One of the worst things that can happen in the trading business is to go broke. Of course, anyone would do anything to prevent it from happening. If you run out of your investment funds, the stocks and shares just keep moving on and never stop. Of course you won’t be able to operate anymore because you have no money to spare. That couldn’t be difficult to understand, right? So that this horrible vision of bankruptcy will not happen, it is important that you set your limitations in penny stock investing.
Nothing can be more obvious than that. No matter how cheap the stocks are, it is important to keep your reservoir full as well. The stock market trend is not predictable. You share can sell high today and you could lose it tomorrow. What if that loss was the last investment money you have? Sad story but this can happen to anyone who is not setting clear goals for themselves. This article talks about some random guidelines on how to keep your savings intact.
- Spend only within your budget. This is common sense. You can’t spend any more than what you only have. But what this means exactly is that if you are into penny stock investing, don’t pour in all your savings. Set aside a budget for your investment to bank roll. A reasonable margin would be not more than ten percent of your personal funds. Any profit made, you can always add it to your savings. But don’t go above the 10% mark unless you can really afford it.
- Know the loops in penny stock investing. In this same way as setting up a business, you have to understand the dynamics and the operations. This will lead you to better understanding of the trade. With it, you can make decisions with better precision, not accurate but better.
- Know the risks you may encounter. Known to everyone in the trade, penny stock trading ranks the highest in risk scale. The stocks lack liquidity. Fraudulent exercises are very possible in this arena. You could lose your money like bubbles bursting in air. But good investors are natural risk takers. They understand it like it’s at the back of their hands. With this mindset, you can set your investment funds better.
- Learn when to invest and when to hold back. Don’t get carried away if you stock price goes up. It can go down just as fast. So it is important to learn some timing strategies in penny stock investing. This should save you from losing more money and keep your savings steady.
- Do not think of your investment as gambling. If you lose the bet, you can’t have it back. So you bet another. Although stock market trading behaves somewhat similar, it’s not exactly the same. Investment aims for profit. When you get your share, you bank roll it for more profit. And you’re not the only one benefiting it. Gambling is just for entertainment. Penny stock investing is for serious money makers.
The list can simply go on. But no matter how sensible and persuasive these tips are, it’s really up to you. It’s your penny stock investing money. You have full authority over it. Small cap trading can make you smile a lot if you stop betting your money and start thinking of it as investment.
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January 31st, 2008 by admin
How do you find out about the details regarding insider stock selling?
Although insiders must report their pertinent stock sales and purchases to the SEC, the information isn’t always revealing. As a general rule, consider the following questions when analyzing insider selling:
- How many insiders are selling? If only one insider is selling, that single transaction doesn’t give you enough information to act on. However, if many insiders are selling, you should see a red flag. Check out any news or information that is currently available.
- Are the sales showing a pattern or unusual activity? If one insider sold some stock last month, that sale alone isn’t that significant an event. However, if ten insiders have each made multiple sales in the past few months, those sales are cause for concern. See whether any new developments at the company are potentially negative. If massive insider selling has recently occurred and you don’t know why, consider putting a stop-loss order on your stock immediately.
- How much stock is being sold? If a CEO sells 5,000 shares of stock but still retains 100,000 shares, that’s not a big deal. But if the CEO sells all or most of his holdings, that’s a possible negative. Check to see whether other company executives have also sold stock.
- Do outside events or analyst reports seem coincidental with the sale of the stock? Sometimes, an influential analyst may issue a report warning about a company’s prospects. If the company’s management pooh-poohs the report but most of them are bailing out anyway (selling their stock), you may want to do the same.
Matching Stocks and Strategies with Your Goals
Various stocks are out there, as well as various investment approaches. The key to success in the stock market is matching the right kind of stock with the right kind of investment situation. You have to choose the stock and the approach that match your goals. Before investing in a stock, ask yourself, “When do I want to reach my financial goal?” Stocks are a means to an end. Your job is to figure out what that end is or, more importantly, when it is. Do you want to retire in ten years or next year? Must you pay for your kid’s college education next year or 18 years from now? The length of time you have before you need the money you hope to earn from stock investing determines what stocks you should buy.
