Welcome to VDMTrading.com


Thursday, February 8, 2018

Extreme volatility likely to continue to plague the markets for one good reason

After taking a break from blogging about stocks, Forex and other equities I certainly haven't stopped trading them. I've been more focused on my portfolio than keeping up a blog. But I've decided to start writing again about what's on my mind and trades I'm in or going to make. There is something that worries me in this current scenario and I'd like to share it in this opening post.

If you think the markets are recovering from Monday's plunge, you may want to think again. This not just simply a 'correction' as often referred to by many traders and investors. The Dow is slowly but surely cutting its losses after the 1,100 + drop (the most I've ever seen it drop in one day), somehow almost 75% is recovered, and they make it seem like everything is just fine and it was just a 'wild ride'... but is it? Some say it was an issue with computerized trading that may have affected Monday's crash. I believe that there is something a lot more serious going on! This may just be a prelude of what's to come and set the tone for the rest of the year and beyond.

Many (new) traders forget that there's still a major underlying issue, it's something that's not much talked about for some odd reason. It's almost like no-one really wants to hear about it, even though they know it's a major indicator regarding the the state of the markets.

Since the big recessions of 2008 this has been going on. It's called the Fed rate:


The Federal Reserve has not really adjusted the U.S. Funds rate since the great recession - not to the levels seen before 2008 anyway. To me that is pretty alarming. Yet the Dow is climbing and climbing - more money is pumped into the markets, but the rate still stays the same. Does that make sense? The US dollar is still very weak, which is a good thing according to some traders and investors. 'It makes U.S. products cheap so more American goods will be sold abroad'. But it actually hurts the U.S. / global economy - it only drives up inflation and only the 1% will benefit from it. This is just another bubble that's about to burst! The same scenario we saw in 2008!

10 years ago I started this blog as a result of the market crash that happened back then. All these 'financial experts' were all dead wrong. Everything was fine. Remember Jim Cramer saying "don't be silly on Bear Stearns"? He even gave a buy recommendation - and look what happened! Now guys like him are doing exactly the same thing. Nothing was mentioned last week about being cautious in the markets. In fact, there were reports that stocks 'were cheap' - and a few suggestions were given. See the resemblance? Once again only the wealthiest are only getting wealthier because they are playing the same trick in the book, and believe it or not most of them are falling for it.

What's happened in 2008 is going to happen again. Extreme volatility is going to continue to haunt the markets. Usually volatility is a good thing, of course you need some up and down swings to make money - extreme volatility on the other hand can hurt your portfolio, it simply carries a tremendous amount of risk.

Four essential indicators I'm using right now for trading equities and you should have your eye on are the VIX, the US dollar strength index, the Dow and the global markets. Right now the market crash on Monday is kind of brushed off like nothing ever happened, however the VIX is still extremely high: it doesn't add up, therefore use extreme caution when making a trade.

As of this time of writing the U.S. Dollar is gaining some its strength back, but the markets are still very wobbly. Again the core problem is the Fed. What do they know that the rest of us don't. Why haven't they raised the rates? Why do they want money pumped into the markets and not savings? So many questions that are unanswered at the moment. Whatever the case is, we haven't been in a sound trading environment since the beginning of 2000. Therefore I advise extreme caution when making a trade. If you do, keep a close eye on it and definitely don't use the 'set and forget strategy', and perhaps think about going short more than going long.

Next week after I've done some research I'm going to post a few tips and trading recommendations on the site.

Thursday, November 24, 2016

VDM Trading Contest 2017 now live!

As every year in November around Thanksgiving, a new trading contest for the new year: the VDM Trading 2017 contest is now live and open to anyone who wants to participate! It's free to join this game (hosted by MarketWatch) and runs until November 24th 2017. Start with a fictitious $100,000 and see how well you fare in the stock market with this advanced stock trading game! This year there are some slight modifications to the game rules: portfolio's are now public and no limit orders are allowed. Full rules below:


Your portfolio options:



Starting balance for players:
$100,000.00
Commission:
$10.00
Credit Interest Rate:
3.00%
Leverage Debt Interest Rate:
6.00%
Minimum Stock Price:
$2.00
Maximum Stock Price:
$500,000.00
Trading Volume Limit:
1.00%
Short Selling:
Enabled
Margin Trading:
Enabled
Limit Orders:
Disabled
Stop Loss Trades:
Enabled
Partial Share Trading:
Enabled




Symbols Available for Trading

All symbols can be traded
Indexes:
  • S&P 500
  • Dow Jones
  • Nasdaq
  • Nasdaq 2000
Exchanges:
  • AMEX
  • Nasdaq
  • NYSE
  • OTC-BB
Security Types:
  • Public Companies
  • Funds
  • ETFs








The aim of the game is to learn and to have fun. Good luck to all who join!

