Investment Basics

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.

Importance of Financial Statement Analysis

GuestPoster — Wed, 18 Aug 2010 00:59:05 +0000

It is really important that every investor understands the investment basics of how to analyze corporate financial statements. You shouldn’t be investing in a stock if you don’t know how to read their underlying financials. It’s really fundamental in understanding the stock market and how it works.

Financial statement analysis is the backbone of understanding how a company functions and how it performs. The numbers tell the true story of what is really going on in a company. If you don’t know how to read a company’s financial statement, then you really don’t understand how to evaluate a company and it’s stock.

For example, a fundamental way to invest in stocks is to do value investing. This is a method that starts out with analyzing a company’s financial statements. You look at their numbers and first determine how much that company is worth. It may be worth $100 million, $1 billion or $2 billion. Without understanding their financials, you can’t determine how much they are worth.

Next you look at their market cap, which is the measure of what the stock market thinks it is worth. If you think the company is worth $1 billion and the stock market thinks it is worth $800 million, i.e. the market cap, then you have a winner. But you can’t come to that conclusion if you don’t know what the numbers say in the beginning.

If your stock investment strategy does not look at how much a company is worth based on financial statement analysis, you are missing a big piece of the puzzle. Even traders have a sense of how much a company is worth when they are trading them.

Understanding financial statements is a huge step to understanding stocks and the companies that are attached to them. The numbers tell a story of how they are really doing, in spite of press releases, CEO speeches or analysts’ comments.

Stock Market Basics For Newbies

GuestPoster — Tue, 17 Aug 2010 20:11:08 +0000

If there is an old and tried investment, stock market stands at the center. It is one of the best investment ideas around. Just carrying out some research will show you people are making thousands of dollars every month, others every day. You can make it one of your best investments in 2010. However, prior to putting your funds into stock, understand the basics that govern this market. Learning amicable stock market basics will definitely put one in a level many only wish for. In fact, any people are doing poorly in the stock market because of poor mastery of the basics.

If you want to learn to trade stocks like a pro, don’t ignore the basic knowledge. Stock is basically an ownership stake in an organization or company. Companies raise funds by floating shares to their investors. By owning stocks of a particular company, you are entitled to the profits of that company which is termed as dividends and also a fair share of risks as well. Success of the company leads to your own. To increase a percentage of ownership, you only need to buy more stock. Don’t forget owning a company’s stock does not mean you become a part of the everyday staff; nevertheless, shareholders have a chance to elect such people by voting in annual general meeting.

To know how to find the best investments in the stock market, understand the two stock types, preferred and common. The most traded stock and in abundance is what is known as common stock. It is also what most investors refer to when they talk of ‘stock’. Apart from giving one a percentage of company ownership, it has no special benefits.

On the other hand, preferred stock has many benefits. The stakeholders who hold preferred stock might not get voting rights but they mostly get their dividends fixed in the entire life of a particular company. For common stockholders, theirs is just an occasion dividend but hardly equals what a preferred stockholder gets. When a company is under liquidation, the only stockholder with few worries is one holding preferred stocks, since in debt repayment they get their percentage first. They are better placed to receive their funds back in case a company has limited money for debt repayment.

As you learn to trade stocks and understand the stock market basics, don’t forget demand and supply makes the price of stocks to either shoot up or go down. The price goes up if there are so many people to buy while the shares are less. If there are many investors unloading their stock with few buyers available, price shoots down.

Stock Market Charts

GuestPoster — Sat, 07 Aug 2010 05:26:03 +0000

Stock charts are a commonly used visual aid used by traders in the stock market.

Stock charts, in the form of relatively easy to interpret graphs, show the range of fluctuating prices of a stock or a stock index that have occurred over a selected period of time in the past until the current date, useful information for the stock market trader.

The value of the stock chart to the trader is based on the assumption that the patterns of trading activity of the past are likely to be repeated frequently in the future and if those patterns can be recognized as they begin to develop they can provide actionable evidence for stock trading decision making. The expectation being that whatever outcome occurred previously is likely to occur again, a matter of history repeating itself.

At a glance, the trend of the stock or the market in general can be seen, important to know when following the standard advice of “Do not trade against the trend”. Also, other important relationships such as those between changing trading volumes and changing stock prices are also instantly recognizable.