Dividends are payments made to an owner (unlike interest, which is payment to a creditor). Dividends are a great form of income, and companies that issue dividends tend to have more stable stock prices as well. Every investor has a unique situation, set of goals, and level of risk tolerance. Remember that the terms large-cap, mid cap, and small-cap refer to the size (or market capitalization, also known as market cap) of the company. All factors being equal, large companies are safer (less risky) than small companies.
Investing for the Future
Are your goals long term or short term? Answering this question is important because individual stocks can be either great or horrible choices, depending on the time period you want to focus on. Generally, the length of time you plan to invest in stocks can be short term, intermediate term, or long term.
Investing in stocks becomes less risky as the time frame lengthens. Stock prices tend to fluctuate on a daily basis, but they have a tendency to trend up or down over an extended period of time. Even if you invest in a stock that goes down in the short term, you’re likely to see it rise and possibly go above your investment if you have the patience to wait it out and let the stock price appreciate.
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January 28th, 2008 by admin
One of the most important skills to have as an investor or trader is patience. You have to know how to control your impulses and not to act on emotion. Patient traders and investors have done their homework- They have precise entry and exit times and they stick to them. Sticking to your strategy is most important. You did research for a reason, you took the time to develop a strategy for a reason, now be sure to follow it.
First, Choose The Right Stock
It’s important to remember that there are many different stock opportunities and it is not necessary to grab each one. You want to be sure that the opportunities you take fit within your trading or investing goals. If the stock that you chose isn’t meeting your criteria, be patient and find a new one. There are always other opportunities available.
Wait For Your Entry Point
Once you have done your research and picked an entry point, wait for it. You may expect the stock to quickly fall to your entry point, but instead the price rises. Don’t panic. Just because the price rises doesn’t mean that it won’t fall. Don’t enter above your planned entry point because you’re afraid you’ll miss the trade. If you enter above it, you will lose some of your potential profit. Be patient. The stock will eventually fall back. Take some time to remind yourself why you decided on your entry point to begin with.
Wait For The Right Time To Sell
Once you have bought a stock, you have to know how to wait patiently for the right time to sell. All traders / investors must fight the urge to sell too early or too late. If you are a long term investor, it is important to have patience so you do not impulsively sell when the market starts to turn down or buy back at the top of the market. This usually results in losing your money.
If you are a short-term trader, you must also have patience. Even though short-term traders hold onto their stocks for a shorter period of time, they must know how to tolerantly wait for the best time to sell. Selling too early does not allow one’s profits to grow quickly. The same goes for holding on to a stock for too long, hoping that it will eventually go up if it hasn’t already. Don’t turn your trade into an investment. Accept your losses and get out. Most importantly, learn from your mistakes. Waiting for the right entry and exit points is key to every successful trade / investment.
Gaining Patience
One of the best ways to gain patience is to try to view the trades objectively. If you try to view the trades with the attitude that you are not losing out on something big, you may be able to resist the temptation to enter or exit early. A cold approach to trading may increase your tolerance and thus increase your profits. Just because you like the company that you’re trading or investing with does not mean you should stick with it regardless. Be objective and don’t bring your emotions into it.
Fighting impulse and being objective is the best way to become profitable. Patience is the most vital characteristic to develop in order to be successful.
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The SUBWAY has established a national reputation for providing investor relations services. We are a full service firm and we work with you through each stage of the investor relations process. Risk Tolerant Investors, Public Corporations, Promoters : We have the best of all three worlds. The one source for High Risk High Return Education and Information.
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January 28th, 2008 by admin
When traders lose money, it is often because they cannot control their emotions. Those who act on their emotions often make irrational decisions. So, learning how to control emotions when trading will be one of the most essential aspects to success. Successful traders can view the market objectively and are emotionally disconnected from market happenings.
Fear and greed are the two main emotions that traders need to overcome. They are both very powerful emotions. When humans foresee harm, they instantly feel trepidation and react quickly. In the market, reacting to fear usually causes a trader to make an impulsive decision that leads to a trading error. Fear of losing money may cause someone to sell a stock before their target price.
