Online Stock Trading

December 27th, 2008 by admin

November 18th, 2008 by admin

What it are momentum stocks?

Momentum investing is the most difficult to define of all the common trading strategies, but simply put, it’s based on looking for companies whose stocks have been getting stronger over the past 3 months to a year. The rule here is “buy high, sell higher.”

Why people choose momentum investing

Investing in momentum stocks is simply a proven-effective strategy. The two people credited with defining momentum investing, Narasimhan Jegadeesh and Sheridan Titman, showed this strategy yields average returns of 1% per month for the 3 to12 months following a given trigger event that signals when to buy the stock. Their first report was published in 1993 by the American Finance Association and another report that confirmed their earlier research was published in the Journal of Finance

The benefits of trading momentum stocks

The first is profitability. Statistics show trading momentum stocks is a sound and profitable strategy provided you do your research and watch your timing.

Another advantage for some is that the system doesn’t require absolute accuracy when picking stocks. Instead, momentum investors look for large reward to risk ratios. For each stock that loses a small amount, they find at least one if not several that brings in a 50% or higher profit.

Relative simplicity is another benefit of this strategy. Most trading systems require an enormous amount of self-discipline, which many people just don’t have. The system of trading momentum stocks is based completely on concrete data that’s easy to find, so your emotions won’t take you off course.

Although many people presume the turnover in this strategy would be extremely high, but in most cases it really isn’t particularly bad. Average turnover seems to be around 90% and while high, it’s still lower than with certain other strategies.

The downsides of trading momentum stocks

Momentum investors don’t buy stocks to hold. The stocks they buy are highly volatile and while the investors expect their momentum stocks to do well in the short term, they′re ready to sell as soon as the stock starts going downhill. That means if you don’t get your timing right, you won’t profit much.

Another complaint against the momentum trading is that economists can’t seem to figure out exactly how this strategy works, which makes it seem like it’s based on nothing but dumb luck. Some economists believe it works because the high returns offset the risk, while others think it’s a case of smart investors taking advantage of the mistakes of other investors, such as overreaction to hot stocks.

Trading momentum stocks is a sound strategy that, while riskier than some, can provide excellent returns for those who know how to identify momentum stock accurately and can get their timing right.

November 18th, 2008 by admin

Imagine buying TASR at $5. going away on a world cruise for 9 months. Coming back and it is at $300+? Many fortunes have been made by complete stock markt novics becasue they got lucky and did not try to over-trade.

For example, let’s say ABC stock lashes a buy at $30. You buy and 3 months later it is at $50. You think great I am up 66% I am going to sell and re-buy (or even worse short what you consider a temporary top.). You sell out and wait. The stock does drop a little to $54 then in the space of a few days charges back up to $65. You can’t bring your-self to buy higher as you had banked on getting in much lower. So you pass it by.

You watch ABC stock as it climbs to $100. Now you are bitter and angry. “No way am I going to touch that stock again. Lousy stock wouldn’t let me get in at $50.”

It does correct again for a few weeks touching $80. You feel a bit better now. Then again it takes off and hits a high of $150. You curse and swear. Vowing never to make the same mistake again.

You cannot time every twist and turn in a stocks trend. It’s a valuable lesson I learned many years ago. It’s best once you are in to try and ride put the correction and get out when it is finally over. Hold on for the big moves instead of trying to trad each smaller move. Yes, it’s easier said than done. What sounds simple isn’t that easy to do in real life trading when it’s your money on the table. BUT, that’s what separates the “also rans” from the top traders.

Most people think shorter term trading beats longer term “trading”. But that’s not what I have found. I have come across long term investors (1 year+) who make millions. Compared to day traders who are happy to scrape out a few thousand dollars a month. (IF hey are very good). As Jesse Livermore said “The big money is made from the big moves. Not the small day to day gyrations.”

Obtaining outstanding stock market % returns can be achieved in one of two ways. And it is only these two ways.