More detailed examination and interpretation of charts, commonly known as Technical Analysis, has become a specialized skill and takes into account many more indicators and variables than those mentioned here. Through the analysis of the stocks portrayed, the trader looks for chart patterns that can signal the point when the time is right to enter or exit a trade. The stock chart can often do that quite well and often with ample prior build-up time to plan carefully and be ready to make the move.

A vocabulary of names of the various formations has developed among analysts and traders and an unofficial set of ground rules establishes the attributes attached to them. The names of some of the many formations, some of which are very similar, include, Flags and Pennants, Ascending and Descending Triangle, Saucers, Measured Moves, Breakaway Gaps, Wedges, Head and Shoulders, and there are many others. There are also indicators that use combinations of factors related to price and volume and convergence or divergence and crossovers of lines of moving averages. For a sample chart and a further introduction check out this link: Looking at the Charts.

For those wishing to learn how to trade stocks or to study stock charts in greater depth, reference books on technical analysis are available from the better bookstores and many local public libraries have them for general circulation. There are many internet resources that deal in depth with the subject and anyone prepared to spend the time can soon become familiar with the half dozen or so that consistently lead to profitable decision making.

After the easy to recognize trend lines and the support and resistance levels, those I recommend to watch for are: saucer formations, breakaway and exhaustion gaps, triangles and pennants, and measured moves. If those can be recognized and traded, the odds of making profitable trades are increased.

But do not forget to ALWAYS USE STOPS to manage risk.

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.

Performing A 401k Rollover

GuestPoster — Wed, 28 Jul 2010 00:35:05 +0000

If you’ve tried to look around online regarding 401k accounts, one of the most common phrases that you saw is 401k rollover. You may have tried to read about it, but due to the various unfamiliar terms used, you ended up even more confused. To sum it all up, a rollover is when you move your retirement fund somewhere else. Although your 401k account is owned by you, you don’t control it. Contributing to your company’s 401k plan is actually putting your money in a trust. You as the contributor have an account in the trust, but it is your employer who manages the trust in your behalf. Once you leave your employer, they will either charge you a fee for managing your trust for you or you would have to transfer it elsewhere.

There are several ways of doing a rollover, and one of the most popular is rolling over your retirement funds to an IRA. An IRA or Individual Retirement Account works by keeping your retirement funds for you once you’ve resigned from your company. You can also open this type of account if you are self-employed and would like to have somewhere to save up for your retirement.

Transferring your fund is quite easy. You start by filling out a form informing your employer that you would like to transfer your retirement funds. Your employer will forward this to the plan trustee, who will then start the process to execute the requested transfer.

If everything goes okay, your funds will be released to your new plan. If this new plan is one from your new company, then you would also need to fill out a form asking them to accept your funds and to put it on a plan under them. This process can take anywhere from weeks to a few months, so make sure that you fill out the forms completely. One of the most common mistakes that would delay the transfer is not completely filling out the forms, or filling them out with the wrong information.

One more thing, ask your new company first if they even accept rollovers before you do any steps. Not all plans accept transfers, and you may be left with nowhere to put your money once you’ve pulled it out of your former employers. If this is the case, chances are the money will be sent to you through a check, instead of having it transferred to another account immediately. If this happens, remember to open an IRA and deposit the check there within 60 days. Not doing so might subject you to penalties and taxes, and you might end up having to start with a new 401k account all over again.

Forex Investments

GuestPoster — Wed, 21 Jul 2010 16:12:04 +0000

There are three reasons that now is the time to start investing in FOREX, the largest and most active market in the world. This market buys and sells the currencies of different countries around the world; these currencies are grouped together in pairs. Between $1 billion and $1.5 billion are traded each and every day in this market which operates nonstop from Sunday afternoon through Friday afternoon. Forex investments can be a great way to diversify your portfolio and take advantage of the fact that the world economy is always changing. Furthermore, this market deals with all the currencies and the market is too large to be controlled by any industry or any government. It is easy, it is fun and it can be extremely profitable to do a forex investment.

Forex investing is easy. Only currency brokers can place orders in this market; currency brokers are much like the stockbrokers. Many brokers belong to an organization that allows them to make trades and most agree to and abide by the rules of the countries they operate in. Opening a trading account is as simple and easy as opening an account with a stockbroker. A simple application is made, an account is set up and funds are transferred. Now the investor is ready to commence his or her FOREX trading career.