Triumphant traders are not affected by fear and greed. When a stock falls, they are not overcome by fear. They expect small drops in the market. When an inexperienced trader sees a stock reach its target, they are often driven by greed and keep the stock in the trade, hoping to make an even larger profit. So, set your target price, accept your profit and sell. You haven’t made a profit until you actually sell the stock.
Fear and greed are the main reasons why the inexperienced trader buys and sells at the wrong times. This is why skilled traders are able to use the volatility of the market to make large profits, while inexperienced traders lose, lose, lose. Regardless of what the market does, a successful trader has a plan and sticks to it.
While at first it may seem hard to buy and sell objectively, the more trading experience you gain, the easier it becomes. There are steps you can take to learn how to stay unemotional and objective:
• Limit your risk by trading with money that you can afford to lose. If a loss won’t really hurt you, it will be easier to convince yourself that the outcome is insignificant. Once you have convinced yourself that the outcome is not important, it will be easier to remain emotionally detached.
• Know your risk tolerance. If big risks make you uncomfortable, don’t make dicey trades. Start by making safe investments. As you become more knowledgeable and less emotional, start increasing your risks.
• Do your homework. Come up with a trading strategy and be sure to stick to it. Stay away from stock message boards until you gain confidence in yourself. They may have the ability to sway your emotions and thus sway your trade. Successful traders can think for themselves. They don’t let the stock boards tell them what to do.
• If you find yourself obsessing over your stock, you are starting to trade on emotion. Stop yourself from becoming attached and confidently remind yourself of your trading strategy.
• Don’t trade just to trade. Even though the stock market can be an exciting place, and you probably feel like you are missing out on something, don’t buy a stock for the heck of it. Instead, learn how to anticipate the market. Trading more often will not result in more profits. In fact, the cost associated with trading more often may actually cause you to become more emotionally involved. Wait for the ideal entrances and exits.
• Taking a loss is a part of trading. Instead of letting your emotions control you after a loss, come up with a plan for managing them. Some people say that your first loss is your best loss. This is because you will hopefully look back at what you did wrong and learn from it.
If you can learn how to trade without emotional involvement, you will always be more successful. The best way to learn how to emotionlessly trade is not to think of the stock as a company, but just think of it as a stock. As you gain more knowledge about the market, you will become a more confident trader. Begin by taking small steps to overcome your emotion. Study the market, and do your homework. Once you can think objectively, you are on your way to becoming a consistent and profitable trader.
TheSUBWAY: Small Cap Stock Promoters http://www.TheSUBWAY.com
The SUBWAY has established a national reputation for providing investor relations services. We are a full service firm and we work with you through each stage of the investor relations process. Risk Tolerant Investors, Public Corporations, Promoters : We have the best of all three worlds. The one source for High Risk High Return Education and Information.
Visit our Forum at http://www.thesubway.com/fusionbb to comment on small cap stocks, ask questions and talk with other investors.
You can also visit our Blog to read more, comment, and/or ask questions about Stock Promoters at http://thesubway.wordpress.com
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January 24th, 2008 by admin
Selection
1) What goes up MUST come down: the best short candidates are former highflyers of the preceding bull market. Think about it: this alone has just reduced your list to no more than a couple hundred names at the most. Much better than the 10,000 potential candidates you have to sift through on the long side.
2) Cyclicals: the current uptrend which started in 2003 is almost 5 years old. Nobody has outlawed business cycles. Staying with basic materials and capital goods puts a powerful trend on your side.
Many investors/traders who entered the market post 2003 probably believe that the current highflyers can only move in one direction - UP, but that’s what will make the eventual downfall so much more dramatic as investors in the tech/Internet bubble found out the hard way in 2000, and numerous investors in numerous other bubbles before them did too.
3) A clear downtrend: the 50 DMA BELOW the 200 DMA, with both lines declining. The stock must be below both.
Risks
Short squeezes and buyouts are your biggest risks on the short side.
While you can protect yourself against short squeezes by staying with more liquid and established issues with low short interest, there is no real protection against an occasional buyout and a possible sympathy move in the entire group. The best you can do is diversify and trade smaller amounts of multiple stocks in the same group to minimize damage.
Timing
Long-term trends do not reverse in a day.
