Stocks Technical Analysis - Estimating Price Trends Using Technical Analysis Of Stocks

For any normal person, trade is nothing more than the give and take of products or services within an agreed fixed price. for instance if you have bought a package of candy for $ 2, that is trade. You purchased a $ 45000 four-door sedan, then thats trade . You purchased a $ 4.5 million home, and that also is trade. once you have purchased the good or product from the seller for what ever price you have set the deal, that is trade and then the deal if finished.

But for traders on various deals, trade is a priority consideration. They have invested lots of money in an attempt to generate greater profits later. In exchange for goods and different titles with different operators from various deals, they hope that they could reach an enormous profit and pursue their careers until their trading accounts either increase or dehydration.

In addition, for the various governments of the nation , trade is a blessing which everyone should feel grateful . The country's economy is heavily dependent on how the international and local operations in the market perform . a trade is declared successful if only it can translate to an increase of GDP( gross domestic product), that's the indicators of a nations thriving economy. Successful businesses also reflect additional jobs, help the unemployed to have to work and earn for their families.

Trade can be a blessing for the various operators (people engaged in the negotiation of stocks) and the various companies which issue securities to the people to raise extra revenue. when the stock value goes up , the owners of that bulk will get profits when they trade them then.. On the other hand, stocks of companies that is owned by common people are also guaranteed to high profits since the value of stocks on the market are now greater than it was when they were first released. both sides benefit from the trading of securities in various exchanges.

However, if a business man or any trader reaches you to offer his stocks, it does not mean that the agreement is done. when you buy a house or expensive item, you need to first look into the market and then decide base on that information whether it would be cost effective to have an agreement or not this particular time. this is defined as technical analysis.

Technical analysis is in finance and investments is the study of an asset or safety (in this case, security is the product) price action (change of prices the quantity and open interest) in the market to predict profitable price movements. It generally uses different cards from both the past and present of price fluctuations in order to arrive at a price well-established trend. Such price trends will help you decide if could take advantage when you trade a particular stock at that time or not.

Stocks trading are still profitable, he understands the risks that can endanger your investment. By using technical analysis in the business of your actions, you could eliminate the risks in your investment.

How to Find Good Stocks That Will Survive 2008 Market Crash

Finding good stocks that are able to survive stock market crash is really tough. However, these simple financial ratios can help you to discover these tough stocks. The stocks are so tough, that will only grow stronger after the recession. Make sure you stick with it if you want to be rich from stock market.

Earnings per Employee

You can calculate the staff productivity by dividing the total earnings by the number of staffs. As different industries have different ratios, you should compare staffs' ability to bring value to the company in the same field. Compare yourself a bank with $12k profits per staff with another bank of $98k profits per staff, I bet you can notice the difference.

Good employees maintain the business operation, but great workers will sustain the business growth. And in stock investing, earnings growth does matter, especially during depression. Though times never last, but tough people do.

Return on Asset

ROA can be calculated by dividing the net profits by the number of assets that the company owns. It indicates how efficient the management is in turning the assets into profits. Compare with other stocks on how they do is something you should consider. Lower ROA can be attributed to not having enough expertise to manage the assets or not having the right assets in the first place.

During recession, companies with the lowest return on asset (ROA) are prone to be acquired by stronger companies. Unfortunately, not all low ROA stocks hold the value they want in the eye of larger companies. Therefore, better avoid this type of stocks.

Liquidity Ratio

Liquidity ratio measures if the stock is able to meet the short term obligations. It can be calculated as current or quick ratio. Either way, it is about the liquid asset over its current liabilities. This ratio is critical during recession as the interest rate will increase substantially that time. Although Federal Reserve maintains the interest rate recently, there is no guarantee it will be the same in 2008.

Recently, I noticed some good companies holding substantial liquid assets like never before. This indicates the stocks are preparing themselves of any possibilities of higher interest rates next year, or having enough cash to buy profitable asset at cheaper price in 2008.

Either there is market crash, recession or economic depression in 2008, make sure you get ready yourself. Market crash can be bad to some, but offer great opportunities to smart investors. So, make sure you are one of them.

Choosing The Right Online Brokerage Firm

Currency trading is one of the more interesting investments that a small (personal) investor can make at this point in time; the basic principle, like all trading positions, is to buy low and sell high, and currency trading is all about playing the spread in thousandths of a cent, between the exchange rates at different parts of the day. There are a lot of technical details muddying the water, but ultimately, your aim is to scope out a currency exchange rate, buy at one point in time, and sell at another.

A typical margin in a foreign exchange rate is expressed in hundredths of a penny. For example, a forex trade that we committed recently was to buy Euros at $1.41425, and sold them at $1.41200. Yes, we bought and sold Euros trying to make a profit of three quarters of a US cent on the transaction. Our transaction was run through an online brokerage account, and we would like to talk a bit about what things to look for in a Forex brokerage firm.

First and foremost, when you set up an account, you are paying for a service. Your service relationship is set with expectations. You need to know what to expect and when. Therefore, how quickly and easily you can get ahold of your representative is important.

Look for brokerages that offer personalized service. You should be able to reach your representative quickly and easily when the market turns volatile. You should have an established relationship with one or two representatives at the firm, not be routed to a call center and getting the next available operator.

Foreign exchange trading moves quickly if you are going into a day-trading strategy. For small investors, we do not actually recommend a day-trading run, because while the profits are higher in a day-trading strategy, the risks are as well, and day-trading requires almost constant access to your buy-sell window.

Now, you can get accounts with stop-loss and profit-now techniques, where if a trade goes beyond certain parameters, you are cashed out on your bet as quickly as is possible, but the speed of the transaction is what is important in day trading. For longer term positional trading, the risks are much less, but you are also not committed to watching numbers on a screen for 10 hours a day. Whichever strategy you take, your forex broker should be aware of it, and should structure their buy and sell advice for it.

