When you think of the words “insider buying” I bet you immediately think of either the Martha Stewart insider trading scandal or the movie Wall Street.

Yes, insider trading as defined by the rather complex laws surrounding what constitutes insider stock trading is quite illegal but there is a little known legal form of insider trading that is available to anyone.

You see, by law top company officials like CEOs and VPs must file forms with the SEC whenever they buy or sell any of their company’s stock and since the SEC is a government agency this information is available to the public.

Every trade that senior officials make in their company’s stock must be documented and a cottage industry has sprung up selling these aggregated insider trading reports to the public for very reasonable prices.

Now why would anyone want to know if Steve Jobs is selling large blocks of his Apple stock? Well, it could be a number of things such as part of his long range estate planning or perhaps for a charitable donation.

But, it could very well be that this insider selling along with sales by other Apple officers indicates that Apple is looking at some hard times ahead that could cause the price of the stock to drop sharply.

Conversely if there is a lot of insider buying of a stock by senior officers that could mean that bullish news is forthcoming with a rapid rise in the stock’s price to soon follow.

While this type of discretionary trading strategy is not foolproof (none are) many people do make a nice profit trading on insider information using a few rules of thumb.

The cheapest online stock trading is of course free stock trading. There are some online brokers that will give you free trades based on certain criteria.

If you open an account you might get 20 trades for free with Broker A. Broker B will give you free trades if you trade size or maintain a certain minimum balance. Another might give you 20 trades a month but charge you pay a fee for subsequent trades.

If you can think of a fee structure there is more than likely several online brokerage firms at any given time advertising it.There are plenty of firms that charge a flat rate per trade or .01 or less a share per trade and some brokerages let you pick from a menu of fee structures to better suit your trading style.

If you trade 1,000 shares blocks it might make sense to go for the $7.95 trade but if you are trading 100 or 200 share lots maybe the penny a share makes more economic sense to you and only you will be able to make that decision because only you know your trading habits.

So you see the cheapest online stock trading will be different for every trader based on the way they trade. Another thing to consider, even though this isn’t an issue as much now in the competitive would of online trading as it used to be, but in the past the cheapest online stock trading brokerages also had some of the worst service.

There is no worse feeling in the world than trying to liquidate a position and have your trading platform go down as your position continues to deteriorate. In one trade you could conceivably lose more money than what you have saved in trading commissions!

Thankfully the market votes with their dollars and any cheap stock brokerages that provide less than stellar service often find themselves with a shrinking customer base as word gets around very quickly in the online trading community.

So how do you get the cheapest online stock trading rates? Simple, search out various online brokers and make an Excel sheet of their fees. Next, review the trades you have made in the past to get an idea of how often you trade and the number of shares and dollar value per trade and pick the best brokerage that fits your needs.

Now do your due diligence and search for everything you can about the broker. Read comments made by people in trading forums, etc. and try and weed out the outliers.

These are the people that obviously are trying to tout the brokerage as being the cheapest online stock trading company and make grandiose claims about the service or on the other end of the spectrum watch out for people that make negative remarks that are based on petty incidents.

The goal is to get a well-balanced overview of the brokerage kind of like the middle of a bell curve before you open an account. If the reviews are bad go back to your worksheet and look at the next cheapest online stock broker and check them out.

Put in a little effort upfront investigating and you will end up saving money on your trades and have an online broker that you can rely on.

Anyone that wants to learn the stock market needs to have a place where they can buy and sell their stocks. Easy right? Well, maybe not when you consider how many possible ways you can buy stocks online or offline.

In the old days the only choice to buy stocks and bonds was with what is called a full service broker. Remember those EF Hutton ads? There was no buying stocks online because there was no online!

Just to get a stock quote you had to call the broker and they either had a teletype machine that would give quotes that were delayed around 20 minutes or so or they had to call their floor traders and get a quote for you.

These full service brokers charged very high commissions (this was before the discount stock brokers became popular) and usually tried to sway you towards the stocks that the brokerage firm either thought were good issues or what they had in their inventory and had to unload.

You could easily pay $50 to $100 or even more on a 100 share round lot of a stock depending on the stock’s price. Sometimes the broker would knock a few bucks off if you were a regular but you still ended up paying an outrageous amount in commissions.

Good brokers back then earned tons of money and really had a pretty nice thing going for them until the discount stock brokers came into existence.

