted a weak rally, then broke.

Let’s say you went short on that break. (You sold the futures and / or the S&P 500 exchange-traded fund SPY.) You used a market order. You were filled immediately. The ride down was rough. The price staged micro rallies but worked lower. After the close of bond futures floor trading at 3:00 p.m. Eastern, the S&P 500 rallied sharply.

At approximately 3:50 p.m., the price broke again. So, there you were… you had a choice to make…hold your short or exit. You had to think fast. You decided that a disciplined exit was a good idea. The price was jumpy. Here was your dilemma: If you set a limit buy order, the market might run away from you. If you opted for a market buy order, you knew you would catch an ask. You opted for a market buy order. Good move!

The price action I just described really happened. The day was November 30, 2007. Just seconds after your exit, the S&P 500 spiked higher. You pocketed a decent profit that otherwise would have turned into a painful loss.

Here is an example of a well-paced limit order: Say you have your eye on crude oil futures. Crude oil is in a four-day downtrend. The price has been setting lower highs for four days in a row. Today, the price broke sharply during the early morning hours. Now, you see the price hit support at a low that was established earlier in the month. You see the price rally off that support.

The price is working higher now. It may test resistance at yesterday’s low. You plan an ambush. You place a limit sell order just above yesterday’s low. The price is hit. You are now short crude oil. Within minutes, the price begins to break sharply. Just before the close of crude oil futures floor trading, you take your profit.

Of course, the price action I just described also just really happened. The day was November 30, 2007.

Limit orders and market orders are tools. Each tool has its strengths and weaknesses. In the right situation, one is better than the other. In a fast-moving situation, use a market order. In a situation where you can see "obvious" support or resistance, use a limit order. Another occasion to use a limit order is in a slow-moving market. Get the price you want or walk away.

Limit order or market order? Let your training and the situation be your guides. Stop loss orders? Yeah, you’re supposed to use a stop loss order to protect yourself from yourself. Because I’m primarily a day trader, I find that placing stop loss orders, then moving and cancelling them, creates an administrative burden for me. The burden can slow my reaction time, and I can easily leave a forgotten stop loss order in effect. Forgotten orders can bite.

However, if you are a swing trader or a trend trader, then, yes, use stop loss orders. Your need to act fast is diminished. But, if you’re a day trader, my vote is to steer clear of stop loss orders. Stay alert! Trade liquid markets. Avoid wide spreads. Study how orders work. Study how markets work. And, always appreciate how your own mind works. Do what is right for you and for the situation.

ZAP Awaits Court Decision on California Jurisdiction for Smart Car Lawsuit A lawsuit filed by California electric car maker ZAP (OTC BB:ZAAP.OB) against DaimlerChrysler, Smart GMBH and Smart Chairman Ulrich Walker is awaiting a decision before a Court of Appeal to proceed in California court. Yesterday the Court of Appeal for the State of California heard oral arguments on ZAP's claims against DaimlerChrysler, Smart GMBH and Smart Chairman Ulrich Walker. Specifically, the Court will decide whether ZAP's claims against these parties may proceed in the California courts. The trial court found in June of 2006 that no jurisdiction existed to permit California court to hear ZAP's suit. ZAP is confident that this procedural error will be reversed. A decision is expected within 90 days. In the preceding year and a half, the defendants have engaged in activity that inadvertently proves the truth of those initial allegations made against them by ZAP. ZAP's initial complaint alleged that the defendants engaged in unlawful actions in order to eliminate ZAP as a competitor in the California market. Since the trial court dismissal on jurisdictional grounds, defendants have proven their true intentions to bring the Smart ForTwo to California and to eliminate any competition standing in its way. The lawsuit cites eight different counts, including intentional interference with prospective economic relations, negligent interference, trade libel, defamation, breach of contract to negotiate in good faith, breach of implied covenant of good faith and fair dealing, common law unfair competition, and statutory unfair competition. ZAP is seeking damages in excess of $500 million. As the Smart Car prepares to launch in 2008, ZAP CEO Steve Schneider noted that DaimlerChrysler and the Smart division, at the expense of ZAP, have parlayed their struggling business unit into what they say could be its best-selling vehicle. Smart Car sought to introduce the car into the United States, but reversed the decision on the grounds that there was not enough demand. They subsequently made the decision to introduce an SUV called the ForFour, which was also reversed and the business unit for Smart in the USA was shut down in 2004. When ZAP started selling its first units of the Smart Car Americanized by ZAP in 2005, DaimlerChrysler cited record losses in excess of $5 billion on the Smart Car while closing down plants and laying off employees. ZAP had collected signed purchase orders totaling $2.2 billion, representing 156,000 cars and opened discussions with DaimlerChrysler in the hopes of expanding on its business plans by ordering the vehicles directly from the manufacturer. ZAP secured a $425 million revolving credit facility to assist with the purchase of the Smart Cars.

