In the post I said the market is about to make a big move to the upside or downside starting on Wednesday of last week. As we see in the below chart the S&P fell for three days straight, broke through it’s support line, and now lies at it’s lowest point in over a month.

I take it you all followed my advice and moved to cash and protected yourselves from losses, good job.

Now we are ready to profit off the markets next big move. I see it happening around Tuesday, maybe Wednesday, of this week. I see a potential gain of 10% in a matter of days.

During this same time period, my portfolio has risen over 50%. How was I able to do this?

First, if you take a look at a chart of the S&P 500 you will see the market didn’t move sideways for five months, but rather had a series of ups and down and has now ended back in the same spot it was five months ago.

Those investors following a “Buy & Hold” strategy have just wasted five months of their life for no gain. The secret to big gains is to play the ups and downs of the market! Here is how it works:

First we need a vehicle to invest in. Now since most stock investors think of “stock” as an investment vehicle, the sad fact is.. about 25% of stocks will move in the opposite direction of the markets. If you are investing in stocks while the market is rising, there is no guarantee your stock will rise also. But what if there was a guarantee?

Enter the ETF. Exchange-traded funds (ETFs) are innovative investment vehicles. They are built like mutual funds and trade like stocks. For example, you can buy an ETF that mimics the S&P 500. So when the S&P gains 5%, that ETF will also gain 5% (or close to it). It’s what we call a sure thing. Everytime the market goes up, your ETF will also go up. You can’t say the same about stocks.

But wait. It gets even better. You can also make money when the markets drop. In the old days that meant “shorting” stocks which left you at the mercy of your broker if the trade goes wrong. You could lose it all. Extremely risky.

Today, there is what’s called an “inverse” ETF. This ETF goes up when the markets drop. You trade these just like a stock so it’s easy to profit when the markets fall.

Now that you know how to profit in up and down markets, now it’s time to supercharge your returns. To do this you invest in a “leveraged” ETF. These currently come as 2x and 3x. For example, if the S&P rose 5%, your 3x ETF would rise 15%. How sweet is that. The same goes true for Inverse ETF’s.

To sum it all up. Simply buy an ETF (TNA, UPRO, BGU are some) when you feel the markets are rising. When you feel the markets will fall, invest in an Inverse ETF (BGZ, SPXU, DOG, plus many more).

The only thing you’ll need to master with this trading strategy is timing. How good are you are telling when the markets will fall or rise? There are big returns to be made if you are good at market timing.

If you are like most investors you are always getting in and out at the wrong time.
All is not lost. For less than $11 a month you can subscribe to my stock alert service amd I’ll email you when the markets are about to rise or fall (in 2011 it’s been about once a month). I’ll even tell you which ETF to be in at any given time.

If you would like to consistently out gain the markets (I’m currently up 63% in 2011 vs the S&P’s 6%) than I urge you to join me today by clicking the link below:

Click to learn more about my profitable ETF investing strategy.

So how did he do it? Zanger uses volume and chart patterns as the main criteria in stock selection. He mostly avoids technical indicators, but instead looks for high momentum stocks with 2-3 times the average daily volume exhibiting pattern breakouts. Some of the patterns he uses most are head and shoulders, cups and handles, rising and falling wedges, triangles, and flag and pennants.

In addition, Zanger looks beyond technicals to the fundamentals. Zanger looks for companies with rapidly increasing earnings, a new product or service, strong management and dominance in their market.

A typical day for Zanger is sitting in front of his six flat screen monitors watching the price and volume movements of the selected stocks that have passed his trading criteria. Zanger also spends a large amount of time on the phone with any one of his three brokers when any of the stocks on his watchlist are on the move.

Every night Zanger scans 1,400 stocks looking for the next days trading prospects. Using his strategy, Zanger has shown a knack for locating high-alpha stocks that lead the market, particularly during a major market move to the upside.

Zanger’s final advice is “Trading for me is all about volume and price action. I buy on pattern breakouts when volume is rising, and as long as price is responding well to increasing volume, I stay on board. But when either price or volume stops rising, it’s time to get out.”

While I am not saying that there is a guaranteed “secret formula” to success in the stock market, there is definitely hope yet for those who are feeling lost in this strange and confusing world.

One of the best ways to boost your confidence as an investor is to make your first profit in the stock market. It does not matter how large the profit margin is, investors just get a kick out of seeing their statement grow. That said, the most common reason that beginners lose hope in stock investment is also losing money. So it boils down to this: if you can earn money on your first venture into stock investment, then you are likely to stay on and try again but if you lose money on your first try, then you will probably never touch investment ever again. So how do you maximize your chances of earning money on your very first try? One way is to simply avoid the common pitfalls faced by all amateur investors.