Your online trading account is going to cost you fees per transaction or a monthly access fee. Forex brokerages make their bread and butter off of those fees. Do not begrudge your broker the money they use to make a living off of but do not be blindly trusting either. Your broker is going to suggest trades that make them money as well as you, and you need to be aware of the fee structure and what they are getting out of each piece of advice before signing up with the account. This ties into the above advice of get a broker who supports your strategy.

Online trading is predominantly a numbers game, it is all numbers. It is also a game of trend spotting, whether drilled down (watching the London close, or the Tokyo open), or sitting long term (watching bank exchange rates and the news). Whatever the trade margin is, you will want to make sure that your information is timely and fast, and that your transactions are timely and fast; if you have to make a call (or send an instant message), you are competing with all the other clients your broker has to get your trade in under the wire.

The alternative is automated trading programs. Automated trading programs are an essential tool for day trading and less so for position trading, but the key here is how quickly you get updates on your information (transparency) and how quickly you can make changes to your position (velocity).

Lastly, you should look at details like minimum balance required in the account, and how much access you have to your funds. As in all investing, read the fine print, and be aware of where the person selling you the service makes their money so you can make an informed decision. Online brokerages are trying to make a win-win situation, but for that to happen, you need to be well informed.

A Simple Introduction to Forex Trading

By : Ian Armstrong
Short for Foreign (currency) Exchange, Forex is the world's biggest market for trading in currencies. As much as 2 trillion US dollars worth of currency are traded on the Forex on a daily basis. Compare this with the approximately 25 million US dollars traded on the NYSE and you'll get the picture - Forex is huge.

So what is Forex all about? Simply put, Forex entails buying one currency, let's say Turkish Lira, and selling another, say US Dollars. In Forex, currencies are always traded and quoted in pairs. The exchange is made through a broker.

Just like the stock market where you are investing in a company, with Forex you are in a way investing in a country. If your company is a success, the value of your stock goes up. Much the same principle is at work in Forex. If the economy of the country whose currency you are trading is robust, the value of that currency will also go up - and you can then sell it for a profit.

Unlike stock markets, there is no "trading pit" in the world of Forex. Forex operates through the internet and other electronic communications and runs 24 hours a day, 5 days a week.

It has only been in the last several years that the Forex has been open to the average person to invest in. The Forex market itself has been around since 1971, but for most of its history only large companies and a few very wealthy individuals possessed the resources to be able to trade in foreign currency. Today however, anyone with a high speed internet connection and a small initial investment (as low as 50 US dollars) can get in on the Forex market.

The seven most commonly traded currencies on the Forex market are U.S. Dollars (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD) and Australian Dollars (AUD). Foreign currencies are identified by means of a three letter code. The first two letters stand for the country, while the last letter identifies the nation in question's currency.

For example:-
USD: U.S. = United States, D = Dollars.
GBP: GB = United Kingdom (Great Britain), P = Pounds.

At any given time, business is going on somewhere in the world. Global business never sleeps, and neither does Forex. This can be beneficial to you - you can trade on the Forex market any time that is convenient to you.

There are seven currencies on the Forex which are called Major Currencies, due to their being the most heavily traded currencies on the market. The biggest four are, in order: U.S. Dollars (USD), Euros (EUR), Japanese Yen (JPY), and UK Pounds (GBP). The remaining three are Swiss Francs (CHF), Canadian Dollars (CAD) and Australian Dollars (AUD).

Advantages Of Forex Trading

There are a few advantages which the Forex trader enjoys which those who trade in the stock market do not.

1.Unlike with stock brokers, the investor does not pay commissions, per se, to the broker. Instead, the dealers in Forex trading receive part of the "spread" (that is to say, the difference) between the buying and selling price of currency. This is generally a very small amount per trade; a fraction of a percent.

2.You can trade on the Forex market any time which is convenient for you, unlike the stock market - it is closed only on weekends, from 5pm Eastern time on Fridays to 12AM on Mondays.

3.As opposed to the stock market, it is nearly impossible for companies or individual investors to manipulate the Forex market. The volume of Forex trading each and every day prevents any one actor from having undue influence. We all know of instances of the stock market being artificially influenced by unscrupulous persons and companies however.

4.Forex trading can be done with borrowed capital, meaning that you need not have hundreds of thousands in liquid assets to trade currency in large numbers. This concept is called Margin Trading. A small amount of your own capital (less than 5 percent) can be used to leverage a large chunk of borrowed assets, which may then be invested. Forex is traded in what is called lots, the normal size of a lot being 100,000 US dollars. Depending on the dealer with whom you deal you may be able to trade is smaller amounts, these are known as mini-lots or micro-lots.

The 7 Most Common Forex Trading Mistakes

By : James Theiss
When trading currencies online, there seems to be no end to the mistakes a beginning forex trader can make. Beginning traders are always the most susceptible, but experienced traders can often revert back into bad practices as well. Here are some of the most common trading mistakes listed in no particular order, and how to avoid them.

Predicting instead of reacting. Otherwise known as overconfidence. This usually happens after a winning trade or two. The trader starts to think that if he can enter a trade sooner, he will get more pips. He begins to believe he can pick the top or bottom before the market reveals it to him. So instead of reacting to what the market is telling him, he starts to predict what the market will do. He enters a trade and the market continues its move, which is against him. Now, does he admit he was wrong and close his position, or does he add to it?

Adding to losing positions. Here is an extension of predicting instead of reacting. Look, you just entered a trade and the market is going against your position. The market is telling you, you are wrong. Now is the time to close your position, not add to it. If you add to your losing position, you are making at least two incorrect decisions. First, you are predicting the market will turn around. Second, you are hoping the market will prove you right because you are unable to admit you made a losing trade. Losing trades are a fact of life in the forex market. You weren't wrong, simply, your edge didn't play in your favor on this trade. Close your losing position and move onto the next trade.

