Online Stock Trading

May 6th, 2008 by admin

Bond is a debt instrument, where the issuer acknowledges debt owed to the holder and is responsible to repay the principal as well as the interest upon the maturity. Bonds are generally issued by the corporations and differ from the equity shares and stocks. Unlike, equity shares, bonds do not confer any ownership rights to the holder. Apart from corporations, bonds may be issued by several statutory bodies and even by the governments.

Bonds can be classified into four types a) Bonds issued by Federal Governments, such bonds are called ‘treasuries’ (b) Bonds issued by Government agencies. (C) Corporate Bonds (d) Bonds issued by state or local governments. Bonds are also known as fixed income securities, since they generate a pre-fixed income for their tenure. Interest payable on a bond is called ‘Coupon Rate’. Coupon rate is denoted as a percentage of par value. Tenure of bond is known as its ‘Maturity period’.

Bonds’ maturity period may range from a couple of months to several years. Another important factor to consider is ‘Par value’ which is the amount payable to holder on maturity of bond. Despite being called ‘Fixed Income security′, bonds still carry the risk of default. To counter this problem, bonds generally come with credit rating. Higher rating denotes lower risk of default.

Bonds are an extremely popular investment opportunity, with the bond market alone worth several billion dollars. Many investors dabble in the process of arbitrage where they can purchase the bonds at a discount and then collect the face value at maturity. This is actually a completely risk free way of making money from investing in bonds.

May 6th, 2008 by admin

May 6th, 2008 by admin

Are you weary of trusting human beings to pick stocks for you? So-called, self-styled “stock analysts″ may claim to have expertise in making stock predictions, but very often, many of them they have failed to call out impending crashes. Only a few stock analysts possess the foresight to truly understand the market, because they see it at a level that the majority of other analysts do not.

With the advent of the Internet Age, computer software programs have now been written that can make stock predictions for you. They possess a capability to analyze and trend millions of data points per second, which is a feat that no army of human beings can ever hope to achieve. Based on their complex data analysis, they can generate statistically accurate extrapolations (notice I did not say “predictions″) as to what stocks, out of the hundreds of thousands available, have the highest probability of yielding the greatest return on investment in the shortest period of time.

An online stock picker is a day trader’s best friend. as it takes all of the guesswork out of picking stocks. It saves you countless hours of research. Of course, a computer cannot understand the human element that drives stock prices up and down. However, it can make mathematically precise and statistically relevant recommendations that you can use to base your decision on whether or not to buy a particular stock.

So if you are the type of investor who approaches stock investing from a strictly mathematical numbers game, then leveraging the services of an online stock picker might be the right choice for you. On the other hand, if you are the type of investor who approaches stock investing as a measure of socio-political and economic productivity and an indicator of the state of the human condition itself, then you are better off relying on the opinions of a stock analyst.

May 6th, 2008 by admin

Although some brokers may allow you to invest as little as three dollars to execute a trade, this kind of investment is suitable only for an academic interest. These small trades allow the investors to get a feel of the online stock trading. They allow them to understand the level of freedom and flexibility that online stock trading offers.

Online stock trading, like any other business, requires a sizeable investment to become a viable source of income, more so, if you want to make it a full time source of your livelihood.

Like every other business, stock trading has its own pitfalls which may land unwary investors into trouble. Ignorance cannot be made an excuse for losses and failures.

An informed and careful planning can minimize the losses and maximize the gains. Some of the salient points that you must understand before opening an account with any brokerage firm are:

1. There are hordes of online brokerage firms that offer attractive terms to lure the customers. Some brokerage firms offer lowest trade commissions, but over- charge you on other counts such as inactive account maintenance fees. Still others may insist upon very high minimum deposits.

If a brokerage firm offers lower charges on almost every account activity, try to search out the reasons for this type of all round munificence. Either there may be some trap, or, the offer may have really genuine reason.

Some brokerage firms have lower overhead charges which they distribute to their customers. For example, most brokerage firms receive their market data on rent from the data vendors like Reuters or Bloomberg. They, naturally, transfer the costs to their clients in form of higher commission charges and so on.

