In days gone by, investing money in the stock market and reaping a reward was a skill that some experts spent a lifetime honing. More recently, with the growth in the popularity of smaller investments such as penny stocks, small cap and even microcap stocks, day trading has become a potentially profitable hobby for almost anyone from high school students to grandmothers. As computer technology moves toward the potential of artificial intelligence, and as programmers turn their attention toward equity investments, it is becoming less necessary actually to know much of anything about the stock market in order to purchase stocks, sell them, and realize a return on one’s investment.
One very dramatic case in point of the success in programming computers to analyze and select stocks that will, hopefully, increase in value is the so-called stock picking robot created by two computer programmers from Seattle, Washington. The young men were first contracted by one of the world’s largest global investment banks to develop a computer model for trading stocks. This software is now responsible each year for more than four billion dollars in profits from stock market trades.
Using their computer skills, these gentlemen next focus their attention on the opposite pole of Wall Street. Instead of managing multi-billion dollar portfolios, they turned their attention towards managing as small a portfolio as a few hundred dollars, and running on a basic personal home computer. It was a wise decision, because there is a potential of much higher financial returns when one is trading penny tocks, highly volatile investments that can see a rise in value of as much as 400% in only a few minutes.
Looking at stocks being traded over the counter (OTC) and on Pink sheet stock exchanges, the program sought out companies whose trading patterns indicated that their value was about to rise up significantly. This tactic proved so successful that it now has a track record that is impressive even to hardened skeptics. It averages an increase of 105.28%, and this rise most often happens within three hours of the opening of the market.
The programmers’ company now publishes a weekly newsletter that passes picks of hot stock tips from the computer to its subscribers. Of course, anyone who trades penny stocks on an ongoing basis knows that there is no such thing as a sure thing, and the newsletter publishers openly admit that their computer’s choices will sometimes lead to losses instead of gains. Nevertheless, an average success rate of higher than 100% is a track record that cannot be sneezed at.
For a limited time, the penny stock newsletter publishers are offering a deal which looks too good to pass up. They say subscribers to their “Doubling Stocks” newsletter may take eight weeks to try it out for free. During that time period, the subscription may be canceled for a full refund, if the subscriber is not satisfied with the quality of the penny stock information it delivers.
Find out more about the stock-picking “robot” and his eight-week risk-free Penny Stock Newsletter at the Tell the Boss to Get Lost website: http://tellthebosstogetlost.com
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Can there be such a thing as a stock picking robot. No, you say. Well, maybe you should continue reading and start thinking outside of the box. I recently came across the latest craze to sweep the stock trading world off its’ feet. Apparently, there is a stock picking robot on the market that can provide stock picks that are ready to make tremendous gains and from my experience it seems to work. Allow me to explain. After using the traditional methods of picking my own stocks and taking advice of so-called stock gurus’, I was able to lose a fairly large portion of my investment portfolio.
So, one night while searching the net, I came across this offer for a penny stock picking service. I subscribed to their newsletter ($47) and within a few days, I had received my first stock pick. Well, that pick went on to gain over 87% in less than one day. Then about a week later, my second pick went up 50% within less than an hour. I was astounded that a stock could gain this much in such a short amount of time.
As two or three weeks went by, I continued receiving stock picks, and then one day, I was offered a chance to purchase their stock picking robot named Marl for a mere $97. At first I was skeptical, but I went ahead and purchased Marl. Well, let me tell you, this was the best investment I have ever made. I was posting on a stock forum one night about the success I was having with Marl and was told by a traditional trader that Marl was a complete scam and I had been conned. It was amazing to me this guy could somehow see into my stock portfolio and tell me how my stock picks were doing. This stock picking guru, Aiki14, who claimed to have over 25 years of stock trading knowledge, also challenged me to a stock picking contest. So, I did what any red-blooded American would do - I accepted.
How did the contest turn out? You’ll have to go to my website http://MaryKay1965.com to find out. You will also be able to see the daily stock picks given to me by Marl-The Stock Trading Robot. You can view the picks for free, and paper trade the results to see if this is a program you may be interested in for yourself.
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January 31st, 2008 by admin
Relying on the primary market indexes and studying their daily price and volume interplay is one of the best possible methods for analyzing the market’s behavior and determining its overall direction and health. The second best method is studying the current and recent action of market leaders. Remember that history shows three out of four stocks follow market down trends. When you see the best and the strongest stocks unraveling one after the other on heavier-than-average volume, that’s telling you something about the market. Your job is not to figure out why it’s happening, but to recognize that it’s happening, and know what you need to do about it.
