Tips On Stock Trading: February 2007

13 February, 2007

Making Money Through the FOREX

Those who have extra money lying around should invest it to make this grow. There are treasury bonds and the stock market. Since the rates of these two fluctuate throughout the year, it is uncertain if the amount placed will double in the next few months.

This is the reason that many people have decided to put the money somewhere else. A good example is the foreign exchange market otherwise known as FOREX where

The money to be invested in this endeavor is never overnight. Just like the stock market or the treasury bonds, this will be stay there for a few months or years before the person decides to cash in on some of the investments.

The nice thing about the FOREX is that an investor can put more money in or cash some of it at anytime. This is because trading is done 24/7 almost 6 days a week since people from different parts of the world do business in different time zones.

The investor will have to do business through a dealer. This professional will advise the person on what to buy and then decide whether to push through with it or not.

Who can play in the market? The good news is that anyone can join in the frenzy. Those who don’t have money can borrow something like $500 then pay it back gradually when a little cash has been made.

There are two ways to analyze the current market conditions. The first is called the technical analysis. Basically, this is the use of historical data to make a prediction and hope that the assumptions are correct.

The second is based on fundamentals. There are a lot of things that could affect the currency of a current. A good example is the Asian meltdown in 1998. There are also other things to watch out for such as political and economic situation as well as the credit ratings given by different bodies like the World Bank.

Some people use one method of analyzing while others use both. In the end, these are mainly assumptions because some countries are able to bounce back after a crisis.

Making money through the foreign exchange market can be done at home or at work. The only thing needed will be a computer that has to be kept on at all times to monitor everything.

There are two versions that investors can choose from when playing in the foreign exchange market. There is the web based and the client based.

Those who have been in the game for quite awhile can use the web-based version to do transactions personally. First timers and those who are uncertain are better off using the client-based version. An analyst will be able to advice the person before money is thrown into the wind.

Studies show that more than a trillion dollars exchange hands daily in the foreign exchange market. This shows that there is a lot of money floating around and a fortune can be made if this is done correctly.

Is the FOREX risky? The answer is yes but just like other things in life, people have to gamble once in awhile in order to get a huge payoff. It will be a good idea for someone new to start small first.

12 February, 2007

Discover The Day Trader's Trading Strategies

One investment opportunity that is much misunderstood is what is called day trading. It can be option day trading, or day trading for regular stock issues rather than options. Either way the name comes from the fact that the transactions take place usually within the time frame of one day. As a matter of fact, many of the transactions take place in a matter of minutes.

It was the introduction of ECN's, Electrical Communications Networks, and their acceptance by the SEC, The United States Security and Exchange Commission, that opened the door to day trading as it is practiced today. In the past, it was the way the Stock Exchange operated that restricted day trading, as a certain amount of time was required to process transactions on the floor of the Stock Exchange.

Day trading is a wide and diverse investment opportunity, and its reception by the more traditionalist in the financial world has been somewhat mixed. Often viewed as more gamblers than investors, day traders have been reviled by some. On the other hand, some are giving day traders credit for helping to stabilize the market.

One thing is certain. Day trading carries a great deal of risk. So much so, that brokers are required to issue risk warnings to potential investors before allowing them to engage in day training. Individual investors are generally required to maintain a $25,000 minimum balance in their accounts.

Day Traders use several methods to make investment decisions. Trend following is one of them. Trend following is based on the assumption that stocks that are rising will continue to rise, and stocks that are falling will continue to fall. The day trader makes his buy early in the day, and sells at the end of the day, taking the day's rise as profit.

Another method used by day traders is called Range Trading. The idea here is that stocks have certain points that when reached cause the stock price to drop. Traders have knowledge of this range level, and use it to guide purchase or sale decisions.

Some Traders use a method known as "Playing the News." This method is simply keeping up with news that might impact the price of a stock. There is usually a delay in between the announcement of financial news, and the reaction of individual stocks to the news. The news can be good and cause stocks to rise, or bad, and cause them to fall, but the day trader acts quicker than the market.

Another method is called shorting. In this type of trading, stocks are borrowed from a broker, and sold. The trader is expecting the stocks to fall during the day, and at the end of the day, he buys them back at the lower price, repays the broker, and pockets the profit.

All of these various trading strategies depend on the ability to make trades in volume, and to make them quickly. This was not possible in the days before the internet became so wide spread, and the ECNs were established. Today, online option trading allows transactions to be made with the stroke of a keyboard, and this has fueled the rise of day trading.

10 February, 2007

Online Option Stock Trading is it For You? Some Info You Should Know Before You Take The Plunge

Online Option Stock Trading is it for you? Some Info You Should Know Before You Take The Plunge.