Tuesday, November 22, 2016

VDM Trading: a personal trading blog

Welcome to VDM Trading! A blog that was established back in 2008 about trading stocks, forex, commodities, etfs, etc, with some personal opinions about not only how to trade them and why, but also commentary about (recent) economic events that affect the financial markets around the world. I realized that although I have this personal stock trading blog for some time now I never really explained anything about the blog itself. Many people approach me on this blog wanting to know if I'm interested in collaborations to promote financial products, or write about certain topics. Perhaps it's a good time to explain what this personal trading blog is about, to avoid any confusion.

Friday, November 18, 2016

Top 7 best mobile stock trading apps

For the sake of convenience I've categorized the following best mobile stock trading apps into three categories. Every successful trader knows that reliable information and the ability to execute trades promptly is key to making sound investments, and what better way is there than installing essential apps on your mobile device that inform you about upcoming trading opportunities or give you information about your open trades that you currently hold. The categories are as follows: news apps for stock traders (to get some ideas), stock simulation apps (which allow you to try out various strategies without risking your own money), and actual trading apps so you can trade from your mobile phone on the go (usually from your own stock broker). Here they are listed in no particular order:

Tuesday, November 15, 2016

The worst mistake any trader can make

I've written many articles about trading. In fact I wrote an article a few years ago about the top 6 biggest mistakes you can make as a trader. Oddly enough I left one mistake out, a big one too, and to be true I have been guilty of doing it as well a few times. At the time I guess I wasn't thinking about it when I compiled the list. But we all learn (hopefully) from our mistakes, and the biggest one I found in my trading career so far has been the 'set and forget' strategy. Not monitoring your open trades is by far the biggest mistake you can make as a trader of equities, commodities or anything you can trade really. Thinking that a particular trade will 'go as planned' on a certain time frame will often result in a loss. There have been many instances when I was in a profitable trade, but didn't close the trade in time (often because the set 'target' was set just above or below the profitable trade). If I would have closely monitored the trade I could have seen that the trade was just about to hit my profit target and I could've closed the trade manually, minimizing my loss or taking profit just before the trade went south.

This mainly applies to short term trading, although it's a good idea to always check your portfolio every day, no matter which time frame you are trading on. What if you have several trades open at a time, are you supposed to monitor every single trade? Yes! That's what makes trading so exhausting sometimes. Don't step away from any open trades. There surely have been success stories about people closing successful trades that they weren't even watching for a long time, but this scenario rarely happens. It sounds amazing, making money while you sleep - but unfortunately we don't live in a perfect world like that. Successful traders need a set of rules in order to make money, and monitoring all your open trades should definitely be one of them!

Monday, November 14, 2016

Why the EUR/USD is losing value so quickly

The value of the euro against the dollar dropped down again this Monday morning. The European currency fell to its lowest level since the beginning of this year. The euro reached a low of 1.0728 compared to 1.0840 dollars at the close of European stock markets on Friday. The euro traded around these levels on January 6th 2016, after hitting lows of 1.05 a couple of times a year before. There are a few major factors in play that are putting a tremendous amount of pressure on the Euro currency.




Trading Bitcoin for a change

I was going over my usual charts last weekend when I noticed that I had never ever traded Bitcoin before in my life. Once I clicked on the infamous digital currency in my trading station I immediately got a warning from my broker: 'Warning, Bitcoin value is extremely volatile!' etc. I remember seeing this a few years back as well, likely one of the reasons why I never traded Bitcoin. But it's also why it's fascinating to me, especially now that it looks like this extremely volatile trading instrument is on the rise. It has managed to keep it's value over the past few months, and in some places now paying with Bitoin is more widely accepted. Time to take a closer look.



Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.