These discount brokers would charge fixed fees or a few cents a share and you could easily buy stock for $10 a trade. Firms like Scottrade, Charles Schwab and Fidelity are examples of what the modern day discount brokers look like and many of these discount brokers can be a called a true online stock broker with the many benefits of a full service stock broker like company research while giving you an online stock market trading platform where you can buy and sell stocks in real-time.

Active traders usually look for even bigger discounts and some of the best online stock trading deep discount brokers like Interactive Brokers charge 1 penny or less per share depending on your lot size. They have a $1 minimum so if you buy anything less than 100 shares you pay a buck.

How’s that for trading stocks online cheap! I use IB for many trades and it is amazing how cheap the trade commissions are.

One thing you need to be aware of with online stock market trading using a deep discount broker is the learning curve of their trading platform.

Every online stock broker has their own software for trading stocks online and you need to spend some time learning the trading software before you actually make any real online stock trades.

Even when you are comfortable with the online trading software you can make mistakes. Several times I have accidentally bought a stock or bought more shares of a stock online because of keying errors. A few seconds and a few hundred dollars loss soon teaches you to be very careful when entering your online stock orders.

TradeStation is another good tool for online stocks trading as it allows you to write trading systems and do extensive backtesting, etc. and the trading platform is very nice but Tradestation charges about $100 bucks a month depending on your account options unless you have a large account balance or are a very active online stock trader while Interactive Brokers provides a free online stock trading platform.

So today your options for buying stock online are so vast that it really isn’t that easy picking an online stock broker so you can trade stocks online whenever you want.

There are many discount and deep discount online stock brokers to choose from and most of them are pretty good but like anything else related to trading stocks online you need to do some research.

I have the firms I like for buying stocks online but they might not be right for your online stock market trading so the best thing to do is look for reviews of any online stock broker you are thinking about using in your online trading.

Reviews from actual customers are a great way to learn the good and the bad about a particular online broker but be sure the reviews are real and not fakes put up the firm itself. If you are investigating better known online brokers the odds are that the reviews will be real.

A major factor to consider when choosing a broker for buying stocks online is the stability of the online trading platform. If it is constantly down or has data issues that can cost you big money in your online stock trading business. You absolutely need to get this one right or you will be very frustrated when you are trying to make an online stock trade and you can’t log into your account or stand-alone trading application.

Most online stock trading firms do have 800 numbers you can for trading but the commissions on these can be fairly high compared to doing it yourself online.

You also want to be sure that the online stock trading companies you are looking at are solvent and that they have ample protection for your account(s). You don’t want to wake one day to find that your online trading brokerage went out of business and you didn’t have adequate account protection.

Once again, most of the “name” online stock brokerages will have more than enough account insurance to cover most people’s online stock trading accounts.

In summary, buying stocks online is so much easier than using a full service broker and cheaper too! Just make sure you do your due diligence before you open an account and take the time to learn the terms of service and how the online trading system works and you will be fine.

Good luck in your online stock market trading and I hope you are profitable!

f you plan on trading profitably one thing you have to learn how to do is take a loss on a trade. Obviously no one wants to lose money but the fact is when trading you will have trades that are losers. That’s the nature of the beast.

In fact, the psychological/emotional issues we all have about losing money and our inability to cope with them is one of the primary reasons traders end up losing all of their trading capital.

Many traders will set a mental stop for a trade and when that stop gets triggered they make a rationalization that keeps them in the trade. They will tell themselves that they have a good feeling about the trade and will bend the rules “just this once”.

What almost always happens is that the trade continues to deteriorate and the losses keep growing. Now they say they will get out if it drops x points more or if it rebounds to y they will sell.

They yearn for the option to exit the trade if it could just get back to break even. That would make them happy and they would settle for not making any money on the trade.

I might mention here that hope and gut feelings have no place in trading and as soon as you change the rules on an open trade you have in effect begun a new trade with new rules. Think about it.

Have you ever said these things to yourself? I have and almost every time I “bent the rules” I paid dearly for it.

Losses of $1,500 soon become 4 and 5 times that. You do that a few times and you soon learn a very painful and expensive lesson…

Stick to your exit rules. Play by the book. Follow your system and trading plan.

There, I just saved you thousands of dollars if you will just listen.

The best way to overcome this anxiety of losing money trading is to think of it is a cost of doing business and trading must be treated as a business.

Just as a grocery store will have to throw away spoiled food and take a monetary loss so you too will have to get rid of a trade that has gone bad.

Keep that in mind along with the old trading saying that the first loss is the best loss and you will be on the right path to trading success.

