Risks in Stock Market Trading

2008-11-19T23:51:00.001-08:00

One general asserted truth is that profit is a goal for many of the men and women who populate this planet. Profit is the more desirable in the case of those who actually invest money because they want to extract even more financial benefits out of these particular investments. One popular way of giving a fertile employment to your money is making them circulate through stock market trading. Share owners can sell, hold their shares or even buy some more, if a series of rules (based either on well-established commonsense practices or on mere intuition) tell them the moment is just ripe for this or that strategy.

As a matter of fact, strategy is one of the terms often heard of in stock market trading. But can anyone talk about a strategy that never failed in this area? This is a frequently raised question, since it is widely acknowledged that the stock market can be tricky. The stock market may easily lead to a downfall in stock market trading. This process takes place, obviously, to the disadvantage of the investor. However, stock market trading doesn't always end with a loss. Should loss be a certainty, people would no longer invest in the stock market.

Whether we are talking about time-honored stock market trading - taking place within the ‘real' here and now, on the floors of stock exchange rooms - or about online stock market trading one of the regularly advised strategies is to stick to the trend. Online stock market trading has acquired, in its turn, a value over the past ten years so it can be taken into consideration also. Every stock market undergoes certain (longer) intervals of development manifest in the evolution of stock price. Terms like bull market or bear market are recurrent in stock market trading reflecting either the continuously rising stock prices or the reverse situation. Both online stock market trading as well as its longer-established relative go hand in hand with the progress of the national economy. One example at hand is provided by the extent of a bullish market during the 1990s, determined by the robust national economy of the USA - a genuine initiator of investment confidence. When the situation changed, at the beginning of the year 2000, the market turned bearish and stock prices began falling. In both situations, the advised approach was not to go against the tendency of the market.

Circumstances have long proven it is wise to be consistent with the general trend. Indeed, there is ‘fashion' within stock market trading as well. And if you don't want to be outdated - being outmoded in stock market trading may have damaging consequences - you go with the flow. Nevertheless, when someone trustworthy or when some reliable conditions offer you a ‘hot' suggestion, you may want to act in its direction. Nonetheless, caution, shrewdness and wisdom must be in your proximal reach. This means that you are not to instantly trust any ‘good old pal' who, out of good-will, provides you with a tip. You must be able to make your own research targeting the tip you received or else request the services of a stockbroker.

The latter may turn out to be a wise stratagem. Stockbrokers, even in online stock market trading, are generally certified and skilled authorities whom you can easily employ for you to take full advantage of your capital investing. Notice however that their expertise is not available free of charge. There is nothing ‘on the house' in stock market trading. Basically, brokers get involved in stock market trading for you, making use of their fuller comprehension of the stock market status quo so as to trigger gains that will proceed to your pocket or to some further investment. Should the commission basis on which the relationship between you and your broker is built (as a general rule) not be appropriate for you, there are other possibilities as well. In online stock market trading it is less costly to supervise your own deals.

Additionally, in online stock market trading, the useful, instructive material you may need is obtainable day-and-night. Moreover, in case you take particular content in looking into your private stocks, you cannot find a richer source of information than the Internet. Online stock market trading allows you to research websites designed by investment companies so the client and the virtual investor can be aware of previous operations. By accessing reports and descriptions offered even by the companies themselves, one may even notice the excellent performance of key institutions. Even more, online stock market trading sites offer the investor support in the shape of online stock market trading tools, services and instruments that allow the investor to place an order beforehand and, should the client not be present at the moment when the market reaches the condition opted for by him or her, enter the order automatically.

Certainly, both online stock market trading and its ‘next of kin' have their own advantages. Whereas online stock market trading provides more accessible assistance for dealing with stocks, what was the initial, fundamental stock market trading still goes on. Even if not following a time schedule as generous as that of online services, the traditional ways do not disappear. However, they both involve taking risks which is why prudence is the most often heard of strategy. In other words, it's better to "hold for a while the bird in the hand than quickly grab two in the bush".

Plan For Stock Market Success

2008-11-17T09:41:00.000-08:00

To be a successful investor or trader, a written investment plan is a must! In fact, most broking firms will not allow its professional traders to trade money without a trading plan!

Each and every trader must submit their plan and have it approved to be able to start trading money on behalf of clients. The trader is then judged and compensated for how well he follows his own plan and how well he does financially. If he violates his own plan, he may be subject to immediate dismisssal!

So it’s crazy for us non-professionals traders to start trading without a plan, especially when things don’t go our way, and they won‘t always go our way, you can be assured of it!

Now, before we begin to write our plan, take just a moment to think about your true investment objective. What do you want to accomplish with this trading account? Simply saying “ I want to make money” is not an investment objective. You have to have a specific objective, like, “To outperform the All Ords by at least 10% annually”. That’s an objective.

Then you must decide what type of industry and sector of shares you are going to invest in. The energy sector, the housing sector or the retail sector are unlikely to outperform the All Ords. That means you might have to look at the more volatile, but more rewarding sectors, like the computer sector, telecommunications, etc. This will likely give you lots of volatility in your portfolio and you’ll have to accept it or don’t get involved in that sector in the first place.

There are 7 necessary ingredients in your investment plan:

Reasonable investment objective

What growth factor do I want to achieve? Be realistic. Are you actively trading or long-term investing?

Risk tolerance statement

What industries, sectors and types of shares will I invest in?

Diversification plan

How many different types of companies do we buy on average? Between 10 –20 should be a maximum.

Price range of the shares we buy
Do we buy $30 shares, or only the sub $10 shares? Do we invest only in Australia, or overseas too?

A defense strategy

How much price decline are we willing to accept? Be sure to use a Stop-Loss!

Contingency / Repair plan

What do we do in a potential large market correction? How do we prevent and/or repair large market losses?

Timeframe

How often do we, or will we, re-assess our investment strategy? It should be reviewed every 3-6 months and updated if and when the market conditions change.

To help tailor your investment strategy, try asking yourself these questions:

Do I usually average down in price, or do I take a small loss?
How many shares do I buy and sell everyday and do I diversify well?
What is the usual size of my trades? 500 shares, 1000 shares, or even more?
When do I take my profits? When I’m up 10%, 20% 50% or more?
If I have a profit in a stock, do I hold it overnight?

When you have considered all the above aspects, you will be well underway to finalising a very valuable and effective investment plan.

Buy to Cover Orders with Stock Trading

2008-11-14T02:15:00.000-08:00

Within the buy to cover orders, there are 4 options in which to place onto your stock purchases. When you buy to cover on a market order, you are in agreement that you will purchase the stock at the current market price, however, because there is a lag between the time you agree to purchase the stock and the actual transaction, a price difference could occur. You could end up paying more than anticipated for each stock, or a considerably lower amount per stock, which is what you are hoping for. You can also buy to cover limit orders, in which guarantees that you will pay no more than the set limit price. However, if stock prices stay above the limit price, this type of buy to cover order will never be executed.

This type of transaction is typically used by investors who are trying to get into a certain market. You may also want to buy to cover stop orders in such case the stop orders become simple market orders as soon as the price is at or above the stop price. This type of order should be used to get you out of an unfavorable market so that you will not lose any profits. And, last, you may choose to buy to cover a limit order that converts to limit order only when the market price is at or above the stop price. You must become familiar with each of the buy to cover orders so that you can make educated decisions about your investments.

From one decision period to the next in the stock market game, the market moves up and down non-stop, meaning that prices of stocks are at a constant changing point. You may think about purchasing a certain stock at $65 per share, and in the next second, the price per share has risen to $165 per share.

This is where the gambling of the stock market comes into play. By learning the advantages of the buy to cover orders, you can increase your chances of earning money on the stock exchange instead of losing money. The most obvious advantage to all of the buy to cover options is that they are in place to make you money, when executed properly.

For example, you would not execute a stop loss on a stock that has steadily increased over a 4 month period. If you did this, you would force yourself to waste money to buy the stock in order to cover your mistake. You decide to buy 175 shares of stocks from Albertson 's , a grocery store chain, at $75 each, for a total investment of $13,125. Over a four month period, you notice that the stocks have gained in profit, and you would like to do something to ensure that you keep this earned profit.

Not knowing any better, you put a stop loss of $50 per stock without consulting your stockbroker. From that point forward, if your stock decreases to $50 per stock, you are forced to sell it, and any previous earned profit is null and void. The only chance you have in gaining back that profit, is if you are quick enough in the non-stop stock market game, to purchase the Albertson 's stocks before someone else does. However, even if you are able to do this, you have still suffered a great loss monetarily.

This is why you must educate yourself BEFORE playing the stock market game.

As with any game, there is some form of risk involved, however, when playing the stock market game, you can prevent a great deal of heartache by simple taking the time to gain knowledge about all types of order you are able to place on your stocks. If you need help learning about types of orders to place on your stocks, you should consult your well-trusted stockbroker in order to seek professional advice before taking matters into your own hands, inevitably forcing yourself to lose your invested money 's profit. Thus, it is absurd to invest your hard earned money into any program before you know all the facts necessary to make a well-informed, educated decision.

Strategies for Profitable Share Trading

2008-11-12T00:03:00.000-08:00

Share trading, like any other investment, has its' inherent risks. No trader, or system, no matter how smart or well designed, can foretell the future. Natural disaster, human emotion, terrorism and globalization, among other things, manipulate the market. These things make it virtually impossible to invest in any market with 0% risk. That being said, there are 5 key strategies that professional, successful traders use to lower their trading risks and increase the likelihood of profitability. Savvy investors should always:

1.Create a Trading Plan: An effective trading plan will guide the trader in his/her decision making and make the difficult decisions easier because they have already created their own trading guidelines or guideposts. A trading plan should include the following components: (a) Investment and trade time frame guidelines, (b) A personal risk assessment. Determine how much risk you are willing to take, this will make your future trading decisions much easier, (c) Proper knowledge of the designated area of trade. Not knowing your market will more than likely doom your chances of trading profitably even before you start, and, (d) Predetermined entry and exit strategies and guidelines.

2.Have a Disciplined Approach: Once you have created a personalized, well thought out and researched trading plan, follow it. This is so vital because emotional decision making often ruins undisciplined investors.

3.Acquire Only Blue Chip Growth Stocks: Stocks with the greatest likelihood of profitability are appreciating liquid stocks. Investors that experience long term success don't take unnecessary risks by investing in junk stocks.

4.Research and Become an Expert in Their Market: Study the market like a college student studying for a final exam. Knowing your market will help you create a better trading plan. Your trading plan, as discussed above, will guide and predetermine nearly all your trading decisions. Therefore, by creating a strong foundation, you give yourself a greater opportunity for success.

5.You're Not a Goat, So Forget The Herd: If you have researched your market and have developed a smart plan that is proving to be consistently profitable, than stick to it. Don't develop a herd mentality and begin to follow anyone and everyone with a "bright" idea. The old adage proves wise; Plan your work and then work your plan.

Any type of investing has inherent risks. Lower your risks and increase your chances of profitability by creating a trading plan, adopting a disciplined approach, acquire only Blue Chip Growth Stocks, research and become an expert in your market and guard against developing a herd mentality.

Origin of the Stock Market Formula

2008-11-10T03:25:00.001-08:00

The search for automatic investing techniques - schemes which would produce profits by giving investors advance indication of market swings, based on a mechanical interpretation of market data - has been going on for quite some time. One of the earliest methods was the "Dow Theory," a set of rules for interpreting market action drawn up by William Peter Hamilton about 40 years ago, which were roughly based on the writings of Charles H. Dow.

The search for mechanical market techniques accelerated after the 1929 crash which had revealed not only the treacheries of emotion but also the frequently appalling inadequacy of even the most reputable investment advisers. The well-known debacle of the closed-end investment companies during the period following the crash - including those managed by some of the best-known names in Wall Street - indicated to many observers the near-impossibility of reliably predicting the course of stock prices.

Stock market forecasters did not stop forecasting during this period, but their results were far from outstanding. A famous study by Alfred Cowles, covering the period from 1928 through 1943 and including 6,904 forecasts of the market as a whole made by 11 experts, showed a score, on average, of about two-tenths of one percent better than random guesswork.

Investors did not stop losing money, either. Results of an exhaustive research project conducted by Paul Francis Wendt covering the period 1933-38 (on balance, an upward period for the market), indicated that only 21.8 percent of a sample of typical customers came out with a profit.

Beginning in the thirties, large numbers of automatic investing techniques were developed, bringing into existence dozens of charts, tables, trend lines, moving averages, breadth and depth indicators, complicated mathematical computations, economic indexes, banking data curves, adaptations from the recondite areas of physics and chemistry, and plenty of others. By now, it seems that every available set of statistical data has been put to some use as a forecaster of stock market trends, no matter how tenuous the connection.

Some of these "timing devices" are intended to work automatically, and others are subject to considerable interpretation. Some are only sporadically successful, others are worthless, and a great many of them tend to be quite complicated. The principal difficulty with such methods is that they make no allowance for errors. As we have seen, one of the characteristics of formulas is that they do not aim for one hundred percent accuracy, and always make allowances for the probable, while hedging against the possible. A formula method can, however, be combined with a timing device.

Eventually, the idea of an automatic formula - which would not be designed to predict market swings with any accuracy, but would still dictate a reliable investment policy, prevent large losses and produce a steady profit over any market cycle - became increasingly attractive.

Originators of formula plans, therefore, eschewed "forecasting" as far as possible, and based their policies on the single assumption that the market would continue to fluctuate - in some cases specifying approximate limits, but without trying to predict their timing.

These earliest formulas, in the late thirties and early forties, were largely the handiwork of various institutions, primarily college endowment funds. An automatic formula was especially attractive to such investors. The investment committees, often composed of non-professionals and given to policy disputes, were more than anxious to rely on a formula which would allow them to agree on investment principles and also take them off the hook in case the institution's investments didn't fare too well.

Although the original impetus for formulas came from such large institutions, many of them have long since discarded the formula idea. On the other hand, a rising trend of popularity has been seen in the use of formulas by individuals, perhaps as a result of market experience in recent years, which has so often and so regrettably proved the experts wrong. A number of investment counselors, in fact, have adopted the policy of selling their services on the basis of formula investing techniques.

Stock Market Advice

2008-11-10T03:24:00.000-08:00

With the stock market performing so poorly this year, many people who have no experience are getting interested in learning about stocks. They have probably heard that is good to buy stocks when they are low and sell them when they are high. With all the bad news of the stock market going down seemingly day after day, these beginners are now becoming interested in getting involved.

Once a beginner learns how to buy a stock, the next step is to try to figure out what stocks to buy. Where does one get that kind of information or opinion? You can get stock pics almost everywhere including magazines, TV shows, radio shows, The Internet and probably many other places as well. One thing is for sure, there is no shortage of opinions.

If you watch the financial TV shows, you will often see segments with the top analysts or "experts" where they give their stock tips. These experts might be asked to analyze certain stocks or to give their own stock pics. It seems to me that most of the time these so called stock market gurus are positive about most stocks. There are exeptions but rarely do you find an analyst come on and say that he would not be buying any stock and that now is not the time to invest.

These stock analysts are often the representatives for their company that the public sees and so they don't want to be negative. It is so much harder to drum up business with a negative outlook than it is if you have a positive rosy outlook. It seems to me that these analysts are told to go out there and paint the most positive picture you can about the market. For example, "the market might be bad right now but it will turn around and these are the stocks you want to own when it does".

Learning how to do some of your own research and not listen exclusively to the experts is perhaps the hardest part of investing. If you are going to do things right, you do need to learn how to form your own opinions and research stocks on your own. If you buy every stock a guru says is a winner, you will soon find that they aren't right much more than someone who picks stocks by throwing darts.

If you are a beginner looking to buy stocks and learn, it is wise advice to proceed slowly and not believe everything you hear. These stock analysts are professional salesman and can make the worst stock in the world look like a screaming buy. It is your money and not theirs so be careful with it.

Fascination in the Stock Market

2008-11-05T23:34:00.000-08:00

The stock market has fascinated people all through the years. Many have made fortunes, others have lost them investing and trading on the stock market. But what constitutes the stock market and how does it work?

Many countries have their own stock exchanges where one can buy and sell shares for company stocks, options and bonds that trade in that particular market. The US stock market is the most volatile of them all, where traders and brokers perform millions of transactions every day. The most common exchanges in the US stock market are the New York Stock Exchange, Nasdaq and the American Stock Exchange.

The Price
The stock market is a place where people, either on behalf of their clients, their organizations, or themselves, bid to buy a number of shares of a particular stock at a specific price. On the other side, another set of people asking to sell the same stock for a different price. These are technically called the ‘bid' and the ‘ask' price. When a price from the bidding side agrees with a price from the asking price, a trade is performed. In heavy volume transaction stocks, the difference between the ‘bid' and the ‘ask' price is marginal.

Why does the stock market fluctuate?
The answer to this is the variation between the supply and demand of the stock in question. In simple terms, when a particular stock is demanded heavily and the supply is short, the share price for the stock goes up since people are ready to buy that stock with a higher price than the current price, and people who want to sell are ready to wait and sell at higher prices.
When the reverse happens, people want to get rid of the stock but there are not enough people ready to meet the selling volume on the other side. As a result of this, the price goes down since people are willing to sell the stock at lower prices than the current price, and people who want to buy are ready to wait for the stock to go lower. The volume and quantity by which this happens relies heavily on the number of shares demanded against the number of shares supplied and the level of aggressiveness buyers and sellers (also known as bulls and bears) are buying and selling their stocks.

Shares Ownership
Once a number of shares are owned, as a result of a stock market transaction, these shares can be kept for a specified amount of time. This time can be years, months, weeks, days or even minutes. This depends on whether the shares have been bought for a long term investment (years and months), short term investment (weeks and days), or as a trading scalp, which normally lasts for hours, minutes, and sometimes even just a few seconds.

When entering the stock market, the first question one needs to ask is whether he/she wants to be an investor or a trader. This depends on whether one is looking for a long-term commitment or a short one. While investing in the stock market can be controlled quite easily, requiring only limited amount of knowledge, trading, on the other hand, is quite a different ball game requiring much more knowledge and skill to perform and master.

Timing The Stock Market

2008-11-03T03:32:00.001-08:00

Most individuals will lose money, over time, buying and selling stocks. A fundamental mistake most people make is the notion that the stock market will continually rise. Technically it will, but there are time restraints for most people in the simple fact that none of us live indefinitely and depending on when the stock market goes through one of its corrections can negatively impact our portfolio.

If you are under the age of 50 (as an example) and the market goes through a severe correction, more than likely you still have enough time for your portfolio to recover until retirement, assuming it never goes through another correction in your lifetime. How about if you are in your 60’s and the market corrects itself? Chances are you will never recoup the losses that you incur.

strategy. Probably more important than buying a stock is knowing when to sell a stock. I learned a long time ago to never fall in love with any stock because eventually it will break your heart.You may have done your due diligence in researching a stock, but there are forces at work that may limit the ability of a particular stock to move in a positive direction.

Some, but not all stocks are manipulated by Wall street. Many times a stock is over hyped by analysts and brokerage houses in an effort to get people to buy the stock and drive up the price. Once the stock reaches a certain price, the Wall street insiders then sell their shares and the rest of us are left with a stock that starts to decline. The problem for most people is that they generally get into a stock after its made it big climb only to then see the price drop. It is the old buy high-sell low mentality; a sure strategy for losing money in the stock market.

I have read in more than one source that 70 percent of stocks move in the direction that the overall market is moving, so if you have a stock with great fundamentals and the market is declining, guess what? Your great stock is probably declining as well. Additionally, 20 percent of the movement of a stock is based on the sector that it is in (eg: transportation, health care, banking, etc.), so if your sector is not doing well then chances are your stock will not as well.

Lastly, 10 percent of a stocks movement is based on the true fundamentals of a stock, but those fundamentals can be skewed by management of a given company as well as the brokerage houses and the analysts.Back in the mid 1990’s everyone was a stock picking genius. It seemed every stock you purchased did nothing but go up. Then in 2000-2002 reality set in. Most people who were in the stock market without an exit strategy suffered severe losses. At that point many people vowed to never play the stock market again. What happened in 2003? The market soared again, but of course those with a sour taste for stocks either did not get in or got in after the big run up to end up either making very little money or no money at all. Once again, the buy high-sell low strategy came into play.So, what are you supposed to do?

You could buy mutual funds where “supposedly” your money is professionally managed to avoid these corrections. The problem here is two-fold. One, these funds have managerial fees which take away from your profits and two, perhaps even more important, during the downturn from 2000-2002, mutual funds in general also performed poorly.

The problem we all face is that we are looking for a place to invest our money and after considering all options it would seem the stock market offers better opportunities than other investment vehicles. If you are going to invest in the stock market, as I said before, you must have an exit strategy to protect your assets.One option is timing the market. You will read every where that you cannot time the stock market. Truthfully, no one can predict which way the market will go on any given day. BUT, there are ways to see trends in the market, either up or down (and sometimes sideways). Once you are able to identify these trends you can have your money in the market when it is going up and have your money sitting safely on the sidelines when the market is going down.

Over the last ten years I have looked at a number of stock market timing systems. None of them will get you into the market at the exact bottom, nor will they get out at the top, but they will get you in and out somewhere in between so that you can walk away with a profit and most of them will have you out of the market when it is correcting itself.

Active trading like this gives the average investor a tremendous advantage over the person who buys a stock then “hopes for the best”.

My suggestion is to do an internet search for “stock market timing” and take a look at the various programs out there. Look at their track record, consider how many times they have you switching in and out of the market (you do not want to be jumping in and out every few days) and the cost for the service.Find one that meets your investing needs and give it a try. You will find that you are able to sleep much better at night.

Risk and Patience in Stock Market

2008-10-31T06:55:00.000-07:00

You often hear the term “Risk Management” in tradings and stock markets. This article will not explaining the tenets of Risk Management, but together with the concept of patience, this paper will be showing you the potential role of risk and patience in evading stock market and trading problems.

In a scenario where the market comes to terms with a steep fall, some experts cannot help but analyze the situation. This is one article where Trade and Market experts expressed their valid opinions in such a scenario. First it is safe to identify that there were many factors including high leverage positions, lesser liquidity, rich valuations, FII selling, excesses in select market segments and rising global concerns among others that could lead to a steep fall in the domestic markets.

In a steep market fall, the following are some of the lessons that are learned. One of the obvious learnings for investors is to avoid leveraged positions vis-a-vis high exposure in the futures and options segment. Gul Teckchandani, an Investment Advisor, explains, "Avoid leverage. I've been saying that people who do F&O trading have a pathetic future."

Anoop Bhaskar, CIO, UTI Mutual Fund, adds, "Investors have to limit their expectations and cannot think of the markets as a 100-meter sprint. It is a marathon and you have to be patient." To state it simply, look at a longer term of over a year.

Vikas Khemani, Co-Head, institutional equities, Edelweiss Capital, says that “The other one deals with risks and rewards. Markets are driven by greed and fear. Markets rise, greed grows. When reward per unit of risk is high as is the case now, investors do not take risk. Investors are not looking at risk but are focusing only on returns. Risk factor should be borne in mind before investing. In markets like these, it is equally important to remember how much you can lose and not just focus on how much you can make."

One of the good considerations of investors, assuming that there may still be some downside left, is to examine the indices. If you are an investor and you see a fall in the popular indices or share prices across the board, you should not necessarily interpret that things have changed. It could just be an indication that the fall has corrected the excesses that existed in various pockets. But, more importantly, what it also tries to establish is that quality growth stocks can now be bought at reasonably fair valuations. In a wider angle, the price-to-earnings (PE) ratio of the market has fallen from 22 times to 17-18 times estimated FY09 earnings. And, given that corporate earnings are likely to rise between 18-25 per cent a year, over the next two years, the PEG (PE to growth) ratio at under one time spells comfort. A ratio of under one, to an extent and largely applicable to non-commodity stocks, indicates that valuations are not exorbitant.