On its way up a stock changes owners several times. The latecomers who buy at the top do not give up easily: they are armed with the stock’s long history of stellar earnings and spectacular rise. The stock has broad institutional sponsorship with firepower to support the price. There are bargain hunters down below waiting to buy at a discount.
But the shrewd operators and insiders already know the party is over. They are the ones quietly distributing to the unsuspecting public. Sharp shorts sense the change in mood and start selling. But bouts of selling are followed by heavy buying from the above groups and short squeezes, causing the stock to spike back.
Longer term, history and the law of physics are on the short side. As they say on Wall Street, stocks are put up but fall under their own weight. Longs are literally fighting an uphill battle. One by one, they give up. Bargain hunters run out of cash from doubling down. They now operate on hope. They are hurting, and as the pain becomes unbearable, they sell in disgust. Institutions rotate out. The spikes lose intensity while failing to regain the old highs. The stock gets exhausted and finally breaks through long-term support. THIS IS YOUR BEST PLACE TO SHORT.
ATI as an example
It peaked in late April 2007. It failed to build a proper base, printing a series of lower highs (June 1, July 19) and lower lows, finally slicing through the 200 DMA on August 10. But the 50 DMA was still above the 200 DMA, and the 200 DMA was rising. The 50 DMA crossed the 200 DMA in early September 2007 but ATI bounced back from a double bottom as the general market improved. ATI spiked back above the DMAs, peaking on October 9, making a third lower high in a row.
The gap down on October 12 presented a good shorting opportunity. But the longs still had firepower left. Two more lower highs (October 29, November 30). Notice how the intensity of those spikes decreased, even though they became more frequent. Each time the stock found support around $90.00.
Now, a fundamental difference between buying breakouts and shorting breakdowns is that with the exception of huge gap downs caused by overnight news, capitulations are often anti-climactic. The stock wears down gradually. The slide starts slowly then accelerates.
The right time to short ATI was when it broke through $90.00. But it did so multiple times in December before finally moving lower, and still had one more pullback. And that’s another major difference: instead of a clear pivot you had a window of opportunity.
Now that the long-term support has been taken out, it is safer to add on pullbacks to the DMAs. And, as always, it’s important to keep an eye on the market as stocks do not trade in vacuum.
Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of proprietary trading data that swing traders can put to work right away. http://www.tradingzoom.com
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January 20th, 2008 by admin
Market orders
When you buy stock, the simplest type of order is a market order an order to buy or sell a stock at the market’s current best available price. It doesn’t get any more basic than that. Here’s an example-
Kowalski, Inc., is available at the market price of $10. When you call up your broker and instruct him to buy 100 shares “at the market,” the broker will implement the order for your account, and you pay $1,000 plus commission.
I say current best available price because the stock’s price is constantly moving, and catching the best price can be a function of the broker’s ability to process the stock purchase. For very active stocks, the price change can happen within seconds. It’s not unheard of to have three brokers simultaneously place orders for the same stocks and get three different prices because of differences in the broker’s capability.
The advantage of a market order is that the transaction is processed immediately, and you get your stock without worrying about whether it hits a particular price. For example, if you buy Kowalski, Inc., with a market order, you know that by the end of that phone call , you’re assured of getting the stock. The disadvantage of a market order is that you can’t control the price that you pay for the stock. Whether you’re buying or selling your shares, you may not realize the exact price you expect (especially if you’re buying a volatile stock).
Market orders get finalized in the chronological order in which they’re placed. Your price may change because the orders ahead of you in line caused the stock price to rise or fall based on the latest news.
Stop orders
A stop order (or stop-loss order if you own the stock) is a condition-related order that instructs the broker to sell a particular stock only when the stock reaches a particular price. It acts like a trigger, and the stop order converts to a market order to sell the stock immediately. The stop-loss order isn’t designed to take advantage of small, short-term moves in the stock’s price. It’s meant to help you protect the bulk of your money when the market turns against your stock investment in a sudden manner.