The investor can decide how active he or she wishes to be in the decisions regarding the account and the currencies traded. Many investors choose to turn the funds over to a management broker who will make all the decisions regarding investments. Others choose to work with the currency broker and follow their guidance and suggestions. Some are do-it-yourself investors and choose to make all the decisions themselves based on their view of the market and current events.

Foreign exchange investments can be extremely profitable. With the right managing broker, currency broker or information obtained from the market, the active movements of the different currencies create great opportunities to make money in a forex investment. Eventually, you might even branch into more advanced forex trading techniques, such as forex options trading. The currencies from the different countries are grouped together in pairs and the manager of the account will choose to buy or sell a particular pair depending on the short-term or long-term information from the market. 16 different countries combined their currency to form the Euro; this is one of the most popular currencies. In the Euro/US Dollar pairing, if this pair is purchased the investor expects the Euro to increase in value against the US dollar. If this pair is sold the investor expects the US dollar to increase in value and the Euros value to go down.

Now is the perfect time to take advantage of opening a forex investment account and capturing some of the profit in the minute by minute moves of different countries currencies.

Determining How Much Money You Should Invest in Stocks

GuestPoster — Wed, 21 Jul 2010 16:11:03 +0000

You have probably heard about the ups and downs that the stock market has had in recent years if you have been listening to the news. Before you jump into buying stocks online, it is important therefore for you to determine not only how much of your money you should use for other types of investments, but also how much is safe to have in the stock market.

Your age and investment strategy are two factors that determine the amount of money you are going to invest in stocks. You should be willing to make adjustments as time goes by which means there will be different strategies you should use as you move up in years.

Because you will run out of the years that you will need to recoup any losses that you may suffer, you will want to take fewer risks the older you get. If you are an older investor, it would be wise to put your money in safer investments such as T-bills, mutual funds, and other investments that carry a minimum risk; on the other hand, if you are a young, you might want to invest most of your money in stocks that you have taken the time to research.

Two additional factors that you will need to determine about yourself are whether or not you will be able to deal with the daily fluctuations of the stock market and how risk-averse you are. If you don’t like seeing your hard earned money go down the drain, then stock investing might not be the right kind of investment for you. Even if you are good at identifying the best stocks to buy right now, you will always have your money at risk which is uncomfortable for many people.

Your investment strategies should match the different stages of life that you will go through. In order to determine how much of your money you want to invest during the different stages of your life, it’s a good idea to take some time to research the various investment strategies that are out there.

How Are Stocks Traded?

GuestPoster — Mon, 19 Jul 2010 22:41:05 +0000

Investing in stocks is not that hard. If you are trying to imagine yourself collecting pieces of certificates that confirm your percentage of ownership in a certain company then you can breathe easy now. Selling and buying of stocks do not work like that. You don’t have to shout on a trading floor to get the stocks you want.

Before we start on explaining the trading of stocks and how you can purchase them, first we need to know what stocks are. Stocks are one’s ownership in a company. If one buys stock in a company, he will have a piece of the whole. The more stocks you have, the bigger the ownership. Stocks can also be called in different names such as share or equity. It can also be of different types such as preferred and common stocks. Being an owner of a stock entitles you to the earnings of the company based on your ownership percentage. Usually these are just small amounts but if they are invested as long term stocks then the returns are usually higher because the company has time to mature.

Now, due to the upgrading of technology, people don’t go around handing their certificates to be able to sell them. These are now in the form of electronic stocks called holding shares. This will make the transactions easier by just clicking the mouse or phoning the company that you are selling your shares. They are placed on sophisticated exchange markets and it facilitates the passing of the stocks from one hand to another. There are many exchange markets all over the world but the biggest and famous ones are the American markets like the New York Stock Exchange and NASDAQ.

We get to the purchasing phase. Stocks can be bought in two ways. First is the use of a brokerage. These are firms that you could run to in case you need help on the investing aspect. Some can be expensive because they give you a full service by giving personal advice and assisting you in terms of managing your portfolios. There are cheaper ones that are called discount brokers. You’re basically on your own however. No one is going to tell you which are the undervalued stock picks.

Other ways to buy them are by dividend reinvestment plans (DRIPs) and direct investment plans (DIPs). These are individual plans by the companies allowing the stockholder to buy the stocks directly in the company. It is advisable to purchase to them at steady intervals if you are into investing small amounts. These plans cost minimally compared to the brokerage.

There many ways you can put your money in and we are sure that there are many open markets that will take you no matter what your portfolios may be. Learn to balance your stocks and see where all it goes.