But before investing in stocks and making deals with the sectors, it is important to note that the next three to six months or a bit more could be painful given that some uncertainties still exist. Hence, a long-term perspective of three to five years is most ideal.

With that in mind and also the macro environment, it's advisable to play safe by investing in companies with exposure to domestic consumption or investment plays. For example, companies functioning in the infrastructure and construction, banking and financial services, retail, telecom, entertainment, capital goods and engineering, and FMCG space, are better placed than sectors like information technology or textile exports, where companies derive a large chunk of their revenues from countries like the US. A firm financial status of a nation, uncertainty regarding IT budgets of US-based companies and cost pressures (rising wages) are among the factors that are weighing heavily on domestic IT stocks. The current situation suggests that good days are far from actualization.

As a contrarian strategy, investing in companies from the automobile industry can prove to be beneficial and perhaps capable of establishing a boost to overall returns. The reasons for the contrarian strategy anchors on the belief that sooner or later, given the rising interest rate differential between interest rates, the benign domestic inflation and subdued crude prices (under $90 a barrel), the RBI may be pushed to lower interest rates. Should that happen, it could translate to further growth for car companies.

Prudent stock picking can help achieve better returns. So, be disciplined, don't over leverage or take higher risks, maintain your asset allocation as per your long-term goals, be patient and be discreet in picking stocks, then you will reap benefits like never before!

dangers of online stock market trading

2008-10-28T10:29:00.000-07:00

Online stock market trading has made it possible for millions of individuals, especially those who are not keen on investing in stock the traditional way, to play the stock market game. Almost anyone, can participate in online stock market trading.

Online stock market trading has made the business of trading easier, faster, and cheaper. An investor who does online stock market trading will not need to call his broker to conduct business. Stock market trading using online applications like the internet has made stock market trading more efficient, secure and manageable to a lot of retail stock market investors.

But online stock market trading has many dangers and if you are nit careful you could end up losing instead of earning lost of money. Needless to say, investing in stocks market trading is a risky business.

Online stock markets trading allow individuals to participate in the stock markets at greater speed. But because of this, it has also become easier to make investment mistakes. Therefore, the fundamentals of smart should still be applied in online stock market trading to avoid falling into traps.

New online stock market traders think that they could survive in online stock market trading without any investment skills and knowledge is because markets have been bullish recently. Like in traditional stock market trading, the first thing you have to do is to arm yourself with basic information about stock market trading and the company you’re investing into so as to avoid “gambling.”

What potential online stock market investors need to realize is that online stock market trading is really no different from traditional stock market trading. The web hasn't changed the fundamentals of smart investing it has only made it easier to invest. investors should still have a set of rules and guidelines to help them avoid the dangers of online stock market trading.

To avoid such risks, you must diversify your portfolio. Basically, it means buying a little bit of a lot of different types of stocks and bonds. It is a good idea to have some stocks in the technology sector, telecommunications, biomedical, and consumer corporations.

There are also companies that offer "safety stocks". It will be a sound decision to have several shares of companies such as this in your portfolio. This is because such stocks rarely fluctuate and most often offer a slow and steady growth, thus giving you an assurance in your investments.

These online stock market brokers or stock market websites, as they are called, also contains a lot of additional services in their websites. They can provide online stock market traders with stock market information, and other relevant insights.

Guide to stock market depressions

2008-10-28T10:28:00.000-07:00

10 Worst Stock Market Crashes

10th Worst Stock Market Crash (1932 – 1933):
This crash required the longest recovery time of all the 10 crashes. The combination of the tech bubble bursting and the September 11th terrorist attack served a deadly blow to the stock market, but relative to markets past, this was a minor one.
Date Started: 1/15/2000
Date Ended: 10/9/2002

Total Days: 999
Starting DJIA: 11,792.98
Ending DJIA: 7,286.27
Total Loss: -37.8%

9th Worst Stock Market Crash (1916 – 1917):
This market suffered about a 40% loss.
Date Started: 11/21/1916
Date Ended: 12/19/1917
Total Days: 393
Starting DJIA: 110.15
Ending DJIA: 65.95
Total Loss: -40.1%

8th Worst Stock Market Crash (1939 to 1942):
It was one of the most grueling. It took nearly 3 years to recover from this crash! With the attack on Pearl Harbor, the markets had a very tough time.
Date Started: 9/12/1939
Date Ended: 4/28/1942

Total Days: 959
Starting DJIA: 155.92
Ending DJIA: 92.92
Total Loss: -40.4%

7th Worst Stock Market Crash (1973-1974):
Another long market crash -one that many people still remember (think Vietnam and the Watergate scandal). This crash lasted for 694 days before bottoming out.
Date Started: 1/11/1973
Date Ended: 12/06/1974
Total Days: 694
Starting DJIA: 1051.70
Ending DJIA: 577.60
Total Loss: -45.1%

6th Worst Stock Market Crash (1901 – 1903):
This is the oldest crash to make the list (DJIA records are not available before 1900).
Date Started: 6/17/1901
Date Ended: 11/9/1903
Total Days: 875
Starting DJIA: 57.33
Ending DJIA: 30.88
Total Loss: -46.1%

The 5th worst stock market Crash (1919 – 1921):
This crash followed a post war boom (Stock prices rose 51%). After the crash bottomed out in August of 1921, this decade saw tremendous growth in the stock market and the economy (often called the roaring twenties).
Date Started: 11/3/1919
Date Ended: 8/24/1921

Total Days: 660
Starting DJIA: 119.62
Ending DJIA: 63.9
Total Loss: -46.6%

The 4th worst stock market crash in U.S. History
Although this is the shortest market crash observed, it was a deadly one. Investors saw almost half their money disappear in just two months. This crash started the "Great Depression."
Date Started: 9/3/1929
Date Ended: 11/13/1929

Total Days: 71
Starting DJIA: 381.17
Ending DJIA: 198.69
Total Loss: -47.9%

3rd Worst Stock Market Crash (1906 – 1907):
This crash was called the "Panic of 1907." The U.S. Treasury department bought 36 million dollars worth of government bonds to offset the decline
Date Started: 1/19/1906
Date Ended: 11/15/1907

Total Days: 665
Starting DJIA: 75.45
Ending DJIA: 38.83
Total Loss: -48.5%

2nd Worst Stock Market Crash (1937 – 1938):
Just when investors thought the market was finally good again, following a recovery of almost half of the great depression losses, the market plunged again due to war scare and Wall street scandals.
Date Started: 3/10/1937
Date Ended: 3/31/1938

Total Days: 386
Starting DJIA: 194.40
Ending DJIA: 98.95
Total Loss: -49.1%

Worst Stock Market Crash Ever:
1932 Stock Market Crash:
Investors lost 86% of their money over this 813 day beast. This market crash combined with the 1929 crash, made up the great depression. The full recovery didn't take place until 1954.
Date Started: 4/17/1930
Date Ended: 7/8/1932

Total Days: 813
Starting DJIA: 294.07
Ending DJIA: 41.22
Total Loss: -86.0%

Stock Market Information

2008-10-28T10:27:00.000-07:00

What do you generally need when you plan to invest in stocks? What you need is information. You don’t want to put your money in investment that will have high risk of losses and little amount of return. What you need is to learn if these risks of losses are high and that there are little potential of earning. When the information is available, you can now evaluate. Will the particular company worth your money? What are the potential returns if you buy shares of stock in the company? How much my stock is worth in the future? These and more questions need to be answered before you even buy the stocks at hand. Stock market information then is essential in stock trades and investment.

Stock market information can be taken in various resources. It could be in the television, newspapers, and Internet. The most used form of today is the Internet because it is not limited to news only. There are sites that provide stock market information in all angles. It could be about the company, the market, the industry, the events, and all others. You could even trade directly online with various online stock trades. But then again the initial step in all these is to be equipped with stock market information for all possibilities. If it seems that the condition is favorable, then you can invest in the stocks of the particular company you are eyeing.

Small Caps in Stock Market

Ironically, there are investors who target small caps in the stock market. Small cap stocks come from companies that have small market capitalization. By definition, market capitalization is the product of price of shares by the number of shares outstanding. In essence, the small caps are those shares that come from smaller companies. Big caps are labeled to large companies who correspondingly have big market capitalization. With these definitions, we understand that small cap have low valuation of shares but can have the potential to grow into big companies.

Small caps generally have limited volumes traders. This is because generally, a small company has the potential to lose easily unlike that of big companies. This goes to say that small cap have higher risks of losses than the large ones. However, this does not always follow. We all know that large companies are not faced with risks to close down. Likewise, small companies have the potential to grow into something big. Again what investors need to do is to get stock market information if small cap are his target investment. Those that have the potential to grow based on the given information can be a good investment.

However, because small cap have only few traders, it is not given too much attention in the stock market. There is little information that one can get about companies in small cap. But if you really want to invest in small cap you can get stock market information in the unlimited resources of the World Wide Web. Unlike before that information is limited to the television and newspapers, today you can already get access to information limitlessly.

To start with you can get small cap stock picks in the Featured Profiles. All best stock picks can be seen in this site. Resources can access in this starting point. And indeed, you will get the stock market information that you need from these resources.

Stock Screeners for Stock Market Success

2008-10-23T18:43:00.000-07:00

Stock screeners allow traders to screen the entire market for stocks that conform to certain criteria to meet the needs of the trader. They are indispensable for modern stock traders, and can be either web-based or stand-alone tools. One of the benefits of web-based screeners is that upgrades tend to be automatically available.

If you consider how stock screening was carried out some years ago before the advent of the modern online stock screener, you will begin to understand the benefits that these systems have provided in enabling trading opportunities to be identified in seconds. Think of pouring over the stock exchange sections of newspapers, of trying to make sense of radio, real-time stock quote machines and of charting graphs by hand.

These manual procedures allowed very few stocks to be examined in a given timeframe, and you would be lucky to spot any stock to meet your criteria, let alone compile a useful Watch List. By allowing today’s traders to set criteria and automatically screen out all companies that do meet these criteria, today’s stock screeners can examine tens of thousands of stocks in a very short time. Results are virtually instant.

The filtering criteria used can detect stocks suitable for growth, for short or long-term earnings, or whose values will increase in a relatively short period of time. Using technical criteria to spot key reversals and breakouts can boost your stock earnings several-fold. If a trader feels a specific criterion to be important, then the stock screener will find a list of stocks that fit, and if several criteria are used in the same search, stocks with very specific properties can be identified.

There are two specific types of screening that can be carried out: by use of either fundamental or of technical criteria, and each can be made available either as end of day or real time intraday screening. Most normal stock screeners utilize fundamental criteria, although elements of technical analysis can also be included to fine tune the screening.

So how should these screeners be used? Let’s have a look at the technical criteria that can be used in filtering the stocks that you want on your Watch List. You could start by trying to find trending stocks, or those that will break out above or through resistance levels. The criteria to use in your filtration in order to screen for these could include:

Stock trending up

Rising on unusual volume

Price crossed above resistance line

Price has touched support line (It is likely to climb again)

Price has reached new highs

Many of the fundamental screeners can be obtained free although if you want a real-time technical screener then you will likely have to pay a nominal fee. However, although it is normal for stock screeners to be predominantly one or the other, there are screeners available that can be used with both fundamental and technical criteria. This expands the type of screening available to you, and you should never buy a stock unless both the fundamental and technical criteria are both positive for the stock. You will achieve better results if you screen the stocks for both types of criteria, and for that you will need either a combined stock screener, or one of each type.

Stock screeners are essential for screening in today’s markets because most professionals actually underperform the market due to human influences. A machine-based model can filter out human weakness, such as believing press forecasts, and produce better results assuming that the criteria, or variables uses, are those that affect the direction of stock prices in the future.

Given that is so, stock screeners are a must for the modern investment professional and novice alike.

Stock Market Winners

2008-10-21T06:19:00.000-07:00

Every new investor would like to enjoy the continuous winning spree, but such a dream remains short-lived. Remember you can never the boss the market, it will always boss you. Its collective strength is more than your individual strength. But if you follow proper rules of the game, it allows you to play with considerable freedom and you can score a few goals and may be awarded with some 'penalty corners' with the possibility of converting them into goals again. To the day traders, the stalwarts of the game, the area is both heaven and hell. The recent downward slide in the indices has blown off many speculators and day traders off their feet. Millions of dollars were lost within a week. The investors, who had enjoyed highly rewarding 6-7 months, were suddenly taken aback and majority of them lost good chunks of the gains made during that period. A careful investor, therefore, needs to device ways and means to protect oneself, from the abrupt swings of the index. One needs to plan the investments prudently, and the tried and tested rules of the game demand that it is better to keep the long-term interests in mind, than remain jubilant for a short time, through guess works.

Some of the options to remain safe with investments are:

The long-term perspective! You need to cultivate the habit to stay invested. Temptation is so strong; many investors just neglect this advice and pay the price. Such investors have daubed the color of speculation and gambling on the walls of the exchange. Much better, those who desperately seek wealth attend horse races and visit casinos.

The timing! You are in the serious business of finance. Do not ape the astrologer. Do not wait for the high tide or the low tide before deciding to take the bath! As a long-term investor, try to focus on the true worth of a share and then decide whether to invest or not in that particular company. Let the market swings not upset you. If at every swing you sacrifice a part of crop of hair on your head, soon you will be bald. Take early, proper decisions to invest.

Your own homework! You are the best researcher and analyst. Have confidence in your judgment. You need to know the fundamental value of the share that you are buying. The PE ratio is not the be all and end all of the investment. Low PE should not prompt you to make the investment, and the high PE rate is not an automatic choice to take an unfavorable investment decisions. Many important forces like, debt-equity ratio, interest coverage ratio, the quality of management and break-up value of the share merit due consideration.

Penny-wise and pound foolish! Do not be carried away by attractions. Penny stock is one such item. When the index is rising, this one looks good, sometimes very good as it rises faster. When the market falls, the investor stands nowhere. Invest in only those shares where the basics of a company are sound. Tips are no faultless aphorisms. These tips are sometimes planted deliberately

Do not panic! Avoid hassles off fast buying and selling. Go by the pre-decided target and stick to it. Do not be carried away by the opinions expressed in various journals, TV channels and research bulletins of the brokers. Rely on the fundamentals. You have with you a group of shares that are chosen by you for investment. Some appreciate fast, some are stationary and some depreciate. Sell the losers and let the winning share continue to enjoy its fortune. As for the losing one, never hesitate to sell it but before that make a detailed study of the company and try to identify the weaknesses whether it is of short-term nature or will have long tem implications. In the later case, get the share out of your kitty so that your losses are minimal. Find the suitable substitute to fill its place.

The wise old saying goes, "Go placidly amidst the noise and din." The sun never rises and sets in a hurry. He takes the predetermined time. Your investment decisions needs to be like that! The world salutes the winner.

Stock Market Forecasts

2008-10-21T06:18:00.000-07:00

Rely on your well-studied conclusions and stick to them

A youth in deep love fell sick. How was he cured? The poet writes,

"Half the cure goes to the credit of knowledgeable doctor's medical research,
Half to her magical touch!

Similar is the case with the stock market forecasts. Your research, analytical abilities, deep knowledge about the history of the goings on in the exchange, your regular reading of the articles in periodicals, all these will add to your understanding of the issues, but will never provide accurate and reliable conclusions. When the ocean is calm, the swimmer is not afraid to take the plunge. But when it is turbulent, only the experts will have the courage to have a go at it. When the going is smooth, investors buy and sell with confidence. Panic prevails when the exchange is volatile. At this time, any forecast and the investments on the basis of such predictions are fraught with grave risks. Give credence to the realities, the permanent factors, not the variable ones, when to you decide upon investments. Some of the possible strategies to deal with the situation are:

You see speculators swarming the exchange, but the exchange does not belong to them. It is the realm of the practical people, those who believe in long term investing. When market crashes, the speculators bite the dust.

Have no tension about the price movements. You have decided to buy a share, you have decided about its limitations, you have pre-fixed the margin at which you have to sell it-that's all. Fear about the temporary fluctuations is futile. The day to day calculations that 'I have gained this much or I have lost this much,' are meaningless. You need to take care as and when a particular share is continuously on the slide. You need to go into the root cause, and if necessary take an ad-hoc decision about selling the share, from among the many on which your future hopes lay. With this decision, you minimize your losses.

Predictions based on research are differed from wild guesses made on whims and fancies. The creditability of the researched material is not to be relied upon completely, as more than one factor influence the share price. Wild guesses have no basis and the sale and purchase that you do on haunches is nothing but gambling. You may gain or lose. This approach is not meant for the ones who wish to make a permanent profitable career out of the dealings in the exchange. Stock market corrections are not to be confused with the predictions on the share prices. But keep a watch on the share, whether the price fall is due to corrections or due to degeneration. You need to study the current profile of the company and arrive at your own conclusions, in consultations with the experts on the subject.

When you stop trusting those experts who claim to make accurate predictions in shares, know that it is the beginning of knowledge for you. You can read such literature for the sake of enjoyment of their ignorance. If the predictions were to be accurate as per the claim, the person concerned would not have waited for the payment for the article published; he would have straightaway invested heavily in such shares to reap the benefit. Remember your broker is in the share business, and whether loss or gain, he gets his brokerage for each trade. Mailing literature to you regularly is part of his professional job, and business-promotion strategy. He is promoting the company while claiming to promote your interests.

Remember, the forecast could be a trap. Winning is a matter of your application and study. Your conclusions are your precious assets. Work on them and stick to them.

The Stock Market Drop

2008-10-21T06:17:00.000-07:00

Imagine your friends laughing when you say you made a lot of money as the stock market dropped. Then imagine their faces when you show them your incredible gains. They won't laugh any more. They'll beg for help.

Everybody loves it when the stock market goes up. Many people panic when it falls. But they don't need to. An American market exists that allows traders to make money regardless of whether stocks are going up or down.

Professional investors know how to hedge their bet. They take precautions because they know the economy will move through various cycles. What goes up will eventually come down.

The common man and woman are different. They assume investing is difficult so they don't take time to learn simple methods that might benefit their lifelong effort to get ahead. They throw their money into mutual funds or a 401-K account and hope for the best. This may work when things are going well in the financial markets. In a crisis, this method will be the cause of many a sleepless night.

Every family could use some extra money each month. And it's not a pipe dream, if you are capable of taking simple direction and absorbing new information.

Here's how you to make money when the stock market falls: hedge your bet by trading the mini-sized Dow Jones futures market. I know what you're thinking. Futures?! Isn't that a great way to lose money? My answer: Have you ever lost money in the stock market?

Today's economic conditions should be a reminder that our money is always at risk. Yesterday's victories may be tomorrow's defeats. All the more reason to hedge - always - your most important investments.

The mini-sized Dow Jones electronic market is global and stays open for business throughout the night and into the next day. It closes briefly at the end of each business day, all day Saturday, then opens again late Sunday afternoon. Plenty of time to access and manage your online account.

One significant reason for learning this market is its simplicity. You can learn to trade the market up and down - and it's all legal. For people who have only traded stocks, it is sometimes difficult to understand how a futures trader can make money when a market drops. But it's true, it can be done, without breaking any laws.

This is not true of some "short selling" that takes place in the stock market. Some rogue brokerages break Securities and Exchange Commission rules and in the process rob good, honest investors. That is not what I'm suggesting. But that illegal practice is precisely why you would be wise to learn how to hedge your stock portfolio with the mini-sized Dow Jones futures market.

There are many tutorials to help you understand how to trade this market. Google "mini-sized Dow Jones" or "the mini-Dow" and you'll have plenty to choose from.

But don't fall for offers that ask you to pay big bucks for software and platforms you won't need. I'm not suggesting you day trade - not at first anyway. So choose a guidebook that is modestly priced and then learn as much as you can from it before buying your next book.

The Chicago Board of Trade and the CME Group Exchange websites offer good, free information to help you understand the basics of trading futures. Take full advantage.

Finally, be a specialist. Master the one market that can do you the most good. The mini-sized Dow Jones stock index will be enormously beneficial if you have long-term or short-term stock investments. You'll soon realize that by concentrating on one market you don't have to be Warren Buffet to make smart moves.

Profits From The Share Market

2008-10-21T06:16:00.000-07:00

The stock market is a place, which creates a lot of speculation, dreams and much more. How many people really make their dream a into a reality? It is actually a matter of great concern. However, it is up to you how you perceive the market from your side and experience.

The main purpose of investing has always been the same, i.e., to build a future of financial stability. Investment options provide you the opportunity to earn maximum returns from your hard earned money. Invest now and earn profits in a small time period. Yes, the Internet based stock trading has changed the whole scenario. Now, you only need to click a few mouse buttons and you are done. With the advent of the Internet, the whole world has become small and interconnected. Therefore, even if you are present in any corner of the world, you can invest in the share market and can reap the benefits in the best possible way.

Though the stock market is as volatile as before, today with advanced market strategy and online tools, anyone can trade without facing any risks. Today, with more competition in the investment world, trading industries are offering impeccable services to attract more and more investors from the market. However, consumers are enjoying the benefits from the company. So, if you also want a future financial security then start investing in stocks now.

The procedure for online trading is very simple: investors need to open an account online. And for that, they are required to search major industry so as to avail more and more services at a very low commission rate. To find the best company, a comprehensive market survey is must. Browse some of the major stock company websites and then compare their services; choose the best company as per your need. Besides this, your online broker also plays a very crucial role in trading. Your stockbroker not only does all kinds of online transactions as per your command, he also provides latest market updates such as all major marker shares that are being launched in the market; how and when to buy and sell shares so as to gain maximum profits, etc.

Online stock trading provides a clear picture about the market scenario, because there is no middleman involved and traders can access all kinds of information from the company website. You can trade at any time and this is again an added advantage of Internet based trading. The advent of easy and effortless trading system combined with intuitive stock trading company websites -- things have become much easier than ever before.

However, the key to successful trading depends on your planning, market knowledge, decision-making capacity and above all your attitude towards the market. For all those who are investing for the first time, it is always beneficial to discuss with experienced traders. And if you have no contacts with traders who are already in this business, then don't worry - consult with online financial experts. These professionals can really help you in planning and investing money in the right direction.

Another important point is your market knowledge and gaining knowledge about the market. Try to understand the market mood and then trade accordingly. You can access open resources that are available on the net. Market analysis is a must before the buying and selling of stocks. Therefore, it is inevitable to learn first and then reap the benefits from the market. There are many investors, who with their positive attitude and knowledge are making profits from the same market. So, what are you waiting for? Invest now and live your whole life happily.

Stock Broker Listings

2008-10-17T12:04:00.000-07:00

The rapport amongst stock exchanges like New York, London, Singapore, Hong Kong, Malaysia and over lapping of trading at all the stock exchanges all around the world has made investors aware of the importance of listings. The internet technology has made stock broker listing an essentiality which cannot be overlooked.

Stock brokers are an indispensable lot for those who have their hands on both the purse and the pulse of the stock market. They represent the parent investor and deal with the changes taking place in stock markets in such a way that investor is safe and sound as far as returns on investments is concerned. They maintain and sustain steady relationship with the investor family.

With the spread of stock market business, investors need to identify brokers in other parts of the world who would represent their clients as if operating from their native country. Also, the local and the resident stock broker could deal with affairs stock exchanges elsewhere in the world at par with local or national conditions.

Listings are essential for investors because it provides choice and independence. Internet has come truly handy with the appropriate stock broker and stock market search box becoming available. It is a "custom search engine" by Google and covers the very best of stock market websites.

The investors can have access to highly customized stock market search results. There would be no need to go through millions of unrelated pages. Stock brokerage listing serves as a tallow page in the directory the investor is free from unwanted hassles and is more organized.

Brokers have their individual skill sets and knack for controlling the stock market. Just as a person has different cooks, tailors, hair dressers, etc to suit individual requirements, an investor also need to seek advice of different stock brokers who have wisdom and experience in guiding investors.