Say that your Kowalski, Inc., stock rises to $20 per share and you seek to protect your investment against a possible future market decline. A stop-loss order at $18 triggers your broker to sell the stock immediately if it falls to the $18 mark. In this example, if the stock suddenly drops to $17, it still triggers the stop-loss order, but the finalized sale price is $17. In a volatile market, you may not be able to sell at your precise stop-loss price. However, because the order automatically gets converted into a market order, the sale will be done, and you prevent further declines in the stock.
The main benefit of a stop-loss order is that it prevents a major decline in a stock that you own. It’s a form of discipline that’s important in investing in order to minimize potential losses. Investors can find it agonizing to sell a stock that has fallen. If they don’t sell, however, the stock often continues to plummet as investors continue to hold on while hoping for a rebound in the price.
Tips to turn $1000 into $1,00,000, articles on stock market trading and investing. To get detail about the stock market and finance visit http://www.2stocktrading.com
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January 20th, 2008 by admin
1) Don’t rush in to buy. Wait. Watch it for a while. Check what they say on the Yahoo message board. See what Cramer thinks about it. Find out if any of the advisory services recommend it. Ask around at work if they’ve ever heard of it. Watch it some more. If all the sources check out alright AND it’s up 40% from where you first saw it - BUY.
2) Set your stops 5% below your purchase price - because, you know, stocks never go down more than 5% below your purchase price.
3) If you’re down from where you bought, buy more to average down and lower your breakeven point.
4) If you’re down big time, wait for it to come back before selling - because, you know, they always do.
5) If you’re up from where you bought, take your money and run before you lose the profit - because, you know, good things never last.
6) If you’re not sure what to do, go to Yahoo stock message boards and ask. Plenty of free objective unbiased advice from friendly folks with your best interest at heart. But only listen to what you want to hear.
7) Your best sources of timely investment information are the business section of your local Sunday paper, weekly periodicals, and TV - in that order. Who needs Investors’ Business Daily when there is so much good stuff out there that’s free?
You can time the market. The best time to buy is after a family weekend barbeque when everyone and their uncle are boasting about how much money they’ve made in stocks.
9) Attend a free stock trading seminar (make sure they serve a free meal) and buy their software package. The ones where you only have to watch for three green arrows or trade for no more than 30 min. a day to get the lifestyle you deserve are especially good.
10) Hunches are good, too. After all, those bozos on Wall Street don’t know what they are talking about.
11) If you want to learn about investing, take economics at your local community college.
12) If buying breakouts doesn’t work, try something else. Shorting is good. Or futures. Just keep trying new things until you find that one thing that will make you rich.
13) Your best bet is low risk high return situations. Don’t let them talk you into “any of them risky things”.
And remember: if you don’t look at the screen, the losses are not really there.
Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of proprietary trading data that swing traders can put to work right away.
http://www.tradingzoom.com
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January 12th, 2008 by admin
Buying the right stock is the most important component in stock investing. You can reduce risk of losing money if you buy money-making stocks as well. Continue reading to find out how to buy the right company.
Research General Economic Condition
Stock market prices are sentiment driven. Even the strongest company will get affected by major market interruptions. This can happen if most of the investors decided to run away from stock market no matter how good the individual stock is.
Take 1929 market depression for example, none of the stock’s price can sustain the pressure which eventually bring down the whole stock market. Therefore, look for economic indicators such as interest and inflation rate to estimate if the current market is still healthy.
Analyze Related Market Segment
Even though the economy looks pretty much normal, watch out for specific market cycle. Individual market segment may behave differently in any economic condition. For example, as transport companies suffer from high oil prices, oil and gas related stocks may enjoy superior growth.
In fact, this is critical if you prefer to play a momentum trading game. Since you love investing in stocks that are expected to grow exponentially, identify them before anyone did is the only thing you should do. Else, you will not be able to make much money.
Explore Company Fundamental Value
Since you are buying stocks instead of the market, you have no choice but to choose a profitable one. Use various key financial ratios to help you identify which stocks worth investing right now. Remember, in any economic and market condition, there must be stocks that will make money for you.
But you have to reveal the hidden gem!