Insufficient capitalization. Forex trading is already highly leveraged. Insufficient capitalization just magnifies the potential problems you can face. If you read about the famous and big name traders, they never use more than 1% - 2% of their trading capital on a position. Get out a calculator and let's see... 1% of $10,000 is $100. So as a position trader who might have a stop-loss order of 100 pips, you can only trade one mini lot of one currency pair for each $10,000 in your trading account. That is, if you want to trade like the pros. Do you have $10,000 in your account? Why do forex dealers boldly advertise you can start trading with only $250 then? Because they are in business to make money, and if they can convince you to commit trading errors, they stand a much better chance that they will soon have your money.

Overtrading. A close cousin of insufficient capitalization. Knowing that very few currency traders trade with sufficient capital in the first place, they further compound the potential problems by trading too actively and in too many currency pairs. Spreading themselves too thin you might say. Potential problems include loosing focus and margin calls. Getting a margin call is a very irresponsible position for a forex trader to be in and is a direct result of overtrading, over leveraging, and insufficient capitalization. This is as close to the perfect recipe for failure as you can get.

Not using stop-loss orders. There are very few times when not using stop-loss orders is the correct action to take. Large traders with several hundred or more lots don't want to advertise where their stops are placed is one. The other might be scalpers whose stop is only 10-15 pips away. By the time they figure the math and enter it in the system, the price might already be there or even past it. And some forex dealing stations won't let you place stops closer than 15 pips anyway, especially in fast moving situations. Other than those times, you need to put stop-loss orders in on every position. It is in your own best interest to protect yourself. I know, some people whine that their stops are always being run by the dealer. A whole article could be written on stop-loss order management, if not a complete chapter in a book. Let's just say for now, don't put them where everybody else does, and don't put them too close.

Trading as a hobby. Golf is a hobby and it costs you money to play. Horseback riding is a hobby and it costs you money as well. The point is hobbies cost money, business makes money. You need to treat your forex trading as a business if you ever hope to make money on a consistent basis. That means keeping records, keeping a trading journal, and have a written business plan. You wouldn't invest money into a start up business without first seeing a business plan, so why would you invest money into your own trading account without the same thoughtful consideration.

Not having a trading plan. This is one of those catch-all mistakes. If you have a written trading plan, and follow it, you will already have identified and hopefully eliminated all of the above mistakes. If you don't have a written trading plan, you are almost assuredly making some, if not all of the above mistakes. Maybe not all at once, but even occasional mistakes add up quickly. Do yourself a favor and don't put on another trade until you think through and write down the response for all of the above mistakes and any others you can identify, as well as entry and exit rules. Then follow it.

These are just some of the many mistakes you can make as a forex trader. You need to take responsibility for yourself and your money and act in your own best interest. The currency markets are a zero sum game and the many players are out to make a profit. Don't let them profit with your money. Do your best to eliminate the above mistakes, and you will go a long way to ensuring you are the one who profits in the forex market.

Author Resource:- James is a successful online currency trader and also runs the popular website http://www.todayscurrencytrading.com. Go there now and you can sign up for his FREE, "Currency Trade of the Week".

What Makes A Good Forex Trading Market?

Whatever you are trading, whether it is stocks, futures, bonds, foreign currency or anything else, there are certain conditions which must exist for the market to be attractive to the trader and profitable for him. The four characteristics of a good investment market are liquidity, transparency, minimal trading costs and trending.

Liquidity
Trading in its simplest form comprises two elements, a sale and a purchase, and the liquidity of a market is nothing more than the ease with which a trader can both buy and sell. For a market to be truly liquid however a trader must not merely be able to buy and sell with ease, but he must also be able to do so in substantial volume without this having a marked effect on the price of the items being traded.

If a market is not sufficiently liquid delays in buying and selling can often result in considerable differences between the price when an order is placed and when it is executed. Additionally, traders can often find that it is difficult to sell items in a market with poor liquidity.

The foreign currency market is arguably the world's most liquid market with an enormous trading volume which is second to none.

Transparency
When we talk about the transparency of a market we are referring to a trader's access to accurate information throughout the trading process. The greater the access to accurate information, the greater the transparency.

Information is the key to successful trading in many of the world markets and indeed there are numerous examples of individuals and companies running into problems because they did not have access to accurate information.

Fortunately, in addition to being the world's most liquid market, the Forex market is also the world's most transparent market.

Minimal Trading Costs
In any market the market makers need to make a profit and that means that there are inevitably costs to be met by the trader. The secret to a successful market, as far as the trader is concerned, is for trading costs to be as low as possible, as the higher the trading costs the lower his profit, or the greater his loss.

The Forex market enjoys some of the lowest trading costs of any market with no commission or similar trading costs and trading costs being largely limited to the difference between the buying and selling price in any currency trade. This difference, which is known as the 'spread' and which is common to many markets, is also extremely tight in the case of the foreign currency market, keeping trading costs to a minimum.

Trending
In most markets the biggest problem traders face is knowing when to buy and when to sell and it is vitally important that traders have some way of gauging the direction in which a market is moving.

In the case of the Forex market many traders employ a technique known as technical analysis, which essentially studies the past performance of the market and looks for trends which can then be used to predict its future direction.

Such predictive tools are not unique to the Forex market and most markets will display at least some form of trend. However, the Forex market shows particularly strong trending characteristics and this makes it much easier for traders to identify when to enter and exit trading positions than is the case in most other markets.

Getting Into The Lucrative World Of Forex Trading

For many years the foreign exchange market was the preserve of major players such as national banks and multi-national corporations. In the 1980s however new rules were introduced which permitted smaller investors to enter the market through a margin account. In simple terms, a margin account allows you to trade with more money than you actually have in your trading account. For example, a 100:1 margin account allows you to participate in trading up to $100,000 with an investment of only $1,000.

Now, although this entry level has opened up the market to the smaller investor, care needs to be taken as Forex trading is not easy and is certainly not without its risks. For this reason the very first thing that any novice trader needs to do is to sit down, study the foreign exchange markets carefully and learn the ins and outs of trading before putting any money at risk.

In addition to some basic training, the newcomer will also need to find a good broker as all trading must be conducted through a broker. Here a personal recommendation is often the best place to start but, in the absence of this, you should choose a broker who is registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM). This will provide you with protection against both abusive trade practices and fraud.

