Day Debt

Discovered in 1989 by a semi-legendary bond trader called Nick Stott, it is allegedly a secret day trading formula that will help your day trading reach new heights of accomplishment, with the bare minimum of risk. Or so the story goes.

Origins of the Camarilla Equation

Discovered while day trading in 1989 by Nick Stott, a successful bond trader in the financial markets, the ‘Camarilla’ equation uses a truism of nature to define market action - namely that most time series have a tendency to revert to the mean.

The equation produces 8 levels that are meant to predict these reversal points allowing the trader to profit from them. The equation uses nothing more than the previous trading day’s open, close, high and low levels and some interesting mathematics to produce these supports and resistances.

Trading the Signals

Now these levels are numbered L1-4 for the supports and H1-4 for the resistances but it is really the L3, L4, H3 and H4 ones that are most important.

When the price level reaches the H3 level the theory behind the Camarilla Equation says that there is a strong resistance at this point and that a SHORT trade should be made with a stop loss at the H4 level.

Conversely, when the price drops to the L3 level there is a strong support and a LONG trade is the recommendation with a stop loss at the L4 level.

Breakout Possibilities

While the H4 and L4 levels should normally be reserved for setting stop losses on the above trades, occasionally there will come a point when these points are broken through. If this breakout is maintained for a significant amount of time and the price is still on the move then a LONG or SHORT trade should be entered respectively.

These trades are not so common but could provide massive profits (or so the Camarilla Equation suggests)

Choosing entry point with Camarilla Equation

There are two entry points that you may like to consider when using the Camarilla Equation. Firstly you could trade as soon as the market reaches either the L3 or H3 level and go AGAINST the current trend but there is more of a danger that the trend will continue and you will lose out if this is your preferred method.

The alternative is to wait after the market has broken the L3 or H3 level until the reverse actually occurs and enter the trade just as the market passes the respective level once again. This allows you to trade WITH the trend which should prove a safer option.

So does it Work?

If you are interested in whether or not the Camarilla Equation provides a viable trading method then you may wish to follow my experiment which is testing the given levels for the FTSE 100, Dow Jones and DAX 30 stock markets.

Steve Waller has learnt much since he first took up financial trading over a year ago. His experiment on the Camarilla Equation is being blogged daily at http://camarilla-trading.blogspot.com

The typical scenario is that you get your paycheck. After you recover from the shock at how little is left after taxes, you proceed to divvy it up among all your outstanding bills, intending to put whatever is left over into your savings.

But there never seems to be anything left over and your savings don’t grow.

A better plan would be to pay yourself first. Don’t let the money get into your hands.
You might find that you actually begin to grow your savings much quicker this way.

If you work for an employer with a 401K plan, the first thing you should do is to fund it to the max. If you can’t afford that, at least put enough in to get the full matching contribution form your employer.

This investment is made before taxes. Your investment is larger and with the employers contribution grows quickly.

Next have a brokerage or mutual fund company debit your banking account monthly. This money should first go into an IRA - if you have five years or more to go to retirement, make it a Roth IRA.

Next have a few dollars more be debited to go into a no-load, low cost mutual fund. The younger you are, the more aggressive your choice of fund can be.

After that is done, then figure out how to pay your bills and living expenses. If money is tight, cut back on your living expenses and use the extra money to pay down your debt.

Start with the lowest balance first. Once that debt is paid, take the amount of money you were paying on that debt and add it to the payment on the next lowest balance debt. Continue doing this and you can be totally debt free within 5 to 7 years.

Another version of this method is paying the highest interest rate debt first. The principal is the same, you just see more progress with the first method, although it could be more costly based on how your debt is distributed.

(If you don’t believe me, get the premier version of Microsoft Money or Quicken and use the “Debt Reduction” module. You will be shocked at how much money you will save and how fast you can eliminate debt this way.)

The idea is to scrimp at the expense of your current lifestyle, while leaving your savings to grow and you debt to shrink.

I know many of the people reading this will scream that this is an impossible plan.
But it is quite doable with a little will power and the ability to delay gratification for a while.

The problem is that if you don’t do this, your future might turn out to be very bleak.

For more financial planning articles, visit http://www.credit-yourself.com/financial-planning.html

Chris Cooper, a retired attorney, and his wife Aileen, who has a MBA in Finance provide financial planning advice at Credit Yourself - www.credit-yourself.com.

In today’s world who doesn’t want to be rich? There are several ways of making some quick dough; one is to queue up for one of those reality shows on television and the other more viable one is to put your money in some smart investment.

If you explore the investment market, you will find several options that can make your money grow for example savings accounts, trusts and property market.

But none of them is as lucrative as the share market. Now if you are wondering as to why you must invest into stocks, here are a few reasons:

. No other investment promises such big and quick returns as the stock market.

. Shares are liquid assets, which can be easily sold or bought, and you can even sell a portion of it. Moreover, this entire process of selling and buying shares doesn’t take more than a few seconds especially with online stockbrokers available.

. You can easily determine the worth of a particular share investment by checking the share market results in the daily newspaper. The entire activity is not half as hassle prone as getting your property valued.

. In most cases shareholders also enjoy great tax benefits on the profits they earn.

Now that you are convinced about the worthiness of a share investment, you must now strategise as to how you will go about investing your hard earned money into the stock market. With so many online stockbrokers now available, you no longer have to queue up outside a stockbroker’s office. You can sell or buy shares online also.

As an online stock trader, your homework is to first analyse your own savings and risk tolerance and then study the stock market for a potential investment. A good online stock dealing strategy is always simple and practical. With consistent study, you will be able to gauge the buying and selling signals with ease and reap good benefits out of your share dealings.

One smart way of dealing in stocks is by spreading your money over several types of investments. This reduces your risk to a huge extent, because if one type of investment doesn’t do well, then you can always bank upon the other.

Despite the fact that shares yield great returns, still at the end of the day it is a gamble. So, before you invest into it you must first assess your immunity to risk and only after thorough study of the stock market should you venture into it.

Seek.uk

Nidhi
http://www.seek.uk.com