Investment Basics » Stock Trading

3 Tips For Selecting Profitable Stocks

GuestPoster — Mon, 01 Nov 2010 08:10:10 +0000

Choosing stocks is a complicated process. Every investor goes about it a different way, some choose a penny stock broker and other go it alone. But if you want to be able to select profitable stocks from an over-the-counter market having some general steps to follow is important and helps you minimize risk. So let me outline three possible steps you could take.

Step 1. The first step is to establish a time frame and strategic direction for your investing. Getting this strategy in place is what is going to dictate the shares you purchase.

For example, long term investors would establish a strategy around finding shares in companies with long term competitive strengths and a history of stability when it comes to growth. Because they are buying with the long term in mind they would look at historical trends over past decades and analyze the businesses strengths and weaknesses.

Shorter range investors might consider some of these alternatives:

a. Trading on Momentum: looking for stocks that have increased in price and volume recently. This is a common and supported strategy for investing. It is underpinned by locating stocks with smooth rises in price with the goal of riding the trend upwards as the price continues to increase.

b. Using Contrarian Strategies: Contratrian strategies look for stock market over-reaction. The stock market is not efficient and so the value of a stock isn’t always a true representation of the value of the company. In a situation where a company makes an announcement, particularly when the news is bad, panic selling ensues and it isn’t uncommon for the price to fall below fair value. Contrarian strategies involve finding stocks that have had recent sharp falls and analyzing the possibility of a reversal. Candlestick analysis is often used in this strategy.

Step 2. Using research software or services that enable you to filter stocks according to your timeline and price. Many online programs are available to do this. They are very helpful in enabling you to screen out those stocks that aren’t going to meet your strategy.

Step 3. Ensure you diversify your portfolio sufficiently from the stocks you have analyzed and found match your strategy. A Markowitz analysis is one way of doing this. It will tell you the ratios in which you should buy different stocks to fill your portfolio. Diversification is a risk reduction strategy and essential for successful stock trading.

These are just preliminary steps to getting started trading in the stock market. They are principles only and should be expanded upon. You need to continually improve your knowledge of financial markets and trading strategies. Following these steps and advancing your education will improve your confidence and success as a trader.

Stock Charts

GuestPoster — Wed, 27 Oct 2010 15:11:08 +0000

One of the most widely used tools for stock traders are stock charts. Stock charts reveal so much information about the stock, that it is imperative for the trader to have access to the best stock charts available. Free stock charts are available online or through your broker. There is also software available with more complex algorithms and dynamics that the charts online or through your broker can provide.

The best stock charts are usually available through your broker if you are a day trader. If you are making long-term investments and do not need split-second chart results like the day trader, then free online stock charts may suffice. There are a variety of stock charts to choose from, and it is a good idea to become familiar with all of them before you decide to make any investments in the stock market.

Being able to predict where a stock is headed is crucial to becoming a successful stock trader. This ability takes time, patience, and a lot of study. There exist many chart patterns that the stock trader must be able to read and understand before making an investment. For the short-term trader, candlestick and stochastic charts are the most revered charts. Learning how to read stock charts gives the trader an idea of the volatility and direction of the stock. These are the best stock charts. Candlestick charts reveal patterns that can be highly rewarding to the trader. Candlestick patterns emerge throughout the trading day that, through determined analysis, the trader can predict with certainty which direction a stock is headed.

It is important to take advantage of all the resources available to you as a stock trader. Free stock charts online are often the best stock charts at your disposal. Of course, you must also pay close attention to any outliers when trading, things like the news and the strength or weakness of the market indexes, as these often have a profound affect on stocks and stock charts.

Buying Stocks Online

GuestPoster — Fri, 15 Oct 2010 11:57:04 +0000

The DOW has passed the 11,000 level this past week and many are wondering if the ride up is over or not. If you’re one the them that have been buying and selling stocks over the last ten months, then you have most like made a good amount of capitol in that time frame. Buying stocks online during this climb on the major indicies has made investors and traders grow their portfolio. Is there still room to make money with the stock market being this high after being as low as 6,600 just nineteen months ago?

The answer to that is YES. There is always a way to make money in either a bull or a bear market. As long as you learn the different trading techniques and properly do your research, it’s very likely to increase your portfolio.

If you’re an investor, you typically buy stocks to play long (looking for the stock price to grow). If that’s the case you need to see a substantial pull back on the stock price before you buy into a position. I consider a good pull back at about 5-8% from it’s recent high. Too many stocks have gained some good ground in the recent past and you have to take into consideration that other investors who have been in the stock for the climb will be looking to take profits before the pull back happens.