There may be other brokerage firms which have some agreement with the market data vendors and save by not having to pay rent for market data. This leads to huge savings to them and they transfer these savings to their customers by charging less fees and commissions.

These inside secrets cannot be found out by cursory search. You have to devote some time and energy to thoroughly search the website of each brokerage firm before opening your account and parting with your vital financial data.

2. You may have to abide by the terms and conditions laid down by your broker as well as NYSE and AMEX market data display services. For this you are required to check the appropriate boxes at the end of each agreement. You must read these terms and conditions carefully before checking the boxes. They are not mere formalities. Ignoring to understand them may lead you into problem at a later stage.

3. If you find it difficult to do the entire search by yourself, you can hire some investment advisor. You can save a lot of expenditure over the long time by making one time payment to your investment advisor.

4. ISP services that run the online trade sometimes break down. These technological glitches cause lots of trouble at crucial moments, more especially, when you are trying to place an order. The delay in execution may cause you losses in form of increase in the price of the stock if you have placed a buy order, or, in form of decrease in price if you have placed a sell order. You suffer both ways due to delay in execution of your order. You must talk to your brokerage firm to make sure that they accept the telephone instructions to buy and sell the stock in the event of any collapse occurring in the functioning of the ISP services.

5. If you want to trade on multiple stock exchanges, says, like NYSE and NASDAQ, you must ensure that your online broker has the technical capabilities to meet your needs.

6. Trading in online stocks is always fraught with risks. Be prudent in your investments. Do a thorough research and invest in the stocks of the well-managed companies. Unless you are a day trader, hold the shares for some time and do not sell them in panic if, sometimes, the price of your stock falls suddenly. Price fluctuation is a normal feature of stock trading. In all probability the price of your stock will rise over the time.

7. Develop the habit of investing regularly irrespective of the occasional slumps in the stock market. The other alternative is to reinvest your dividends in reinvestment plans.

May 6th, 2008 by admin

Finding hot penny stocks is an easy thing to do. To find them, all you need to do is use the right tracking methods.

Hot penny stocks are found by following some methodical steps, removing emotion from the investment equation. More important that what you do, however, is what you don’t do. In this article I will discuss some important points to remember when investing in the stock market.

It is well known that the returns from penny shares can be extremely high. The problem with the big return is, it usually involves some big risks. Fortunately there are some proven methods to reduce risk.

When investing in shares you should always do so in a cold and un-emotional way. Always invest solely on the basis of the numbers and historical trends, never on what you “have a feeling” about. People that invest on hunches and feelings have some wins, but they also sustain heavy losses. Treating market trading as a serious business is the best way to profit from it.

Never invest like there’s no tomorrow. When investing in any market you should treat it as a business venture. In any investment, know up front how much you are prepared to lose. If you cannot afford to lose some money, consider the investment very seriously first. I find the best way to invest is to set a stop-loss factor first: once the value of an investment drops to a certain level, I’m out. Cutting losses is what separates winning investors from people that should be at the race track.

Finally, stay away from home equity loans and refinancing when investing in pennies. When it is done correctly, you will make money, but do you really want to risk your house?

Provided these risk reduction measures are followed, there is plenty of money to be made from hot penny stocks.

May 6th, 2008 by admin

More and more people across the world are trying to make money through internet. Internet or online business is considered much more hassle free than off-line real world business.

But the online business experts will tell you that making money online is equally, if not more, difficult than off-line business. In some cases, off line business, despite its apparent high investments and attendant problems, is even easier than online business and also a surer way to make money.

For example, if you open a grocery shop, you are certain to get some customers in course of time even if you do not advertise. Making a living does not appear to be really difficult in such cases.

Open an online store and you wait till eternity. Not a single soul is likely to turn up unless you advertise extensively on the internet. There is a huge competition. Since online work appears to be much easier and cost efficient than setting up building, infrastructure, more and more people just rush up to set up their online stores and sales programs. After all, nowadays, everybody owns a personal computer and an internet connection.

It must be noted that you need to set up a website-an online substitute for your brick and mortar store or office. You have to pay a webmaster for building a website and keep paying him to modify it as long as you are in business.