Several years ago I became fascinated with Darvas Boxes after reading “How I Made $2,000,000 In The Stock Market” by Nicolas Darvas.

This book is considered by many as a trading classic and I read it at least twice myself. It is an easy read but is filled with some great insights into price action and is a “must read” book.

Who was Nicolas Darvas?

Darvas was a world famous ballroom dancer in the 1950s that learned to trade stocks while touring the world performing with his sister.

What makes his story so interesting is that he devised a trading system that looked for stocks making new highs and traded them by telegram using closing stock prices.

Since he made his trading decisions without the normal market noise of news and intraday price fluctuations he could remain totally objective which is something we all need to achieve in our own trading isn’t it?

Darvas Box Method

Put simply, Darvas constructed “boxes” (similar to a channel breakout) around a stock’s price chart looking for price breakouts based on formulas that can be found in his book and based his trades on them.

Since I like looking at new trading methods I immediately started searching for a software tool that would automate the construction of the Darvas Boxes on my charts.

For the most part everything I could find was either biographical in nature or was an explanation of how to manually construct Darvas Boxes.

The only real tool I could find was a Tradestation system written by a private party that was for sale. I bought it and played around with it for a bit but the problem with Tradestation is that it is extremely limited in its ability to scan a universe of stocks so I shelved my research into Darvas Boxes.

As I was writing this article I did a quick search and it looks like today not much has changed. Most of the information on Nicolas Darvas is about him, his books or an explanation of his system rules.

While there are a couple of sites that sell Darvas Box packages I wasn’t very impressed with them. One site’s product offerings were all “out of stock” which makes me wonder if they are even selling software anymore.

Nirvana Systems to the rescue…

Fortunately, the folks at Nirvana Systems built a Darvas Box plug-in for OmniTrader a few years ago that not only implements the original Darvas Box rules but also includes some enhanced Darvas Box systems.

Being an OmniTrader user I bought the plug-in and I must say that it is a very nice implementation of the Darvas Box method, easily the best available on the market today.

Will it make you money?

That’s the $2,000,000 question isn’t it? Just as a power drill can make a hole in a board or a hole in your hand a trading tool can either make you money or lose you money, it’s all in how you use it.

There is no “magic bullet” or “Holy Grail” in trading, just tools we can use to help us trade better if we use them correctly.

So, if you are interested in using Darvas Boxes in your trading I would recommend taking a look at the Nirvana Darvas Box Plug-in for OmniTrader.

Note: Once you get to the site click on the Store link to find out more about the Darvas Box plug-in.

What?

Did you think that trading was exciting? I think you are thinking of gambling where the rush and the action is a big part of the “gaming experience”.

Question…

How many people that gamble are net winners over time? Do you know any?

Trading is a business, period. You are in business to make a profit, not get a cheap thrill. Sure it is fun and stimulating but the actual act of trading is and should be boring.

If you are bored trading that means you are following your trading plan to the letter and executing your trades without your emotions getting in the way. You are on autopilot, a trading machine if you will.

Hopefully you have bought or built trading systems that have an edge in your chosen markets and you know over time you will be profitable by sticking to your plan.

You don’t jump from one idea to the next without thorough research and testing. You don’t follow your hunches and override your system rules “just this once”.

No, you follow your system putting on and taking off trades as required. Boring but profitable

If you feel bored trading congratulations, you have mastered your emotions and are trading like a pro.

I remember buying a stock market game when I was a kid and playing it with my sister (I think she still has it). While it was fun it was really just a version of Monopoly and didn’t actually teach me anything about trading.

If you really want to learn stock market trading there are two schools of thought as to how you initially approach the markets…

First, there is paper trading where you simulate your trades and record them either using paper, a spreadsheet or computer program.

The second method is to use real money and just start trading once you have developed your trade plan and have all of your trading tools in place.

Now, many people will strongly advise that you paper trade for some time before risking real money while others say that this makes little sense as you never know how you will react until you are tested by fire and have real money at risk.

I fall into the latter group and don’t paper trade because it is too easy to do. By that I mean that your emotions are not a factor when you are using “play” money and until you have real cash on the line you won’t know how you will really do as a trader.

In recent years there is a new method of learning to trade that goes by many names and is a nice bridge between paper trading and actual trading that you might want to consider…

Fantasy stock market game, virtual stock market game and online stock market games are just a few of the terms used to describe these new stock market simulation games that are web based and often free to join.

I have been looking at one of these free stock market games called Wall Street Survivor that not only allows you to sharpen your trading skills without risking your capital but also lets you win prizes while doing so by competing against other traders.