If you’re a trader, It doesn’t matter what type of market we’re in. You’re looking for an opportunity to either buy shares to go long or you’re out there shorting the shares expecting the pull back. Traders are people who are more into trading stock on the short term basis. They don’t look to be in a company’s stock for too long. They are in it just waiting for a catalyst (an event) to happen so they can profit on the moment and after that they will get out of those positions and take profits.

Once you’ve been investing in the stock market and learn more investment basics on how to buy and sell stocks in different ways, you’ll most likely be more of a trader than an investor. Either way, if you study the company you’re going to build a position in, you’re going to do just fine or better.

Consider Penny Stocks for Solid Returns

GuestPoster — Sat, 21 Aug 2010 18:59:03 +0000

The type of stocks referred to as penny stocks and are also known as micro caps can be an excellent investment for many people. Penny stocks are very cheap to own and can do much for diversifying your portfolio since you can own so many of them at one time. Even though the name “penny stocks” probably evokes images of stocks selling for $0.99 or less, these types of securities are really made up of all stocks that are less than $5.

Micro caps are often perceived as a solid investment due to the fact that you can buy them for such low prices and then, if the stock’s price moves up just a little, you can see a very high return. As an illustration, if you buy a micro cap for $0.25 a share and then the price shoots up to $1.00, your money has quadrupled! It’s very different for the higher valued stocks. For example, a $0.75 price increase for a stock that’s now selling for $60.00 a share is not very impressive. Inexpensive stocks can realize high returns on seemingly insignificant price increases. Micro caps see price fluctuations like these all the time.

Identifying a micro cap that is in a pattern known as a rolling stock is a very easy way to trade these stocks. A stock that is in a rolling pattern is very easy to identify. This is merely a stock that trades month after month between two price points. Essentially, the stock will rise in price for awhile until it reaches the upper price point. It will then decrease in price until it reaches the lower price point. The stock gets its name because it looks on a chart like it’s casually rolling along. Rolling stocks are very easy to identify on a chart. Once you have located a penny that’s in a rolling pattern, trading it is very easy. You just buy it when it’s at the low point in its range and sell it when it reaches the top of its range. This is a very simple strategy to implement. You can profit from a rolling stock by trading it over and over again.

While it’s true that you can profit from a penny stock multiple times, there are some potential negative aspects of these securities that you should be aware of. To start, micro caps are usually affordable for a good reason. Micro caps are usually cheap because they are either new to the market or they are companies that were higher priced at one time and have decreased substantially in value due to a negative event. Since there could very well have been a negative event in a company’s history that has caused its price to drop, you will want to research the company to see if it is something that is only a temporary setback. Take the time to review a company’s history and investment basics before investing to see if it has a promising future.

A penny stock’s trading volume is another aspect you should take the time to review. If the penny stock has inadequate trading volume, you might not be able to sell it if you are in a position where you need to quickly do so. With sufficient volume though, you can usually quickly sell the stock.

Dynamic, affordable and profitable have all been used to describe the penny stock market. Before launching your penny stock trading journey, be sure you are fully aware of the potential pitfalls of trading these securities.

Stock Options Software

GuestPoster — Sat, 21 Aug 2010 08:49:04 +0000

As complicated as it is to try and trade stock options successfully, you need all the help you can get. It’s one thing to get stock options explained adequately to you when you are learning about these financial instruments, but it’s another thing to attempt to profit consistently from the trades that you make. Many options investors, of all experience levels, use stock option software to help them visualize the possibilities inherent in a given position that they are considering.

Fortunately there’s plenty on info to learn stock trading and free trading software available to help you. Normally these tools give you a wealth of information about the options chain of a given stock simply by you entering in the stock symbol. When you do, you’re presented with all the expiration months and option strike prices associated with the stock. You can then pick a contract and the software will instantly tell you where your breakeven point would be the as well as your maximum profit and loss, and myriad other information.

Option trading tools are very valuable when it comes to more complex trades such as spreads and straddles. In these trades multiple options contracts, known as legs, are bought and/or sold simultaneously so that one’s overall profit is dependent upon what happens to each of the underlying legs during the time the trade is on. It can be very difficult to visualize what your profit or loss will be at a given point in the future or at options expiration, without having it all in front of you in graphical form. Specifically, you can see exactly what you’re profit/loss would be at any price at which the stock will be trading at any point in the future. For most people a visual representation of risk/reward is extremely helpful and that’s what these tools are so good at providing.

The newer options trading software is even capable of representing different factors that determine the pricing of an option as a three-dimensional volume. Extremely complex shapes and surfaces are used to represent the the performance of every single one of a stock’s option expiration dates and strike prices, at all times until expiration.

If you decide to use these investment basics trading tools, be sure and try one or two of the free software packages available to you first, because frankly they are so sophisticated that in all likelihood you will not need much more functionality than the free tools provide. There’s really no downside to using software like this, try it and see if it helps your bottom line.