What Defines a Market Leader?
A market leader is a company that dominates its industry in a number of key fundamental and technical measurements. On the fundamental side, it will boast strong profit and sales growth, high return on equity or fat profit margins. Those gains are almost always the result of an innovative product or service that satisfies a need among consumers or other businesses.
The other side of leadership is technical, meaning the company’s stock performance. By definition, market leading stocks outperform the vast majority of other securities. Huge winners during the 1990s, such as Cisco Systems and Microsoft, were outperforming the market averages, and at least 87% of all other stocks, before they launched into their massive price advances.
Notice that in definition of market leaders didn’t include “number one in name recognition or brand awareness.” That is not a relevant factor when determining a leading stock. Everyone knows and recognizes brand names such as Sears and Campbell Soup, but are their fundamental and technical performance numbers saying they are the current leaders in their respective industries? You should not be influenced by how many commercials a company has, how many magazine covers have featured the company’s CEO, or how often you eat the food or buy the gas for your car. When the market hits bottom and rallies toward new highs, it’s best to forget about most of the old familiar names. Historical research shows that just one of every eight past leaders reasserts itself as a leader in the next bull phase.
Follow Mainly the New Leaders
After a clear-cut downturn, the market will try to rally at some point. But the first few days of an attempted upswing tell you nothing about prospects for success. Instead, wait for a follow-through day, a powerful confirmation of the market’s new uptrend. A follow-through occurs usually between the fourth and tenth day when one of the major indexes shows a booming gain of 1.7% to 2% or more on greater volume than the day before. In this kind of market follow-through strength, the first stocks that move to new high ground out of sound chart bases on big volume are typically the new leaders in the next bull phase. They’ll likely go up farther and faster than other stocks, even after the others gather strength.
Because these new leaders don’t show up and identify themselves until the market has definitely hit bottom and turned upward with a confirming follow-through day, you must be on your toes, ready to act decisively. New leading stocks will continually evolve from proper patterns for the next three months. In the period that follows, identify stocks leading their industry groups. Place them on a watch list and see how they perform. Look to see whether the big mutual fund managers are moving into these stocks. Investor’s Business Daily has a daily list, “Where the Big Money’s Flowing,” and also “52 Week Highs & Lows” that separates the leaders from the market laggards. Track the daily price and volume action of the leaders against the major indexes. When you see new stocks hitting price highs as the market also rises, it indicates a healthy rally and overall upward trend. At the same time, when the majority of these new big leaders begin to break down, it could be your cue to an emerging overall downtrend.
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
When you decide to start investing in the stock market, you have to somehow actually pay for the stocks you buy. Most brokerage firms offer investors several different types of accounts, each serving a different purpose.
Three of the most common types in the following sections.
The basic difference boils down to how particular brokers view your “creditworthiness” when it comes to buying and selling securities. If your credit isn’t great, your only choice is a cash account. If your credit is good, you can open either a cash account or a margin account. Once you qualify for a margin account, you can (with additional approval) upgrade it to do options trades. To open an account, you have to fill out an application and submit a check or money order for at least the minimum amount required to establish an account.
Cash accounts
A cash account means just what you think it means. You must deposit a sum of money along with the new account application to begin trading. The amount of your initial deposit varies from broker to broker. Some brokers have a minimum of $10,000, while others let you open an account for as little as $500. Once in a while you may see a broker offering cash accounts with no minimum deposit, usually as part of a promotion. Qualifying for a cash account is usually easy as long as you have cash and a pulse.
With a cash account, your money has to be deposited in the account before the closing (or settlement) date for any trade you make. The closing occurs three business days after the date you make the trade (the date of execution). You may be required to have the money in the account even before the date of execution. In other words, if you call your broker on Monday, October 10, and order 50 shares of CashLess Corp. at $20 per share, then on Thursday, October 13, you better have $1,000 in cash sitting in your account (plus commission).Otherwise, the purchase doesn’t go through.
If you have cash in a brokerage account, see whether the broker will pay you interest on the uninvested cash in it. Some offer a service in which uninvested money earns money market rates and you can even make a choice about whether the venue is a regular money market account or a tax-free municipal money market account.