But beware, usually it is not feasible to hire too many brokers to maintain diverse portfolio in different sectors. Thus it is a good idea to look up good stock broking firms from the broker listings available in the local yellow pages or on the internet.

Any stock broker listings and the information provided under it can be created, updated and retained till nine years. It can be refreshed and updated while confining it to a central source. This usually goes well with investors who might have stored brokers information at various sources. Thus keeping information in this manner becomes much unorganized. Moreover, it also poses a risk that the information could be stolen, tampered or affected adversely by any unknown or unexpected circumstances.
Stock broker listings at a centralized place are much safer and efficient manner. The centralized storage data centers are usually equipped with state-of-art technology.

In conclusion, these listings are constantly updated and new entrants are also constantly updated. Thus, if you look up stock brokers for any local area under these listings, you would find more update information rather than digging into your old databases.

Discount Stock Brokers

2008-10-17T12:03:00.002-07:00

In the days before discount brokers, only the wealthy invested in stocks. After all, before discount stock brokers, commissions on trades were typically over $100.

In order to get your commission down to 1 percent, as recommended, you'd have to buy $10,000 worth of stock at a time.

The Father of All Discount Stock Brokers - Charles Schwab

Luckily, there came Charles Schwab, first of the discount brokers. His namesake company slashed commissions down to around $40 per trade, which made it more affordable for middle class people to invest.

As more discount brokers entered the field, Charles Schwab cut rates even further. Schwab was always looking for ways to streamline operations, cut costs, and pass the savings on to customers. These strategies are what made them the greatest of all discount stock brokers in the pre-internet age.

Dot-Com Boom - A Real Boom for Discount Stock Brokers

Without Charles Schwab, the person and company, stock trading probably would have forever remained the domain of the rich.

But as Schwab ushered in an entire crop of discount brokers, these new firms were always looking for ways to innovate. One of these up-start firms was E-Trade, the first of the internet-based discount brokers.

By not even having physical offices or human "brokers" sitting behind desks, E-Trade was able to cut costs even further. As other discount stock brokers went online, competition intensified and the cost of trades continued to go down.

Soon, everyone with an internet connection and a little extra money was checking out the online discount brokers, opening accounts, and making easy money during the fabled dot-com boom.

Now You Have Your Pick of Discount Stock Brokers

There are now dozens of online brokers to choose from. E-Trade, Ameritrade (now known as TD Ameritrade, after acquiring rival TD Waterhouse), and Charles Schwab have been joined by new brokers such as Options Xpress, Fidelity, FirstTrade, ScottTrade, and Sharebuilder.

Although the number of web-based brokers might seem staggering at first, the good news is that the crowded market place is great for the consumer. The price of trades with discount brokers has been pushed down to around $7.

A few discount stock brokers charge more than this, but in doing so, they offer extra perks. Competition has led many discount brokers to offer nearly full-service level features.

What About the Offline Discount Stock Brokers?

The bad news, if there is any, is that brick-and-mortar discount brokers have become pretty much a thing of the past. After all, it's extremely difficult to compete with the low prices of the online brokers when you have to maintain an office in the real world.

Most offline brokers are "full-service brokers," meaning you pay them to give you advice. For interested investors, this advice certainly isn't worth paying for. In fact, the average full-service broker knows a lot less about the market than you probably do if you're reading this.

Take Edward Jones, for example. It's advertising campaign is designed to send the message that "investing is hard" and that "only professionals should do it." Yet if you look online, you will see that Edward Jones aggressively markets its offices as franchise opportunities.

A kid right out of college with well-heeled parents could open an Edward Jones in your neighborhood - do you want to pay for his advice?

If you're uncomfortable making tough investment decisions, look into some diversified mutual funds. If you want to be in stocks, you probably don't need a full-service broker to hold your hand.

Investigate the different discount stock brokers and find the one that's right for you.

Role Of Online Stock Brokers

2008-10-17T12:03:00.001-07:00

In this ever-fluctuating financial world, it is very difficult to know the best way to go about making your money work for you. For generations the stock exchange has given consumers the opportunity to invest their money into companies that they felt would perform solidly, thus increasing the worth of their stock. In essence, the stock market acts as a facilitator between buyers and sellers, as they exchange stock that they hold in companies.

These companies use the money they receive from their investors to further their business and increase profits; increased profit means a higher worth for the stock. And round and round it goes. Traditionally, those looking to invest went to a stock broker in any number of brokerage companies who would assist the investor in the buying and selling of stock and the building of their financial portfolio.

But in this age of the Internet, investors need only turn on their computer to be linked into the stock exchange. Subsequently, to keep pace with this changing economy, online stock brokers entered into this new world of finance in order to assist virtual customers in achieving their financial goals.

Online stock brokers work within investment companies that offer online resources as either their entire service or as part of their traditional brokerage service. Some of the more commonly used online stock brokers are Ameritrade, ETrade Financial, Fidelity, and Schwab. Such brokers operate much as traditional brokers - assessing the investor's financial situation, the financial plan they want to execute, and the stocks in which they are interested.

Working through these online stock brokers, investors create an account where they can access their financial information at the click of a mouse. Online brokerage houses offer an extensive amount of information in order for investors to make informed decisions regarding their trades; stock quotes are kept scrolling at all times on the website; historical performance on each stock can be accessed; and in-depth information regarding each company's history and financial status is available for investors to perform research prior to investing.

Investors turn to online trading and online stock brokers for a variety of benefits, not the least of which is low broker fees; online broker fees generally run between $7 and $10 per trade. There is also the control investors have to make decisions on behalf of their own portfolio.

Investors are able to choose what stocks they want to buy - regardless of what the stock broker prefers. Online stock brokers - unlike traditional stock brokers - do not exert much control over the stocks of the investor. Online trading offers investors a whole new level of independence.

The world of investment has changed; no longer are investors required to physically visit their stock brokers in order to examine their portfolio, set financial goals, and buy and sell commodities. Today's savvy investors work from their computers along with online stock brokers in order to be hands-on participants in their own financial future.

Stock Market Wisdom

2008-10-13T10:27:00.000-07:00

Once upon a time, there was a young hare, a hotshot rabbit investor who would always brag to anyone that would listen and that he was the smartest, fastest, best performing investor in the world. He would constantly tease the old tortoise about his slow, solid investment style.

Then, one day, the annoyed tortoise answered back: "There is no denying that you are very aggressive in your investment strategy. You take very high risks and get high returns. But even you can be beaten."

The young hare squealed with laughter. "Beaten? By whom? Surely not by you. I bet there's nobody in the world that can win against me, because I'm so good. If you think that you can beat me, why don't you try?"

Provoked by such bragging, the tortoise accepted the challenge. Each of them put an equal amount of money into a new account and the race was on. The hare yawned sleepily as the meek tortoise trudged slowly off.

As might be expected, the tortoise invested in high quality blue chips, companies with household names.

The hare, as anticipated, invested his money in dotcom stocks and options.

You know the story. The aggressive hare jumped out to a big early lead. In a rising market, the highest risk stocks perform the best. This is called momentum investing. Money flows into the investments that are performing the best.

The hare, having jumped out to such a large early lead, stopped paying attention to the market environment. Basically, he fell asleep. He thought to himself, "I'll have 40 winks and still remain way ahead of that stupid old turtle."

The hare awoke from his sleep and gazed around looking for the tortoise, who was nowhere in sight. Unfortunately, while he was sleeping, dreaming about what he would do with his winnings, the market turned against him.

His very high-risk portfolio had taken a terrible beating and was now practically worthless.

The tortoise, a Warren Buffett style investor, had passed the sleeping rabbit long ago. He had been plodding forward, steadily, since the beginning of the contest. The Tortoise never for a moment stopped, but went on with a slow but steady pace straight to the end of the course.

The hare realized that the tortoise was way ahead of him, and away he dashed. He leaped and bounded while gasping for breath, but it was too late. The tortoise had beaten him.

There are two very important lessons to be learned here.

First – slow and steady wins the race.

Second – never confuse your own intelligence with a bull market.

Stock Market Investing - Top 10 List

2008-10-13T10:25:00.000-07:00

The 10 dumbest things investors say to advisors.

1} When my investment gets back up to what I paid, get me out.

This is surely a big mistake. That stock has absolutely no idea that you're waiting for it to go up so that you can sell.

2}The stock is selling at $3.00 a share. How much can I lose?

$3 multiplied by the number of shares.
Oh yeah, don’t forget to add in commission.

3} I want to buy shares of XYZ Company. Three years ago, they were selling at $60; now the stock selling at $5.

You can actually make a lot of money investing in good companies when their stocks are out of favor (go to dictionary – look up: “Warren Buffett”). You cannot make money buying junk just because it’s cheap. (Same dictionary – lookup “cheap junk”). If this creates confusion – please see item 2.

4} The stock is up 10 % this past month.

It’s too high, I can’t buy it now. Have you ever heard of a long-term uptrend? Just because you missed the bottom doesn’t mean you missed the boat. I’ve heard that the shortest time measurable by man is the time between when it’s too soon to buy a stock and when it’s too late.

5} I paid $60 for that stock 3 years ago. Today it’s selling at $4.

I can’t afford to sell. I don’t want to lose so much. I’m just guessing here, but did you say the same thing at $30? $20?

6} I bought the stock at $10 and now it’s $35. I have too much profit.

I can’t sell here. I don’t want to pay so much in taxes. My wish for everybody is that next year you have more than twice the profits and that you have to pay twice as much in taxes.

7} I never sell an investment at a loss. I’m a long-term investor. Eventually, they always come back.

Ever heard of ENRON? Pan American Airlines? Polaroid? Penn Central Railroad? If I were to be your advisor for the next 20 years, I GUARANTEE you that you will have losses. Losses are a very important part of a successful investment program. Since the perfect human hasn’t been created yet, the perfect advisor hasn’t been created yet. Expect to have some losses and plan accordingly.

8} Sell my utilities; buy DOTCOMS.

Stock brokers heard this, a lot, just a few short years ago. Every up cycle investment advisors are instructed to sell safe, but dull investments and buy something with sex appeal that’s moving. The worst possible thing has happened – one of the clients' friends or acquaintances is making more money than they are. It’s the CINDERELLA story. They’ll look great for a short time. Then, the clock strikes “OVER” and their limo turns back into a pumpkin.

9} I know as much about the stock market as any broker.

What would you think of me if I came to your place of business and told you that I know as much about your business as you do? Can you outperform a professional in the short run? Absolutely. You would never say this to your doctor, lawyer or accountant. You wouldn’t even say that to your butcher or your barber. Stock market investing is the only profession where the amateurs think they know as much as the professionals because they might have picked a winner at one time.

10} That total stranger made the investment sound like such a great idea.

Of course he did. That’s his job. Do you remember your mother telling you “Don’t talk to strangers.”? When was the last time you ran with scissors? If you develop the practice of giving your money to strangers, sooner or later, you will come to harm. Or, as Al Capone used to say “Anybody found sleeping in the trunk of a car, deserves to be shot.”

Mastering Your Mind For Stock Market Profit

2008-10-09T09:56:00.001-07:00

The stock market is made up solely of buyers and sellers. These buyers and sellers may be super-huge, billion dollar institutions trading enormous amounts of money everyday or private individuals trading just one or two parcels of shares each year. Regardless, at its core, the market is made up 100% of people. People with emotions just like you and me.

You’ve no doubt heard the phrase, “History repeats itself”. Well, despite all of our technological achievements, we have still not mastered our emotions. History in the stock market always repeats itself because the markets are driven by two of the strongest human emotions, FEAR and GREED.

Markets boom and bust with cyclical regularity because of human nature. We are creatures of habit. For those who can accept this and learn to control their emotions, the rewards are outstanding. By recognising emotion in the markets, we can time our entry and exit strategies and profit from history repeating itself time and time again.

Investors like Warren Buffet recognise that investing is 80% psychological and only 20% mechanical. It doesn’t matter how good your system or strategy is. Unless you are mentally focused and as emotionless as possible, you will fail. This is much easier said than done, of course. Why? Because we spend our entire lives developing our psychological feelings towards money. These feelings are often referred to as Comfort Zones.

Comfort Zones

One of the most basic human needs is the feeling of Certainty. When we are certain of our surroundings we can rest easy and enjoy our lives. Uncertainty brings risk and makes us feel anxious and very uncomfortable. Since we were little children we have developed our comfort zones and we all have different comfort zones when it comes to money. Some of us feel that we must work very hard to make money. Others feel that they will never have money, or they don’t deserve to have money.

If you look at the wealthiest people in the world, very few live within these comfort zones. Their money comfort zones see them having an abundance of money. They believe that there is an enormous amount of money, more than enough for everyone to enjoy. They know that there are trillions of dollars circulating the world everyday looking for a home. They know how to make money and that making it is ridiculously simple.

Our emotion of certainty dictates our comfort zones. If we are certain that money is hard to make, then it will be, and we will be certain in our comfort zone. We would probably not be rich, but in our minds, we would be right. Alternatively, if we are certain that money is easy to make, and we just have to know how, than it will be easy to make, and we will be certain in our comfort zone.

Obviously, if your comfort zone has you believing that money is difficult to make, or some other negative feeling, then you will have to break out your comfort zone and climb into another one. When you do this, you will feel very uncertain. This can be very scary and is the reason why, despite all of the opportunities available, 95% of people end up broke or financially dependent when they reach 65 years of age.

The Future Of The Stock Market

2008-10-09T09:55:00.001-07:00

You have no doubt heard of the “Baby Boomers”, those individuals born between 1943 and 1963. Following World War II, Australia’s population grew at record levels. Australia was not alone in this phenomenon. The United States, New Zealand and Canada all experienced Baby Booms at a similar time.

The Baby Boomers are an important phenomenon to understand. They have had dramatic effects on society and will substantially impact the way the stock market performs over the next 20 years. For this reason, it is important to understand some of the background on this interesting group of people.

As mentioned, the Baby Boom was experienced in various countries around the world. Part of the reason for the “Boom” was that these countries were immigrant receivers and immigrants tend to be in their 20’s, the prime childbearing years. At its peak in 1957, the US boom hit 3.7 children per family. Canada hit its peak in 1959 with Canadian women averaging 4 offspring each; that was over 479,000 new births that year alone! Australia’s boom was not quite as big as the Canadian or US booms; however, we still have a disproportionate number of people who are today in their 40’s and 50’s. Following the Baby Boom, we had a Baby Bust. Far fewer children were born during the late sixties, leaving Australia with an asymmetrical population graph.

The Baby Bust group, born between 1964 and 1976 are a much smaller group than their predecessors and are commonly referred to as Generation X.

Baby Boomers are a very significant and important group. It is not that, individually, they are any different than any other group who preceded them, it’s just that there are so many of them. Due to their large numbers, Baby Boomers have had a significant impact on our society, making substantial changes as they grew. They have changed the economy, driven housing and other markets and transformed social attitudes and lifestyles.

In Australia and North America today, the fastest growing industries, apart from technology, are financial management, leisure activities and health care. It is very easy to see why. Boomers have been working all their adult lives, usually for someone else. They have raised their children and are now focusing on their retirement. They have had a magnificent time. They have not endured wars, or a depression like their parents and grandparents. They have enjoyed fantastic luxuries such as cars, world holidays and computers. They have been at the forefront of the age of discovery.

Unfortunately, the majority have not prepared themselves financially for their retirements, believing instead that like their parents, they would enjoy a comfortable pension from their employers and/or government. The stark realities are now coming to light. Everybody, especially the Boomers, must take responsibility for their financial futures. Our government will simply not be in a position to provide adequate pension incomes for a growing number of retirees. Today, for every person who is retired, there are four people working, providing income to the government. By 2025, there will be only 2 people working for every retiree. What’s more, the Boomers, as they start to retire, will live longer than any group before them, well into their 70’s and 80’s on average. As a result, it is up to each of us as individuals to take responsibility of our own personal financial planning.

The Australian government has made substantial improvements and preparations for the growing populations. They have introduced a compulsory superannuation scheme which all employers and employees must participate in and which is gradually rising in required contributions, but it will be too little, too late. The key to investment growth is time, a luxury many Boomers no longer possess.

Consider this fact, that at a return of 8% per annum, net of tax, an investment of $30,000 would require over 15 years to triple in value, not even considering the effects of inflation. Most investment strategies commonly promoted to the public boast returns of 4% to 10% per annum. We often see managed funds, superannuation schemes, bank term deposits and property investments offering such results. Many people consider these returns appropriate and even good! Unfortunately, many members of the public require a much greater return on their investments to adequately improve their financial positions before they retire (if they can ever afford to!).

In future issues we will explore ways of generating high returns and how to self manage your own super.

Dynamic Stock Market Content

2008-10-05T23:58:00.000-07:00

Dynamic stock market content can be gathered from hundreds if not thousands of Internet websites and blogs, not to mention TV and radio programs. Dynamic stock market content allows you to get a good picture of what's going on on Wall Street as well as other places around the planet. You will also get stacks of analysts' opinions and advice (some good, some bad) about how to trade, about what to put into your portfolio and what to do dump out of your portfolio.

When you are looking at dynamic stock market content, you should not pay overly much attention to the short term movements of stocks. Stock market activity is all too often driven by raw emotions of fear and greed, and the typical person is either too enthusiastic or too pessimistic about a given stock at a given time. Brokers on the floor of the exchanges have an obligation to make trades as their clients tell them to, and it's illegal for anyone to trade a stock without going through a licensed broker. However, brokers often also act like salesmen, giving "advice" that is misinformed or else represents a conflict of interest (they are trying to maximize their commission). They MUST do what their client tells them to do, but they often try to influence that command; so that coupled with people buying and selling on emotion rather than discipline and information can create a lot of crazy scenes in stock exchanges.

All good investors know that a person has to buy and sell with a long view in mind. This long view may comprise several weeks, a few months, a year, or lots of years. But successful investors don't care too much about the day to day dynamic stock market content; they are more interested in long-term trends and a security's historical performance. They look to the day to day activities only to keep abreast of these things; they are never controlled by it.

Other dynamic stock market information, as mentioned above, will come in through commentaries and articles written by or quoting supposed market gurus. If they or some mutual fund manager says that they are high on Stock X but don't recommend Stock Y, day trading investors will rush to buy or sell those stocks. This generates a great flurry of dynamic stock market content for the websites and programs, but it means little in the face of reality. Successful investors look at other factors to make their decisions. They look at a company's financial status (not necessarily profits) and strength or weakness; they look at the market sector as a whole that the company is in; they decide if a company's bid and ask prices may be too high or too low depending on their independent research into a company.

In sum, don't let all the dynamic stock market content control you. You will need to think for yourself, and while considering all the streaming information and piled-up data don't be controlled by it.

Impact of Oil Prices on the Stock Market

2008-10-05T23:48:00.000-07:00

Impact of oil prices on the stock market is inversely proportional. A shoot in oil prices leads to a nose dive in the stock market. And a decrease in oil price on an average leads to a higher stock market return. So, the effect of oil prices becomes predictable in the stock market. The effect is profound when the oil prices increase in the magnitude of 50% to 100% annually. The reasons being:

1. Any movement in the oil prices results in uncertainty in the stock market.

2. Higher the oil prices, higher the transportation, production and heating costs.

Say, a decrease in the oil prices by 10% in US will result in the expected return to double up on the stock market in the following month. The waves of the impact on the world market index will make its presence felt significantly. Though the stock market moves in the opposite direction with respect to oil prices, it is basically a one way traffic. The stock market returns has no impact on the crude oil prices.

The entire stock market does not get equally or at the same time affected by the fluctuation in the oil prices. It is rather subtle. The US industrial sectors that get most affected with rise in oil prices are:

1. The cyclical Services sector gets most negatively influenced. They constitute the general retailers, support services, media, entertainment, leisure, hotels and transport.

2. The sector which follows next in order is Cyclical Consumer goods. These include household goods, textiles, automobiles and parts.

3. The next negatively influenced sector is the Financials. They comprise of investment companies, banks, life, assurance, insurance, real estate, specialty and other finance.

During an oil price rise, it is advisable to hold on to energy stocks shift focus from the mass market general retailers. It is a rather straight forward approach. Rising oil prices results in the escalation in the prices of fuels and lubricants along with passenger transport mediums either by road or air. For example, it takes a cup of crude oil in the production of the plastic for a single disposable nappy.

0 Trading Strategies You Should Know Before Your Next Trade

2008-10-01T18:49:00.001-07:00

Would you like to see explosion of your trading profits in stock market?

Is it a challenge for you to squeeze out small profits and reduce losing trades I share market?

Here are some tips to help you to make better decisions every time you trade.
1. Successful traders develop a long-term strategy for their investments and trade only when specific criteria are met. Traders who go back and forth from one strategy to another are destroying their chances for success in investment. Discipline is the key success factor in stock market investment.

2. To enhance profits, you must do careful research and long-term strategic planning. The long-term strategy means developing your investment milestones and ensures that each trade adheres to these goals.

3. You need to develop specific criteria for your trades. Use historical prices and performance as a starting point to decide your buy and sell decision. Note your entry and exit strategies along with the results. Modify the plan as needed to improve the percentage of winning trades.

4. Analyze your risk bearing capacity along with he amount you can invest. Remember, a 20-year man can take more risk to get higher level of return but mid age homemaker with two daughters need to take a calculated risk. Don't be too aggressive in stock market investment.

5. Research and more study is an important tool in the successful stock trader's arsenal. These traders utilize stock charts, press releases, news articles, and other sources to detect trends in various industries as well as to make forecasts of individual stock.

6. Always, avoid bogus stock purchase programs to promises of doubling your profit in 3 months time because nobody can predict the market.

7. Take trading course; educate yourself with latest tools and techniques to improve your trading style and strategy.

8. Don't make investment decisions based on emotions. Most of the times, this is one of the worst decisions a trader can take. If you are seriously interested in investing to make profit, control your emotions and make fact-based trading decisions as per your own trading plan.

9. It's necessary to stick to your plan, to determine quality of your plan. You need to change plan after careful observation only.

10. Remember, stock market is neither a casino nor lottery.

ips In Getting Your Own Valuable Penny Stock Pick

2008-10-01T18:48:00.000-07:00

Balancing high expectations with the actual stocks being in trade can be quite a challenge for the new penny stock investor. It is no joke to be investing in penny stocks. But if you have the stamina to overcome your first quarter hurdle, you should be good for the next challenge.

In this field, factual data should be coupled with a rational conclusion. Even with the best penny stock pick can't compete with your decision.

When you get the feel of things, however, penny stock trading can be worth your investment. That is no myth and there are people who can tell you that it's even fun. So where do you start? Know the basics first. Here are five tips that are most important to get your excited.

- Don't be hasty in buying shares from ambiguous claims. Of course you wouldn't buy a product in a grocery store if the label doesn't say much about its content, would you? There may be phone calls and emails you'll be getting saying stuff about penny shares that are up for grabs. Verify this claim first. Verify the source of the information too. It is important in your penny stock pick to have track records and an accurate stock price before you buy a penny share. The point is, don't buy if the information you need is not given completely.

- The PE ratio principle is essential. This is a bit technical for you if you are just a beginner. PE stands for price to earnings ratio. The basic definition is that it's the value being set by the stock market per dollar per share of a company's annual earnings. Conduct a thorough research on this to get a better understanding of how it can be applied to your decision making.

- Do not trust hyped penny shares. Although it is true that press releases can pump up the value of a penny stock. But there are scams involved in this part of the trade and hype is often the favorite game. You should be confident enough of your penny stock pick to not get influenced by other stock broker's opinion. Sure you'll need these brokerage firms but your analysis is what matters most.

- Seek advice from credible sources. You decided to throw in your investments in your penny stock pick because it is your personal decision to. That means whatever risk you have, loss or gain is all yours for the taking. If someone else gives you an advice, make sure that they have traded their own money and have a good track record of successful transactions.