Stock Market Trading Software Packages

GuestPoster — Sat, 07 Aug 2010 01:09:03 +0000

In the information age, with so much technology available, stock market trading software is essential for any investor. Except for those who buy and hold stock for a lifetime, all serious investors want the best, most reliable software for their investing careers. This article provides three answers to why there are so m any stock market trading software systems.

Because There Are So Many Stock Market Traders.

There’s an old saying that we are all as unique as snowflakes; no two of us are alike. Some theorize there are 4, 8, 16 or more different personality types and that your personality determines how you notice information, learn it, make decisions and act upon it. If this is true, then it makes sense there would have to be a minimum of 16 stock trading software programs as there are personalities of people trading stock.

Because There Are Mathematicians And Software Developers.

These people love to calculate, formulate, design, build and tweak in the quest for the perfect equation – the perfect number-crunching system. Some mathematicians would be thrilled by the mere idea of testing the mathematical validity of theories touting how there are as many stock market software packages available as there are days in the year.

Because Traders Are Only Human.

There are too many markets, too many stocks, too many websites, too many opinions, and too much research – when we are overloaded with information, we get emotional. Emotions and stock trading do not mix well. In addition, when we get emotional, we make poor personal and business decisions. Stock markets trading software can research, forecast, sort, select, track and monitor single or multiple stocks, markets, trends and indicators faster and more accurately than any mere human – so consumers want it. It makes our lives easier, less stressful, and more profitable.

Therefore, there are my answers and explanations. However, was your question really what you wanted to know? Did you really want to know how to pick a profitable stock trading software tool? If so, try this:

1. Ask your broker and friends who trade stocks for their recommendations and then choose three.

2. Download free trial versions and try them (if no trial version is available, make sure there’s a full money back guarantee).

3. If you can use it correctly and quickly, make steady profits, and it fits your trading style, stop looking.

Closed End Bond Fund

GuestPoster — Sat, 17 Jul 2010 23:29:05 +0000

There is a broad range of stocks, bonds and other investment opportunities to invest your money into. While diversifying your portfolio is critical to investment strategies, it may also be difficult if you do not understand what is available. Each category of investments has a different level of risk and return rate. Deciphering the information so you can invest wisely is critical.

One type of investment that you may inquire about is a closed end bond fund. These types of funds can only be purchased through a broker. All trading that is associated with a closed end bond fund must be handled in second tier trading (through a broker) you can not initiate a purchase with the bond manager independently.

The bond is considered a closed end because there are a limited number of shares available. For instance, a bond can be created that will encompass 100,000 shares. At that point, no further shares can be issued. Unlike a stock or open end fund that can add shares at any time, once the number has been set on a closed end bond, which is the maximum amount it can ever offer.

The bond holder, once the shares are sold, will then invest the money raised into other stocks, generating money for the fund. The value of the closed end bond will increase based on the performance of the bond managers choices. There is some risk associated with closed end bonds, they often sell for less than what they are valued at, but there is also a great chance for wealth creation if the fund manager makes good investment choices. As with any type of investment, discuss with your personal broker what would be in your best interest for investing. Investments should be made to coincide with your direct goals, not just a generalized investment pattern.

Spread Trading On the Stock Market

GuestPoster — Wed, 14 Jul 2010 22:40:05 +0000

I’ve always been a big fan of betting on sporting events. I always feel that it adds a little something extra to that game your watching knowing that you have a stake in play. I only found out recently that you can actually place bets on how the stock market will turn out. As well as betting on sports I’m a keen investor so the option to mix two of my favourite money making past times was just too much to pass up.

Spread trading is really quite simple. Firstly you decide the length of the bet you want to place. The shortest is the daily bet which of course lasts till the end of that trading day. You simply place a bet on an individual stock or even an index and decide if you think it’ll go up or down in price. At the end of day depending on the outcome you might just make a little profit. You can also place a rolling bet which means that your stake will roll on to the next day of trading. Finally there is the monthly bet which can last anything up to 3 months in advance. Long term this could turn out to be the better option as it’s less like gambling and will allow you to apply a little research to your stock picks.

On the whole, I’ve have some success with spread trading. I guess at the end of the day it is gambling so you will have good days and bad days. I try to apply as much theory as I can to picking my bets and so I tend to go for the long term options. I follow the value investing techniques promoted by Warren Buffett so I feel a little safer with my bets when I know there is a proven science behind the options I come up with. It’s ok reading those stock market for dummies sites for a while but I’ve using my own hard earned cash I want to get a return!