Margin accounts
A margin account gives you the ability to borrow money against the securities in the account to buy more stock. Because you have the ability to borrow in a margin account, you have to be qualified and approved by the broker. After you’re approved, this newfound credit gives you more leverage so that you can buy more stock or do short selling.
For stock trading, the margin limit is 50 percent. For example, if you plan to buy $10,000 worth of stock on margin, you need at least $5,000 in cash (or securities owned) sitting in your account. The interest rate that you pay varies depending on the broker, but most brokers generally charge a rate that’s several points higher than their own borrowing rate.
Why use margin? Margin is to stocks what mortgage is to buying real estate. You can buy real estate with all cash, but many times, using borrowed funds makes sense since you may not have enough money to make a 100% cash purchase or you prefer not to pay all cash. With margin, you could, for example, be able to buy $10,000 worth of stock with as little as $5,000. The balance of the stock purchase is acquired using a loan (margin) from the brokerage firm.
Option accounts
An option account gives you all the capabilities of a margin account (which in turn also gives you the capabilities of a cash account) plus the ability to trade options on stocks and stock indexes. To upgrade your margin account to an options account, the broker usually asks you to sign a statement that you’re knowledgeable about options and familiar with the risks associated with them.
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January 15th, 2008 by admin
Everyone who has a computer and access to the Internet connection can easily find a stockbroker on the web. You can open a trading account with any of the listed stock brokers on the net. You must, however, understand that you are going to invest your hard earned money to build wealth. A slight wrong move can jeopardize your investment, more so, if you are a beginner.
The first important step in finding a good stockbroker is to study his or hers website. Do not be taken in by a flashy website with colorful and complicated graphics. The website should be simple and professional. It should be easy to navigate so that you can peruse its content without much difficulty.
It is equally important to identify what you should actually look for in terms of content. Do you understand its language? Investment in stocks is a technical subject. The language used to explain various investment issues is bound to contain certain new and unfamiliar terms, which may be beyond your comprehension if you are a beginner. Therefore, the website should provide sufficient articles to educate the visitors about various aspects of investing in stocks and shares.
Again, nobody can raise any questions if he or she does not know the subject. The website content should be primarily designed as to list the relevant questions and provide their answers in FAQ or other suitable format starting with the ABC of the subject. For example, the first few questions that a beginner may wish to know may be: What is stock? Why can’t we buy the stock directly from the company? What are IPOs? Why is it necessary to trade in stocks and shares only through a stockbroker? What is the stock trading market? What is a stock exchange? What are stock exchanges like the NYSE, NASDAQ, AMEX and what are their different features? What are physical and virtual or electronic stock exchanges? What are the reasons for trading in stocks only through stock exchanges? Why can you not advertise in the classified ads in the local newspapers when you have to buy or sell a stock? All these questions should be answered in simple language in sufficient details
The website’s pages should educate the visitors about how the prices of shares are determined. What is supply and demand? How does the supply and demand affect the sale and purchase of shares?
Stock market like any other area of human knowledge has its specific jargon. For example, stock market has bulls, bears and chickens that affect the stock market. A beginner needs to thoroughly understand these and other similar terms. The website should have appended a glossary of typical terms and explain these terms with the help of simple, understandable day-to-day examples.
There are numerous other questions and doubts that need to be clarified. For example, if you are a beginner, what minimum amount should you invest to gain some experience and confidence in trading in stocks? What are the inherent risks in stock investing? The visitor should be left with no doubt on any unexpected risks. A good website does not create unrealistic dreams, but emphasizes upon study and analysis before investing in any stock. The website should also educate the investor about how to study the stock market, analyze the balance sheets, charts, quarterly reports and other essential financial aspects of investing.
Having studied the website of one stockbroker, you must also study other websites to find more information about issues which may not have been covered in your first search. You feel inclined to invest, say, in exchange traded funds, but the information on certain issues, for example ‘what is index tracking?’ may not be clear in the site you are presently studying. It would be much better to consult the sites of other stockbrokers to decide who can provide you the most satisfactory information and benefits in terms of brokerage and services.
You should settle for a stock broker who provides satisfactory answers to all those questions through his website.
It would be important to note that you have to provide your vital personal and financial information to the stockbroker whom you open your trading account with. You must be sure that he can protect your privacy and does not sell or part with your information except when it is legally binding upon him.