Nobody in the trading business can tell you how to make decisions. Nobody in the trading business can teach you penny stock wisdom. Nobody and that is a fact. Penny stock brokerage firms can give you advice and present you the hottest penny stock pick there is. Yes, that can be very helpful. But it's your money out there. Even the stock market doesn't own it.

Stock Market Data Grid - A Tool Which Promotes Efficiency

2008-10-01T18:47:00.000-07:00

One of the most lucrative markets in the world is the stock market. There are scores of investors and trading buying and selling stocks at any point of time when the market is open. This means there are countless strategies being played out in the market at any point of time. As the number of market participants increase, every trader will find that the time required for a transaction to go through also increases.

This is because of the lack of data processing or computing resources in the stock exchanges. The requirements of data processing has increased at such a rate that the conventional processors cannot handle the number of transactions coming through.

Data grid is a system that uses grid computing technique. Grid computing technique essentially utilizes the processing power of several computers that are connected to form a network. This network may be private public or also the internet. The current grid computing is done centrally where all the transactions are handled. This system crumbles when there are thousands of transactions being processed at once. The traders will experience downtime in such scenarios which is totally unexpected. If there is a grid that is the size of Europe, you need scores of computers connected in a network to process the data.

This can be expensive and cumbersome. Current developments are trying to make this process much cheaper by using the internet. At any point of time, there are millions of computers that are connected to the internet and are lying unused. If a part of the processing power can be utilized, then the load on the central administrator becomes less which reduces the risk of possible downtime. By employing this technique, exchanges can reduce the administrative costs of handling each transaction. Another advantage that this type of system has is scalability. The resources can be scaled up during peak hours of trading by utilising more computers connected to the internet. This type of system is however very complex to design and it is usually done in a phased manner.

Most of the exchanges have not implemented the latest system described above as this is still in the research phase where they are trying to validate its use. The more conventional approaches are using the computing facilities in the exchange itself. There are several systems that are idle at any point of time. The exchanges try to use these resources to reduce the operational time in settlement and clearing system. This kind of grid computing needs support at the software level that can allocate resources depending upon the various needs.

Managing data is one of the biggest challenges for the stock exchanges. Grid computing technology has addressed this challenge and has provided the ideal solution. It allows the stock exchange to share and manage distributed data with its traders much more efficiently. This efficiency translates to lesser time required for transactions between buyers and sellers and reduction of the costs involved for such transactions. The world is certainly becoming faster.

Stock Market Analysis is About More Than Just Buying and Selling Stocks

2008-09-27T07:59:00.001-07:00

When you want to begin really letting your money work for you, you will want to think about investing in the stock market. While this can be a risky venture, if you have some basic stock market education, you will be able to make smart decisions with your money. And you never know-you could hit the next big boom and have the chance to retire early.

While most people really have big dreams about hitting it big with the stock market, those are the people that will take the most risks and probably have the most money to lose. With the right stock market education, you can play it safe and still make a profit.

Firstly, you will want to consult a broker. This is your right hand man when in comes to investing in the stock market. Not only will he be able to suggest your next move, but since he works for you, you don't have to listen to him. If you want to make a move on your own, he'll do it for you. Generally though, your broker will have years of experience that will help you to decide what to need to invest in and what time to make that move.

Next, you will want to have stocks already in mind that you want to buy. You should start watching the market months before you even think about making a leap onto the market. This way, you will be able to spot trends in the stocks that you are following and this will clue you in on what time to buy. Consulting a broker before you are ready to invest is also wise so that you can get feel of how this process works.

Once you are in the stock market, don't worry about every little change. Stocks change at a moment's notice, often a dozen times or more during the day. If you think you are going to have a heart attack every time your stock drops, then maybe the stock market is not right for you.

The stock market education that you need is more than just "buy and sell" - the stock market is about patience and making the right moves at the right time. You have to be smart about the stock market in order to play it for profit. And if you worry too much, you are just going to put yourself in an early grave for no reason. Invest smart and you will be able to sit back and relax, watching the money build up.

Stock Market Education - How to Research Stocks

2008-09-27T07:57:00.000-07:00

It would be almost impossible to make a comprehensive list of all of the ways television and movies have mislead us or oversimplified things when it comes to performing complex tasks over the years, but if such a list existed, investing would likely be at or near the top. In Hollywood, every stock transaction is done on a whim thanks to a red hot stock tip gotten from someone on the inside or someone's crazy uncle who can see into the future. In reality, hot stock tips to exist, but even the hottest ones are researched meticulously so that those involved don't lose their shirts. Researching stocks is a bit of an art form, however, the Internet has made doing most of the heavy lifting easy. Here are a few tips for the amateur stock researcher to follow.

If you are a smart investor than you have a full service stock broker on speed dial that you can speak with at any time. Before you make the final decision to buy a stock, it is always a good idea to tap into the huge knowledge base that your broker has at his or her disposal and see if this stock is all its cracked up to be. This is one of the major reasons why having a full service broker is better than using one of the online stock trading websites. With a full service broker, they can give you more information that the vital statistics associated with a particular stock. They will likely know about any sort of breaking news associated with that company and what the daily activity has been on that stock (are people buying or are people selling.) Most importantly, they can also give you information that only they are privy to that might or might not have been made public yet. The best research tool any investor can have is a good stock broker.

If you have made the decision to invest online on your own, there is still quite a bit of information available on the Internet. Many online stock trading websites not only deliver a huge amount of raw data to their users about how a stock has performed over the short and long term, but also how to read that data. They have dozens of graphs, charts and read outs that try to put the raw data into context. What these sites can't do, really, is interpret the data and tell you how all of that is likely going to affect the stock's future performance. Of course, this is speculation and not statistical analysis, but knowing how a stock has performed in the past doesn't really help you if your fortunes are going to be determined by what the stock does in the future. Research can only help give you some context on where the stock has been.

Finally, having a subscription to a daily newspaper like the Wall Street Journal, or at least an online subscription to their webpage, is an essential way you can do research, just bear in mind that there are millions of other people reading the same information and likely acting on the same trends you are. It isn't really possible to get a "hot stock tip" from the financial newspaper of record, but it can help you spot trends and news that can affect how the market is going to perform in the future.

Stock research is a vital part of any healthy investment strategy. However, having a plugged in stock broker on your side is the best research assistant possible.

2008-09-23T21:35:00.001-07:00

The stock market is unique in that it relies on other businesses and as long as we have trade it will always be around. This, in turn, means that learning to trade in the stock market means having a virtually endless source of income. However, the trading part itself is not easy and there are many disillusioned individuals that started trading with high hopes but only lost their money. There have been cases where stock trading almost looks like some form of addiction where the traders ignored their jobs, careers, and life just to find a way to find financial success through stock trading.

Stock trading is not without its risks and people have gone bankrupt overnight but then there are also people who have amassed great fortunes in a short time. There are several pitfalls in the stock market and there are so safety flags in place to warn traders. It is quite easy to fall into one and suffer permanent damage. What is required is discipline when trading in the stock market.

The first thing to note is that the stock market is never stable. It is in constant flux and you never know which way it will move. Quite often, there is no sensible explanation for what happens in the stock market because everything is dictated by human behavior. The problem is that most traders are trading emotionally, except the most successful ones.

Self-discipline is a big part of keeping emotion out of the equation. The stock market is not forgiving to those who make decisions based on emotions rather than logic. This lack of discipline often deprives traders of deserved profits or makes them run into loss. Perhaps this method of teaching is not the gentlest but then the stock market does not have a human perspective, it is simply a trading platform that rewards those who think clearly and logically and tends to punish those who don't.

Here are some tips on how to invest in the stock market.

Money Management

This is what finally defines your profits and losses. When you enter into a trade, you never know what will happen despite the best research. Your profits or losses in the stock market depend on how you exit the trade, not how you enter it.

Risk Management

Minimizing risk is your insurance policy against losses and your guarantee for profits. If you do not minimize your risks then you are bound to lose more than you profit. Risk management entails not trading too high, not retaining stock overnight or over the weekend without a profit buffer.

Business Objective

Always have a business objective so you know why you are working in the stock market to begin with. Your objectives will define the plan that you will use while trading. Along the way, you will also learn many strategies and ways of trading that will require you to change the plan so keep things flexible.

These are three among several of the fundamental concepts for successful trading.

Stock Market Position Sizing

2008-09-23T21:34:00.000-07:00

Position sizing determines the amount of currency you wish to put into a stock trade. It is part of money management for an investor. Money management has many different types of calculations to help an investor determine how much money they are going to lose. Position sizing is the main aspect of money management.

Just because an investor has a stop loss in place, it does not mean that they have covered position sizing. Having a stop loss in place simply allows a trader's stock to be removed if a certain position is reached. However, with a stop loss the trader loses the highest amount of money. With position sizing, it allows the trader to determine how much units of stock they are capable of purchasing. This in turn, allows the trader to minimise the amount of money they can lose.

By determining the traders stop loss and their maximum loss on a stock, they can use these two figures to determine, without going over their maximum loss, the amount of shares they are able to buy. The calculation is as follows; the maximum loss is divided by the stop loss size. This gives the trader the amount of shares they are capable of buying.

The difference between the traders entry price and their stop loss value is what a stop loss size is. For example, if the trader entered the stock market for two dollars, with a stop loss value of one-dollar ten cents, their stop loss size is ninety cents. By using this formula, a trader can limit the amount of risk of over buying shares, which can exceed their maximum loss.

An example of this formula; with a trading float of $10,000, and a trader risking 3%, their maximum loss is $300. The market entry price is for example two dollars, with a stop loss value of one dollar ten cents, thus the stop size is ninety cents. To determine the amount of shares the trader can buy without exceeding their maximum loss, the maximum loss is divided by the stop size. Thus, $300 is divided by ninety cents, which allows the trader to buy 334 shares. The use of this formula is the confirm the security of the float.

If a trader wishes to incorporate their brokerage fee into the maximum loss, it is possible. The formula for this is to subtract the brokerage fee from the maximum loss. An example of this is, if the brokerage fee was $50 and the maximum loss was $300, the new maximum loss would $250. The $250 is then used in the above formula which decides the amount of shares the trader can purchase.

Limiting the amount of loses made is an important aspect of trading. Position sizing helps a trader with this. This article has explained the benefits of position sizing and the ways in which to incorporate it. As well as that, ways in which to confirm the security of a traders float have been explained.

The Best Timing In Doing Stock Market Trading

2008-09-20T21:38:00.001-07:00

Timing Is Everything

Aim for the best timing in stock market trading. It is the only option for a successful stock market investor.

In order to raise capital and invest in the business, companies issue their stocks and the public may then buy and sell. The price varies depending on the supply and demand. This is what a stock market trader takes full advantage of.

The business of stock market trading can offer better profits to the investor compared to ordinary stock enterprise. The stock market offers a wide variety of stocks to choose from for any investor to go on with stock trading. There is always a moving stock out there amongst the thousands of others registered.

However, a careless attempt to proceed with stock market trading can produce undesirable result. Big losses can be incurred if the market trend is not properly predicted. Small profits would also frustrate the purpose of doing stock market trading. An uninformed stock trader may also end up waiting for that decisive moment that would never come.

Market Timing

To avoid the adverse effects of poor stock market trading, investors use market timing to forecast when the market will change its course. Market timing presumes that the decisive point can be predicted ahead. The direction of the market is predicted through a thorough examination of the price and economic data.

Best Timing

The consistency of such trend prediction is subject to many factors, that is why the aim of any would-be successful investor is best timing. At first glance, market timing sounds like a guaranteed way to make it big. This however requires exertion of considerable effort and persistence in carefully studying the various factors.

Avoid mere speculating. Speculating is a desperate move when the investor hasn't done his homework.

Investors also buy stocks because they got a hot tip from someone. Most of these tips however prove to be false, as they are mostly given by parties with vested interests.

Market timing requires involvement in research to know the company's history and calculate the trend by charting the movement of the stock's price. This involves analysis of the value of the stock to come close to accurate in predicting the trend. This is ideal in developing standards for when to buy and when to sell for the investor must accurately settle on the proper time to sell. One must also correctly determine when to regain, reselling the stock bought when it reaches its peak value. This way, the maximum profits can be realized.

Stock Market Crash? Your Options Explained

2008-09-20T21:36:00.000-07:00

We live in interesting times...

You cannot switch on the TV or read a newspaper without hearing of doom and gloom. If it's not property and stock market falls it's oil prices going through the $100 level, and the situation in Iraq seems to be deteriorating.

Well, we will stay clear of most of that, except the issue of markets across the world going down. At this point we feel like saying please take a deep breath everybody.

It's certainly true that the 'sub prime' crisis has badly affected the confidence in the markets. Just as has the Northern Rock fiasco in the UK and the Bear Stearns collapse in the US. Are there any more 'nasties' around the corner people will rightly ask?

The answer is yes there could be, and things may take several more months for any residual problems to make an unwelcome appearance.

So what has happened?

Well, in a nutshell, it's partly down to greed.

In the last few years many banks have devised complex products to sell on at a profit, with the full ramifications of what they were selling not known at the time.

They packaged various types of debt together - good, average and poor quality - and sold it on. The banks priced these packages with a formulae devised by themselves.

With the benefit of hindsight, it could be argued that they got it wrong in spectacular style.

Roughly speaking, the high risk debt became worthless, the medium grade debt halved in value, and even the high quality reduced in value by circa 30%. This was made worse of course because in forced sales you tend to get less.

There is also the issue of how banks lend to each other, called the Interbank rate, so that they have the money to lend to people like us.

Gone are the days (but coming back?) when the bank used purely savers' money to then lend. So when confidence is hit, and banks are reluctant to lend to each other, and any lending they do do they charge a lot more for.

What we need of course is a period of stability, with bad debt being written off, and Interbank rates settling down. Working capital needs to be found, with wealthy companies called Sovereign funds helping - at a price.

As a background to all this, it must be said that the last 15 years have been quite amazing with low interest rates and high growth. This 'Goldilocks' period is ending, with growth down and inflation up. This brings to mind the dreaded word stagflation, and this is perhaps worse than recession.

Another point is that compared to other periods of stock market volatility the fall in the markets has not looked huge. Compared to the end of 2007 the FTSE is down around 14% and of course may fall further or recover. But in 1974 the market fell 51%, before bouncing back in 1975!

So what should investors do?

Well, if you don't need your invested capital now (or within 1-3 years) our advice is to hang on. Don't turn paper losses into real losses by selling low. We have seen new clients tell us that they have sold when the markets went down, and bought again when they went up.
Why?

Well, they simply felt that this was the 'sensible' thing to do.

This is the classic way for investors to lose money, time after time. For example, if you had missed the best 25 days out of the 7,300 days between 1986 and 2006, your compound annual returns would be 6.72% instead of the 11.74% the market returned.

Keep Stock Market Investment Profits

2008-09-18T22:45:00.001-07:00

Have you had one of those huge investment winners – a stock that went from $2.00 to $80.00? Or any other numbers you want that gave you a gigantic percent profit?

Did you take the profit or did you watch the equity drop back down to what you paid for it? I hope you sold and kept the money. That’s what it is all about. So many times when I was a broker I have seen customers make large profits and then think they were omniscient about trading and within a short period give back what they had made.

As a brokerage company owner I had seasoned brokers do the sane thing. One of my men made $150,000 in a short time. I called to congratulate his performance and suggested he take a vacation from trading for a while. He said, “No, Al, I know what I am doing”. The very next month he lost $155,000. What happened?

Listen carefully as I am going to tell you one of the great truisms not found in the trading training manuals. If you are doing any trading whether in stocks, mutual funds, real estate, currencies, whatever, this applies. Print this out, frame it and put it up on your office wall.

“Making a lot of money is just as upsetting to your mind as losing a lot of money”.

A big score destabilizes thinking. Many people want to do it again and again so they immediately plunge back into their investments with their winning cash and make bigger bets. It is almost without exception that they become losers and give back their winnings.

For many years I have advocated taking time off after a big profit. It takes time to get your head on straight again. As a former floor trader I would have about 6 or 8 times during the year when I made a good “hit”. Then I would immediately call my travel agent to ask where I could go for a week. I knew I must get away because my investment strategy would be clouded by success.

Too many of the big winners seem to alter their basic trading plan because they now had a large amount with which to trade causing them to deviate from their successful pattern. They then became losers. Because of their success their thinking changed and they were not aware of what had happened. The trader must get away and let his emotions down.

A disturbing event, even a positive one, can alter up your thinking. If you want to keep your investment profits you must keep your emotions under control.

Reasons to Invest in the Stock Market

2008-09-18T22:45:00.000-07:00

The stock market is one of the most popular forms of investment for investors. If you don't invest yet, you might be wondering why someone would put money in the stock market. The truth is that there are a number of reasons to invest in the stock market. Let's look at a few of the best reasons that you might want to invest.

The number one reason that people invest in the stock market is for their retirement. If you start when you're young enough, the stock market is a fantastic tool to grow your retirement fund. The benefit that you have when you are young is time. This helps to average out the risk of the stock market because you have a long time to win. You can usually tolerate risk more when you are younger, because the stakes aren't quite so high. You probably don't mind investing in risky things at the beginning so you can build up your nest egg. Then over time, you can get into some more "cash cow" type of stocks and build steady growth. If you invest over a long period of time you can use the dollar-cost averaging method to steadily grow your portfolio. The basic idea behind this is that you periodically and systematically invest the same amount of money in a certain stock over time. This way you will be unaffected by the market and will have a large amount of stocks by the time you're done.

While it helps to start early, you don't have to. There are many scenarios that people have, that will keep them from investing until they get older. There is nothing wrong with that at all. It only takes one really good investment to make up a lot of years. You could have waited until you were 60 and then invested in Google and been completely fine.

Another reason that someone would want to invest in the stock market is for a career. You don't have to wait until you're retired to reap the benefits of your work. Many people, called "day traders" make a living out of buying and selling stocks every single day. They make multiple trades every day and make their living off of the daily fluctuations in the stock. They aren't in it for the long haul. Instead, they are there to make the quick dollar off of the market "ups and downs". This is another viable strategy and has been used successfully by many people. If you don't know what you're doing, you could stand to lose a lot of money doing this. If you don't do your homework, you'll most likely just be guessing on what a stock will do. In this scenario you might as well go to Vegas and roll the dice. Your odds of success are similar.

Besides these two obvious reasons, one of the most overlooked reasons to invest in the stock market is for the fun. There isn't much better than picking a big winner in the stock market. When you pick a really big winner and sell just before it goes down, others will look at you like you're a genius. You may have been guessing, but they'll never know the difference.

How to Identify Stock Market Trends

2008-09-16T07:33:00.001-07:00

Over the years, many different people have tried many different approaches to investing. Buying and selling stocks has always been the most popular form of investment. Many people have made a great deal of money in the stock market and there are varying theories as to how to do it. One of the best ways to make a great deal of money i

When you can get in a stock before the trend occurs, you stand to make a great deal of money, if it's the right company. Can you imagine if you were one of the first investors in a company called Wal-Mart? How about Google? These companies represented a significant uptrend in their respective industries. If you were one of the one's who identified the trends you would be living on easy street today. If you think about it for a second, someone did analyze those trends. They saw the potential and they acted on it. They were greatly rewarded for their actions. This indicates that there is potential for anyone to do the same. Every year, there are success stories of new companies that have emerged. They essentially come out of nowhere and lead the field. This means that there are opportunities all the time for you to see a trend. If you act on it at the correct time, you will also be greatly rewarded.

So how can you find the trends before they happen? The best way is to keep your eyes open and use common sense. In every person's lifetime they are usually presented with multiple opportunities that they should act on. If they go ahead and act on the right one, they can retire a millionaire. However, if you don't act, you might not get many more chances. When you see a new product that is revolutionary, you might want to research it. Keep your eyes open and look for something new that you feel will make a big splash in the industry. In fact, it might be so good that it will create its own industry. If you see a product or company like this, it might be wise to jump on it.

Despite keeping your eyes open for new products, this doesn't mean that you should jump on every bandwagon that comes along. Usually common sense can aid you in your decisions. This can be compared to the people who bought Beta a few years ago. Now you can't even find one if you wanted to. Don't invest in something that doesn't have any practical, long-term applications.

When looking at a stock, you'll want to take notice of its price and volume. Volume indicates the number of people that are buying and trading a stock. If the volume is high and the price is high, this can indicate an uptrend in a stock. This is usually a great time to buy the stock, before it gets too high. When you become skilled at identifying stock market trends, you'll get in, in just enough time to make some money on your investment.

n stocks is to get good at identifying stock market trends.

Stock Market Tips

2008-09-16T07:31:00.000-07:00

The stock markets are at all time highs and just like the last time around when the market was at its previous high every one thinks that nothing can go wrong and there is just one way where the market can go which is UP. Nothing could be farther from the truth and this will be clear from the way the market behaves in the next few months. Here are a few tips that would hopefully save you from losing a lot of cash in the current frenzy.

Time and again investors have burnt their fingers in the markets and here are some tips to you so that you do not end up burning your fingers in this market.

The number one tip at this point would be to sell if you have stocks and not to buy them if you have cash. The golden principle in the markets is "Buy when everyone else sells and sell when everyone else buys". Simple enough right? Not really. Why? Because of peer pressure pure and simple. When everyone else around you seems to be having a ball at the markets you would feel like a fool if you didn't participate now.

OK so you can't resist buying at this time then at least do yourself a favor and stay away from unknown Penny Stock and hot tips that your barber gave you. True that the stock has tripled in the last fifteen days but that was before people like your barber started buying the stock. Chances are that the Promoter of the company have started buying into the stock and have spread rumors like acquisition or a big export order to fool investors and sell out to them at a later date.

Another tip that would serve useful is to value a stock based on its future growth and not its past performance. For instance many investors say that I will not buy stocks of X company because it has doubled in the last year. Well it may have doubled in the last year but that should not be the thing you should be telling yourself. Rather you should ask yourself why has this doubled in the last year and can it do so again? There should be a solid answer to your question like the launch of a new product or reduction in the prices of raw material. And indeed if the answer is in the positive then by all means go ahead and buy that stock regardless of what has happened in the last year.

Another tip would be to remember what you are buying. Quite simply investors often forget that when buying a stock they are simply buying ownership in the companies. Most of you would know that nothing spectacular would happen in the company that you work for, in a month, they are not going to double their revenues and certainly not double your salary every month. Then why expect anything different from the companies that you are investing in. Why expect the prices to double in a month or two. Give time to your investments; don't reduce it to a gamble. Only when you invest in fundamentally sound companies and then give the investments sufficient time to grow will you see some healthy returns on your investments. Ideally a minimum horizon of one year is a good time.

Hope these tips will prove helpful and you will make a lot more in the stock markets than you have already been making. Happy Investing!

How Does the Stock Market Work?

2008-09-16T07:30:00.000-07:00

One of the daily topics that you hear about in the news is the stock market. You'll hear random things like "the Dow hit an all-time high" or something to that effect quite frequently. However, do you really have any idea what they're talking about? How does the stock market work? The truth is...many people haven't the slightest idea.

The stock market is an important part of our economy and has a great deal to do with our economic power in the world. While it may not affect you individually, it does have a cumulative effect on you in some way. So exactly, how does the stock market work? Let's look at the basics.

Imagine that you wanted to start your own business. We're not talking about the neighborhood lemonade stand. Imagine that it's a legitimate, big business. This business is going to require a lot of capital to get started and you don't have the money. Instead of going into your local bank and asking for a loan, you want an alternative form of funding. Therefore you come up with the idea to sell pieces of the ownership in your business. You divide shares of your business up and sell them for a certain price. Now, each person that buys a part of the business is a partial owner. You can still be in charge of the daily operations of the business, but your business owners now require a share of the profit. You pay the investors a share of the profit (also called a dividend) every so often and they receive a return on their investment. This is the basic idea behind the stock market.