Stock Trading Tutorial

admin — Mon, 11 Jan 2010 23:08:34 +0000

There is nothing more electrifying than trading in the stock market. Smart trading is the chief key here. If you are given the opportunity to place $100 and after some time you’ll generate $500, you’ll definitely develop a desire for the game. If you only aspire of doing this, but are fearful to take your first step in the stock market, don’t you worry! This article will give you a stock trading tutorial that will help you learn about the basics enough to start a trading career.

Learn About the Basics Now and Start Trading Later!

Every tutorial pertaining to the stock market should begin with familiarizing yourself with the trading jargon. You should recognize what the stock symbols are, which are the letters that stand and represent the company owning the stocks. You should be aware of the meaning of stock shares, if not; they are a fraction ownership in a company.

When you trade, you either carry out a market or limit trade. Market trading is about buying and selling stocks at the price determined at present. On the other hand, limit trading is about setting the price that you’ll buy or sell the company’s shares. When you go for penny stocks, you must perform limit order at all times. It’s vital for you to keep in mind that the stock market moves suddenly and a tenth of a penny can lead to a huge difference between win and loss situations. An important segment of a stock trading tutorial is to make use of limit order and make up your mind ahead of time on how much you can afford to recompense a stock.

Study Stock Trading

You don’t have to be a stock market’s slave. Study the stock trends and follow beginners guide to investing. While some prices will go up, others will go down in customary intervals. They normally volley in the middle of two prices. If you uncover a stock that does, choose a number near to its bottom price and place in a limit order. Once the stock hits your price, you must automatically purchase it. After which, you should position a sell limit order for the greater end of the trading cycle. The transaction is a success when the stocks you bought hit your dogged price.

In stock trading, you do not always make as much money as you can. However, you can also limit your money and effort to generate sufficient earnings. Try learning how to invest but note that stock market trading integrates discovering how much you desire to make out of trading. Of course, you want to make as much as you want, but this is a wrong thinking. You need to determine a comfortable profit level while you avoid being greedy.

If you generate $100 on your first trading day and then incorporate it to your initial investment and made $150 on the second day and so on, you will soon have a huge sum in your hands. A stock trading tutorial will help you understand that it is not beneficial to only guess when you should trade, since this will only end up losing your capital. A tutorial for stock trading may appear very basic, but this is your best tool not to commit costly trading mistakes at the outset of your trading career.

Learn Stock Trading

admin — Fri, 30 Jan 2009 08:33:09 +0000

So you want to become a successful stock market trader? Learning stock trading can be extremely exciting and fascinating. If you can learn everything you can from the proper sources and become skilled at it, you will give yourself the right tools to make yourself some nice profits.

How to Learn Stock Trading

There are many different ways to learn stock trading. You need to find the one that will work best for you so that way you learn how to trade stocks in your own style and will be more likely to make higher profits.

There are many ways you can go about learning how to trade stocks but here are a few avenues you can investigate and see which one works best for you:

Stock Market Mentor

Probably the absolute best way to learn to how to successfully trade stocks is to learn from someone who has actually been lucrative at it. Finding a good stock market mentor will have the maximum payoff since you can use their years of experience and knowledge firsthand for yourself – rather than taking the long route and trading to learn by yourself. However, finding a great mentor can be a difficult thing to do.

If you can find a potential stock trading mentor candidate, here are the steps you can take to lock them in as your mentor:

Make them your friend

Before you ask anyone for anything, you should get to know them on a personal level. No one likes being asked for favors from people they hardly even know.

Spend time with them

Finding the right mentor is crucial and you won’t know a person’s true colors unless you spend a lot of time with them. Make sure you hang out with them in a group as well as in a one on one atmosphere.

Offer a helping hand

Before you ask for any advice, you should volunteer to help them out in any way you can. More importantly help them out on numerous occasions and do it because they are your friend – don’t expect anything in return.

Asking for advice

Ask somebody to be your mentor will create an uncomfortable situation, instead you should just ask them for advice at whatever time you need it.

Stock Trading Books

If you would like to learn all you need to know about stock trading for beginners, one of the best and easiest ways is to get a few good stock trading books. There are tons of remarkable books out today from some of the top professionals. But beware – you can actually absorb too much information from all these books and drive yourself crazy with an information overload.
Before spending hundreds dollars on stock trading books you think may be good, make sure to first ask for recommendations on which books are worth reading and start from there.

Videos on Trading Stocks

Another way to learn stock trading is through online videos and software. Stock trading videos and trading software can be expensive, but it might be worth it to explore. Don’t get sucked into cleverly written sales pages, but ask some successful traders what they would recommend to get you started.

When you are learning stock trading for the first time, it can be fun as well as profitable. The key is to pick your sources of knowledge well and learn all you can from them. Don’t be too afraid to get your feet yet, if you can learn to manage a balanced portfolio and know the stock market risks, you will be able to minimize any losses you may suffer.