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January 12th, 2008 by admin
When you’re ready to dive in and start investing in stocks, you first have to choose a broker. It’s kind of like buying a car. You can do all the research in the world and know exactly what kind of car you want to buy, still, you need a venue to do the actual transaction. Similarly, when you want to buy stock, your task is to do all the research you can to select the company you want to invest in. Still, you need a broker to actually buy the stock, whether you buy over the phone or online.
The broker’s primary role is to serve as the vehicle through which you either buy or sell stock. When I talk about brokers, I’m referring to organizations such as Charles Schwab, Merrill Lynch, E TRADE, and many other organizations that can buy stock on your behalf. Brokers can also be individuals who work for such firms. Although you can buy some stocks directly from the company that issues them, to purchase most stocks, you still need a broker.
Although the primary task of brokers is the buying and selling of securities (keep in mind that the word securities refers to the world of financial or paper investments, and that stocks are only a small part of that world), such as stocks, they can perform other tasks for you, including the following:
- Providing advisory services - Investors pay brokers a fee for investment advice. Customers also get access to the firm’s research.
- Offering limited banking services - Brokers can offer features such as interest-bearing accounts, check writing, direct deposit, and credit cards.
- Brokering other securities - Brokers can also buy bonds, mutual funds, options, Exchange Traded Funds (ETFs), and other investments on your behalf.
Personal stockbrokers make their money from individual investors like you and me through various fees, including the following:
- Brokerage commissions - This fee is for buying and/or selling stocks and other securities.
- Margin interest charges - This interest is charged to investors for borrowing against their brokerage account for investment purposes.
- Service charges - These charges are for performing administrative tasks and other functions. Brokers charge fees to investors for Individual Retirement Accounts (IRAs) and for mailing stocks in certificate form.
Any broker you deal with should be registered with the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC). In addition, to protect your money after you’ve deposited it into a brokerage account, that broker should be a member of the Securities Investor Protection Corporation (SIPC). SIPC doesn’t protect you from market losses; it protects your money in case the brokerage firm goes out of business. To find out whether the broker is registered with these organizations, contact the NASD, SEC, and SIPC.
The distinction between personal stockbrokers and institutional stockbrokers is important. Institutional brokers make money from institutions and companies through investment banking and securities placement fees (such as initial public offerings and secondary offerings), advisory services, and other broker services. Personal stockbrokers generally offer the same services to individuals and small businesses.
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January 12th, 2008 by admin
Sometimes you become unsure as to which one of the two or three stockbrokers you should finally select to open your trading account. It is, therefore, advisable that you do comparison-shopping before settling for a broker. There are certain salient points on which you should compare them.
Guidance and Information
Compare the quality as well as the quantity of information provided by each stockbroker on his website. The stock investment scenario keeps changing with new policies, rules and algorithms coming in periodically. You must ensure that the information and guidance provided by your stockbroker should be the latest and most relevant to your investment needs. There should be latest news flashes about the new stocks coming in the market, financial decisions and policy changes in the relevant financial sectors to keep you updated so that you can take informed investment decisions. Sometimes the information provided, though important, is too less to serve any useful purpose. The tools for stock market research such as charts, quotes, symbol finder, market scanners, fundamental and technical analyses, moving averages, Linear Regression Functions, Band Indicators, Oscillator Indicators, Index Indicators, General Indicators and so on and their use should be explained to the investors.
Brokerage or Commissions
You may ignore your broker’s commission-if it is high– if you are a one time or a long time investor, but you cannot ignore the broker’s commission if you are a day trader or a frequent trader. Higher commissions cumulatively affect your overall earning percentage. It must not be forgotten that the brokers survive on commissions and they try to charge the maximum from the investors. Some brokers have hidden charges, which even the experienced investors cannot easily detect.
Minimum Deposits
Since investment in stocks tends to be huge over a period of time, the brokers expect the investors to maintain a certain minimum deposit with them. The minimum deposits range from zero dollar to $500 to $2,500 depending upon broker to broker. That a broker charges zero dollars as account minimum should not be an only reason for you to open an account with him. You must compare the benefits offered by each broker. Some times the benefits offered in terms of services and commissions outweigh the comparatively higher minimum deposits. Conversely, a minimum deposit of zero dollars may prove costly in the long run.
Investment Plans
Some stockbrokers offer automatic investment plans. There are others who do not provide such plans, or, offer them only on selected investments.