Then you need customers to buy your wares, products or services. You need to establish your credibility among them. You have to try several advertisement and business gimmicks like offering freebies, bonuses and discounts to attract buyers.

You have to set up ezines, newsletters and mailing lists. You need to attract customers to opt for receiving your mails. You need a different kind of infrastructure for running an online business too, which if not as costly as in offline business, can be quite as difficult to sustain.

How about running an online business without all these problems?

You do not need a website. You do not need to find customers to sell your products. You do not need opt-in lists, enzines, ad-word advertisement campaigns and so on to find leads and close sales.

In fact you enjoy all the benefits and comforts of working online without having to be always on your toes devising ever-new strategies to keep your online business going.

This business is called online stock trading.

You can work in the comfort of your home. You can work even when you are on the move, enjoying luxurious cruising vacations on the Mediterranean or staying in a hotel. You remain with your family and kids. You do not have to stick to any fixed work schedule. You can work during day or even at night, if you like.

Online stock trading has numerous other equally attractive benefits.

1. Low commissions

Earlier whenever you wanted to invest in stocks you had to pay high commissions to the brokers. The real world brokers, as against the present virtual, online brokers, would charge fairly large commissions on any trade that took place through their good offices.

The advent of computer and internet has spawned a large number of online brokerage firms for the simple reason that setting up online brokerage firm is now much more easy and cost efficient than offline brokerage firms in the earlier times. There is, therefore, a huge competition among the brokerages to woo stock trading customers. The brokerages not only offer numerous freebies and other alluring services, but also lower commissions. Moreover, the online brokerages can afford to offer lower commissions because of the lower overhead expenses due to the online nature of the work itself.

2. Education

Knowledge about any trade is a first pre-requisite for its successful implementation. There is an abundance of information resources on the internet about online stock trading. You can start online stock trading even if you have zero knowledge about the trade. There is a surfeit of websites set up by the online stockbrokers to educate their clients in the art of online stock trading.

3. Freedom and Flexibility

You can execute your trade any moment you like, whether you buy a stock or sell it. Besides, there is no investment threshold. You can trade with as little as two or three dollars. You can invest even millions if you like. You can buy and sell one or hundreds of shares. Your earnings are instantly credited to your account. This freedom and flexibility is not easily available in any other business.

May 6th, 2008 by admin

Penny stocks are a great way to make money in the stock market. They have an extremely low cost of entry, thus allowing you to buy significantly more shares than a more expensive stock. Therefore, even very slight fluctuations in price can have a huge impact on the value of your portfolio.

If you buy a penny stock worth $0.25 (penny stocks by definition refer to stocks that are valued at under a dollar per share), then you can buy one thousand shares for $250.00. If that stock goes up to $0.35 per share, you just made a profit of $100.00! Try achieving those types of results with stocks that are worth $50 per share or $100 per share!

Of course, penny stocks have a tendency to be volatile. On the flip side, if the same stock were to decrease from $0.25 per share down to $0.15 per share, you would experience a loss of $100.00.

Therefore, thorough analysis of penny stocks is extremely crucial. But then again, the same applies to just about every stock. You have to do your homework when it comes to investing in stocks.

But wouldn’t it be nice if you could have a computer program do the stock analysis for you? In fact, there do indeed exist penny stock analyzer software programs out there on the market that make life easier for investors, both long-term and day traders alike. They can analyze thousands of penny stocks across millions of data points in a matter of seconds, minutes, or just a few hours. Based on their analysis, they can issue you “recommendations″, which are based on extrapolations of complex mathematical computations.

So the next time you wish to make a decision on which penny stock to buy next week, just fire up your penny stock analyzer, and it will pick your stocks for you.

May 6th, 2008 by admin

Successful stock investing without the proper tools is like building a house without using a hammer and screw driver. It can be done successfully, but your odds that the whole effort will come crashing down on you are much greater. If you have been investing in the stock market for any length of time but have been frustrated by the frequent ups and downs in the market, and you find yourself in the red more often than not, then you may not be leveraging the right stock investing tools.

Research is one of the most critical elements of the entire stock investing game, especially if you are a day trader looking to make quick gains on your investment. How do you know which stocks to invest in, out of the hundreds of thousands of stocks available on the market? How do you know which ones are doing well and which ones are doing poorly? And how do you game the market so that you can get into and out of a stock as quickly as possible and walk away with a sizable profit that you can be happy with?