1) Trade more often

2) Trade with bigger size.

Some day traders. swing traders can make great % returns. But I am telling you now you are at a severe disadvantage here. Many day traders are limited in the size they an trade. AND hey have to watch the markets every day. Ask if this is how you want to spend the rest of your “career″? Swing trading too can be lucrative but I have to ask why make it such hard work? Why try and “super time” each stock cycle when there is more profit, less stress, going with the longer term trends? Doesn’t make sense to me. I guess there are easy or hard ways to make money and you have work out which one is which.

Trade with bigger size simply means stop trading like a Mutual Fund. Experiments have been conducted in the stock market to show that if you hold more than 10 stocks all you are doing is mirroring what the averages will do. i.e you cannot make more than what the averages are going to do.

What you must do is focus on say 3-5 stocks. WAIT. Be patient. And trade each stocks as and when it tells you to for maximum gains. Bet big when the odds are 70%+ in you favour of a big move. I am not saying for one minute I am right all he time. You don’t have to be. Make sure you make big money when you are right and your losses are relatively smaller when you are wrong. Presto. you are making fantastic gains.

November 18th, 2008 by admin

Trading systems are simply sets of rules that traders use to determine their entries and exits from a position. Developing and using trading systems can help traders attain consistent returns while limiting risk. Trading systems are effective since rules are not the victims of trader judgment. The whimsical nature of a trader is diminished by a system.

Trading systems are used widely in the financial industry. A trading system must implement the complex business process correctly, and provide good interoperability with clients and legacy systems in different organizations. Trading systems are used widely in the financial in dustry. A trading system must implement the complex busi ness process correctly, and provide good interoperability with clients and legacy systems in different organizations. Trading systems are not designed primarily to price derivatives - that is a separate large area of technological spending. However, many systems include pricing functions, or are designed to work with certain pricing models.

Trading systems are typically generated by complex computer software (but not always). Each is organized around a general set of principles: “buy undervalued stocks,” “sell futures when price movements accelerate,” “buy Yen when Euros are overvalued,” etc.

Automated trading is not perfect yet, and Human nature can not think instead of humans. Human nature occasionally enjoys to scream: foreign exchange market It might be difficult to find human nature of Forex managed accounts if you don’t know where to look or what these theories to look for. Automated Forex Trading systems are often made up of this business which analyses a trade at very high speed. Not to mention, that the risk to reward the most part isn’t that good. Automated forex trading systems are popular because they are known to help newbies earn money while simultaneously teaching them how the perfect forex trading system works. If you want to make money, follow The response.

Automated trading through managed accounts, the program itself takes the responsibility of trading for you. Any dependable trading platform helps you to save valuable time, since you no longer do the trading manually. Automated trading through managed accounts, the program itself takes the responsibility of trading for you. You save a great deal of time with these auto systems since you do not have to carryout the trading yourself. Automated forex trading systems are popular because they are known to help Every trader’s earn a livable wage while simultaneously teaching them how the markets works. Get a livable wage in order before you start to trade.

October 14th, 2008 by admin

I didn’t want to find myself in this position.

Hank Paulson looks awful. He’s sweating, uncomfortable, and clearly would rather not be where he is. He looks like he has a gun to his head. Maybe he does… judging from his choice of words-”quickly,” “action is needed,” “strongly urge”-something dire is about to happen.

Indeed, Paulson’s got himself into a real fix. In July he asked Congress for a blank check-a “bazooka″ as he called it-to potentially bailout Fannie and Freddie. At the time, his argument was that if the market perceived him as having this “bazooka″ he wouldn’t have to use it.

Well, Hank DID have to use the bazooka… the bazooka didn’t do anything… and now Hank is back asking for a nuclear warhead. And this time he wants it without any judicial review or oversight.

Rather than delving into the actual testimony of the various officials, I’d rather focus on the subtext or real message they were trying to communicate without doing so explicitly. That message is the following…

We have lost control.