It is normally a simple process to open an account with a broker and once this is done and funds are added to your account you can start trading. Brokers will normally offer a number of accounts to suit individual clients and most will have "mini" accounts which will allow you to begin trading with as little as $250. The margin on which you are permitted to trade will vary from one account to the next.

One thing that you should always look for when selecting a broker is the ability to cut your teeth by carrying out simulated, or paper, trades for a period of time. This is a facility which many good brokers will provide and which simply allows you to trade in the normal manner but to do so simply on paper and without any money changing hands until you have found your feet. Many online brokers provide simulated accounts allowing you to make free paper trades for up to 30 days.

One thing that worries newcomers is the subject of trading charges and brokerage fees. Unlike many other markets, the Forex market is free of commission and so you can make as many trades as you like without worrying about running up huge brokerage fees. Your broker will make his profit from the 'spread' on each trade, which is the difference between the buying and selling price of a currency pair and is a subject all of its own.

Forex Channel Breakouts - Riding a Tsunami of Profits

By : Jason Fielder
Forex channel breakouts occur anytime that a price, either going high or low, breaks one of the set lines of a channel that is developed through technical analysis.

A channel occurs when two lines are made to show the range of a current market. This can be done whether the market is in trend or in counter-trend. One line represents the high of a current channel, while the bottom line represents the low. The channel is found through technical analysis.

Any time the price of a currency pair rises above the top line, that is an upwards channel break. When the price of a currency pair drops below the bottom line of a channel, that is a downward channel break, also sometimes referred to as a "breakdown" as opposed to a "breakout." The channel breakout in a Forex market can happen either up or down, just as long as it escapes the channel created by your technical analysis.

Not every break in the line becomes a full blown breakout. There are often times when a price may temporarily just break one of the lines, then retreat back into the channel. These are called "false breaks" or "false breakouts."

These can be frustrating because a lot of money can be made in the Forex market off of being in early on a major breakout, so false breakouts tend to get the hopes up before dashing them again, but this is all part of trading Forex. Being on the right side of a true channel breakout is worth all the false alarms you might find along the way.

Besides, if you use your stops correctly, a fake channel breakout shouldn't cost you much, and it may even lead to a very slight profit. It's certainly worth the risk because when you hit the right side of a Forex channel breakout, the profits in some extreme cases can even be hundreds of pips.

A true Forex channel breakout that takes off however, can provide fantastic profits, and is a major reason why technical analysis is used in the market: to try and determine when these channel breakouts are going to occur and to get in the market early can bring good profits.

Channel breakouts can often lead to the forming of another channel, so constant analysis should take place even as the market is in the middle of a breakout in either direction. If you are riding the price up, a trailing stop can be a good idea since reversals can happen rapidly, and sometimes seemingly without warning.

5 Forex News Reports Successful Traders Devour

By : Jason Fielder
If you're going to be a successful Forex trader, then part of that involves learning what profitable Forex traders already know. One of the major movers of the Forex market are the economic reports of each nation.

This isn't just restricted to the United States, either. Traders looking at the Yen, British Pound, Canadian Dollar, or Euro (or any currency, for that matter) will look at the economic news reports that are released by each of these nations.

There are many minor economic reports, some of which can spill over into the larger reports (look at the U.S. Housing bubble, for example), and while the "minor" reports are useful, this is going to concentrate on the big five, because these are the five major economic reports that will have the strongest and most immediate impact on the Forex market.

These are also the five reports that are acted upon by the most traders, so being able to keep track of these are critical if you're going to be able to keep a finger on the pulse of the Forex market.

The five major economic reports to keep track of are:
1. Unemployment/Non-Farm Payroll Reports
2. Interest Rates
3. Consumer Price Index
4. Trade Balance (Deficits vs. Surpluses)
5. Retail Sales

Unemployment/Non-Farm Payroll Reports
No matter what you're trading, this is always one of the most important reports about a particular area's economy. A low unemployment percentage is one of the strongest indicators of a strong, robust economy. Likewise, the opposite also applies. A country with a large unemployment rate is going through hard times.

Surprises in anticipated unemployment numbers can have a strong effect on the Forex market, as well. For example, if the unemployment rate is expected to be around 6.5% for the nation, and the report comes out with 4.9%, then that nation's currency is going to strengthen thanks to the unexpected good news.

Interest Rates
Interest rate changes directly affect the strength of a currency. A higher interest rate will usually cause a stronger currency because it will attract foreign investors and traders. Interest rates are one of the BIGGEST key influences in driving a currency either up or down; especially since carry trades remain popular among Forex traders.

Consumer Price Index (CPI)
The Consumer Price Index is a monthly report that gauges prices across the country and compares it to salary. Basically this means it tracks inflation, which is a major factor in the health of any economy. A sudden jump in inflation is never good news, and in some nations (see Zimbabwe) it can be absolutely disastrous, so keep an eye on when these reports come out.

Trade Balance
The trade balance refers to a nation's trade surplus and/or deficit. This measures how much a nation exports versus how much it imports. A deficit means you bring in more than you send out, while a surplus is the opposite. Often times you may hear "trade deficit" referring to the United States, but this is not necessarily a bad thing - it depends on the situation and why the balance is tilted the way it is. This is also a monthly report in the United States.

Retail Sales
A nation's report of retail sales may be the best indicator of how the common person feels about the economy. In the United States this is a monthly report of how sales are going for individual businesses. Some parts of the year are going to be much busier than others. December, for example, will always be expected to have great retail sales because of the Christmas holiday.

Knowing what these reports are and how they affect the markets will help you make better fundamental decisions when trading the Forex.

Stock Investing Basics - 3 Things to Do Before You Get Started

By : Zainul Anuar
No doubt you can make millions of dollar and get rich from stock market, but it won't happen if you missed these critical checklists in the first place. In case you are so eager to invest in stock market, hold yourself first. Make sure you have the right starting point before putting any money in any stock.