Digital Ally, Inc. Applies to List Common Stock on the NASDAQ Capital Market OVERLAND PARK, Kan., Nov. 15 /PRNewswire-FirstCall/ -- Digital Ally, Inc. DGLY, which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial security applications, today announced that the Company has applied for a listing of its common stock on The NASDAQ Capital Market. "We believe that Digital Ally, Inc. now complies with all of the listing requirements for The NASDAQ Capital Market, and we have filed the appropriate documents with NASDAQ to apply for such listing," stated Stanton E. Ross, Chief Executive Officer of the Company. "In light of the strong sales and earnings growth achieved by the Company in recent quarters, we believe it is appropriate to list Digital Ally's common stock on the widely respected NASDAQ Stock Market. Our goal in seeking this listing is to broaden our exposure to potential investors and improve the trading liquidity of our stock." Approval of the listing application is subject to a qualitative and quantitative review process by NASDAQ. About Digital Ally, Inc. Digital Ally, Inc. develops, manufactures and markets advanced technology products for law enforcement, homeland security and commercial security applications. The Company's primary focus is the field of Digital Video Imaging and Storage. For additional information, visit http://www.digitalallyinc.com The Company is headquartered in Overland Park, Kansas, and its shares are traded on the OTC Bulletin Board under the symbol "DGLY".

Investors' Insatiable Appetite for Chinese IPO's and Public Companies Doing Business in China China-AsiaStocks.com Reports on Listings from Shanghai to Hong Kong to U.S. Markets, Updating Growing Stock Directory for Investors Following Sector. PR9.NET November 13, 2007 - POINT ROBERTS, Wash., Delta B.C., - InvestorIdeas.com and China-AsiaStocks.com, its investor and industry portal focused on the China-Asia sector, updates its growing stock directory with new public company listings as investors witness the China IPO frenzy and seek investment opportunities in the sector. From Shanghai's listing of oil and gas conglomerate, PetroChina- China's largest domestic IPO, to the recent Alibaba.com IPO on the Hong Kong stock exchange, the market can't fill the growing appetite for China related listings. According to a recent report by Ernst & Young, companies in mainland China and Hong Kong raised $14.3 billion in the third quarter and the number of company listings in Hong Kong and mainland China hit new records. Philip Leung commented in their release "The record number of IPO's shows that companies were quick to react to keen investor interest in equities ". Outside of American Depositary Shares (ADS), investors can also invest in the China play in the micro cap markets. After Market Support, LLC, a wholly owned subsidiary of Keating Investments, is a financial marketing firm specializing in creating liquidity for publicly traded stocks and has worked with multiple clients that have gone public through reverse mergers (a method of going public increasingly replacing IPOs for micro cap issuers). Keating has an office and division in Shanghai (www.keatingasia.com) According to Justin Davis of After Market Support, LLC., currently working with Benda Pharmaceutical, Inc., (OTCBB: BPMA), smaller listed companies can provide investors the opportunity to get in on the ground floor of China's dramatic growth story. Justin does advise investors to complete their own due diligence and review SEC filings prior to investing. Benda Pharmaceutical (OTCBB: BPMA) is building its presence within the fast growing Chinese market and beyond, forecasting that Gendicine® will generate $16 million in revenue in 2008, up from estimates of $6.2 million for 2007. In total, the Company anticipates revenues to reach $25.1 million in 2007 and progressing upwards to $56.7 million in 2008. Yahoo!s (NASDAQ: YHOO) US$1 billion investment (40% interest) in Alibaba's business-to-business trading portal, represents another alternative for U.S. investors looking to participate in and own shares in companies doing business in China . Some notable recent and pending China listing market debuts include- Longtop's (NYSE:LFT) American Depositary Shares, posting significant gains its first day of trading Longtop, provides information technologies services to China's financial services sector. Also making headlines- China National Heavy Duty Truck Co, a heavy truck maker, in a Hong Kong IPO and Giant Interactive Group Inc ADSs (NYSE: GA), an online game developer . In the pipeline is AirMedia, planning to list its ADSs on NASDAQ, trading symbol AMCN. FUQI International, Inc. (NASDAQ: FUQI) recent IPO at $9.00 has already had a range of $6.50 - $11.75 and is currently down from its IPO debut. FUQI International, Inc. designs high quality precious metal jewelry in China.

China's largest drugstore chain based on the number of directly operated stores, China Nepstar Chain Drugstore Ltd  ("Nepstar" or "the Company"), was listed today on the New York Stock Exchange. Nepstar offered 20,625,000 American depositary shares (ADSs) during its initial public offering at US$16.20 each. Gross proceeds from the offering, not including the potential exercise of the greenshoe, amounted to approximately US$334 million. Nepstar is the largest drugstore chain in mainland China, with 1,791 directly operated stores as of September 30, 2007. Proceeds from the offering will be used to open new stores, to upgrade information management and inventory control systems and to set up two new distribution centers. The proceeds may also be used for other general corporate purposes and for potential acquisitions. Goldman Sachs (Asia) L.L.C. was the sole global coordinator of the offering. Goldman Sachs (Asia) L.L.C. and Merrill Lynch, Pierce, Fenner & Smith Incorporated were the joint bookrunners. CLSA Limited was also an underwriter of the offering. Nepstar's registration statement relating to these securities has been declared effective by the United States Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.