The trading of stocks and options has certainly met with a great deal of new enthusiasm as of late. Many people who have never hired a stock broker, or even traded a single stock for that matter, are being attracted to the option of trading online preferably than in the traditional manner. One of the main rationalities behind this is that most of the newer generation of stock traders have literally grown up using a personal computer for more or less any task for which it's able.

As you can probably guess, given the chance to utilize online option stock trading, this newer generation of investors will happily go online to trade. One of the advantages to online option stock trading is the power to see real time gains and losses of stocks being traded. This allows market savvy traders to be able to identify which way the stock prices have most potential to go. Another big advantage which online option stock trading offers is the chance for the trader to spot and foresee stock price variations. The ability to speculate when a price fluctuation will occur can greatly heighten the trader’s profits.

Being able to foresee when a price fluctuation may happen can also enable investors to hold on to a stock longer than they would usually if they are anticipating a price surge. Naturally this also goes with its own risks, , if the trader has a bullish position, and if the price falls drastically instead of rising, then the investor could stand to lose a significant amount of capital. One of the main attributes of any successful investor is a good sense of timing.

Online option stock trading is available for all types of stocks. It makes no difference what type of stock that you may be interested in trading, because you'll find that online option stock trading covers all stocks. Want to trade common shares? You can trade it online. You will also find that you can trade issue stock, story stock, penny stock, treasury shares, synthetic stock, preferred shares, and widow-and-orphan stock.

Another huge advantage that online option stock trading offers investors is a rather fast and fairly cheap method to trade stocks. These trades can be made from anywhere that the investor can find an internet access, at home or on the road. Some of the online option stock trading websites also give investors a trial demo account so that they can practice trading before they invest any capital. These demo accounts also act as stock trading training, allowing the investors to see how everything works and to get comfortable with online trading.

One thing is for certain; before you begin online option stock trading, be sure you fully understand all of the inherent risks associated with online option stock trading. Always do your research before picking a stock, and if you're uncertain of your abilities, consult a broker.

08 February, 2007

Safe Investment Strategies

You want your money to grow and work for you, but risk makes you uncomfortable. Is there a way to do it safely? You bet there is.

There is a rule of investing that is ancient and unchanging. It has guided the investment strategies of people since the very beginning of commerce and the advent of money. This rule states that the bigger the risk, the more the return. You can invest in safe and secure investments, but you will not make big profits or grow rich. You also will not be likely to lose your investment and go broke either. When you understand this principle, the answer to the question becomes dependent on the rate of return you are expecting. It would be better to go ahead and phrase it this way: What is the safest way to invest money to realize the return on my investment that I desire?

A regular passbook savings account at your local bank could be considered a form of investment. Many people see saving and investing as two totally different things, but when you understand the risk versus return principle; you can view savings as a very low risk investment. There are ways to increase your return even when investing in savings at the bank. Certificates of Deposit and Money Market accounts pay a higher rate of return than passbook accounts.

Bonds such as United States Saving Bonds are another low risk, low return investment. There are many types of bonds issued by local governments and corporate entities. The bond is basically a promise to repay at certain amount of money and interest over a certain time span. They are similar to Certificates of Deposit in many ways. Once again, the drawback is a lower rate of return on your investment.

Mutual Funds are one of the safer ways to seek a little more return with a minimum of risk. A mutual fund basically gathers investments from a large number of individual investors and puts the total amount under the control of a fund manager. The fund manager invests in various stocks and other investments to try to make a profit. The profit is then split among all the investors. The fund manager is guided by certain restrictions in his investment options depending on the type of fund, but by spreading the investment out over a large number of various stocks, he reduces the chances of taking a major loss. One disadvantage is that a certain amount of the profit must go to pay the administrative costs of running the fund. This reduces the profit, but still, overall, the mutual fund represents a safe investment that can give a higher return than simple savings.

It does not really matter what type of investment you chose. There are still some ways to make the investment safer. The most important is to study the investment carefully. When you are armed with knowledge, you have a much better chance of negotiating the rocky waters of investment. You can develop an investment strategy that further reduces risks. What you can not do is find a sure thing in investing. Certainly not in an investment that offers the chance of a large return. If you are not willing to take some risks, the savings account at your bank might be the best course for you.

Stock Index Funds - What Is An Index Fund?

You may have heard of the term before, financial indexes, but just what exactly are they. Indexes, also known as stock market indexes, are the listings of stocks and any statistics that show a full of value of any given stock in the index.

These indexes are generally used to show the character of all the stocks taken together. These characteristics can include trading on the same market, belonging to the same industry or even market capitalizations that are the same or similar. Very often these stock market measurements are used as benchmarks in portfolios known as mutual funds. There are funds out there that contain the securities that are part of a given index. Not surprisingly, these funds are called index funds.