Have Enough Money

You can invest everything you have in savings into stock market, but it is like risking your life into it. The truth is, there is nothing as guaranteed as cash deposit when it comes to investing no matter how strong the stock is. So, it is a wise decision to create an emergency fund in case the stock is turning against you. I always advise my friends to keep at least six months income worth in savings before investing in share market.

Trust me, you can concentrate much better by doing just this.

Understand Yourself

There are many ways to make money in stock market. For instance, you can buy and hold the stock forever, buy and sell stocks after holding them for few years or even trade the stocks in the same day. Believe me, there is no one way that is better than the other. It is really up to you which investing style suits your needs. Besides, your investing capability, commitment and the available fund will affect your preference too.

Spend time asking yourself, which investing style you prefer the most.

Aware of the Risks

There are three risks associated with stock investing; namely individual financial risk (possibility of you went broke), company business risk (possibility of the company went down) and market risk (possibility of weak market sentiment). There is no way you can avoid these risks, but you can reduce the risks by applying some mitigation measures. For example, invest in stock market whenever you have enough money or buy stocks that offer huge growth potential only.

It is not about avoiding risk that matters, but how you can manage the risk is more important.

Not many investors did these whenever they've decided to invest in stock market. What they do is simply jump into the market using others tips. Stock brokers, insiders and friends influence them the most in deciding which stocks to invest. If you are high risk investors' type, then it is fine. But if you are looking for long term profits, I suggest you stop it now.

Author Resource:- Find out step by step stock investing tips, zecco review and doublingstocks review in http://www.Stock-Investment-Made-Easy.com/

Stop Trading Individual Shares If You're Not Beating The Market

By : James Woolley
Every share investor enjoys hunting out profitable companies they can invest in, and hopefully finding a potential ten-bagger that will make them rich, but there comes a time when you have to analyze your portfolio and make harsh decisions if you're not beating the overall market.

After all what is the point in spending hours and hours researching different companies if the end result is that you are underperforming the overall market. You may as well just invest in a tracker fund that tracks the market or a top performing mutual fund and spend your time doing more worthwhile things.

I know it can be quite exciting doing your own research and investing in the companies of your choice, but professionals are paid to do the same job and will generally have access to more information than you do, and can make better informed decisions.

So take a look at your share portfolio over the years and see how it's performed in percentage terms. Then compare this to the performance of the FTSE 100, for example (or the Dow Jones if investing in US shares) and see how you compare.

If you find that the overall index has seriously outperformed your own efforts then something is seriously wrong here, and it might be an idea to seriously rethink your investment strategy.

For instance, taking the FTSE 100 as an example, this index has increased dramatically since 2003 almost doubling in value so almost all good quality companies will have risen a lot during this time. Now look at the companies you've been investing in. If they haven't risen during this time when the market as a whole has been extremely bullish, then your investment strategy is seriously flawed.

If however, you have achieved excellent gains in percentage terms then your individual share picking strategy is of course justified, although it might still be an idea to place your money in a tracker or mutual fund, depending on your performance.

This isn't always true though, because it's important to note that portfolio managers have more constraints placed on them in terms of the types of companies they can invest in, plus of course there's the added fees you have to pay for their service, so ultimately it's a matter of choice and convenience.

I personally have done extremely well investing in my own portfolio over the years and have plenty of time to do my own research. However for people who have busy lives and have maybe shown that they are not that successful in managing their own portfolio and selecting individual companies to invest in, then paying someone else to do it for you is probably the better option.

Stock Broker or Stock Analyst - What's the Difference?

By : Denise Villani
Depending on what type of investing you plan to do, you might need to hire a broker to handle your investments. Brokers work for brokerage houses and have the ability to buy and sell stock on the stock exchange. You may wonder if you really need a broker. If you intend to buy or sell stocks on the stock exchange, the answer is yes, you must have a broker.

Stock brokers are qualified and regulated professionals who buy and sell shares and other securities through market makers on behalf of investors. In order to become a stockbroker in the United States, a person must pass exams such as the General Securities Representative Exam, also called the "series 7 exam". Also, most brokers have a background in business or finance, with a Bachelors or Masters Degree.

It's important to differentiate between a stock broker and a stock analyst. A stock analyst basically analyzes the stock market, predicts what it will or won't do, and predicts how specific stocks will perform. Keep in mind that it's fairly common for some stock brokers to also be analysts and vice versa.

Stock analysts basically do alot of research and make recommendations to help companies and clients make investment decisions. They read company financial statements, analyze commodity prices, sales, costs, expenses, and tax rates to determine a company's value to help project its future earnings. Sometimes the analyst will meet with company officials to gain an insight into the company and determine how effective the company's management is. Analysts usually study an entire industry, assessing the current trends in business practices, products, and industry competition. They also keep current with regulations and policies that affect the industry and monitor the economy to determine its effect on earnings.

Putting all this together, analysts write reports and make presentations citing their recommendations on whether or not to buy or sell a particular investment or security. Analysts summarize their reports with ratings such as "buy", "sell", "market perform", "overweight", "hold", etc.

Stock brokers, on the other hand, are usually there to follow instructions to buy or sell stock, not necessarily to analyze them. Stock exchange transactions must be made between two members of the exchange. Basically, the typical person can't just walk into a stock exchange and make trades.

Stock brokers perform three types of stockbroking services: execution only, advisory dealing, and discretionary dealing. Execution-only, or discount brokers, just carry out the client's instructions to buy or sell, nothing more. Advisory and discretiony dealing is done by full service brokers who do research and provide advice. In advisory dealing, the broker acts as an advisor and advises the client on which shares to buy and sell, but leaves the decision making up to the investor. In discretionary dealing, the stockbroker knows the client's investment objectives and then makes the decisions on that client's behalf.

In most cases, brokers get paid from commissions on transactions made for their clients. Brokers usually earn a flat per transaction percentage of each transaction they perform.

If you are new to investing, you may need to go with a full service broker to ensure that you are making wise investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades for you.