For those of you that don’t want to risk your money while learning to trade I would take a look at Wall Street Survivor. Hey, it’s free and you just might win something.

[rating:3.5]

OmniTrader 2008 is Nirvana Systems latest and greatest version of their popular OmniTrader program and like prior releases this version is chocked full of new features.

My first experience with OmniTrader was the OmniTrader 2001 version. I was new to trading having decided to switch from being an investor where others make my financial decisions to being a trader where I make my own decisions.

I spent quite a few hours over several weeks trying to get the software to produce profitable trading signals. Frustrated, I asked for and received a prompt refund and that was it.

Looking back I see what I did wrong…

Despite Nirvana’s constant reminder that OmniTrader is a prospecting tool that you use to find trading candidates for further analysis I tried to make it into a trading system that produced buy and sell signals that could be taken without any further signal confirmation.

In other words, OmniTrader 2001 and subsequent releases was a prospecting tool that produced a list of trading candidates that you further analyze using your favorite technical analysis methods to make buy and sell decisions.

This is known as discretionary trading as opposed to systematic trading which is what I wanted to do.

I did find some comfort in knowing that I was not alone in my misuse of OmniTrader as many people bought the program thinking it was a trading system when it was not and then were dissatisfied with the program because “it didn’t work”.

Luckily, I learned from my mistake as my trading skills developed and when OmniTrader 2002 became available I bought it and have been using OmniTrader ever since.

Now the good news for those wanting to be system traders is that unlike some trading software Nirvana is committed to constantly improving their product and they have a major release each year with great new features that have slowly evolved the product to the point where it can now be used for system or mechanical trading if desired.

You see, besides adding new features to OmniTrader Nirvana has developed some major enhancements to the program that allows for the addition of optional plug-ins.

Some of these provide capabilities not found in any other trading software and include an innovative Chart Pattern Recognition System, an implementation of the Darvas Box method and a complete implementation of the Turtle Trading System.

There are quite a few others available and each one is easily installed so you can mix and match plug-ins with no adverse effects.

What’s more exciting is that Nirvana now sells two mechanical trading systems named NSP-31 and NSP-33 that have some pretty impressive backtest results and are reasonably priced compared to other lesser trading systems on the market today.

OmniTrader also allows you to build your own trading systems with the optional Strategy Builder Module and you can even write your own indicators, stops, etc. with the OmniTrader Professional version.

This makes OmniTrader 2008 one of the most powerful and complete trading software packages on the market today while still remaining very affordable.

With this tremendous power comes a learning curve so be prepared to spend some time learning the program.

The good news is OmniTrader 2008 now has a full set of help videos that are available at all times to walk you through the program and they also produce some of the best trading seminars you can buy that are also very reasonably priced and will give you an excellent education in how to use OmniTrader to its full potential as well as how to be a better trader overall.

I have personally met with most of the Nirvana staff at the annual “Bash” which is held for Nirvana Club members (more on that in another post) each year and I find them to be a very sincere, honest and open group of people that really care about their customers.

Nirvana Systems founder Ed Downs is probably one of the nicest people you will ever meet in this business and he is a class act as are the other Nirvana personnel.

If I had to choose one trading software package to use right now it would be OmniTrader 2008 hands down. Actually, it is the only one I am using along with TradeStation which I use primarily as a broker/trading platform.

My only criticism of OmniTrader is that over the years Nirvana has had a habit of releasing versions with minor bugs in them that I feel should have been caught during QA testing.

While all computer software has bugs it seems like Nirvana sometimes takes a few releases to fix a reported bug and the user forums show that others have similar opinions.

As an example, limit buy orders in trade plans not working correctly has been an ongoing issue that has not been fixed as I write this review.

Despite this criticism I would not let this dissuade you from taking a serious look at OmniTrader 2008 as your primary trading software package especially given their generous 30 day return policy.

Discretionary and system traders alike will find OmniTrader 2008 to be robust enough to handle pretty much any trading methodology and with proper use can be an indispensable part of your trading toolbox.

[rating:4.5]

This is going to be a high level overview of TradingSolutions by NeuroDimension because frankly, I cannot think of an easy way to explain how Neural Nets and Genetic Algorithms work. Rather this will be my personal impressions of the product.

If you want a good overview check out their FAQ pages on the TradingSolutions site.

Since I already own another similar (but more complicated to use) program I did not buy TradingSolutions but I did test it extensively over the 30 day trial period and came to the conclusion that I liked the program more than the one I owned because it was so much easier to use.