Want to invest in stock market without mistakes? Continue reading on How to Invest in Stock and How to Trade Stock For Living at http://www.Stock-Investment-Made-Easy.com/
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January 12th, 2008 by admin
With the daily remarks getting more planned and people getting more futuristic, investments have been an interim part of layman’s lives. Each person, along with the regular sources of income seeks to have side investments of their savings. Hence, stock market is gaining its importance. Though other features are also responsible for better trading in stocks, large part of it is contributed by introduction of online trading. For trading any share, it is important to first buy the stock. Buying and selling of stock is the core of any trading. The profit made out of selling of stock deducts the opportunity cost. Holding cost and brokerage charge is the actual return of any investor. Hence, just a few words regarding the process of buy stocks online.
• Research, analysis and education: the headline itself says it all. It is important for any trader to go through research work and get sheer knowledge of the share market. It is no point investing on broker’s tips and friend’s deals. This counting on others surely may pay for sometime but at last has the ever-lasting loss. Hence, for a trader it is necessary to decide on the investments independently, though some references may be used. Also, try and understand the stock market moves. Past movements and trends being followed by the stock market can help this.
• Get a system: the 2nd step is to get a system to work for you. By system, we mean the brokerage firm. There are many sites online that work as catalyst for share trading. They are the mediocre for online investments and provide relevant services according to the brokerage charged. If some one seeks for full time services and tips, brokerage is more as compared to discounted brokerages.
• Get the formalities completed: Though there are no lengthy paper works included in online trading, but, some of the documents are to be filed and hence, trading account is ready to start the trading.
• Set the rules: each business has its own set of rules and separate vocabulary to be used. It is same with the stock market. There are certain guidelines to be followed for each investor; however, it is important for each investor to set rules for him too, whether a domestic or foreign investor, short-term or long-term investor and other things are to be decided.
• Maintain a balanced portfolio: portfolio refers to the track sheet of all the investments done. It includes detailed information about the buying and selling of stocks by the trader. Hence, the investments are recorded for future reference and a balanced approach must be included. Integrated investments surely promise better and safe returns as compared to investment in a single company’s share.
• Eye for all opportunities: seek for all opportunities that come your way including index funds. Diversify the investments as much as it suits and buy stocks online accordingly.
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January 12th, 2008 by admin
One can control them and any mistake in any step can stifle your trading with its monstrous effects. Most of the businesses probably have their competence in the buying and selling of products and the same applies to the stock market. Buying and selling of stocks is apparently the most important decision to be made that decides on the profits and losses procured. However, it should be noted that the stock market is quite risky and fluctuating; hence, the timing for buying and selling must be appropriate and be able to get sheer returns.
Note that the timing must be appropriate and cannot be perfect. Most of the traders seek for perfect timing due to which they lose on good opportunities for investments. There is nothing called perfect timing in the stock market. The common mantra that works is buying the stock at lower prices and selling it at higher prices. However, this transaction as it seems is not so easy. It takes loads of calculations and forecast about the movement of stock in accordance to the stock market. It is not necessary that a share if grows will break for sure in next future and vice versa. For example, Dell company share rose to 6000, after which it was expected to break in next future but opposite to trader’s expectations it remained high and they had to lose on the investing opportunities.
Other feature of buying and selling of stock is the time the stock is being retained for. Any trader who holds the stock for a period of time is seeking for the prices to grow. But, most of the day traders tend to hold the stock even if they are breaking down, hence, ending up in huge losses. It is to be noticed that a share facing tremendous loss has a meagre possibility of rising in the next future. Also a share having better future prospects must be retained even if it is facing some breaking down. To cut short, a share must be retained in accordance to the expected future appraisal of the stock.
Some of the applications of stock market must be devised like automated investments, short selling and stop order limit. These tools help in avoiding huge loss brunt and maintain a balanced trading portfolio. Automated investments help in maintaining consistency and diversify the investments dividing the risks. Stop order limits also tend to sell the stock automatically at a particular that is avoiding a trader to retain the falling stock. It helps to cover the limitations of any trader that does not let the trader the falling stock for a long period of time.
Also, another trick for buying and selling of stock is selling short. It is not necessary to buy the stock when it is falling. A stock can be sold even before it is purchased while forecasting says the stock will fall in the future. Though it is more dangerous than regular trading but it turns out to be a better return provider in case of appropriate calculations.
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