3 Factors Affecting Share Prices That Most Stock Investors Do Not Know

By : Zainul Anuar
Certainly, there are just so many factors affecting share prices. For example, high oil prices, interest rates, GDP and CPI to name few. However, many beginners are focusing too much on the external factors than what can happen from the accounting perspective. They can easily get frustrated from their own ignorance. Therefore, before you think of getting cheated next time, spend time to read this article very carefully.

Dividend Effect

I love dividend as much as you do, but apparently, it does not comes for free. Simply because, the share price drops in the same value as the dividend paid after the ex-date. For instance, if Wal-Mart Stores Inc. decided to distribute $1 per share as dividend to its shareholders, its share price will generally drops from $49 to $48 per share after the ex-date.

So, do not comment so much in the future if the stock price drops after the dividend payout, because you took the money away already.

Bonus Issue

Bonus issue is additional shares given by the company to its existing shareholders. By doing so, the company is able to reinvest the dividend cash for better earnings growth. In fact, this is another way for the company to maintain its share price at cheaper rate without splitting the stocks. Bonus issue is also a good way to reward long term stock investor.

Ideally, the share price drops the same ratio of bonus issued. For instance, if the company is giving one new share for each four shares own by the shareholders, the share price will drop by 20%.

Warrants Exercise

With warrants, you have the right to buy shares from a company after the exercise date at specified price. As a result, its earnings will be diluted as more shares are sharing the same earnings pie. In general, the share price drops the same proportion of the number of exercised shares. For example, if the exercised share is 10% of the existing number of shares, the stock price will normally drops by 10% as well.

Unfortunately, unlike stock split, these factors are diluting the earnings per share (EPS) of the stock, which in turn will adjust the share price accordingly. That is why, the stock price will get affected if any of the events happen. Although long term investors do not care much about it, stock traders (esp. swing traders, day traders, position traders) should consider these factors seriously.

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How to Invest In Stocks

By : Sameep Shah
Investing in stock market to make capital gains is often a very tricky affair. There are thousands of stocks floating in the market, and to pick the right stock at a price that will maximize the return on investment requires deeper knowledge and insight into the stock price movements and other technicalities. If you are intending to invest in shares and stocks, then to start with, you must open a brokerage account with a stock broking firm. After that you need to learn about the different instruments which are being traded in the stock market.

For beginners one of the safest investment options is bonds, which are devoid of any risk and offer assured returns. For other investment options one must calculate the compensation factor -- the return on investment compared to the interest offered by banks. If you are new to the stock market then choose a broker who is well established and has a good track record. If you want to play safe then invest in bonds that are guaranteed by the government which tend to have lower risks.

But how does a brokerage account work? There is a simple legal agreement between an investor and a licensed broker. Through this account the investor can make investments in securities as well as place orders through the firm. So the next time you decide to buy or sell securities like stocks, bonds and mutual funds, operating through a brokerage account is one of the safest avenues for carrying out investment transactions.

Investment in stock market can be for a very short period, known as short-term investment, or it can be for a fairly longer period, which is known as long-term investment. Short-term investment can bring in good returns when the market is dynamic and there are rapid movements in stock prices. In this kind of investment the investor should be an active trader and should keep a close look into the share prices. Traders generally take independent decisions but often the weight of numbers has a direct influence on short-term prices.

Long-term investment is suitable for investors who want to earn substantial returns from investments. However, for long-term investment it is essential to identify stocks, which have greater potential for growth in future. While purchasing shares for long- term one should opt for the shares, which are well established since shares are even more risky than mutual funds. While asset management companies manage mutual funds, portfolio shares are to be managed by the retail investors themselves.

There are two major ways of judging and selecting stocks - through fundamental and technical analysis.

Fundamental analysis, as the term suggests, is concerned with the economic fundamentals which may have an effect on the stock prices such as interest rates, exchange rates, performance of different sectors, fiscal and monetary aspects of the economy and stock management. If you're a long term investor then you should familiarize yourself with fundamental analysis.

Technical analysis, on the other hand, is an extensive research on the stock price movements over a shorter period of time such as weeks and months at most. If you're a short term investor, which I am, then you should familiarize yourself with technical analysis.

In stock market investments, both short term and long term investments come with risks and therefore nothing comes with absolute guarantee. However a smart investor with deeper insight and skillful analysis of the stock prices can reap the benefit even in a volatile market condition.

Author Resource:- Sign up for our Free Stock Picks Newsletter to find out how our last stock pick, Netflix, could have helped you gain a whopping 31% in less than 2 months. How To Invest In Stocks

Day Trading Against System Trading

By : John Porter
What a day trader does is he restricts his investments to a day. This means that whatever he buys on the day he sells on the same day. The philosophy is there is hardly any chance of a stocks hitting rock bottom over the space of a day.

So even if there are losses, it will be marginal. Of course, the profits are also limited since stocks get hardly the time to gain value in just a day. Of course there are exceptions when stocks plummet or shoot-up in hours. But those are generally irregularities.

However there are a few issues with day trading. First of all, when someone invests on the stock market there is generally a hope for high returns. Day trading runs counter to that philosophy. Of course you can make high profits even in day trading but for that you will need huge capital where you can pump in money to buy rising stocks, and then sell them at the end of the day when the stocks have gone higher. It is the number of stocks you buy that makes the most difference and not the change in the price of the stock.

Also day traders discount the history and performance of a stock. When a day trader buys stock in a particular company, he will try to buy the ones which have shown profit in the recent past. But it might happen that on the day he bought the stock it showed a marginal decrease.

There is every promise for the stock to again gain momentum and go up. But the day trader has to sell the stock cause as a day trader you cannot hold on to any stock at the end of the day. So while you were almost certain of profit over a period of time, you end up making a loss just because of the weird way day trading works.

The basics of system trading is quite simple. What you need to do is fix certain parameters on when to buy a stock and when to let it go. It is like a guide book that you follow by the word. Now these parameters should be made based on a lot of research and inputs from successful traders.