For decades the market has operated under the notion that the Federal Reserve would be able to solve its problems by controlling the money supply should things turn for the worse. We are now finding out that assumption was blatantly false. The Fed and the Treasury have done everything they can-including several actions that are not in their charters-to strengthen the financial markets.

All of their efforts have failed.

We are now at a CRITICAL point. Even if Congress DOES grant the regulators the $700 billion in funds they′ve requested, it won’t necessarily re-instate confidence in the credit, bond or stock markets. The trust is gone. And investors are panicking.

According to the New York Post money market funds were hit with $500 billion in sell orders last Thursday. The Post wrote that the Fed’s pumping of $105 billion was “just enough to keep key institutional accounts from following through on the sell orders…”

To give you an idea of the seriousness of this statement, consider that collectively money market funds control over $3 trillion. So $500 billion in sell orders represents nearly 15% of this market trying to liquidate at once. We were literally on the brink of a full blown systemic collapse.

Investors are now trying to find safety anywhere they can. It’s proving difficult. Last week the yields on Treasuries fell to their lowest levels since the Great Depression. At one point, investors were willing to lend to the US government for a paltry 0.4% in interest-they were essentially lending their money for free, just to insure that the principal was safe.

However, the interventions-particularly the proposed $700 billion-are not exactly dollar positive. Every bailout the US engages in means more debt on the US balance sheet and more money printing. Small wonder that yesterday the dollar posted its biggest single day decline since the Euro was introduced.

And then there’s gold…

Gold has staged an incredible turnaround as investors turn to value and safety again. There are even rumors that foreign central banks are buying. Hank Paulson might not like the position he’s in… but gold investors are loving it.

Best Regards,
Graham Summers

October 14th, 2008 by admin

Out comes the kitchen sink.

The actions of this last week will go down in history as the end of the US as an economic superpower. I realize that’s a harsh view to take. And I love this country dearly. But the writing is now on the wall. The regulators-SEC, Treasury, Federal Reserve, and President Bush-have officially bankrupted this country, destroyed the dollar and guaranteed that our quality of life will be on the downward slope for the next decade.

I’ve already commented at length on the Fannie/ Freddie deal. In a nutshell that intervention added $5 trillion-at least $1.2 trillion of which is garbage-in liabilities to the US balance sheet. And it:

Didn’t solve the housing crisis-housing starts fell 6.2% in August (a 17-year low) while building permits fell 8.9%.

Won’t boost the homebuilder industry-you can’t sell homes if banks aren’t lending.

Sure as heck didn’t save the stock market: all we got was a feeble one day rally.

However, this latest intervention-one that required Congress to expand the statutory limit on the national debt to $11.3 trillion-is the kiss of death. The benefits to US taxpayers from this deal are even fewer than those of the Fannie/Freddie deal. The Feds have now thrown everything they’ve got, including the kitchen sink, at the market. How the markets react remains to be seen.

As for the commentators going ballistic and saying this move is “unprecedented,” they’re wrong. The government has attempted to solve financial crises before by creating a separate fund or trust to buy crummy assets. The last time they did this was with the Resolution Trust Corporation (RTC) during the Savings & Loan crisis in the early 1990s.

The RTC, like today’s superfund, was a separate entity meant to take over insolvent banks and then sell off their assets-both good and bad. However, the key difference between the RTC and the government’s proposed superfund is that that the RTC primary dealt with real estate holdings-real assets that are relatively easy to value-while today’s superfund will deal with mortgage backed securities or debt-intangibles or paper that are impossible to value.

When you buy real estate, the asset changes hands at a price and the deal is closed. Buying derivatives from someone entails a shift in risk, but for many securities, the deal is not closed until the derivative expires or is triggered. Thus, the Feds are lining up several hundred billion dollars worth of open-ended liabilities.

Until the deal is announced and all the details worked out, it’ll be difficult to gauge its impact. But one thing is for certain:

It will be highly pro-inflationary.