It is a way to raise money when big businesses need to expand or get started. In return for the money, they give out a small portion of their ownership in the company. Therefore the investors are now a business owner, but don't have to take on the tasks of everyday business ownership. This represents a win-win situation for the investors and the companies.

This explains what stocks are, but how does the stock market work? The stocks are then traded on what is called a stock exchange. When someone wants to sell their portion of ownership in the company, they go to where stocks are being sold. A stock exchange is basically a place where buyers and sellers of stocks can meet up to conduct business. This makes it easier to move stocks than a traditional means of selling something. The great thing about the stock exchange is that you don't physically have to go to New York to get something done. You can call in to your broker or put in an order over the internet.

The stock prices are affected by many factors including supply and demand. If there is a low supply of a certain stock and many people want it, the price goes up. If there are many people trying to unload a stock, the price goes down.

Hopefully this has helped you to understand the basics on how does the stock market work and you'll feel comfortable getting started on your own.

Stock Market Advice From Chicken Little

2008-09-10T09:58:00.000-07:00

One day, while Chicken Little was walking in the woods, an acorn fell and hit him on his head.

"Goodness gracious me!" said Chicken Little, "The sky is falling, the sky is falling. I must go warn everyone."

We see this all the time. The stock market goes straight up for eight or nine months, and if there are 2 or 3 down days in a row, there is hand-wringing and the moaning all over the place.

Who are these people that panic at the first sign of a downturn or with the slightest bit of profit taking?

The first group are people who get in the near the top and are now worried that their small losses will turn into big losses. Also, people who haven't invested in the stock market are in this same box. For many, many years they were wrong to not have invested, but now that the market has declined very slightly for a few days they would like the point out how smart they are and how dumb everyone else is.

Short–sellers are the next group. Short selling is selling a security that the seller does not own but is committed to repurchasing eventually. It is used to take advantage of an expected decline in the security's price.

The press comes next. You have heard this before: "bad news sells newspapers."

The 24–hour television news stations must make every tiny move in a stock or in the stock market seem like a momentous occasion. Imagine hearing such a stupid statement as "this is the largest stock market decline since last week."

The slimiest are the politicians whose party is out of power. They try to make themselves look good by making the other guys look bad. It does not matter which group you belong to or who is in power or out of power at the moment.

An out of power politician must find the cloud in every silver lining.

So, how can you protect yourself? What should you do to keep out of "the sky is falling" trap?

The most important thing that you can do is to be clear about your long-term financial goals and objectives. Yes, in the very short run, many circumstances can affect the value of your portfolio. In a well-diversified portfolio, these declines will be relatively small and short lived.

Twenty years from now, it will not have mattered who was shot during the past twenty years or who was in power or who went to jail or to war. Simply ask yourself, "how will three dollar a gallon gasoline affect my retirement twenty years from now?"

Don't worry about tales of imminent doom and gloom. Don't listen to, and certainly, don't act upon rumors and scare stories. And, most of all, don't spread these stories yourself.

5 Things You Should Know Before You Invest On The Stock Market

2008-09-10T09:57:00.000-07:00

The stock market is an untamed animal, a wild beast. Sometimes, it is a raging bull that lifts and throws all stocks upwards into the sky. Sometimes it is a marauding bear that beats all stocks into the ground with brute force. And if you are entering the stock market, you have to ride this beast. It can be a rough ride or it can be smooth one depending on how you handle yourself. But, hey, you can take your precautions and plan your investments well if you keep these five factors in mind:

1. There is always a limit: Every player on the stock market must not play beyond his means. The bottom line is that if you play beyond your financial capacity, and something goes wrong, you will end up with a loss of face and your family will feel the aftershocks. It's better to control risk appetites and adventurism while playing the stock market – after all, it is a market, not a jungle that needs to be explored.

2. There is no room for emotions: Never ever get emotionally attached to any stock. Stocks are an asset class and you must look at them as such. If you don't, and you keep holding a stock no matter what, then you will lose out on many opportunities to make money.

3. Book profits, stop losses: Profit is like a burglar – if you don't catch it, it will run away. Loss is like an insurance salesman – if you don't shake it off, it will stick to you. Therefore, you must always book profits and cut losses in the stock market – all the big guns have done it and they're human beings, just like you. So, why shouldn't you? Get the point?

4. No one can time the market: You have to be God to predict the market movements, which you aren't. So, be happy when you get in, be happy when you get out, don't regret, don't fret and SMILE no matter what you do, provided you do it right.

5. It pays to know: It will pay you well if you understand the stock you are buying into. What are its finances? Is it making profits or losses? Is the market price right? Is the management clean or are they sons of Enron? Does the industry have a bright future? Look, you will make a load of money if you know what you are doing in the stock market. So, get savvy with figures and with the economic and global trends. Analyze all the factors affecting a stock and then act.

Well, these are some basics you have to understand before you enter the stock market. Obviously, you will make mistakes, but that's normal – every stock market player does. Just take care to play the market by the book and that will ensure that you will ride on the booms and weather the busts.

No Profit in Forex Trading - You are the Reason!

2008-09-06T09:53:00.000-07:00

In one of my recent articles I have mentioned that along with trading in the small charts, the next reason why you lose money trading is you. That's right. You are the problem. Eliminate YOU, add a decent technique and you are on your way to the stars.

Eliminate you? Let's look at what happens in a typical trade executed by a novice but properly trained trader.

As I mentioned you already got some professional training and like any good student you do your homework - learn the theory, find a nice little technique, practice alongside an expert in a demo account and see that it is possible to make money. You are now a true believer and the master of the secrets - you know the tricks, you can anticipate every move the market makes. Am I still talking about you? If not – stop trading and get back to the training part.

So you know your stuff and it is your live account today. You wait for your setup, the market comes to you and the order is placed. It even happens to be a perfect textbook example. Easy money is on the way and you are pleased with yourself. The P/L line shows that you are at negative 2-3 pips but you anticipate covering that spread cost in the next few moments and then it is an open road to the much deserved profits. You are confident. Your technique is sound and proven. It works as you've seen and practiced. You even have the next most important piece of the puzzle – the sound money management in place. Your conservative risk is at maybe 1 – 2% of your equity available. You are 100% confident that this is the beginning of your financial freedom. No doubt in your mind and you deserved it - You've paid your dues.

It is now 2 hours or 2 days later and you have lost; many trades. Sure, the market DID what you had predicted. Many pips have been made – But not by you.

So what happened?

Even though you have the "know how" and the practical experience to go along with it, the fact remains that the market can not be 100% predictable. In the back of your head there is always a fear that you might lose in this particular transaction. At some point you will lose. You may have tens of trades that are positive and profitable, but sooner or later one of the currency pairs will get you. Your problem is that you seem to lose every time. The reason: in your mind you carry over the fear of that one bad trade that is going to come at some point to EVERY trade you do. You were supposed to lose only here and there, but the fact remains that every next transaction carries the same risk of going against you no matter how small that risk is. This is in the back of your head and not knowing when the bad trade will come, you over react to any small deviation of the trade from your projection.

So, your fear of losing turned a great profitable trading technique into an account killer. The source of your fear is that the money you have funded your account with was not the money that you could afford to blow just like most of the novice traders. You did not have the luxury to allocate the trading money in your "business plan" as write-off money that is insured or that can be a tax deduction. Oh no, in your case the only deduction is directly from your pocket.

The solution: If you learn anything from me learn this - NEVER MOVE YOUR STOP LOSS UNLESS YOU ARE IN POSITIVE, (similarly, never close your position prematurely - let the market close your position instead). Remember, when you set your stop loss, it is that money that you are prepared to lose. Think of it as lost before you even enter the trade. If you still fear it, then reduce your lot size until your potential loss is so small that you do not care. Do this and you will be surprised how quickly the profits will come. Of course, if you hit your stop loss every time than you just don't have a clue how to trade.

Stock Market Driving You Crazy? Diversify Your Retirement Portfolio with Truly Self-Directed IRAs

2008-09-06T09:51:00.000-07:00

Stock Market Driving You Crazy? Diversify Your Retirement Portfolio with Truly Self-Directed IRAs

Not seeing your retirement funds increasing? The volatility of the stock market can make it difficult to determine which stocks and mutual funds will consistently grow your nest egg.

Do you wish there were other options when saving for your future?

There is – a truly self-directed IRA. A truly self-directed IRA allows you to have total control of your retirement investments. That means you can invest in real estate, promissory notes, mortgages, deeds of trust, tax liens, equipment leasing, mobile homes, private placements, limited partnerships, limited liability companies and foreign exchange (forex).

Brian Harris, an investor at self-directed IRA custodian Equity Trust Company, used his self-directed Roth IRA to invest in something he had a passion for, musical instruments. By using your knowledge and expertise you can invest in the assets of your choice in a self-directed IRA and prepare for your future and your family’s future.

Learn to Create Tax-Free Profits for Life with a Self-Directed IRA

Not only do you have more freedom with a self-directed IRA, but self-directed IRAs also provide tremendous tax benefits – including tax-free investment profits. One of an IRA’s greatest features is it allows Americans to enjoy the true power of tax-deferred compounding interest. Compound interest occurs when interest is earned on a principal sum along with any accumulated interest on the sum. In other words, you are earning interest not only on your original investment sum, but also on the interest earned from the original sum.

Compound interest can occur with any investment you make, but the "true" power of compounding interest is obtained when you make an investment in a tax-deferred environment, like an IRA.

By taking advantage of an IRA’s tax-deferred status, you do not have to pay tax immediately on your earnings. Thus, you are able to enjoy the power of compounding on ALL of your profit, not just what is left after taxes.

Investors Have Been Taking Advantage of Self-Directed IRAs for Over 30 Years…You Can Too

Successful investors have been investing in real estate and other assets with their self-directed IRA for more than 34 years. You may not know this opportunity exists because most IRA custodians do not offer truly self-directed IRAs that allow Americans to invest in real estate and other non-traditional investments.

Although it is possible to invest in a wide variety of assets, you should be aware of what investments are not allowed with an IRA. These include: artwork, rugs, antiques, metals, gems, stamps, coins, beverages and certain other tangible personal property. These have been stated by the IRS and cause tax consequences as well as possibly losing your self-directed IRA (please see IRS Publication 590 for more information).
Don’t Rely on Social Security – Start Saving for Your Future Now

According to the 2007 Retirement Confidence Survey by the Employee Benefit Research Institute, Americans are not prepared financially for retirement. The survey also revealed that almost half of workers saving for retirement report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $25,000.

Don’t let yourself fall in the category of being unprepared for retirement. And don’t fall victim to thinking stocks and bonds are your only retirement investment options. A self-directed IRA provides freedom to choose investments you are most comfortable with and gives you amazing tax benefits. Now is the time to start investing with a self-directed IRA. The earlier you start, the more you will build for retirement.

The Best Timing In Doing Stock Market Trading

2008-09-02T04:41:00.001-07:00

How to invest your first 100$ in the stock market

2008-09-02T04:39:00.000-07:00

Making money by investing in the stock market requires great discipline, patience, and a cold reasoning power. When you are investing money in the stock market, your personal feelings (other than the desire to make more money) don’t matter. You cannot be skittish, nor can you hold on to something with any personal attachment when you sense that you need to sell.

You should also concentrate your energies on just one stock sector (such as metals or energy) to help give you mental clarity.

Some people don’t have $1000 to open a usual stock brokerage account, and they wonder how they can make money in the stock market beginning with just $100.

There are not very many stock market investment accounts that can be opened for just $100. However, there is at least one very good investment account offered by the highly respected financial institution ING. With ING Direct’s Share Builder account, you can open a stock market investing account with as little as, yes, $100, and begin trading immediately. You can buy stocks for as little as $4 and set up your Share Builder account to automatically buy and sell or a regularly scheduled basis.

If you open up an account like Share Builder, you want to have a plan in place for how you are going to invest the money. If you are a beginner, you should probably invest in a company that’s listed on the Dow Jones Industrial Average, the NASDAQ, or the S&P 500. These companies are considered to be pretty stable, established, and doing well. The three different indices represent three different groups in which stocks are listed according to different criteria.

Another thing to keep abreast of is which industries on the whole are doing well. You can then pick a stock market investment based on stock quotes for a company in that industry. For instance, if oil and gas companies are doing well, why not choose an oil company to invest in?

However, you also need to keep in mind that if you’re beginning with just $100 to invest, you won’t be able to buy that many shares of a lot of established companies–their share prices can be very high (higher than $100 for just one share).

One way around this obstacle is to invest in "penny stocks". These are stocks of companies whose shares are only selling for a couple of bucks (so it’s actually more than just a penny but the principle’s the same). Penny stocks can have great upward potential and make you a lot of money when they start to rise. If you buy penny stocks for, say, $3 a share, when their share price gets up to about $15 it’s a good time to sell and take profits.

But don’t just pick any penny stock because it’s cheap. Again, pick a penny stock to buy and trade in from an industry, such as oil, that is going great guns (read the financial news). And watch it carefully. If you buy penny stocks at $3 a share and they go down to a buck a share, sell them and cut your losses. You haven’t lost that much money because you did not invest that much–another great penny stock investment advantage.

When you become more experienced as an investor you can buy options contracts often for $100 or less. Each options contract lets you have temporary control of 100 shares of a given stock. This has the potential to make you a ton of money in a very short time with only a very small investment. But you need to know what you’re doing first because you can lose lots of money fast here if you don’t.

Stock Market - How to Use Fundamental Analysis to Make Trading Decisions

2008-08-28T12:21:00.001-07:00

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Stock Analyzing

Investors come in many shapes and forms, so to speak, but there are two basic types. First and most common is the more conservative type, who will choose a stock by viewing and researching the basic value of a company. This belief is based on the assumption that so long as a company is run well and continues turning a profit, the stock price will rise. These investors try to buy growth stocks, those that appear most likely to continue growing for a longer term.

The second but less common type of investor attempts to estimate how the market may behave based purely on the psychology of the market's people and other similar market factors. The second type of investor is more commonly called a "Quant." This investor assumes that the price of a stock will soar as buyers keep bidding back and forth (often regardless of the stock's value), much like an auction. They often take much higher risks with higher potential returns-but with much higher potential for higher losses if they fail.

Fundamentalists

To find the stock's inherent value, investors must consider many factors. When a stock's price is consistent with its value, it will have reached the target goal of an "efficient" market.
The efficient market theory states that stocks are always correctly priced since everything publicly known about the stock is reflected in its market price. This theory also implies that analyzing stocks is pointless since all information known is currently reflected in the current price. To put it simply:

The stock market sets the prices.
Analysts weigh known information about a company and thereby determine value.
The price does not have to equal the value. The efficient market theory is as the name implies, a theory. If it were law, prices would instantly adapt to information as it became available. Since it is a theory instead of law, this is not the case. Stock prices move above and below company values for both rational and irrational reasons.

Fundamental Analysis endeavors to ascertain the future value of a stock by means of analyzing current and/or past financial strength of a particular company. Analysts attempt to determine if the stock price is above or below value and what that means to the future of that stock. There are a multitude of factors used for this purpose. Basic terminology that helps the investor understand the analysts determination include:

"Value Stocks" are those that are below market value, and include the bargain stocks listed at 50 cents per dollar of value.
"Growth Stocks" are those with earnings growth as the primary consideration.
"Income Stocks" are investments providing a steady income source. This is primarily through dividends, but bonds are also common investment tools used to generate income.
"Momentum Stocks" are growth companies currently coming into the market picture. Their share prices are increasing rapidly.

To make sound fundamental decisions, all of the following factors must be considered. The previous terminology will be the underlying determining factor in how each will be used, based upon investor bias. 1. As usual, the earnings of a particular company are the main deciding factor. Company earnings are the profits after taxes and expenses. The stock and bond markets are mainly driven by two powerful dynamisms: earnings and interest rates. Harsh competition often accompanies the flow of money into these markets, moving into bonds when interest rates go up and into stocks when earnings go up. More than any other factor, a company's earnings create value, although other admonitions must be considered with this idea. 2. EPS (Earnings Per Share) is defined as the amount of reported income, per share, that the company has on hand at any given time to pay dividends to common stockholders or to reinvest in itself. This indicator of a company's condition is a very powerful way to forecast the future of a stock's price. Earnings Per Share is arguably one of the most widely used fundamental ratios. 3. Fair price of a stock is also determined by the P/E (price/earnings) ratio. For example, if a particular company's stock is trading at $60 and its EPS is $6 per share, it has a P/E of 10, meaning that investors can expect a 10% cash flow return. Equation: $6/$60 = 1/10 = 1/(PE) = 0.10 = 10% Along these same lines, if it's making $3 a share, it has a multiple of 20. In this case, an investor may receive a 5% return, as long as current conditions remain the same in the future. Example: $3/$60 = 1/20 = 1/(P/E) = 0.05 = 5% Certain industries have different P/E ratios. For instance, banks have low P/E's, normally in the range of 5 to 12. High tech companies have higher P/E ratios on the other hand, generally around 15 to 30. On the other hand, in the not too distance past, triple-digit P/E ratios for internet-stocks were seen. These were stocks with no earnings but high P/E ratios, defying market efficiency theories. A low P/E is not a true indication of exact value. Price volatility, range, direction, and noteworthy news regarding the stock must be considered first. The investor must also consider why any given P/E is low. P/E is best used to compare industry-similar companies. The Beardstown Ladies suggests that any P/E lower than 5 and/or above 35 be examined closely for errors, since the market average is between 5 and 20 historically. Peter Lynch suggests a comparison of the P/E ratio with the company growth rate. Lynch considers the stock fairly priced only if they are about equal. If it is less than the growth rate, it could be a stock bargain. To put it into perspective, the basic belief is that a P/E ratio half the growth rate is very positive, and one that is twice the growth rate is very negative. Other studies suggest that a stock's P/E ration has little effect on the decision to buy or sell stock (William J. O'Neal, founder of the Investors Business Daily, in his studies of successful stock moves). He says the stock's current earnings record and annual earnings increases, however, are vital. It is necessary to mention that the value as represented by the P/E and/or Earnings per Share are useless to investors prior to stock purchase. Money is made after stock is bought, not before. Therefore, it is the future that will pay, both in dividends and growth. This means that investors need to pay as much attention to future earnings estimates as to the historical record. 4.

For many analysts, the PSR is a better value indicator than the P/E. This is because earnings often fluctuate wildly, while sales tend to follow more dependable trends.
PSR may be also be a more accurate measure of value because sales are more difficult to manipulate than earnings. The credibility of financial institutions have suffered through the Enron/Global Crossing/WorldCom, et al, debacle, and investors have learned how manipulation does go on within large financial institutions.
The PSR by itself is not very effective. It is effectively used only in conjunction with other measures. James O'Shaughnessy, in his book What Works on Wall Street, found that, when the PSR is used with a measure of relative strength, it becomes "the King of value factors."

5. Debt Ratio shows the percentage of debt a company has as compared to shareholder equity. In other words, how much a company's operation is being financed by debt.

Remember, under 30% is positive, over 50% is negative.
A successful operation with ascending profitability and a well marketed product can be destroyed by the company's debt load, because the earnings are sacrificed to offset the debt.

6. ROE (Equity Returns) is found by dividing net income (after taxes) by the owner's equity.

ROE is often considered to be the most important financial ration (for stockholders) and the best measure of a company's management abilities. ROE gives stockholders the confidence they need to know that their money is well-managed.
ROE should always increase on a yearly basis.

7. Price/Book Value Ratio (a.k.a. Market/Book Ratio) compares the market price to the stock's book value per share. This ratio relates what the investors believe a company (stock) is worth to what that company's accountants say it is worth per recognized accounting principles. For example, a low ratio would suggest that the investors believe that the company's assets have been overvalued based on its financial statements.

While investors would like the stocks to be trading at the same point as book value, in reality, most stocks trade either at a value above book value or at a discount.

Stocks trading at 1.5 to 2 times book value are about the limit when searching for value stocks. Growth stocks justify higher ratios, because they grant the anticipation of higher earnings. The ideal would be stocks below book value, at wholesale prices, but this rarely happens. Companies with low book value are often targets of a takeover, and are normally avoided by investors (at least until the takeover is complete and the process begins anew).

Book value was more important in a time when most industrial companies had actual hard assets, such as factories, to back up their stock. Sadly, the value of this measure has waned as companies with low capital have become commercial giants (i.e. Microsoft). Videlicet, look for low book value to keep the data in perspective.

8. Beta compares the volatility of the stock to that of the market. A beta of 1 proposes that a stock price moves up and down at the same rate as the market overall. A beta of 2 means that when the market drops the stock is likely to move double that amount. A beta of 0 means it does not move at all. A negative Beta means it moves in the opposite direction of the market, spelling a loss for the investor.

9. Capitalization is the total value of all of a company's outstanding shares, and is calculated by multiplying the market price per share by the total number of outstanding shares.

10. Institutional Ownership refers to the percent of a company's outstanding shares that are owned by institutions, mutual funds, insurance companies, etc., which move in and out of positions in very large blocks. Some institutional ownership can actually provide a measure of stability and make contributions to the roll with their buying and selling, respectively. Investors consider this an important factor because they can make use of the extensive research done by these institutions before making their own portfolio decisions. The importance of institutions in market action cannot be overstated, and accounts for over 70% of the dollar volume traded daily.

Market efficiency is a marketplace goal at all times. Anyone who puts money into a stock would like to see a return on their investment. Nevertheless, as before-mentioned, human emotions will always drive the market, causing over- and undervalue of common stocks. Investors must take advantage of patterns using modern computing tools to find the stocks most undervalued as well as develop the correct response to these market patterns, such as rolling within a channel (recognizing trends) with intelligence.

Random Stock Market Behavior

2008-08-28T12:20:00.000-07:00

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Gambling your Way to the Market
If you have the money and would like investing it in the stock market, you would do well by studying first the market. It is important for you to know the stock market behavior and the factors that would influence it. There are some who consider investing in the stock market as some sort of a gamble. That the stock market behavior is just too unpredictable and winning or losing in the stock market will depend on pure luck.

People who considers investing in the stock market as a gamble believes that the market cannot be predicted as to the course it would take at any given time. They think of the market as some sort of a rudderless boat floating by its lonesome self without any set of direction to take. You will be lucky if the tide sets the rudderless boat or stock market behavior in your direction but if not, you lose.

Indeed, because of their belief that investing in the stock market is some sort of a game of chance, there are stock market investors, who would even go to the extent of consulting their horoscope before doing their trade. Many Chinese stock market investors even have Feng Shui experts guiding them when to invest or trade in the market.

The Feng Shui Experience
A clear case of this situation wherein investors of a stock market believes that the stock market behavior is simply erratic, random and governed by luck and even by the positioning of stars and other unseen forces such as Feng Shui was demonstrated in Hong Kong when Financial Secretary Henry Tang presented Hong Kong's Budget for 2004/2005.

He made his presentation in a televised coverage. The Finance Secretary was dressed in a dark suit, white shirt and with a corresponding tie maroon red in color. While he was making his TV budget presentation, the TV screen bottom crawler which indicated real time Hang Seng Index performance, started dropping until it dropped to a low of 180.41 points.

Many Chinese stock market investors who have seen the precarious drop of the Hang Seng Index, which is Hong Kong stock market Index, blamed the entire stock market behavior to the colors of the Finance Secretary outfit during the time he made his TV budget presentation.

They pointed out that the colors of water represented by dark blue or black and metal which has white for its color and fire for red and maroon colors are simply against Feng Shui. This is what triggered the very bad behavior of the stock market when the Finance Secretary went on TV, they said.

Economist on the other hand would simply dismiss this behavior of the market as brought about by the color of the Finance Secretary's outfit due to bad Feng Shui. They reasoned that it was not Feng Shui that made the market behave badly. Rather, it was the belief of the investors in Feng Shui that made the market went down. Thus, in effect, it was human attitude which was fear that caused the market to behave badly.