Once you have it ready, your emotions play little role in the trading. You now know exactly when to buy and when to sell. And this is where system trading brings some sense to the erratic trading of amateurs who are into online trading.

Author Resource:- Find more Online Trading and Online Trading info online. For Online trading related articles:http://www.online-trading101-fyi.info

The ABCs of the Stock Market

By : Jonathon Hardcastle

A recent study indicates that Americans are saving less these days than they were 10 years ago, except for entrepreneurs and corporate executive and in one particular segment - young middle-managers who are about six to 10 years into their careers and only beginning to make headway into the higher echelons of their particular industry.

Are you one of these people? If you are, then chances are that you are currently in the process of planning or expanding your base of investments. You have probably given real estate a good look and determined that, although attractive, it is more ideal for a full-time real estate investor because it demands a lot of effort and time. You also probably have a tidy little sum invested in various banking tools like savings and time deposits as well as common trust bonds and government securities. That's all well and good and your money is safe right there. But now you want to shoot for the moon, mainly by investing in the kind of company and industry that you may be familiar with. You are eager to try the stock market.

Here are a few basics about the stock market business.

The stock market is mainly a place where you sell or trade a company's stock. These stocks are small shares in the company which it sells to the public in order to raise capital to finance its other ventures. Of course, you already know that capital is the money that a company spends for producing, improving, expanding, distributing and promoting its products and services. If you buy a company's stocks, you are one of its shareholders.

The use of the term stock market also applies in reference to all the stocks that are available for trading (as well as other securities) as in the statement "the stock market performed well today."

You can also trade bonds on the stock market. Bonds are a business IOU that indicate that the bond issuer holds the bond holder a debt. Bonds are traded directly between two parties over the counter.

You may opt to trade commodities on the stock market. The term commodities refers to agricultural products (coffee, sugar, wheat, maize, barley, cocoa, milk products) and other raw materials (pork bellies, oil, metals). For example, if you feel that the price of coffee will increase next month, you buy the coffee commodity now and reap the benefits of the price increase next month when you sell.

Author Resource:- Jonathon Hardcastle writes articles on many topics including Investing, Business, and Finance

5 Features Of Online Day Trading

By : Abhishek Agarwal

All began at the time household chores were being done by hand. It then developed into something which eased our lives- washing and dishes being cleaned by machines. The advancement made in the field of technology not only benefited the households but also the business industry. As paper works are no longer made by hand, it is now the case in most businesses; people work faster and more efficiently. This in turn helps the industry.

We have really progressed a lot when it comes to technology. Technology no longer helps us to do some simple tasks. One field where technology is of great help is online day training.

You can have lots and lots of benefits from online day training.

Competency :
Traders too have evolved and are now adepts due to the competency of online day training. The main advantage of trading online is that it is done in real time. As implied by its name, you see the results of your previous actions in a couple of minutes. Moreover, you don't face any barriers which may have risen, had you been trading in a real market.

Flexibility :
How does online day training help you become flexible? Well, you should first be aware that day trading is carried out the whole day. As you are connected to the internet, your geographical position and thus your local time are no longer obstacles.

In addition to the benefit stated above, you remain up-to-date as you continue to receive fresh news.

Easy navigation :
If you possess the right trading software and do training, you will quickly become acquainted to using them. You will find yourself browsing through different sites and systems. In most cases, your broking firm will do their best to provide you with user-friendly trading software.

Instant feedbacks :
Do you still remember the fact that online day training is done in real time? It is therefore possible for you to access a particular report and have some reports compiled.

As soon as you get this feedback, you will be in a better position to know the consequences of your previous actions. As you will receive the feedback almost instantly, you can quickly correct any wrong moves. In the long run, you become a guru in online day training as you will learn from your mistakes.

Safety Tools :
As you care about your materials and private data, traders too care about their materials and sources.

With the appropriate technology and know how, online trading is now secure. It is virtual impossible to steal information online. Those safety tools will also back-up sensitive data. Furthermore, safety tools will enable you to have access to authentic trading data.

Technological advancements have revolutionized the way of trading in markets. An internet connection is enough for you to access the most famous markets while remaining in your home, your office or hotel room.

Being a day trader is a very interesting job which provides you with a lot of advantages. For you to become a successful trader, you must cultivate yourself. This means that you should make it a point to listen to the news and know what is going on around you. You must even be able to anticipate news. In fact, even the most insignificant information can impact on trading. The last advice is to remain vigilant too, as no system is 100% secure.

4 Tips To Becoming A Successful Day Trader

By : Abhishek Agarwal

A 'day trader' refers to the risky buying or selling of financial instruments. Financial instruments include cash and other financial derivatives. Financial instruments are only available in the circle of financial market that is often used for trading.

Many business people take notes using a third party that is often backed up by credit parties e.g. banks. The result of this action is that the security is now a transferable interest and is representation of financial value.

Security can be categorized into two main categories: either bearers and registered security or debt and equity security. Usage of these securities is different for both the issuer and the holder. Security characteristics have been greatly expanding with passing time mainly. The reason can be defined in relation with capital raisings.

Usually a Certificate is used for representing security. Included in this certificate is mutual funding, corporate stocks or bonds, stock options, investment instruments, units of limited partnership etc.

Defining stock, using financial term, is the raised capital of corporation that is distributed and issued using shares. Shareholder is not limited to one type of person. It can be anyone including a person in possession of shares, a company or a corporation having a fraction of stock. Aggregation of shares that are issued by a corporation heavily depends on market capitalization.

Each individual should be familiar with the basic techniques of stock market in order to become a successful stock day trader. Given below are important characteristics you must be familiar with to achieve success.

1. You should be familiar with liquidity. Liquidity is the existence of sellers and buyers in large amount over specific stocks that permits a fellow trader to quickly gain a position or willingly exits the stock. Liquidity is based on many important factors such as number of market makers, number of shares, volumes and ownership breadth. Liquidity requires fast execution from a trader within predictable price range. In addition, you should keep an eye out for high-liquidity. High-liquidity gives an additional advantage of reducing the popularity of a bid-ask for a certain stock which results in reduced execution of the cost for a day trader.