I have spent over 30 years designing, writing and testing software and I know when something is junk and in the case of TradingSolutions I was very impressed with the “fit and finish” of the product.

In fact, I remember telling my wife that this was one of the most integrated, well thought out trading software packages I had seen in a long time.

It is obvious that the program’s designers knew what they were doing when they specd it out and it shows throughout the program.

As an example, there are many video help clips available throughout the program which I found to be extremely helpful in learning how to use TradingSolutions.

Something else that stood out was the way the program works. It breaks tasks into chunks that run in a little scheduler that let’s you stop and resume at will.

I found that to be not only unusual as most packages must run their calculations to completion but extremely handy if you want to turn your computer off and resume your calculations later. Neat.

The reporting capabilities of TradingSolutions are equally impressive with some nice statistical and graphical reports available and the charts produced by the program were easy to work with and include all of the standard indicators and drawing tools.

One of the things that always make a favorable impression on me is the ability to download a program’s manuals or help files before purchasing a product to get a feel for the program.

NeuroDimension has them readily available on their site along with other training aids so you know exactly what the software can do even if you don’t download the demo version (which I highly recommend). I liked that a lot.

Overall, I think that NeuroDimension has taken a very complex trading concept and simplified it to the point where anyone wanting to utilize Neural Nets and Genetic Algorithms in their trading would be able to do so with TradingSolutions without getting an advanced degree in artificial intelligence.

[rating:4.5]

Pssst, want a hot stock market tip? Here is the best stock market tip you will ever get…

Don’t listen to stock market tips!!!

This post is all about stock market tips and why you should avoid them like the plague. In fact, if you hear a good stock market tip plug your ears, whistle Dixie and walk away and you will save yourself a whole lot of emotional stress and money.

Think about it, if someone really had some insider information would they tell you? If they did and you made a trade based on that knowledge you could be guilty of insider trading and could end up in jail just like everyone’s favorite Domestic Diva (To be fair she went to jail for lying to a grand jury and not insider trading proper but you get my point).

Here are some of my favorite sources for hot stock market tips:

The Friend

How about that hot stock tip from a friend or acquaintance? Maybe your dentist or doctor tells you about some hot stock they are “playing” and you get excited. After all, they are professionals so they should know what they are talking about right?

Well, statistically speaking doctors are some of the worst investors/traders out there so keep that in mind when they tell you about some up and coming medical penny stock.

Be especially careful if they say something like, “This stock is going to be the next xyz”. You can be pretty sure the stock will be a dog if they hit you up with that.

The Cold Call

You get a call out of the blue from someone you never heard of talking about a hot stock that is going to _____ (fill in your own ending) and you need to get in right now.

Wow! Some big time broker called me up, I must be important! Well, you are something if you listen to them…

Stupid!!!

Most of these guys are working from a list and peddling worthless penny stocks to unsuspecting people. For some great insight watch the movie Boiler Room to see how it’s done.

The legitimate brokers are usually rookies that get assigned a desk, cold call list and phone and are let loose. The stock tips they offer are typically for issues that the brokerage firm has an inventory of and needs to lighten up on.

Speaking of brokers…

Have you ever seen a brokerage firm give many or even any sell signals on a stock? Nope. Normally they will say something like Hold or Watch or some other euphemistic term to soft peddle their weak opinions.

Magazines

Do you think that the editors of mainstream financial magazines (names withheld to protect myself from lawsuits) really know any more about the market than anyone else? I myself have been burned many times by these highly regarded magazines before I wised up.

Another thing about magazines and stock tips in general, everyone tells you what and when to buy but nobody tells you when to sell. I guess you just keep the stocks forever. Even Warren Buffet doesn’t do that ?

Stock Forums

These are rife with stock touts that talk up a stock or bad mouth it in order to try and manipulate the prices. Most shares have such high volumes that these guys really are little more than an annoyance but they can be very tenacious and love to dish out their opinions on a stock and get into arguments.

The best advice I can give is to stay away from individual stock discussions and instead focus on trading techniques that apply to any market.

I hope by now you have come to realize that any stock market tip is probably worthless. You need to think in terms of prices and not individual stocks if you want to be a systematic trader.

When I trade all I see are symbols and numbers. I could care less what the stock is or what the company does.

Nobody can predict the markets or tell you how a stock is going to do. The best we can hope for is to have a set of rules that have been statistically proven to give us an edge in the market and to follow those rules religiously.