Commodities have been slammed in the last two months due to the dollar rally. But we are now nearing a time of hyperinflation when the Feds paper over any and all problems with reckless abandon. As the market comes to realize this, commodities and other inflationary hedges will begin their bull market anew.

Be prepared to pull the trigger.

Best Regards,

Graham Summers

September 20th, 2008 by admin

Many people think that being in the stock market is for professionals. In most part it is, but for the amateur they can do just as well if they follow a few simple guidelines. Here are 5 things to remember when trading stocks.

1. When you trade in the stock market you can’t let your emotions make your decisions. I’ve seen people get emotional when their stock has made a major move downward. They panic and dump the shares as soon as possible, thinking that there’ more to come. When a stock drops in value, you must see if the company is reporting negative information or if other traders are taking profits from a recent upswing in value. If there are no problems with the company then what you have is a buying opportunity for you to add to your position.

2. Before you invest in any stock you must do your research on that company and the sector that they are in. I like to refer to research as “doing your due diligence”. Reading financial reports and balance sheets are a key to knowing if a companies fundamentals are solid. Once you can do that you need to learn how to read their chart. Following the chart will give you an idea if a dip or a spike in price will coming soon.

3. Avoiding “great stock tips″ will always save you from getting caught up in the hype of stock. You need to ask yourself why this person is giving this information to you. Is it because they’re investing in this and need other people to boost share price? If a person has “inside information” on a company, they wouldn’t be allowed to tell you since it’s illegal to do so.

4. When you have decided on a stock to invest in, you don’t buy all of the shares at once. If you do and the price drops(which they do at times), you won’t have any capitol to buy any more. What you need to do is buy incrementally. You need to figure how much total money you will invest into this stock. Divide that in half and that would be your first buy in. When a stock drops below your cost basis by more than 8%, you buy half of the remaining amount you have on the side. If the stock goes up from there you wait and see where it goes to in value. If it drops another 5% from your second buy in, you purchase the remaining shares.

5. Before you buy into a company you must have a exit strategy. Unfortunately there will be times when the stock that you see as a sound investment drops in price too much(or rises beyond 20%) you need to know how and when to get out. Yes, there are other forces at work that will cause a great stock to just drop. To name one, is when investors invest in what they call “shorting a stock”. They buy stock for the purpose of going down in value(when you research a stock you can find out how much trading is going on this way. An exit strategy is needed to be in place before you buy into a stock.

I hope that these few tips are helpful to you. I know that they have helped me thought the rough spots.

September 20th, 2008 by admin

Trading Method Definition:

A trading method could be defined as a procedure used for investment purposes that will help you be successful while trading stocks, options, forex, futures, ETFs, and other investment markets.

Basically, a trading method will give you the skills and tools you need to invest your money in such a way that you will be profitable and increase the value of your portfolio.

What Makes A Trading Method Good?

A Trading Method must contain several things in order for it to be successful. While it is always up to you, the investor or trader, to find or make a trading method that works for you, there are some basic things that all trading methods should have:

Teaches You How To Identify A Trading Opportunity

If a trading method doesn’t show you in detail how to identify WHEN to trade, then you are left to your own devices to try and guess when to get into the market. A Trading Method must show you exactly how to identify potential trading opportunities so you can concentrate on other things and not have to worry about how to figure out when you should enter a trade.

Teaches You How To Avoid “False″ Opportunities

Some methods will teach you a lot of ways to get into a trade, but the good trading methods will also show you how to stay OUT of a trade when you should. Trading Methods should contain information and rules that show you how to identify false trading opportunities so you don’t get caught in a trade in the wrong direction. Many times indicators can resemble a good trade opportunity, but if you look carefully, there will often be false signals that should flag it as a trade you shouldn’t get into.

Teaches You When To Get Into The Market

A good trading method will give you step by step rules on exactly WHEN you should enter the market. If the method doesn’t explain when to get in, you could get in too early (and possibly lose money in a false trade signal), or you could get in too late (which means you will reduce or eliminate your profit potential). Always make sure a trading method you research will include rules on when to get into the market for maximum profit potential.