There are a few different ways to categorize financial indexes. They can be known as broad-base indexes for example. This generally is a reflection of the entire stock market and is a reflection of the investors sentiment about the economy. A lot of the common indexes mentioned are broad-based indexes. These include but are not limited to the American Dow Jones Industrial Average and S&P 500 Index.

On the other hand there are many others that are considered specialized indexes.
The difference is that the specialized ones only track certain segments of the market. Examples of these types of financials include the Morgan Stanley Biotech Index or the Linux Weekly News. These can track different aspects such as companies of a certain size or with certain types of management. The Linux Weekly News tracks companies that use or sell products or even services that have their basis in the Linux operating system. Morgan Stanley Biotech (MVB) as the name suggests tracks a group of companies from the biotech sector.

Another type of index there is the price-weighted index. This includes ones such as the Dow Jones Industrial Average and NYSE ARCA Tech 100 Index. These kinds are based on the price that is considered in the determination of the value of the overall stack. This makes each individual stock in these types of financials extremely dependent on one another. There are a few sub-categories when it comes to these types. They include market value weighted or capitalization weighted indexes, which are determined by the size of the company.

As you can see, learning of the basics of financial indexes can be exhausting. Yet knowing details about them can greatly improve how you do in the market. Once you have a general understanding of the indexes themselves and how they are determined, you are well on your way to doing a lot better than you could imagine.

06 February, 2007

Spread Your Risk: The Golden Rule of Investing

Ask anyone in the finance industry what they think is the No.1 most important rule for a winning investment strategy? I bet they’ll all say “DIVERSIFY!” In other words, spread your risk.

“Don’t put all your eggs in one basket” is another way of summing it up. Leave all your money invested in the one place and you are headed for disaster.

A diverse investment portfolio will bring you (a) higher returns, and (b) protection against volatile markets – in other words, if one of your investments is doing badly, you’ll still have lots of other investments to balance it out.

So how do you spread your risk? The first important step is to spread your money across different investment types, such as Shares, Property and Cash.

The next step is to Spread Your Risk within each of these categories. For example, if you invest in Shares you would invest in various companies and various industries rather than putting all your money into one company. Even though that one company might seem like a “sure thing”, even the most well-known and seemingly profitable businesses can go broke. Even an industry that seems fail-safe, could be badly affected by new taxes, mismanagement, supply issues or the occasional wrath of mother nature.

Let’s take another example. If you are lucky enough to be buying your second investment property, would you buy in the same suburb as your first property? Imagine your first property was a Unit in Brisbane and you’ve made good money on the investment. You would be tempted to buy in Brisbane again and make the same money, right? But the market has changed, perhaps you bought at a good time? Perhaps the property was a bargain? Regardless of all this, you should be thinking about spreading your risk. Buy a property in a different State. Do some research and find out what areas are experiencing huge growth (try to focus on Capital Cities – which are almost always the safest investment). Also consider switching from a Unit to a Townhouse or free-standing house. This is spreading your risk.

The same principle applies when you look at Managed Funds. Consider investing with more than one Fund Manager and spreading your money across different funds, e.g. International Shares Fund (very high risk – possibility of very high returns), Australian Shares Fund (high risk – possibility of high returns), Growth Fund (Low/Medium Risk – possibility of average returns). Look closely at the Product Disclosure Statement (PDS) before you make any decisions and if you are dealing with broker or a representative of the Fund Manager, don’t allow them to sign you up on the spot. Take the PDS home and read it thoroughly. Take the time to compare various funds before you make a decision.

Just don’t leave it too long – the worst investment mistake anyone can make is to do nothing.

Sarah Belle is the webmaster of SmartPiggy, providing free and unbaised tips on money management. The site is designed especially for young people, with easy-to-follow guides and articles to expand your knowledge of financial matters and help you save more, invest smarter and achieve wealth.

05 February, 2007

Stock Index Funds - What Is An Index Fund?

You may have heard of the term before, financial indexes, but just what exactly are they. Indexes, also known as stock market indexes, are the listings of stocks and any statistics that show a full of value of any given stock in the index.

These indexes are generally used to show the character of all the stocks taken together. These characteristics can include trading on the same market, belonging to the same industry or even market capitalizations that are the same or similar. Very often these stock market measurements are used as benchmarks in portfolios known as mutual funds. There are funds out there that contain the securities that are part of a given index. Not surprisingly, these funds are called index funds.

There are a few different ways to categorize financial indexes. They can be known as broad-base indexes for example. This generally is a reflection of the entire stock market and is a reflection of the investors sentiment about the economy. A lot of the common indexes mentioned are broad-based indexes. These include but are not limited to the American Dow Jones Industrial Average and S&P 500 Index.