To point out, they noted that while the Finance Secretary was on TV, many investors watching the proceedings were calling their brokers to sell shares rather than buy because they believe that the colors of the Secretary's outfit carries ominous and dire consequences to the economy because it contradicts Feng Shui, while all the while discussing the country's budget for the year. And because of instant communication through mobile phones, there was suddenly a deluge to sell that even while the secretary was still on TV, the Chinese belief in Feng Shui became evident with the heavy downward spiral of the stock market, all because of his color choice of tie, shirt and suit.

Market Behavior and Public Perception
This clearly shows that the market behavior is determined by the public's perception that will have anything to do with the economy. As many successful stock market traders would say, trading is not determined by gut feel but by how any news or information will affect your gut. In effect, they are saying that a market behavior will depend on the present environment and on the public's perception of the near future.

Seasoned traders debunk the idea that stock market behaves at random and there is really no basis for predicting its movements by using whatever forms of analysis. They reasoned out that just like its human conceivers, the market behavior will depend on the fears and greed of its maker in relation to material wealth and resources as affected by natural factors. History repeats itself, so does the stock market charts that continuously show similar patterns since the late 60s.

The Art of Making Money in Stock Market

2008-08-28T12:19:00.000-07:00

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Most people know that the stock market is unpredictable. Losses in stock market investment are an inevitable part of the trading process. Therefore every stock market trader, howsoever shrewd and experienced he may be, is bound to incur a loss at one time or another.

So before you start trading in the stock market, you must be prepared to suffer losses like every other trader. This, however, does not mean that making money in stock market is more a matter of luck or chance.

This only means that you should make a thorough search, both fundamental and analytical, about the profitability of the stock before investing in it. Having done that you must be prepared to suffer loss since, as already said, the stock market always remains unpredictable.

You have to develop a mind set which should be prepared to take losses in your stride.

What is the use of developing this kind of mind set?

If you understand that losses are part of the stock trading, you will look at your losses with detachment and equanimity like a good sportsman. You will not be shocked and perturbed. You will not lose your perspective and you will be able to prepare yourself for the next game, next trade with a cool mind.

A disturbed mind cannot react properly. It is likely to misinterpret the graphs and charts of the market trends and draw wrong conclusions.

A constantly nagging fear of suffering another loss in the next trade may prevent a trader from investing which would mean that the loss incurred in the previous trade would not be recouped.

If you have a positive mind set and understand that you have to make money in an inherently mercurial market, you try to be realistic instead of perfectionist in stock trading.

A good trading day for a realistic and positive trader will not be one when he makes money. It would be the one when he has made both an extensive and intensive research in the stock he wants to trade in. He has made a thorough planning with discipline and focus and follows each step as per his planned strategy. Making money in stock market for such investors will become easy.

Experts in trading psychology believe that it is important to concentrate upon things which you can easily control. You should not try to lose your focus on attending things which you cannot control.

For example, while you cannot control the price trend, you can control your losses by using the stop loss tool effectively. You can understand the concept of support and resistance levels and use them successfully in your trading.

According to Tim Renolds, you should develop three basic strategies to stop your losses. These are price based, time based and indicator based strategies.

In order to use the price based stop loss strategy, you will have "to make a hypothesis about the trade and identify a low point in that particular stock market." Having done that, you should "set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails."

The time based stops involves making optimum use of your time. You should fix up a certain holding period to achieve your target in trading a particular stock. If you cannot achieve your target within that time frame, you should not keep that stock and sell it off.

The indicator based strategy involves understanding market indicators. As an intelligent trader you should become aware of the market indicators and utilize your experience to analyze them to your benefit. The market indicators include volume, advances, declines, new highs and lows and so on.

Experts in stock trading psychology recommend that you should set stops and "rehearse them mentally". It will help to ensure that you follow these strategies thoroughly and benefit from them.

Another important point is that you should immune yourself from the influence of mass psychology. It means that you should resist the temptation to do what the majority of stock traders are doing. You must make up your own mind whether or not you have to buy or sell a stock. You can make up your own mind only when you have done your own independent research and do not listen to the secrets and tips offered by your friends and stock market experts.

Why Investors Should NOT Listen to Market Forecasts

2008-08-24T10:35:00.000-07:00

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A few months ago I wrote an article called, "Market Forecasting: Investors Beware." I talked about how economists and stock market gurus seem to be consistently wrong, and I provided numerous examples to make this point. In the January 14, 2008 edition of By the Numbers from Direxion Funds, they published a report showing how the forecasters did last year. The year 2007 appears to be a different year, but the same story. One thing the forecasters can claim is consistency because they are consistently WRONG!

* The average prediction made on January 1, 2007 by 58 Wall Street forecasters for the yield on the 10-year Treasury note as of year-end 2007 was 4.88%, an increase of +0.17% over its 4.17% level from December 31, 2006. Instead the actual December 31, 2007 yield did not rise from a year earlier, but fell to 4.02% (source: BusinessWeek).

* 82% of money managers believed in late December 2006 that long-term interest rates in the US would be "unchanged or higher 12 months later." The yield on the 30-year Treasury bond was not "flat to higher" but rather declined from 4.81% to 4.45% during calendar year 2007 (source: Merrill Lynch).

* 56 economists who were surveyed in mid-January 2007 predicted that the average price of oil would be $58 a barrel in the 4th quarter 2007, down $3 a barrel from its $61.05 price of 12/31/06. However the price of oil did not fall but rather rose +57% during 2007, closing last year at $95.98 a barrel (source: USA Today).

* The S&P 500 was up +9.2% YTD (total return) through Friday July 20, 2007, closing at 1534. The headline in Barron's over that weekend stated "It's Still Time to Buy" forecasting an additional +6% rise to 1625 by December 31, 2007. Instead the stock index fell 4.3% to finish 2007 at 1468. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: Barron's).

* As of Labor Day Monday last year (Sept. 3, 2007), there were just four months remaining in the calendar year. The S&P 500 had closed the previous week at 1474. Barron's asked eighty equity strategists to predict where the S&P 500 would finish the calendar year. Seven of the eight saw a rising stock market by year-end with one prognosticator foreseeing a December 31, 2007 value of 1700. The S&P 500 actually finished the year at 1468. (source: Barron's).

Also, from a long term historical perspective here is some more interesting "market forecast" trivia. This is also courtesy of Direxion's "By the Numbers" publication.

* On the morning of October 19, 1987, the trading day that ultimately resulted in the largest one-day percentage loss in the history of the S&P 500, the Wall Street Journal ran a front-page article with the subtitle "Some Stay Bullish, Believing Downturn is Temporary." The S&P 500 fell 20.5% that day (source: Wall Street Journal).

* On August 13, 1979, BusinessWeek ran a cover story titled "The Death of Equities." The S&P 500 closed at 107 on August 13, 1979. The S&P 500 closed calendar year 2007 at 1468 (source: BusinessWeek). Apparently equities didn't die...

* At the close of business on Wednesday October 9, 2002, the S&P 500 bottomed at 777 before beginning a bull market run that gained +101% to peak at 1565 on October 9, 2007, exactly five years to the day after the bear market bottom. The headline in the business section of USA Today on Thursday morning October 10, 2002 was "Where's the Bottom, No End in Sight" (source: USA Today).

The moral of the story is that forecasts make interesting conversation and trivia. Just don't use them to try to make money.

Understanding what makes the Stock Market Move Up and Down

2008-08-24T10:33:00.000-07:00

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Successful investing requires more then just a little bit of know how and a dash of luck. It requires a cool head, an analytical mind, and the ability to make quick money decisions. This is especially true when investing in the stock market. Investing naturally comes with a level of risk. The market's activity fluctuates on a daily basis during the opening and closing bells.

Generally the stock market is supposed to grow in value over a period of time. This growth is actually an average of all of the stocks included on the market. While some may have increased in value throughout the day, other stocks will have fallen in value. In some cases growth can affect whole sectors. A sector is a bloc of companies involved in a specific type of business.

Movement in the market is affected by a number of different factors. News reports affecting a specific industry can cause investors to want to increase their holdings, or negative news can cause investors to exit as quickly as possible. These however, are not hard and fast rules. In some cases favorable news can result in lower stock prices as more investors try and sell their shares then are willing to buy, once the stock price falls, it can rise quickly again as even more investors are interested in "buying low".

According to analysts, the erratic movements of the stock market can sometimes be attributed to the large number of inexperienced and amateur investors. This can cause the irrational behavior sometimes seen. Mass panic has been blamed more then a few times for making the market move in directions that completely contradict normal rules of behavior for the stock market.

Amateur investors have a tendency to make decisions based on press releases or rumors that is sometimes not even related to the value of a stock itself. Other causes could be the activity of day traders. Day traders usually trade in such large volumes that they can affect a stock's price either negatively or positively.

Still other ways the stock market can be swayed is by a coutry's attempt at correcting inflation. Usually raising or lowering the interest rate does this. These rates are an indicator of the financial situation for a country. If rates are either raised or lowered, the market activity will usually be influenced.

Some companies are able to increase their individual stock prices by releasing quarterly reports showing they have met or exceeded their profit forecasts. Also releasing information about new products or technology that can increase that particular sector's value.

Conversely, if a company reports that they fell short of profit projections, the value of that companies stock will usually go down as investors sell off some or all of their stocks. Large shifts are usually due to overreaction to changes in risk.

Without the assistance of a professional, the market can be an unforgiving venture for the casual investor. This trend has begun to change due to better resources being available to investors on all levels. Research is a must for any investment.

Why Does the Stock Market Price Rise and Fall?

2008-08-22T10:35:00.004-07:00

The question about what moves the tock market is quite complicated. There are several visible and invisible factors that cause the rise and fall in stock market. There are several issues on political, economic and social level that include inflation, change in interest rates, earnings of the people, oil and energy prices, war, peace and terrorism, political and domestic situation and so on. While some of these factors may have long-term consequences for the stock market, others may have only short-term implications.

What, however, drives the market crazy is the uncertainty factor. What the stock market is most sensitive to is the surprises. When something unusual occurs in the country, the stock market immediately reacts to it. Stock market radars are extremely sensitive to changes.

This can be illustrated by an example. If the Federal Reserve Board's Open Market Committee-Fed- thinks of raising the interest rates by one quarter percent, the stock market will not react much. If contrary to the expectation, the Fed raises the interest rate by one-half percent, the market will feel shocked.

So any news which can surprise the market can rattle it, be it on the economic front, terrorist attack and similar other incident. If the news is really good, it also shows its impact in form of rise in stock prices.

The cumulative effect of these factors, whether good or bad, creates market phases such as bulls phase, bears' phase or secular phase.

A bull market is also referred to as a bull run. A bull market is characterized by a rise in stock prices. It keeps most investors happy. It creates and strengthens their confidence and makes them optimistic about the returns on their investments. Therefore they tend to invest in stocks in the hope of making big in the near future.

A notable example of bull market was in the 1990s when the US and several international markets had a very happy time because the financial markets went up very rapidly. The US stock markets had a bull run from 1983 to 2007 except for brief periods of slumps.

Bear market is associated with fall in prices and lots of pessimism. Investors fear losses. A negative sentiment prevails in the market and investors want to sell their stocks fearing further downfall.

The most glaring example of bear phase in the history of United States was after the Wall Street Crash of 1929 that continued from 1930 to 1932 generating what was called the Great Depression. A milder version of bear market occurred from about 1973 to 1982 when the economy became stagnant. It resulted in energy crisis and high unemployment in the early 1980s.

A bear market is often characterized by the constant price fluctuations. A bear market does not mean just a simple fall in stock prices. It may result in substantial price fall. Although you cannot give a clear definition of bear market, it is often characterized by a fall in price by around 20% in a period of two months. A recent example of bear market is current state stock markets of world in the year 2008.

A bear market should not be confused with a period of correction. Correction also results in fall in stock markets, but a period of correction is usually short lived. Moreover correction usually occurs during the bull phase. The price fall does not surpass 15-20%. The bear markets last longer and suffer much greater price falls from top to bottom.

A period of correction in stock prices is usually a welcome opportunity for smart stock market investors. They try to buy high value stocks when most people try to sell them away at reduced prices. The profit from their sales as soon as the correction period, which is usually short lived, is over.

When the stock market price shows downward trend, the analysts begin to debate whether it is actually a correction, a rally, or the start of a bear market or even a bull market. In any case it is usually impossible to arrive at any correct decision. In fact, whether the market is actually passing through a correction or a truly bear phase can be determined only after that phase is over.

It must, however, be noted that a bear market howsoever depressing it may be, rarely wipes out the real (inflation adjusted) gains made during the previous bull market. On the other hand the bulls that succeed the bears often make up for the real losses of any bear market.

Secrets Of Online Trading And Stock Market Hours

2008-08-22T10:35:00.003-07:00

Most people would liken stock trading with gambling. However, in truth, the two couldn't be more different. In fact, it isn't simply buying and shares as well. Developing a good trading strategy is the key to making it in the stock market. A stock market simulator, is an online game application that duplicates aspects of real-life stock markets, from trading strategies and information, down to the varying stock market hours of the different stock exchanges. Read on and know more about how you can learn and practice trading with an online stock game simulator.

Two types of online stock game applications are available online for you to practice your trading skills and strategies. Naturally, no real money is involved; play money is used, so you can practice it without the financial risk. The two types of simulators are: Financial and fantasy stock game simulators.

If you want to practice trading through a fictional portfolio based on real entries, scenarios and stock market hours, then the financial stock market simulator is the best one for you. Because this type of simulator downloads and processes real and actual numbers and information, most online trading websites that offer these free stock games use a delayed data feed, that sends the information well after the end of the stock market hours. This prevents any abuse of the simulator and the system by unscrupulous traders who want an edge before the start of the stock market hours of the next day.

Most online simulator systems ensure that the stock market information and data may not be used to do actual trading before, during and after stock market hours using their information. Safe, reliable and enjoyable, a financial stock market online simulator is a great way for you to practice actual stock trading scenarios and gain experience and a working strategy before you move up to the real thing.

Another type of simulator is the fantasy simulator. This type lets you practice stock trading through thoroughly hypothetical yet amusing settings. While it retains many essential features of the stock market like premium picks and options, trading tickers, regular market hours, other traders, among others. But unlike the financial simulator application, fantasy simulators feature imaginary stocks that, while representing real items, would never be actually traded in a real stock market trading setting.

Traded items in fantasy stock market simulators would include questions on how long books will last on selected bestseller lists, the box-office success of specific movies, antics of infamous celebrities, rankings and statistics of sports teams and events, and more. The value of a fantasy market simulator is in its application of principles and how these may work given a real setting.

The simulator uses the analogy to teach anyone with no background in trading understand how it works. Fantasy stock market simulators use these items because they are familiar to a lot of people, thus opening opportunities for learning online stock trading to more and more people. This is one way where you get to practice stock trading techniques and strategies while having fun.

Getting the hang of how shares are bought and sold, and how other variables like stock market hours affect your investments are all part of your learning experience. Learning the ropes with a stock market simulator is one of the best ways to get you started with trading stocks.

he Art of Making Money in Stock Market

2008-08-22T10:35:00.001-07:00

You have to develop a mind set which should be prepared to take losses in your stride.

What is the use of developing this kind of mind set?

A disturbed mind cannot react properly. It is likely to misinterpret the graphs and charts of the market trends and draw wrong conclusions.

A constantly nagging fear of suffering another loss in the next trade may prevent a trader from investing which would mean that the loss incurred in the previous trade would not be recouped.

If you have a positive mind set and understand that you have to make money in an inherently mercurial market, you try to be realistic instead of perfectionist in stock trading.

Experts in trading psychology believe that it is important to concentrate upon things which you can easily control. You should not try to lose your focus on attending things which you cannot control.

According to Tim Renolds, you should develop three basic strategies to stop your losses. These are price based, time based and indicator based strategies.

Experts in stock trading psychology recommend that you should set stops and "rehearse them mentally". It will help to ensure that you follow these strategies thoroughly and benefit from them.

Investment Strategies For the Stock Market

2008-08-22T10:34:00.001-07:00

When it comes to Investment Strategies for the Stock Market most people believe that there is only one safe strategy.

'Buy and Hold'

The reason why most people believe that this is the safest investment strategy for the stock market is because that is exactly what their financial advisors have told them. Have you ever heard the phrase

"The key to successful investing is Time In the Market NOT Timing the Market"

I believe that this is a lazy approach to investing and is really just an excuse to hide the fact that some financial advisors have no idea what the market is doing. Wouldn't successful investors use multiple investment strategies for the stock market? If the market is at a record high and there is a chance of a correction then surely there is something that you can do (other than selling your stocks) to protect some of your profits?

The reason why financial advisors don't want you to know about any other investment strategies for the stock market (other than buy and hold) is because it isn't in their interest for you to know about them. They want you to remain reliant on their advice and have you feel as if the stock market is a very scary and dangerous tool - only to be tamed by the so called experts.

What is your opinion? I certainly believe that at times the stock market can be very scary and dangerous but like any thing; the more you educate yourself the more comfortable you will feel with it.

So what are some Investment Strategies for the Stock Market other than buy and hold?

Let's have a quick look one very simply investment strategies that can be used to great effect on any stock market.

Covered Calls

This is one of the most effective, low risk investment strategies that can be used on the stock market. The basic idea to sell call options on a stock that you own. What? I hear you saying. In simple terms it means that you are renting out your shares for a monthly premium and in return you are giving somebody the option to buy your shares at a predetermined price that is higher than what you paid for them.

Let's say you own 1000 XYZ shares that are worth $15.00 each. People will pay you a monthly premium to have the option to buy these XYZ shares at a predetermined price within a predetermined time frame.

For instance someone might offer you $500 for the right to buy your shares at $16.00 within the next month. Why would they do this? Because if the shares happen rise up to $18.00 they will be able to buy 1000 XYZ shares at a $2.00 discount per share ($18-$16).

The great thing about this strategy is that both parties can win e.g. If this was to happen you would be happy too because you would get to keep the $500 premium and you would also make $1.00 from every share that you sold because you bought them at $15.00 and sold them at $16.00.

What happens if the share price was to go down?

If the share price was to go down from $15.00 to $13.00 then you would still get to keep the $500 premium which would reduce your paper loss from $2.00 per share to $1.50 per share.

Writing covered calls (or renting out your shares) is one of the most commonly used investment strategies by the rich. It is a great low risk low risk investment strategy for the stock market that everybody deserves to know about.

So there you have it a simple investment strategy for the stock market that can help increase your cash flow and also gives you downside protection. What more could you ask for in a stock market investment strategy? So next time you see your financial advisor ask them about covered calls and see what response you get. My bet is they probably won't even know what you're talking about because their university course didn't teach that subject.

An All-Or-None Stock Market Order - What is It?

2008-08-22T10:31:00.000-07:00

This might sound like a good thing for the investor, but it does need a large amount of money to be able to manage it well. Stockbrokers do not give priority to all-or-none (AON) orders, however, and the investor would be well advised to make sure that there are sufficient stocks available to make his or her order achievable before placing the order.

Here is an example to illustrate what is meant by an AON order. There are 700 of a particular type of shares available, but an investor wants to by 1,000 of them. If he places an AON order for 1,000, then he will have to wait until there are at least 1,000 of the shares available. In the meantime, however, the value of those shares could rise, which would cost him a lot more for the 1,000 shares than he was originally prepared to pay. There is also the question of whether the stockbroker can get the order through when the time comes.

When the full quantity of stocks does become available, the value could be lower, or might have remained the same as it was at the time of placing the AON order. The lower price is particularly likely if there has been a bear market, when lots of people are selling their shares, and this causes values to drop. In the case of an AON order, the investor will now spend less on his purchase than originally planned, and this means that the risk associated with the AON order is less.

Inflation is the biggest problem in connection with AON orders, because the investor might have to spend more money than he originally wanted. He could of course try to cancel the order, but if this is not possible he will have to go ahead and purchase the shares.

Having placed an AON order, there is of course also no guarantee that the requested stocks will be available, and they may not be available for quite some time, perhaps even a number of months. Again, the stock market investor may decide to cancel the order during this time, and not receive the shares he ordered. Because of the low priority allocated to AON orders by stockbrokers, this wait and subsequent cancellation is quite a common occurrence.

If you do decide to place an AON order, then be careful to select a stockbroker who is experienced with these orders and can be relied upon to do his or her best for you in this regard. Be wary of a stock market broker who is likely to cause delays in your order, because of their low priority for him.

Relative Market Share Profit - What Exactly Is It?

2008-08-18T04:09:00.000-07:00

Relative market share profit is one of the key indicators to be used when selecting a stock to invest in. The market share numbers is simply a percentage that shows how much of the total sales in a sector or market a company makes. For example in the commodities market lets assume the global annual sales of raw sugar cane are $200 million. If Company A has annual sugar cane sales of $55 million then its global market share is 27.5% (55m / 200m).

Market share is a good indicator of a company's progress if measured over a period of time. Quite often you can plot together the market share over the last few years from information sourced from annual reports, industry publications of market research available on the internet. By looking at the relative market share over a period of time, alongside some other key performance indicators such as profitability can be invaluable to achieve smart stock investing.

A company may have aimed to increase its market share, which is obviously good however to achieve this it may have to reduced the prices it charges. By reducing the profit margins to increase market share the company may have overall reduced its profit. The full effect of this can only be measured by performing relative market share profit analysis.

Such equations and ratios should however be considered alongside strategy information. Many successful companies are highly successful despite having very small market shares. A good example is the car manufacturer Ferrari. Their market share of the entire car market globally is well under 1% however they only target a very small niche of customers, the very rich. By targeting their product to this niche they are able to dominate it and post excellent profits, despite their tiny market share.

Market share, in strategic management and marketing, is the percentage or proportion of the total available market or industry sector that a company operates in. Market share is one of the fundamental analysis tools that many brokers use to pick stocks.

Market share can be expressed as a company's sales (revenue) in a particular industry or sector divided by the total sales revenue available in that market. Alternatively it can also be expressed as a company's unit sales volume divided by the total volume of units sold in that market (non monetary terms).

Relative market share profit is an extension of market share that takes the market share of a company (in percentage terms) and multiplies it by the revenue of that firm.

The figures required to calculate the relative market share profit of a company can usually be sourced from annual reports or in articles or market research that has been carried out. The internet is probably the best place to start this type of research.

Both increasing market share and profit are two of the most important objectives used in business. However they are not linked. Sometime to increase their market share, a company may have to forgo profits by reducing its prices. Conversely focussing on a smaller sector of the market may allow the company to charge premium prices and increase margins and profits.

When relative market share profit calculations are used as an analysis tool to aid stock picking for investing in the equity markets, they can provide more insight to a company and its competitors than many other ratios.

Other investment ratios that are of use to stock investors include return on investment (ROI), return on assets (ROA), and profit margin (gross and net).

Increasing Your Slice Of The Market

2008-08-18T04:08:00.002-07:00

There is nothing that attracts business more easily than dominant market share. When you have increased your slice of the pie to the point that it dwarfs your competition, the prospects begin to seek you out.

I coach an agent on the east coast who, in the two towns she dominates, single handedly sells more homes than the number two and number three companies in sales and unit volume. Last year she listed and sold 66 properties in her market areas, over which time the top competing companies together sold 59. And the balance just keeps tipping in her favor, because success breeds success and nothing indicates success better than dominant market share.

What is market share? Market share is the percentage of sales that you control in your marketplace. Market share can be based on listings taken, listings sold, buyer sales, sales volume, or sales by units. In any case, your share reflects the portion of total market activity that is represented by you or your company.

To calculate your market share, simply divide your or your company's production against the overall production of your marketplace. For example, if 575 homes sold last year in your market area, and if your company sold 215 of those 575, then your company handled 37% of all transactions and controls 37% of the market activity (215 ÷ 575 = .37).