Teaches You When To Exit The Market

I feel this is the most important requirement of them all. Very few trading methods give detailed information about when to get out of the trade. Many of the market analysts you see on TV or even your own broker might tell you to buy a stock, and hold on to it for dear life as long as possible. That may have been true 20 or 30 years ago, but in today′s market, that mindset will almost always lose a lot of money for you. So look for a trading method that will tell you exactly when you should get out of the trade, which will help you protect your profits and minimize your loses, as well as reduce your risk.

Teaches You How To Minimize Your Risk

This is probably the #2 most important thing. We as stock traders will have losses. We will enter into risky trades. Some of them will go against us. That is the fact of life in the markets. Accept it. But MINIMIZE it. A good trading method will have rules and information on how to minimize your risk in a trade, in order to protect your money. Yes, we will always have bad trades and lose money. But minimizing the risk in our trades will reduce those losses, which means overall we will be more profitable and successful when trading.

Summary

When researching Trading Methods, you must always make sure that the trading method contains those 5 requirements as a bare minimum. If the Trading Method does not have those things, then the chances are very good that the trading method will NOT work, and will wind up hurting your overall portfolio rather than helping it. And as always, be wary of any trading method that promises you success, or says that you won′t ever lose money, or guarantees a profit percentage or amount. There are no Holy Grails in trading. You will win some, and you will lose some. The key is to find a trading method that works for you that maximizes your profits and minimizes your losses.

September 20th, 2008 by admin

Would you like to know which penny stocks to buy and when to buy them? Well, the answer is actually quite simple. There are a few things to look for in a company that will tell both which penny stocks to buy and exactly when to buy them. What I am about to tell you will help you gain a better understanding of trading penny stocks. Financial freedom is right around the corner if you really want it!

There is one big factor that I always look for when deciding which penny stocks to buy, and that is trends. Trends are patterns that you will notice in a stock prices history. The stock price may leap up every few weeks then slowly fall until the next leap. This is really good information because it will help you decide exactly when to buy. If you know that the stock jumps after hitting around $.20, then you know to buy at around $.21 or so. This makes profit taking very easy and low risk.

Another thing to look at when deciding which penny stocks to buy is trade volume. If a stock has a small trade volume, it will be very difficult to predict and will be a high risk investment. We want to avoid high risk investments at all cost so those are out. If a stock has a high trade volume, the trends will be very true and make a low risk investment. This is an easy way to determine which penny stocks to buy.

If you document many companies, you can always have a low risk investment waiting for you. The more money you make on these low risk investments, the more you have to invest. You can see how this can quickly earn you your financial freedom!

September 20th, 2008 by admin

There is know doubt, you can make a fortune if you simply invest in penny stocks online. Only one problem, it is not that simple. Well, it may not be simple, but anyone can do it. All it takes is a little know how and some patience. After all, the rewards you get if you can invest in penny stocks online are so great!

If you can successfully invest in penny stocks online, you can live free. Do things your way, and answer to no one! You could quit that terrible day job and finally start living the way you want to. Your income would be completely in your hands. The person that decided how much money you make would be you. You would have all the free time in the world for family, vacation, hobbies, etc… If all that learning is what is stopping you from success, just think about those rewards!

I have been trading penny stocks online for nearly three years now and love it. I earned my financial freedom when I quit my job over a year ago. Sure, I was overwhelmed at first, but I did not let it stop me. I wanted to live a great life and nothing was going to stand in my way! Sometimes you have to stand up and tell yourself what it is you really want. Then make yourself take it.

If you have ever thought about investing in penny stocks online as a way to financial freedom, go for it. All you have to do is work hard and have a little patience. This is a business that anyone can do if they want to. Think about it, would you rather go to a 9 to 5 job for thirty years or trade penny stocks for more money out of your own home.