Computer software programs exist now that can greatly simplify the research process for you. There are stock analysis programs that are capable of processing millions of data points belonging to hundreds of thousands of stocks in a matter of minutes. By analyzing various trends using complex mathematical algorithms, they can make “stock predictions” for you. These predictions are really mathematical forecasts based on extrapolations formulated by the data available to the software program.

If you could run a computer program that would process all of the data available about every stock on the market and spit out a handful of “hot buy” recommendations for you, would you take its advice? The computer is basically telling you that based on past performance, trends, and patterns, stocks X, Y, and Z are on the verge of experiencing a sudden spike in value in the impending future. Would you do it?

May 6th, 2008 by admin

Now a day’s everyone wants to make it big in the stock market. Trading can be a rewarding task when you get the hang of it. That is why I have put together this list of stock market tips.

1. Cut your losses short. It is very important to cut your losses short in the stock market. Capitol preservation is a very important key to remember. Think about it if you lost all your capitol when you were right you will not have any capitol to make money with when you are right.

2. Don’t trade against the industry group. It is said that 50% of what a stock does is based on its industry group. If the steel industry group is going up then stocks in that group are likely to go up to. There will be stocks in that group that go down, but it is best to stay away from these.

3. Develop your own system. This is perhaps the most important part of investing. You must develop your own system of strict rules that tell you when to buy and when to sell. These rules should be simple enough for you to be able to follow them effortlessly.

4. Don’t trade against the trend. Bottom fishing and top picking are the most dangerous ways to trade. The risk that you would face with picking tops and bottoms far outweigh the rewards. It is better to buy a stock that is heading up then to short it.

5. Keep your emotions in check. If you cannot control your emotions when trading you will lose money. Some traders get in and out of trades because they are scared, as opposed to when there system tells them too. This will only hurt them.

May 6th, 2008 by admin

Let’s begin with a common cliche: Don’t put all your eggs in one basket.

A balanced portfolio is one that includes shares from a number of different companies and from different industrial sectors of the market. The more diverse the better. If one share, or one sector, performs badly, then you have balanced this with the gains you are hopefully making in your other companies and sectors.

Try to establish a spread of investments. As a general rule, you should aim to hold shares in at least six different companies in your portfolio at any one time. Remember, your first selection is likely to be your most favored company, and after you have chosen six, you are likely finding it harder to select a specific company to invest in from a range of alternatives.

Reinvest your dividends. If your investments pay Dividends, compounding the size of your investment by reinvesting the dividends will significantly increase the value of your portfolio.

You can limit risk by buying shares in ‘blue chip’ larger companies. Large, well established companies with a good reputation should maintain their value over the longer term, and if you are looking for long-term growth, this is the best place to start.

Try to limit your broker charges. These should be no more than 1.5% to 2% of the total value of your order. If they are significantly higher than this, then your investment has to grow by a significant amount to cover these costs and put you into profit! Remember, this is now a very competitive business area. Charges are under pressure and online Internet trading facilities have increased the pressure and further reduced your likely dealing costs.

For Long-Term Growth

If you are aiming for long-term growth, then providing your investment decision is based on solid company fundamentals, do not worry about short-term price fluctuations. Think in terms of what the company shares will be worth say 5 years from now.

If your reasons for originally selecting the company appear sound, and nothing has happened to adversely affect its value and performance over your 5 year time span, than it can be safe to assume that todays adverse fluctuation will soon swing back in your favor. (see further down for tips on aiming at short-term gains)

For Short-Term Gains

If you are after a shorter term gain, then you should become familiar with Technical Analysis, which measures the price fluctuations revealing indicators of when to enter and exit your trades. In this case, do not leave trades on for an extended period of time. Cut your losses, and find something more promising. If you are after short-term profits be on the look out to make moves from rocking chairs to Ferrari’s. It’s not worth hoping for a bounce back, if there are other opportunities clearly making strong gains right now.

Mikael Lorenzo writes for Digital Look where you can find research data and tools for investment research and more articles about how to invest