Also, calculate market share in various market segments. You might find that your overall market share is low but that you have a commanding market share in a certain neighborhood or price category.

Market penetration is another way to describe market share. If you command large share of your market, you've achieved significant market penetration. If your market share is minimal, your penetration is minimal as well.

A single agent can't expect to penetrate a broad market overnight, if ever. For years, I worked the east side of Portland, Oregon - a geographic area that was home to 750,000 people. Even as productive as I was, with 150 home sales a year, my market share when compared to the size of the marketplace was minuscule. I barely scratched the market surface, let alone penetrate it. But within the market niche I'd carved, I was a dominant force.

A niche is a segment of the overall market. Niche marketers serve a select group of consumers whose interests and needs are distinctly different from the needs of the market in general. Think of niche marketers as big fish in small ponds.

You can create a market niche by serving consumers in a particular geographic area, consumers seeking a certain property type, a certain type of buyer or seller, a certain income category, the list is goes on and on. You can create a niche by focusing your efforts and increasing your penetration of FSBOs, expired, non-owner occupied properties, or small multiplexes.

The key to gaining penetration in a niche is focus. You have to decide which smaller section of the marketplace you want to work and quit trying to be all things to all people. Then, once you identify your niche, you need to create presence, penetration, and dominance, following these steps:

* Make contact with prospects in your niche not just once but repeatedly over a compact period of time.

Studies show that it takes six impressions for a consumer simply to recognize or retain who you are. By increasing both the number and frequency of contacts with prospects, you can increase your market awareness, which is a first step in achieving market penetration.

* Make personal contact. For most agents, the preferred method of contact with people located in a geographic segment is mail. They mail and mail and mail their prospects to death. They send refrigerator magnets, note pads featuring the agent's name and face, local football, baseball, or basketball game schedules, annual calendars, and more. Guess what? That's not enough to achieve market penetration.

A few years ago, I started working with a client named Sue who wanted to penetrate a large gated community where the turnover of homes was brisk and the sales prices were high. She'd given herself a tall order because another agent dominated the market and controlled more than a third of all the community's real estate business. Luckily, though, the dominant agent had gotten lazy and reverted to easier contact approaches than face-to-face visits. Sue moved in with well-designed marketing pieces for use in mailing, but also with a well-crafted personal contact strategy. When all was said and done and her market share goal was met and exceeded, she determined that her success didn't stem from marketing pieces that were better than the other agent's pieces. Her success came from the fact that the people who lived in the gated community saw her frequently.

Whenever anyone in her firm listed a property in the community, she'd ask and receive permission from the listing agent to hold it open. Then, prior to the open house, she'd walk around the neighborhood personally inviting the neighbors. In between open houses, she provided the neighborhood with regular market updates. And on a constant basis she was personally very visible in the community, spending a few hours each week meeting and greeting her prospective clients.
When an expired listing came off the market, she showed up at the owners' front door. When a FSBO sign appeared in a front yard, she was there, as well. In fewer than 20 months she went from a single-digit market share to a share of over 30%. Meanwhile, the once-dominant agent went from 37% to less than 20%. She had been beaten by the effectiveness of personal contact.

How to achieve market dominance

To become a dominant market force, you need to take market share from someone else. Dominance involves growing your percentage of the overall marketplace until you control a greater share of market business than any competitor. In some markets, which are shared by a great number of competitors, a 10% share might be dominant. In other situations, where fewer competitors exist, you might need 30% or even a higher share in order to be the dominant player.

To gain market share and dominance, first you need to gain recognition, which results almost automatically from simply doing more than you are expected to do:

* Do more personal prospecting.

* Create more usable market and industry information.

* Have more communication with your clients.

* Do more for your community, by sponsoring picnics, baseball or soccer teams, or community events as a few examples.

Doing more than is expected will earn you recognition and create a buzz about how you are different. Your reputation will be enhanced. Suddenly, rather than being an unknown agent you'll be a "name," a known entity.

Then, with the confidence you build through your awareness-development efforts go one step further. Dare to do things that no one else is willing to do.

Sue, my client in the preceding anecdote, was willing to take the risk of rejection by calling on people and meeting then face-to-face. Her competitor, even though she was the market's dominant force at the time, was unwilling to subject herself to the potential rejection. Of all the approaches I've seen, I believe that establishing more personal contact is the easiest, most cost-effective way to move to a position of dominance in a real estate market.

By taking each of the preceding steps - choosing a market segment, establishing contact, gaining awareness, establishing personal rapport, going beyond the expected, and daring to be different in your communication approaches - over a period of 18-24 months, you will penetrate your target market niche and be well on your way to achieving market dominance.

Doubling Stock Program - Is it the Right Program For You?

2008-08-18T04:08:00.001-07:00

The Doubling Stock Program has been on the Clickbank marketplace for over a year now and has been at the top of the list for sales almost since they hit the market. Because they are so popular it is time to take a good look at this program to see if it can make you money.

What is the Doubling Stock Program?

Doubling Stock is a membership site that will provide its members with their pick of a penny stock they believe will double in price in a short period of time. They are able to make this pick by using a software they call "Marl, The Stock Picking Robot".

Who are the owners of Doubling Stock?

Doubling Stock is run by 2 self proclaimed "geeks" Michael and Carl. Michael developed the famous "Global Alpha" computer stock trading model, while contracted to Goldman Sachs. It was Michael's technical wizardry that created the foundation for Marl that Doubling Stock.com system runs on.

Michael then joined forces with Carl, who was a fund manager, to tweek and perfect Marl so that it could be used on a home computer. Once the system was perfected the two of them took Marl to the people and developed a system that allows the average Joe to benefit from the same type of analysis that the big players on Wall Street use.

Does the Doubling Stock Program work?

Well to be honest Doubling Stock is not for everyone. As with anything there is risk involved in the stock market and Doubling Stock deals with penny stocks. In following the picks of Marl there is a very regular pattern of the recommended stocks increasing in price shortly after the newsletter comes out and then dropping in price a few days later. If you purchase the stock right as the newsletter comes out you stand a good chance of making some money. You can also wait a few days and short the recommended stock as the price falls again. For the very shrewd you can do both strategies and really take advantage of the recommended stock pick.

That being said the system is not perfect and there are still some stocks that do not go up in price. Invest with your own comfort level for risk.

What is the catch to the Doubling Stock Program?

Well the biggest catch is in the fine print of the newsletter. At the bottom of most newsletters there will be a statement that is a disclaimer. The disclaimer often states that Doubling Stock will be compensated a large sum of money for recommending the stock pick of the week. This is not uncommon however it does make some people a bit uneasy and question whether the pick is actually a good one or just one they are being paid to pick.

Tips to making the Doubling Stock system work for you:

If you are interested in this program the best strategy is to join the newsletter for a few weeks. During those weeks do not invest any money in the picks. Just watch them, track the trends and hone your skills on how to profit from the information. Eventually you will see a pattern that you can exploit for your gains and realize that this system is either for you or not your cup of tea.

Learn to Analyze the Stock Charts

2008-08-18T04:06:00.000-07:00

When it comes to buying and selling of stocks, which is the most crucial phase in trading, your market knowledge plays a very important role. If you have done your groundwork properly, you can easily manage the trading process. However, there are several factors that directly or indirectly influence your trading such as how effectively you have done the market analysis, how have you analyzed the charts, etc.

Since effective trading determines your success in the stock market, investors therefore need to be prepared. As far as market analysis is concerned, which is again the most important factor in the trading process, there are certain things that really matter and determine the effectiveness of the analysis. One of the most important points is the ability to analyze stock charts.

There are certain critical results you can retrieve from the stock chart. But before that you need to ask some questions to yourself: what is the current pattern being followed in the stock market, is the chart smooth or changing with time, is there any specific chart pattern, can I retrieve some important results by analyzing the chart, etc. Once you ask these questions, you get a fair idea of the stock chart.

Trading largely involves buying and selling of stocks. But this simple process needs a good decision making capability - sometimes you need to take quick decisions and without a positive attitude and intelligent decision-making capability - you cannot trade intelligently. So, you have to be more cautious and optimistic about the market.

The new age Internet based stock trading process is much more easier than the traditional brokerage system. In this system, all trading processes are done online and investors need not to consult any middleman. However, your online presence is important and therefore, you need to open an account on the Internet. New investors often ask some common questions like - do they need to know computer and Internet, how safe is online trading and how to open an account online.

These are some of the basic yet important questions that investors always want to know. It is important to mention here that even if you don't have any knowledge of computer or Internet, you can still trading online. When you browse the website, you can find video tutorials and other guidelines - go through the guidelines and then learn all the processes that are involved in trading. Again the most important question is about the safety - since all your account information is uploaded on the web, safety is important. The online trading company websites use hack free advanced software tools and provide full security to the account.

When it comes to opening an online account, it is very important to first search the best company website. Since, there are various websites and trading services available in the market -first list out some of the major sites based on the company profile, services, terms and conditions and present and past market reputation. Once you short list some leading company websites, compare them and then select the best one as per your requirement. Today, companies are offering best services to consumers and charge a very minimal commission rate as well. You can access a wealth of valuable information, market analysis tools, charts, stock quotes, news and more - all in just few mouse clicks.

Investment is important for everyone and Internet based stock trading is the best option one can have. So, don't waste your time - save some money and also some gain profits.

How to Approach the Stock Market

2008-08-10T08:27:00.002-07:00

Before an investor can begin to trade successfully in the Nigerian stock market, there are some basic skills that one needs to be able to position oneself for maximum profits.

The Nigeria stock market is made up of two markets, the primary and secondary markets. A sound understanding of how these two markets operate is very vital if you are going to succeed. At this junction, let's x-ray these two markets to understand their workings.

1. THE PRIMARY MARKET

The primary market is where fresh funds are raised, anyone who buys shares in this market does not pay any commission, If a company's IPO is out for the public, all you do is to fill the form and issue your check,

The primary market is the period from the time of the IPO to the point where allotment was done and money returned to those who could not get all they requested for. The primary market is where both new (unlisted) and old (listed) can raise funds in the future either through PO, IPO, RIGHT ISSUES. Also, it is pertinent to mention here, that privete placement activities also are carried out by small sized companies that are aspiring to be listed at floor of the NSE also come to the public to raise funds privately.

2. THE SECONDARY MARKET

In order to have an enabling ground to buy and exit effortlessly, the stock exchange provides the platform for trading in listed company shares by institutions and individual. The secondary market is where potential investors can buy and sell such shares. Those who buy at the primary market who have received their share certificate and those who bought directly from the floor transact business at the primary market.

3. HOW THE SECONDARY MARKET WORKS.

Once a company is listed, trading on its shares commences. The issuer's broker announces the listing of the shares, immediately after which other brokers start trading on the company's shares from that day. Stockbrokers come to trade on behalf of stock brokerage firms; they are members of the Nigerian stock exchange and are represented at the trading floor by stockbrokers.

When a customer wants to buy a stock either by the advice of your stockbroker or on your own understanding, after the agreement on what to buy is reached, the customer gives his stockbroker a written mandate specifying those stocks. He will also fill out a CSCS shareholder's form and transfer forms. The information given enables the customer to receive correspondence from the registrar and CSCS Ltd, In future, it is on these basis dividends, bonuses, annual accounts and reports will be sent to him. The customer will be issued a contract note by the stock broking firm, which is evidence of purchase. When such stock gets to an appreciable height in terms of capital appreciation in price, he fills out mandate for sale, mandating the stock broker/firm to sell on his behalf.

In the final analysis, approaching the stock market requires that you acquire the foundation know-how, so that you can know how to steer your way in the sometimes uncertain waters of stocks investment.

Watch out for other incisive and impact articles.

AMEX - The Third Stock Exchange

2008-08-10T08:27:00.001-07:00

American Stock Exchange directors Alan Quasha, Philip Frost and others hit on investment option that the individual investor should consider: The Exchange-Traded Fund that combines the best of two worlds.

Many of us are familiar with the two major U.S. stock exchanges, the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ), for very obvious reasons. The NYSE is the stock exchange with the largest dollar volume in the world - the combined capitalization of all its listed companies was over $30.5 trillion (as of 31/12/07) - and its almost 4,000 listed companies make it one of the three stock exchanges with the highest number of listed companies. The NASDAQ has more trading volume per day than any other stock exchange in the world, and with its over 3,900 listed companies it competes with the NYSE for the second highest number of listings (the Bombay Stock Exchange has over 4,700 listings making it the stock exchange with the most listings, yet it has a combined capitalization of less than $2 trillion).

The third largest U.S. stock exchange with over 850 equity listings is the American Stock Exchange (Amex), and while it may seem to pale in comparison to the NYSE and NASDAQ it has many positive attributes that set it above its larger brothers. The Amex has much more liberal policies when it comes to the listing requirements, and this makes it much easier for small and medium sized companies to list. However, there is another aspect of the Amex that makes it attractive to the small investor - and it is here that its uniqueness and innovation is expressed.

In 1993 the Amex gave birth to a new investment instrument called the Exchange Traded Fund (EFT). In conjunction with State Street Global Advisors, Amex launched the first exchange-traded fund (ETF) with the introduction of the S&P 500 index fund (SPDR - colloquially termed "spiders"), which was linked to the S&P 500 Index. Since then, ETFs have flourished across all the stock markets, yet the Amex remains the home and breeding ground of the majority of ETFs. The flurry of activity following the introduction of the SPDR gave rise to many ETFs, many of them index-linked, and the years immediately following the SPDR's burst onto the investment stage coincided with the tenure of Amex governors Alan Quasha and Philip Frost, who together with the Amex leadership nurtured the ETF revolution.

To understand what an ETF is, and also to appreciate its advantages over other investment strategies, requires a basic knowledge of some of the classic investment options available to the private investor. The ETF is in reality a mutual fund that benefits from the advantages of a fund, yet it acts as a regular bond or stock, and thus incorporates the advantages of a stock, thereby eliminating the limitations of the mutual fund. (Many mutual funds - and in turn, ETFs - are linked to indices, which means the funds mimic the successful diverse combination of investments that comprise an index.)

A mutual fund is a collective investment fund which incorporates a basket of shares of listings across the market and it is seen as one of the most solid forms of stock market investment. This is due to its management by professional managers, but primarily due to the fact that it comprises a diverse portfolio covering many spheres of the market, and thus it is less vulnerable to sectorial fluctuations. Not only does it offer the small investor this cross-market diversity, but he is able to invest in numerous and high quality companies that would require funds far beyond the financial abilities of private individuals. (Of course the exact solidity and yield of the mutual fund depend on the declared aims and scope of each mutual fund.)

Regular stocks and bonds are the most basic commodities of a stock market. They are the shares that offer the public ownership in part of the listed company. Unlike shares in a mutual fund that may only be traded at their closing price at the end of the trading day, classic stocks may be traded at any moment, and the price fluctuations during the day can be utilized by investors in speculative activities. Thus the most fluid, dynamic and flexible investment on the stock exchange is the regular stock.

The exchange-traded fund combines the strongest aspects of mutual funds and regular stocks in offering the solidity and diversity of the mutual fund, together with its increased funds and professional management, and also incorporating the fluidity and dynamism of the stock, allowing all the investment activities and real time behavior of the stock. Additional benefits include lower management expenses, as regular brokerage fees apply, tax incentives expressed by lower rates, and the short-term capabilities of the stock. In effect, while investment in a mutual fund resembles an investment in stocks across the market, the ETF allows one to trade in numerous stocks across the entire market as if they were one stock.

With the many benefits of the ETFs, it is no surprise that this market has grown include hundreds of ETFs within only a few years. The Amex remains the fertile ground for the majority of ETFs, and this will continue due to its experience and flexible constitution. This fast growing investment option is estimated to surpass a capitalization of $1 trillion by 2010, and it is certainly one of the prime investment instruments that the individual investor must consider.

Trend Following in the Stock Market

2008-08-10T08:26:00.002-07:00

Trend is the general direction of the price in the stock market. Trend is determined by comparing the price and the average volume of trade in the market. The price and volume have a close relation in determining the trend in the market. There are predominant two different trends that are seen in the stock market - the bullish trend and the bearish trend. Then there are some intermediate trends that also exist in the share market. When there are more buyers in the market and the overall market condition is on the higher side, it is the bullish trend. On the other hand, when there are more numbers of sellers in the market, and the buyers' confidence is low, the market is said to be in a bearish side. These two are the most common trend in the market and the price index and volume of trading are the two most crucial parameters for deciding the overall market trend.

As an investor you can effectively gain from following the trend in the market. In fact there is a group of investors who do the trend trading, i.e. buy and sell the stock by trend following in the stock market. This technique is better way of investing in stock market if your objective is to wealth building from stock market. If you are trading in stocks for income then the trend trading is not really a good option for you. There are so many benefits of doing trend trading and they are as follows,

Trend trading is the easiest and safest way of investing in the stocks. All you need to do is identify the trend and make your investments and then close the deal when the trend begins to reverse. That means when the market is bearish and prices of the stocks are falling on a daily basis, select a few stocks that are fundamentally in good position and invest in them. Wait for the trend to reverse and whenever the market is rising and hits the highest level, sell off those stocks and get the profit. To do that successfully you need to have a good research and technical analysis of the stocks. That will help you to determine the entry and exit point of the stocks that is very much important for trading according to the market trend. The technical analysis and fundamental study of the stock together will help you to identify the undervalued stocks in the bearish market as that will most likely give you maximum return when the market trend reverses.

But following the trend in the stock market is only profitable when you are investing in the stock market for long term. To get the benefit from the trend reversals, you have to wait for the right opportunity and if you can do that you can expect to get benefited from 60% to 80% of the intermediate price change. So, keep an eye on the market trend, identify the right stocks and invest in those stocks for sure profit.

Stock Market Strategies

2008-08-10T08:26:00.001-07:00

If you are investing stocks and want to make profit from your investments, you need to have some stock market strategies. There are investors, whose buying and selling decisions are largely influenced by people they know. They blindly follow what others are doing without understanding what might be profitable for others might not work for them. The result is inevitable in these whimsical trading and would result in huge loss at the stock market. On the other hand, if you can have a strategy of your own and you meticulously follow it, then there is a better chance that you will succeed in the long run and make profitable stock market investments.

Make a strategy - The first and foremost thing is to draw stock market strategies for yourself. For that you need to have a clear understanding of the available stock types and different methods of doing stock market trading. For example, there are different stock types, such as large cap, mid cap, small cap stocks, penny stocks, sector stocks, growth stocks, dividend stocks etc.

All of these have their own characteristics and not all the stock types are suitable for a specific investor. Then there are trading types, you can do derivative trading, you can invest in cash segment, and you can do day trading or you can invest on long term. After you have gained comprehensive knowledge of the pros and cons of all these trading types and have a clear understanding of the risk associated with each type of trading, take notes on your capacity and your willingness to take these risks. Then you can find a suitable strategy for your stock market investments.

Always adopt a long-term strategy - While investing in stock market, it is always better to have a long-term stock market strategy. This does not mean that you should buy a stock and hold for months and years. Rather a long term strategy is to have a predefined entry and exit points for a particular stock and follow them without fail. That will make sure that you can gain from the trading.

Stick to the fundamentals - While forming your stock market strategies, stick to the fundamental rules of the market. Follow the results of the technical analysis and fundamental analysis and take decisions based on that. Do not get confused with the sudden trend change in the market and never give in to the panic. If you have done your research well and have a well-defined strategy to follow stick to it and you will gain in the log run. To have the best effective strategy for your stock market investments you can also consult an experienced broker or stock market analyst.

Do not surrender to the sentiments - When you do the analysis of the stocks and form your stock market strategies, never surrender to the sentiments and rely on your personal feelings about a particular stock. Remember when it comes to stock market, numbers speak for themselves and if you want to make profit, follow them.

Exercising Stock Options And Taxes - How Do Taxes Work With Stock Options?

2008-08-02T01:15:00.000-07:00

Are you confused as to the question of how to deal with your incentive stock options? Or are you worried about owing a large amount of tax on options that you have not even exercised and do not have the cash to pay for it? Well, luckily, if you manage your affairs well and take on board some simple advice, you will be able to avoid owing too much tax on your stock options, and also postpone paying it until you have the cash to do so. Sounds complicated? Not necessarily so. In most cases, if you have a large amount of money tied up in stock options, then you should probably get some professional advice. Financial advisors can help you put together a strategy that maximizes the value of your options. This article is only intended to give you an idea of the steps that can be taken when tax planning with stock options.

First of all, you do not have to pay any tax owed immediately, if you do exercise your stock options. This is the case so long as you do not sell the stock you receive. If you exercise an option to buy some shares, then so long as you do not sell that stock, you do not have to pay any tax at that time.

The second piece of good news is that you can end up only paying 15 percent tax on the options when you do sell. This will apply if you hold on to the stocks for long enough to qualify for a long-term capital gain.

So things are starting to sound a lot better on stock options taxation. By postponing the tax owed until you sell the shares, you can avoid the hardship of having a tax fall due without any money coming in to pay for it. It is similar to the cases in the past where people received valuable paintings or other works of art in a will, and then immediately had to sell the painting in order to pay the tax that was owed on the inheritance. Also, 15 percent is quite a low rate of tax and it should also be remembered that this is the highest rate that can be payable on a long-term capital gain.

Stock Market Scam And How To Avoid Them

2008-08-02T01:13:00.000-07:00

With all the prices going high these days, people would instantly grab the opportunity on anything that will make them earn money. And this is basically where fraudulent people take advantage of.

Today, there are many scams as there are starts in the sky. They had been so rampant that people became so aware of its alarming condition. But still, even if they know that there is a bound to be a scam out there, they could not yet distinguish what is a scam and how can they avoid it.

In the industry, one of the proliferating scams is the stock market scams. A lot of people are getting enticed to join these simply because their offer seems so hard to resist.

Why? Because who wouldn't resist a "get rich quick" strategy? These are just petty things but are actually bigger problems than what you thought it is.

For people to know what stock market scams are and how to avoid them, here's a list of the common stock market scam lurking mostly in the Internet today:

1. The "Pump and Dump" stock market scam

This type of stock market scam is mostly disseminated in the Internet. Here, people usually get to see messages posted in the Internet advocating them to purchase a stock at once. This type of scam also urges those who have stocks already to sell their stocks immediately before the value depreciates.

These deceptive scammers claim that they have reliable sources about a threatening development. They even assert that they utilize a foolproof combination of the stock market and the trade and industry data so as to get some stocks.

The bottom line is that this type of stock market scam is detrimental especially to those who are starting small. In reality, people behind this scam would want to manipulate the stock market through small time businesses because small businesses are easier for them to manipulate.

2. Pyramid scam

Just like its motherboard, this pyramid scam in the Net tries to hoard money from the consumers by letting them invest their little amount of money and grow it really big provided that they recruit more people into the company.

These two are the most common stock market scams lurking in the Internet today, and the only way to avoid them is information. It's a must that people should be aware of them, know their styles, and how they recruit people. If in case, they cannot determine if it is a scam or not, they should verify the claims from the right people. That's the simplest thing to do.

nfomercials touting stock trading systems are ubiquitous on late night television. These infomercials generally showcase examples of people turning small sums of money into making $100,000 plus in a year. Sound too good to be true? It is, and don't be a victim by falling for these traps.

There is a lot of people out there touting stock advice and other investment schemes. Some of these are legitimate; some are not. This article will help you identify those "systems" out there that will just suck the money out of your pocket. Here are the top warning signs:

1. The "system" uses options trading. When you buy stock, you are buying a small share of a major company. If you buy a share of McDonalds, you become a very small owner of the worldwide giant. Stock options, on the other hand, are essentially bets on a stock's price. You do not own the stock; you buy an option to buy the stock. You make a bet with another trader about the price of the stock's movement. Unlike the stock market, the stock options market is zero-sum. Whatever you gain, the other guy loses and vice versa. People who succeed at stock options are generally insiders that work at the Chicago Board of Options Exchange. Betting against these guys is like betting Kobe Bryant that you can beat him at basketball.