The 3 most common mistakes made by investors are:

1. Trading too often. Contrary to popular belief, the stock market is not the action-packed scene where stock prices fluctuate every five seconds and you have to scramble to buy or sell within a small window of opportunity. In fact, investing can be boring at times while you wait for the right opportunities. Many investors make the mistake of being impatient and end up buying and selling their stocks just because they think that it is not rising fast enough. No one benefits from this except your broker, who will rake in tons of money in trading fees. Take your time and hold on to your winners to reap big gains over time.

2. Being afraid. Never ever fear seeing your stocks plummet. If you have set the proper stop losses you will keep your losses to a minimum. This is without a doubt, the most crucial lesson that investors have to learn before they can become successful. Many investors don’t use stop orders figuring the stock will rebound someday. This is a good way to lose all your money. Keep your losses small and instead of waiting for a rebound, take your money and put it on a stock that is going up now.

3. Paying too much. Many brokers charge $200 or more in commissions to make one trade. Learn to trade online and cut your commissions to $5 a trade. While it is good to want to have someone manage your money, the only person interested in growing your money is you. All brokers are interested in how much commissions they can make for themselves. I have lost a lot of money listening to brokers, while they got rich at my expense.

So there you go, the 3 most common mistakes of the beginning investor. Learn these tips well and keep them in your mind always, the best investment practices are cultivated when you first start out. Start strong and you will finish strong, start dubiously and you might be in big trouble in the future.

To learn how you can start trading stocks online, get my Stock Market For Beginners DVD

While almost everyone who ventures into stock investing dreams of being the next Warren Buffet, you cannot afford to neglect getting a good foundation early on. This article will go through “Stock Investment 101”, the basic mechanics and strategies of stock investment and help beginners like you to break into the stock investment world with a good sense of what to do.

Let’s start at the very first step: choosing a broker. Your broker is the doorway between you and the stock market. The broker handles all of your queries, concerns and instructions. His job is to research various stock options for your consideration, give you advice on investment potentials and also tell you how your current portfolio is going.

There are two types of brokers: Full service brokers and discount brokers. Full service brokers offer the traditional one-to-one service while discount brokers are for more experienced investors who don’t need as much service. As the name suggests, discount brokers are cheaper to hire and should definitely be a consideration once you become more experienced. As a beginner however, you will want to go with a full service broker.

Always make sure you are comfortable with your broker, going with a major brokerage firm like Merrill Lynch or Morgan Stanley does not guarantee better results. As a rule of thumb, treat it like you’re giving your broker a loan, if you would feel uncomfortable loaning the money, then the broker is not right for you.

Next, you have to decide which sector to invest in. Now, the best investors will have a varied portfolio comprising of shares from different sectors, this is done so that if one sector experiences a major setback due to scandals or loss in consumer confidence, then at least the other stocks will remain largely unaffected. While I would advise that you keep this in mind, I would encourage you to start off in just one sector first. The reason is simple, as a beginner you do not know all of the nuances and tricks of the stock market yet.

Furthermore, you would not be able to interpret the information related to your stocks. For example, in the electronics sector, a CEO change might not have a great impact on the stock price while the same cannot be said about the banking sector.

For this reason, I would recommend that you start off in a sector that you know well, something that you have worked in before and have experience with the dealings of the industry. By doing this, you break into stock investment with a relatively safe approach, allowing you to pick up experience in trading without exposing you to too much risk.

The first few years are your “learning years”, don’t go all out and buy loads of shares hoping to earn a quick buck. Instead, take your time and soak in all of the information that you can before raising the stakes and trying to earn some real money.

When you decide on your sector, you then need to choose an investment strategy. There is no hard and fast rule for this, even for beginners. The type of strategy you choose will depend not only on the sector you invest in but also on your personal needs and goals. Basically, such strategies offer different investment periods and returns, it is up to you to decide which option to go for. This is something to discuss with your broker thoroughly before embarking on any sort of investment. Once again, keep in mind that as you get more experienced, you will want to vary your portfolio to include different investment strategies for the sake of versatility.

There you have it! These three steps are the essential basics in beginning your journey through the jungle of stock investment. Hopefully, these stock 101 tips will help you begin to understand how the stock market works and give you a good idea of what practices you should adopt. As with gambling, never ever overextend yourself – always invest within your limits and never invest more than you can afford to lose.

To learn more on investing in the stock market, check out my DVD, “Stock Market For Beginners“.