On the other hand there are many others that are considered specialized indexes. The difference is that the specialized ones only track certain segments of the market. Examples of these types of financials include the Morgan Stanley Biotech Index or the Linux Weekly News. These can track different aspects such as companies of a certain size or with certain types of management. The Linux Weekly News tracks companies that use or sell products or even services that have their basis in the Linux operating system. Morgan Stanley Biotech (MVB) as the name suggests tracks a group of companies from the biotech sector.

Another type of index there is the price-weighted index. This includes ones such as the Dow Jones Industrial Average and NYSE ARCA Tech 100 Index. These kinds are based on the price that is considered in the determination of the value of the overall stack. This makes each individual stock in these types of financials extremely dependent on one another. There are a few sub-categories when it comes to these types. They include market value weighted or capitalization weighted indexes, which are determined by the size of the company.

As you can see, learning of the basics of financial indexes can be exhausting. Yet knowing details about them can greatly improve how you do in the market. Once you have a general understanding of the indexes themselves and how they are determined, you are well on your way to doing a lot better than you could imagine.

01 February, 2007

Forex Trading Software

FOREX trading is the buying and selling of worldwide currencies. Owing to the fact that there are different market hours around the world, there are open opportunities at almost every hour of the day. Such as all other industries, the FOREX market has also developed technologically and this allows traders and brokers to make frequent transactions.

With the incessant growth in popularity of web technology, FOREX trading has employed the use of the Internet as a technique to give traders a resourceful avenue for trading. There is various FOREX trading software that allows investors to deal in international currencies. However, just like every other software, accuracy is most important.

When planning to acquire a FOREX trading software tool, it is advisable for investors to try it out first by taking advantage of any free trails offered by providers. This will help traders in opting for the right FOREX trading software. Several trading sites give traders a trial run to test their products. The trading software helps investors in knowing what the rates of the currencies are for the day, and it helps them analyze data and predict the behavior of the market. The most widespread method is the utilization of graphs showing the rise and fall of the currency.

If investors subscribe to a FOREX trading site, in most cases, they can be sure that their transactions are safe and secure. It also becomes possible for investors to have access to several markets of buyers and sellers all over the world, at any time of the day during market hours. An added service that investors may get form FOREX trading sites, in particular if they are novice investors, is access to specialist or experts that can give them advice. These experts can help traders study the market behavior and make a wiser decision on what currency with which it is best to trade.

Forex provides detailed information on Forex, Forex Trading, Forex Brokers, Online Forex Trading and more. Forex is affiliated with Forex Market Makers.

Make Money On The Stock Market With These Tips

For some people, investing in the stock market involves risks that they are not willing to take, but stock market investing does not have to require great risk to provide a great return on investment. Successfully investing in the stock market takes a long term, disciplined approach. Buying a stock, only to sell it when it increases slightly in value is taking an unneeded risk with your money. All investment in the stock market involves some risk, but with research and careful investment you can minimize that risk.

The right research can help you make an informed decision. An informed decision can help you make the right choice when you are seeking a higher return in investment that is available in a passbook savings account, mutual fund or certificate of deposit.

The main reason to invest your money in the stock market is to make a return on your investment. With sound investment decisions you can receive a steady income that increases every quarter. Once you have established your short and long term goals, it is easier to make the correct decisions to reach those goals.

To ensure a steady cash income, each stock that you own must do two things. The first thing that the stock must do is provide quarterly cash dividends. The second thing the stock must do is take the cash dividend and reinvest it by buying more shares of the stock. By providing cash dividends and reinvestment options, your stock portfolio will grow each quarter, providing you with an increasingly high cash income.

Of those companies that provide cash dividends, you must look for the ones that have a proven history of providing higher cash dividends every year. By providing higher yearly cash dividends and reinvesting those dividends, you are helping your portfolio to grow at a rate that will help combat the effects on inflation. Resist the temptation to withdraw your dividends to provide for household expenses. Withdrawing your dividends significantly impairs your plan's ability to make your momey grow.

Another way to help your portfolio grow is by choosing to work with companies that are commission-free. Quarterly commissions can eat into your dividends, reducing the amount of money that is able to be reinvested and diminishing the number of stocks that your dividends can purchase. Each share that your dividends purchase provides extra income that can in turn provide more dividends. Commissions can break this positive investment cycle.

You can greatly minimize the effects of stock market price fluctuations by wisely investing in a long term stock plan. By avoiding commission fees and letting your dividends work for you by reinvesting in additional stock your stock investment plan can provide you with an increasing cash income without the same amount of risk that is traditionally associate with stock market investments.