2. The infomercial (or advertisement) showcases people who make a certain amount of money a day or a certain amount of money during one trade. The proper way of identifying good investors is what percentage they grew their income compared to the market. For example, an excellent investor will make a 15% return on his money in the market when the stock market only produced a 10% return on average during a year. When an infomercial talks about how someone makes a lot of money per day or per trade, they are banking that the viewer knows nothing about the stock market and can be fooled by such claims.

3. The "system" promises amazing returns. An amazing return in the stock market is 13% a year, compared to the long-term average of 10%. If an infomercial is going to lead you to believe that you can double your money in a year or less, run. It's a scam.

4. Most infomercial scams induce you to visit a free seminar, then expect you to pay an exorbitant amount (several thousand) to attend another seminar, then expect you pay an even greater amount for software or other advice. If it follows this pattern, run.

Stock Investing - What you Need To Know

2008-08-02T01:02:00.001-07:00

You do not need a broker's license if you are contemplating stock investing. But you do need a stockbroker to handle the transactions and a basic understanding of how the stock market works.

There are two ways used in to stock investing. The first is trading stocks on the stock exchange floor. For many people this brings up a mental picture of this chaotic scene of people running around yelling into phones.

The reality is, regardless of how much of a chaos it seems, stock market trading on the exchange floor is very organized. The other method is you can trade electronically which is done at your computer.

An important thing to understand about stock investing is that if you are a seller you do not set your selling price. This is different from retail sales or selling your automobile. To better understand, think of stock trading as an auction.

A big step in understanding stock investing is to learn the language of stock trading. For instance, "shares" means a partial ownership in a specific company. Now this only is in relation to what is known as "public" company. A company then, has to be a corporation or it cannot issue stocks for sale.

Now that you have decided you do want to invest in the stock. The first thing you do is call the stockbroker up and advise him on how many shares of a particular stock you want. He then relays this information to the order department who in turn advise a floor clerk on the exchange floor. This floor clerk then tells the stockbrokers company floor trader, who then will be responsible for finding another floor trader who would like to sell the shares you are in search of.

Now, it is a matter of the two traders agreeing on a price and finishing the deal. They then relay this price information back to your broker, who will inform you of the final price for your shares. Also,you get a confirmation notice of the share you bought after most deals. Now this confirmation can take minutes to hours to reach you.

Then we have the second way for stock investing. The stock market has been influenced by technology advances but you still need a stockbroker since individuals are unable to access the electronic markets. A human stockbroker is replaced by immense computer networks.

This picture of controlled confusion on the exchange floor is gone and it has become the choice of many people. An advantage to electronic stock trading is that you can manage your own account and you get instant confirmations in regards to your trades.

The next thing you want to be aware of is how to keep track of the trends of the stocks that you own. One way to do so is to look in the business segment of your local paper where a section is dedicated to the stock markets. If you want more minute information, the place to look is on a business channel. They will have what is called a ticker at the bottom of the screen. By watching this ticker you will know at any time what your shares are worth.

Summary:

You do not need a broker's license to get into the stock market. You do need a stockbroker and basic knowledge about stock investing.

Strategic Moves on Stock Market Investment

2008-08-02T00:59:00.000-07:00

Stock market investment is a risky stance, but it should not stop any aspiring investor from taking the first step. The choice to make the stock market endeavor succeed lies upon the investor.

1. Knowledge

A wise investor would only delve into stock market investment upon being apprised with the necessary and crucial information. It is a must to invest on companies only upon learning everything about it, from its past records, current performance and future plans.

Stock market investment advice should be sought considering the difficulty of locating that right stock that will give big returns. The investor must fully know the fundamental value of the stock he or she will buy.

Invest in a company which belongs to a familiar industry. The stock market investor must have a good understanding of the business in order to realize more the value of the stocks. This will also make the investor less dependent to analysts and advisers.

The sources of information to rely upon must be carefully chosen too. Tips offered in the market should be avoided as much as possible. These are usually given by people with vested interests.

2. Long-term goal

An important consideration in stock market investment is setting a long-term goal. The long-term goal would determine the approaches to be taken and influence the decisions to be made.

The adherence to that goal would ensure regularity in instances of indecision when the stock market gyration comes to play. It would avoid whimsical decisions adversely disturbing the finances. A long-term goal could result to a more stable financial future through steady purchases investments. The key word here is consistency.

3. Calculated Risks

There are risks in any business endeavors. However, this must be calculated to minimize the probability of loss and to increase the expectation of profits. Speculating is not an option.

Never gamble and risk losing big money in the stock market. Investments should not rake in huge losses. It is easy to buy stocks, but money lost would be difficult to gain back. One cannot afford costly mistakes.

The established system in realizing the long-term goal must be strictly followed then. This will reduce the probability of putting too much money just to incur big losses.

5. Discipline

To make the most of the stock market investment, the investor himself must possess the proper determination and discipline to continually persevere in realizing the long-term goals set.

Stock market investment today requires passion and courage to come out as a winner. The stock market gives the opportunities; all that is required of the investor is being prudent.

Stocks - How To Know When To Sell

2008-08-02T00:53:00.000-07:00

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out, especially for first time investors. The good news is that if you have chosen your stocks carefully, you will not need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop and you may even be advised by your broker to do this. But this is not necessarily the right course of action.

Stocks go up and down all the time, depending on the economy and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things all combined affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once you have reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

How to Make Money Trading Online: Easy Tips
There are many ways to make money through online trading. There is the obvious option of trading or selling possessions that you have. But if you want to make money without selling everything that you own, then you might be interested in online stock trading.

Online stock trading is a risky business; everyone accepts this, except the few who choose to delude themselves into believing otherwise. Shares can go up as much as down, which means you must have the self-discipline to buy and sell at appropriate times without relying on emotional triggers. Being greedy in the online stock trading world can cost you a lot of money; however, you will be able to find advice everyone on the Internet about online stock trading; and if you follow the advice properly, then you may be able to make your living off of the stock market alone.

Stock trading websites are everywhere: your computer and your Internet connection, for instance, are one gateway to the stock market. You can buy and sell shares all at the click of a button, and all these buying and selling transactions are executed within one second on most websites.

Stock trading online is not easy; it takes a lot of skill and determination to get anywhere in the stock trading world. If you have that skill and determination, then you can make a killing on these stock trading websites. You could be buying and selling like a skilled broker in a matter of months.

A lot of people see stock trading as a risky business, and that is correct: it is a very risky business; however, it is no different than other risky games, such as poker. Poker is considered "gambling," but there are clearly people who can master the rules and make more money playing poker than the average person. The stock market is similar in that it is a risky game with rules; however, it is dissimilar in that you aren't drawing random cards when you pick companies. Instead, you are basing your decisions on either fundamental or technical analysis, which will yield much more predictable results.

Best Stock Market Investment: How To Choose Investments That Pay Off

2008-08-02T00:51:00.001-07:00

Some financial experts say that engaging into a more lucrative but challenging world like investments are not specially made for the faint hearted.

With the economy seemingly riding on a roller-coaster ride, investing with the right stock seems to be next to impossible. However, with the advent of information technology, people from all over the world go crazy over stock market investments. It is because the convenience of information technology had found its place in the world of investments and computing.

Today, stock market investments are selling like hotcakes. It seems that it has always been the focal point of every investor to get a stock no matter what.

So, for those who would want to get the best stock market investment they should look into the following for advice:

1. The stock market is risky business

Generally, most people believe that buying stocks are as easy as 1-2-3. Of course, it can and in fact anybody is capable of doing it. But the problem lies on the fact that few people only know when to sell. And that is, in its greatest sense, the heart of stock market.

So, the best advice for people to get the best stock market investment, it is best not to gamble everything that they have on it, especially if they don't have a good understanding of how it works. It's better to loose a little than loose really, really big.

2. The "trailing stop strategy."

Most experts incorporate this when getting stocks. What they usually do is to "ride" their stocks really high, and maintain an exit strategy in the event that things get out of hand. This is where the liquidity of their investment is extremely vital to one's business. That is, they should know that whatever liquidity they have can be easily converted into cash.

3. Invest only in what you are comfortable with.

Even if particular investment opportunity, say, an exciting IPO of a big company, looks very attractive, it is a must for every investors not to invest on it if they are not prepared to risk losing their money on it. In this way, people will be able to get the best stock market investment by following this very important advice.

Finally, most stock experts recommend today that people who want to get the best stock market investment should use the every day costs in the stock market investment strategy. It would be better if investors would always carry a handy calculator with them.

The most important thing about stock market investment is not so much to pick the best but to avoid the losers.

Identifying Trends In The Stock Market
1. Prediction of the future

Real Pyschics would, without a doubt, help people investing in stocks. Much of investors' and brokers' time is spent trying to predict what the market will do in the next few days to months. However, the process is not all speculative guessing. If one pays close attention, the market will actually indicate which way it is going. Knowing about predicting the market can greatly benefit anyone.

2. Direction of market

You can see how a stock might do by studying the market. Looking at the overall direction of the market will tell you about future trends. Most, if not all, stocks move with the market. If the stock market is experience a period of growth (a bull market) most stocks will steadily grow. If the stock market is in a decline (a bear market) most stocks will slowly lose value. There may be one day bumps here and there but the general trend will follow the flow of the market at large. To determine the direction of the market only two pieces of information are needed; price and volume. Price refers to the trend of prices of stocks. Volume refers to the amount of stocks being traded. When these two figures are put together it reveals whether there are more sellers in the market or there are more buyers.

3. Setting prices

To determine price, investors and brokers use the big three indicators: the Dow Jones Index, the S & P 500 and the NASDAQ. These indicators help investors and brokers determine whether the market is going to continue in the current trend or reverse course.

4. Discovering volume

The daily sales volume of the markets are frequently used to set understand volume. The daily sales volume is easily obtained from several websites online. If the market has experienced a high-volume day and prices are up (on the three indexes) then the market is up. Huge investors will frequently buy and boost markets under certain conditions.

Buying Stocks? Learn the Art of Timing Stock Market Investments

2008-08-02T00:50:00.000-07:00

A stock is simply a form of a person's ownership and claims in an incorporated company. A person who owns stocks in a company has a claim on its properties and profits. He also takes part in decision making. As he buys more and more shares in that particular company's stocks, his ownership stake increases and becomes greater.

Timing stock market investments affects the value of the stocks that are bought or sold in the market. Market timing affects the profit returns of a buyer or a seller in the stock market. It is also a method of strategic importance in the stock market. Market timing is attributed to logic and can become an acquired skill. It is a skill that can be an asset to a person who participates in the market, whether as an investor, or as a stock broker who knows how to play with stock market timing.

Market timing determines whether a stock seller or a buyer will benefit monetarily or otherwise from his purchases or sales. Most stock holders hold their stocks up and wait for the value to increase. When the value of these stocks increase in the market, this is the time when they plan to sell because it is at this time that profits are projected to be high.

However, peaks and lows in the stock markets are unpredictable and irrational. But this does not mean that timing stock market investments is not good. It is not advisable to ignore the times when there is significant undervaluation and overvaluation in the stock market. This is the importance of timing stock market investments. To buy stocks which are guaranteed to peak while they are still selling low; and to sell high value stocks which are expected to fall. If an investor ignores these important market movements, then he is bound to lose instead of gaining huge profits from overvaluation in the stock market.

Timing stock market investments can also be compared to stock picking, and the two concepts can go hand in hand. Stock picking is also an important skill and like market timing, one that can be done using logic and reasoning.

If a stock market buyer or seller is an expert at timing stock market investments and stock picking, he must focus on sourcing stocks which are guaranteed to outperform. He must also find corporations with competitive advantages, sustainable growth, and important values for these companies are guaranteed to have more stability and therefore, profit.

What Are The Pros And Cons Of The Stock Market?
Understanding the nature of the stock market, including its pros and cons, doesn't have to be confusing one. Many people fear that in order for them to know the nature of the stock market, they have to understand a gamut of stock and marketing terms and all that jazz.

On the other hand, some people saw behind the veneer of all these economic gibberish, and saw the potentials of what they could get from investing in the stock market.

In a nutshell

Simply put, the stock market is the market to buy and sell stocks and shares. This is where company stock gets traded. The term is also used to describe the totality of all stocks in one country. That is why we hear reporters talking that "the stock market was up today" or that "the stock market went down after the dollar fell to the euro."

What are the pros and cons of the stock market?

One of the reasons why we need the stock market is because it is an important factor for the US economic system to operate. Through the stock market, US companies improve their financial viability and expand their operations by raising funds from selling stocks. Without the stock market, our companies become slower in their growth and might falter in the increasing competition in the US as well as against international companies.

Another reason for the existence of the stock market is that it also has role in personal financial planning. This is because many individuals buy stock shares as part of their personal financial strategies. More importantly, most Americans have a stake in the stock market because retirement programs invest in stocks. It has shown that retirement programs earn a lot more by investing in common stocks than other options such as saving the funds in banks.

Of course, the stock market also has its downsides. Remember that the stock market is not a tool for instant success. True, there are cases of one getting wealthy by investing in the market, but this involves having shares in various company stocks, which means a lot of research, time, and money. One also gets rich when some stocks become "hotter" such as the "dot-com" bubble in the nineties, but when the initial buzz around these stocks falter, the value of these stocks tend to crash.

Basics of stock market system

2008-08-02T00:49:00.000-07:00

The stock market system is an avenue for the trading of shares of stock of listed corporations. As a corporation is formed, its initial shareholders are able to acquire shares of stock from the point of subscription when a company is created. When a company starts to be traded to the public, the primary market comes in where those who subscribe to the initial public offering (IPO) takes on the shares of stock sold from point of IPO. When those who bought into a company at IPO point of view decides to sell their shares of stock to other people, they can do so by going to the stock market.

The stock market is a secondary market for securities trading wherein original or secondary holders of a company's shares of stock can sell their stocks to other individuals within the frame work of the stock market system.

The stock market has buyers of stocks or those who wants to own a part of the company but wasn't able to do so during the initial public offerings made by the company to the public when it has decided to list itself as a publicly listed company. The secondary market or the stock market allows other individuals to sell shares of the company when the initial shareholders may have realized that they want to sell their shares after gaining either significant profit or realized significant loss from point of acquiring a company from its IPO price.

As the stock market has developed and progressed over the years, the way shares of stock are transferred from one individual to another has become more complicated and more challenging to be regulated. Technology has aided in providing more efficient ways of transactions. Front and backend solutions are put into place that helps direct the exchange of shares of stock in timely and secure manner.

Public education over how the stock market works is one of the primary concerns of the investing public in order to promote the trading activities of the stock market to other individuals who may also benefit from doing transactions over this secondary type of equities market.

With the abundance of relevant company information on performance of publicly listed companies, this information will help the investors to become more aware of the directions of the companies where they have share of stocks on and this will also aid them in directing their investment strategies.

People hear about the stock market every day. Each time the stock market hits a high, or a low, people hear about them. Daily statements are also issued about the activities of the stock market and its relevant economic implications. But what really is a stock market? What are stocks? And why is it that people want to do stock market investments?

The stock market is the marketplace where the trading of company stocks happen. These stocks may either be the securities which are listed on the stock exchange or those which are traded in a private manner. Stock market investments allow companies and private individuals to get a share of ownership in large corporations. It is also a way of gathering large sums of investment capital which is difficult to produce if the business is solely-owned. The large capital then comes from the stock market investments.

Stocks are shares of a company or business which gets on sale in the stock market. Stock market investment happens when a person buys a share of a company's stocks that were put on sale in the stock market. For example, a businessman decides to sell his business in the stock market. Each stock market investment is represented by the person who buys his share of stocks. When this happens, any person who buys stocks in the businessman's company will have an equal share of profits by the end of the year, and an equal vote in the company's business decisions.

In the past, stock market investments were done by individual buyers and sellers. Through time, however, this has changed and the market participants evolved from individual investors to large corporations. This change in the activities of stock market investment has also helped to control movements in the market.

To encourage stock market investments, a business that wishes to sell its stocks to individuals and corporations could only do so if it becomes a corporation. Individual capital investors and big corporations who buy a number of shares of a business or a corporation are then called shareholders. Shareholders are the owners of the new incorporated business. Their stock market investments gave them the authority to claim ownership of the business. These people can now decide whether to privately or publicly hold their corporation.

In a privately held company, the shareholders are few and probably know one another. Their stock market investments are known to each other. The publicly held company, however, is owned by a large number of people who do stock market investments on the public stock exchange.

some companies in sensex

2008-02-20T10:17:00.001-08:00

Code	Name	Sector	Adj. Factor
500410	ACC	Housing Related	0.60
500425	Ambuja Cements Ltd	Housing Related	0.65
500490	Bajaj Auto	Transport Equipments	0.65
500103	BHEL	Capital Goods	0.35
532454	Bharti Airtel	Telecom	0.35
500087	Cipla	Healthcare	0.65
500124	DLF Ltd**	Construction	0.75
532868	Grasim Industries	Diversified	0.75
500010	HDFC	Finance	0.90
500180	HDFC Bank	Finance	0.80
500440	Hindalco Industries	Metal, Metal Products & Mining	0.70
500696	Hindustan Lever Limited	FMCG	0.70
532174	ICICI Bank	Finance	1.00
500209	Infosys	Information Technology	0.85
500875	ITC Limited	FMCG	0.70
500510	Larsen & Toubro	Capital Goods & Construction.	0.90
500520	Mahindra & Mahindra Limited	Transport Equipments	0.80
532500	Maruti Udyog	Transport Equipments	0.45
532555	NTPC	Power	0.15
500312	ONGC	Oil & Gas	0.20
500359	Ranbaxy Laboratories	Healthcare	0.70
532712	Reliance Communications	Telecom	0.35
500390	Reliance Energy	Power	0.70
500325	Reliance Industries	Oil & Gas	0.50
500376	Satyam Computer Services	Information Technology	0.95
500112	State Bank of India	Banking & Finance	0.45
532540	Tata Consultancy Services	Information Technology	0.20
500570	Tata Motors	Transport Equipments	0.60
500470	Tata Steel	Metal, Metal Products & Mining	0.70
507685	Wipro	Information Technology	0.20

replaced companies

2008-02-20T10:14:00.000-08:00

History of replacement of scrips in SENSEX

Date	Outgoing Scrips	Replaced by
01.01.1986	Bombay Burmah	Voltas
	Asian Cables	Peico
	Crompton Greaves	Premier Auto.
	Scinda	G.E.Shipping

03.08.1992	Zenith Ltd.	Bharat Forge

19.08.1996	Ballarpur Inds.	Arvind Mills
	Bharat Forge	Bajaj Auto
	Bombay Dyeing	BHEL
	Ceat Tyres	BSES
	Century Text.	Colgate
	GSFC	Guj. Amb. Cement
	Hind. Motors	HPCL
	Indian Organic	ICICI
	Indian Rayon	IDBI
	Kirloskar Cummins	IPCL
	Mukand Iron	MTNL
	Phlips	Ranbaxy Lab.
	Premier Auto	State Bank of India
	Siemens	Steel Authority of India
	Voltas	Tata Chem

16.11.1998	Arvind Mills	Castrol
	G. E. Shipping	Infosys Technologies
	IPCL	NIIT Ltd.
	Steel Authority of India	Novartis

10.04.2000	I.D.B.I	Dr. Reddy’s Laboratories
	Indian Hotels	Reliance Petroleum
	Tata Chem	Satyam Computers
	Tata Power	Zee Telefilms

08.01.2001	Novartis	Cipla Ltd.

07.01.2002	NIIT Ltd.	HCL Technologies
	Mahindra & Mahindra	Hero Honda Motors Ltd.

31.05.2002	ICICI Ltd.	ICICI Bank Ltd.

10.10.2002	Reliance Petroleum Ltd.	HDFC Ltd.

10.11.2003	Castrol India Ltd.	Bharti-Tele-Ventures Ltd.
	Colgate Palomive (India) Ltd.	HDFC Bank Ltd.
	Glaxo Smithkline Pharma. Ltd.	ONGC Ltd.
	HCL Technologies Ltd.	Tata Power Company Ltd.
	Nestle (India) Ltd.	Wipro Ltd.

19.05.2004	Larsen & Toubro Ltd.	Maruti Udyog Ltd.

27.09.2004	Mahanagar Telephone Nigam Ltd.	Larsen & Toubro Ltd.

06.06.2005	Hindustan Petroleum Corp Ltd.	National Thermal Power Corpn. Ltd.
	Zee Telefilms Ltd.	Tata Consultancy Services Ltd.

12.06.2006	Tata Power Ltd.	Reliance Communiation Ventures Ltd.

09.07.2007	Hero Honda Motors Ltd.	Mahindra & Mahindra Ltd.

19.11.2007	Dr. Reddy's Laboratories Ltd.	DLF Ltd.

crashes since 2006

2008-02-20T10:10:00.000-08:00

Major crashes since 2000

May 2006

On May 22, 2006, the Sensex plunged by 1100 points during intra-day trading, leading to the suspension of trading for the first time since May 17, 2004. The volatility of the Sensex had caused investors to lose Rs 6 lakh crore ($131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the Sensex managed to move up 700 points, still 450 points in the red.

The Sensex eventually recovered from the volatility, and on October 16, 2006, the Sensex closed at an all-time high of 12,928.18 with an intra-day high of 12,953.76. This was a result of increased confidence in the economy and reports that India's manufacturing sector grew by 11.1% in August 2006.

Effects of the subprime crisis in the US

On July 23, 2007, the Sensex touched a new high of 15,733 points. On July 27, 2007 Foreign Institutional Investors and global cues to come back to 15,160 points by noon. Following global cues and heavy selling in the international markets, the BSE Sensex fell by 615 points in a single day on August 1, 2007.

Participatory notes issue

On October 16, 2007, SEBI (Securities & Exchange Board of India) proposed curbs on participatory notes which accounted for roughly 50% of FII investment in 2007. SEBI was not happy with P-notes because it was not possible to know who owned the underlying securities, and hedge funds acting through P-notes might therefore cause volatility in the Indian markets.

However the proposals of SEBI were not clear and this led to a knee-jerk crash when the markets opened on the following day (October 17, 2007). Within a minute of opening trade, the Sensex crashed by 1744 points or about 9% of its value - the biggest intra-day fall in Indian stock markets in absolute terms till then. This led to automatic suspension of trade for 1 hour. Finance Minister P. Chidambaram issued clarifications, in the meantime, that the government was not against FIIs and was not immediately banning PNs. After the market opened at 10:55 AM, the index staged a comeback and ended the day at 18715.82, down 336.04 from the last day's close.

This was, however not the end of the volatility. The next day (October 18, 2007), the Sensex tumbled by 717.43 points — 3.83 per cent — to 17998.39. The slide continued the next day when the Sensex fell 438.41 points to settle at 17559.98 at the end of the week, after touching the lowest level of that week at 17226.18 during the day.

After detailed clarifications from the SEBI chief M. Damodaran regarding the new rules, the market made a 879-point gain on October 23, thus signalling the end of the PN crisis.

January 2008

In the third week of January 2008, the Sensex experienced huge falls along with other markets around the world. On 21 January 2008, the Sensex saw its highest ever loss of 1,408 points at the end of the session. The Sensex recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US.

The next day, the BSE Sensex index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 AM. Trading was suspended for an hour. On reopening at 10.55 AM IST, the market saw its biggest intra-day fall when it hit a low of 15,332, down 2,273 points. However, after reassurance from the Finance Minister of India, the market bounced back to close at 16,730 with a loss of 875 points.^[2]

Over the course of two days, the BSE Sensex in India dropped from 19,013 on Monday morning to 16,730 by Tuesday evening or a two day fall of 13.9%.