2. One of the factors on which liquidity depends is volume. A good trading day is one in which at least 500,000 shares are traded. This high volumes result in buying or selling of stock in large quantities without affecting the stock prices.

3. Volatility is predicted price range of stock of a specified time period. A $2 up and down in stock prices is a good choice while very little change should not be appreciated.

4. The ability to obtain information by understanding current pattern in market flow, also known as market depth, is transparency. Systems such as NYSE or NASDAQ II are used for this purpose. NASDAQ II obtains information from highest prices asked and lowest bid made while NYSE obtains information using highest bids made and lowest asked prices.

In United Kingdom, a stock is used in a different financial meaning that is bond. Bond is widely used in security markets. Despite this, shares are the same if they are used in specified corporation issued stock.

Options Trading - Calls and Puts

By : Amar Mahallati

Options are contracts on an underlying trading instrument such as shares of stock, bonds, a commodity, a mortgage loan and many others. However, there are common features among all options. It does not matter if it is a share of stock or a mortgage loan; they all have certain things in common. One such commonality is the contract feature that specifies what the option owner has actually contracted.

Options traders have two situations that may influence their buying and selling: calls and puts. There terms are used to indicate specific behaviors of options at various points of the option's life.

CALLs

A call bestows on the contract holder the right to purchase an asset at a particular price on or before the option's expiration date. This is only a right to buy, it is not an obligation. The call owner always has the choice to allow the option to expire. This does mean that all the initial money that was invested in purchasing the contract is lost, but the choice still stands.

Call buyers are gambling on the underlying asset's behavior; that it will increase in price before it reaches its expiration date. Also that it will not only rise, but will rise significantly enough to show a profit.

In order to show a profit, the price must rise enough to cover the difference between the market price and the strike price. The strike price is that price at which the stock must be bought. But, because the option has a cost attached to it, the price must exceed that amount enough to cover the additional amount. This cost is referred to as the premium.

The premium of an option, whether call or put, is determined by a variety of elements. These include, but are not limited to, the price of the underlying asset, the strike price and the time remaining on the option.

The time remaining on an option is vital. The shorter the time remaining, the greater the risk and vice versa. For example, if there are 90 days left to exercise an option, the risk is somewhat lower than if there was only 1 day left. This is because within that 90 day period the price could rise enough to show a profit. With just 1 day remaining, however, the odds are considerably lower.

For example, on April 1, MSFT (Microsoft) has a market price of $27. Call options for June 30 are selling for $3 with a strike price of $30. One contract for 100 shares is purchased.

If the contract is held until the expiration date, the trader either loses $300 ($3 X 100, the initial price of the contract not including commission) or the trader can purchase the underlying stock at $30. If the current market price was $35, then the trader has profited by $200 ($35 - ($30 + $3) = $2 per share X 100 shares, sans commission).

When the market price of a share rises above the strike price, the option holder is "in the money." If the market price drops, then the holder is "out of the money."

PUTs

A put gives the option buyer the right to sell an asset at a particular price by a specified date. Again, like a call, this is a right, not an obligation.

Put buyers are anticipating the stock prices to fall before the option's expiration date. Therefore, in such cases, the market price must drop below the strike price in order to show a profit from exercising the option. For simplicity purposes, the cost of the put is ignored. Under those circumstances the option holder is in the money.

Still using the previous example, maintain the same situation, but this time the option is a put. If the market price falls to $25, the profit would be as follows:

First, $3 x 100 = $300 = Cost of put, excluding commissions.

Purchase 100 shares at $25 per share = $2,500 this is to repay the broker 'loan' (this broker loan is a part of shorting stock which is borrowing shares you don't own, then repaying later).

Sell 100 shares at Strike price = $30, 100 x $30 = $3,000

Profit = ($3000 - $2500) - ($300) = $200.

It is the broker who handles the underlying mechanics. All the investor has to do is order the trades at a given time and date.

Wise investors do their homework and research their strategies, no matter if they are investing in calls or puts. Options trading does present risks and is rather complicated when compared to simple stock trading, although all trading contains an element of complication and risk. But investors in this line should study the history, volatility and other vital factors of both the option contract and the underlying asset.

A trader should never enter the market blindly and trade without doing the proper research first. The failure to do adequate research and go into the trade informed puts the trader at a must greater risk of losing money and not showing a profit.

Your Guide to Stock Trading Online

By : Ivanovich Cuxev

Stock trading has always been a popular way to make money for the many people that are interested in taking a bit of risk. Now that the Internet is available many people are taking their skills and trying their hand at stock trading online. However for the new people wanting to get in on the action, it may be a bit daunting to figure out exactly how online stock trading works.

There is a great deal of jargon that is associated with stock trading so before you even begin, you may want to research the ins and outs of stock trading in general. It is good to look towards friends and family for advice on where they trade stocks online, any advice they may have to offer about how you learn about stock trading. It is good to network with someone who is very experienced so you know exactly where to begin.

Trading stock online starts with knowing exactly how much you can invest and how much you are willing to lose if your stock goes down. This depends on how much cash you have on hand, and how big of a risk you are willing to take. There are many ways to trade stock online that offer you less risk, but almost all of them come with some sort of threat of losing money. You should remember not to put all of your cash in one stock. It might be a better idea to spread it around to give you the best chance to make money.

From there you need to decide what you would like to trade. You have a choice of thousands of different stocks with different values and potential. If you are interested in one particular stock then you may want to watch it for a couple of weeks at least before you dive in and start trading yourself. Research the past ups and downs of the stock, and if you feel that it is a good time to trade you then jump in.

You need to find a good online broker. There are many choices in the United States as well as other countries. You need to do your research to find out which online broker is best for you. Look at their fees and how often you can trade, as well as their products and the information that they offer to the traders. It is always good to choose a broker that has an excellent customer support line in case you run into problems while trading.

When you first begin to trade stocks online you need to have realistic expectations and goals. Be disciplined and know what you are doing before you make your first trade.