There are still other brokers who make irresistible offers for automatic investment plans for only $1.00-$2.00-$3.00 per investment. The automatic investment facility is offered daily on all the listed and NASDAQ stocks and ETFs. This shows how important it is to compare the two-brokerage firms before signing up you account.
Real-time Market Orders
While some online brokers accept real time market orders and charge smaller fees such as $1.50-$2.00-$3.00 per trade, there are others who charge higher fees such as $6.99 -$9.99 to $12.99-$19.95 per trade. It would be interesting to note that those brokers who do not want any minimum deposit, charge as much as $11.95 to $15.95 per trade. As a vigilant investor, you must note these differences while comparing the two brokers.
Regular Brokerage Investment Minimum
Some brokers insist that you should buy at least 100 shares of a stock, since all the stocks trade in units of 100 shares. If you trade in less than 100 shares at a time, you have to pay higher commission charges. Obviously if you cannot afford to buy 100 shares or more, you cannot trade in stocks at all. There are brokers who offer the facility of fractional share investing. You are not obliged to buy 100 shares or even one share. You can buy even a fraction of a share and invest any dollar amount that suits your pocket or mood.
Inactivity or Maintenance Fee
You may have to suspend your investments for some time. Some brokers charge you inactivity fees, which can be as high as $40 per quarter. This can be a very unwelcome liability especially for a person who may have stopped investing due to financial constraints. You must, therefore, check this feature while comparing two online brokers.
There are other issues, which must be studied when making comparison between two brokers, and these include dollar based investing and subscription fee and so on. Vigilance is not only the price of freedom but of making money in stock trading as well.
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January 12th, 2008 by admin
Future financial security is a must in today’s competitive world. However, it is also important to choose the right investment plan. Today, we have so many options where one can invest and gain substantial benefits. But there are so many pros and cons associated with most of the investment plans. Investing in stocks on the other hand is quite beneficial, as it is more flexible and gives more profits in a very less time period.
Though stock market has always been projected as a risky platform, but in the present scenario, things have changed completely. In today’s Internet world, anyone can invest and manage funds easily than ever before. It’s just a matter of few mouse clicks and if you have your own PC and Internet connection, you can manage your funds from home. The key factor that determines your success in all such trading is your online broker.
However, the question arises whether you need a broker or not for your investment. The answer is yes, because you cannot make direct investment and only broker has got the right for direct trading. He is the person who facilitates in your transactions and lets you buy and sell stocks and other such commodities, whatsoever. For all such services, these professional brokers charge some commission and in return you as an investor earn profits from your investment.
However, the next significant question arises is that from where you can hire such professionals? This is a very fundamental question and also the first step to start with in such type of trading. Anyone who wants to invest in stocks needs an online account. And for that you need to register in a stock trading company. Though there are several such industries available on the Internet, but a good company is a must for successful trading. Once you register, you get several services from the company as well as the broker.
Stockbroker acts as a link between the trader and the stock market. Whenever you log in your account, you automatically get connected to the broker. He is the person who lets you know about the market trends, whether you need to buy or sell a particular stock or not; all new company shares that are being launched in the market, etc. He is like a friend who not only manages your funds, but also keeps you abreast of the latest market news and information. Therefore, it is inevitable to have a person who could professionally manage your hard earned money and help you get maximum profits.
Moreover, it is also important for you to understand the risk of the market. To become a successful investor, it is essential to have a comprehensive knowledge of the volatile market. In today’s Internet world, everything is available online. You can read stock related articles, news, blogs, etc. Moreover, you can access a wealth of information from the company website where you have an online account.
Since, your success depends mainly on your investment plan - you need to be more attentive. Take advice from online financial experts and invest intelligently. The only difference between a successful and unsuccessful investor is the proper planning. You should know whether to go for long-term investment or short-term investment. Where do you need to approach for maximum profits? These are some of the basic questions that need to be answered. Once you get the answer, success will definitely be yours.
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January 4th, 2008 by admin
1.. Is the system safe? You will want to make sure that the only possible person with access to your account is you! Ask the company if there have been any instances of hackers who broke into the system. (One could just picture the joy on a hackers face as he sees how much Intel he could short in a screaming bull market before anyone finds out.) Make sure there are ample passwords, phone numbers, or access codes that will ensure your safety and peace of mind.
2. What services does it offer? This will be one of the greatest factors when determining which system to use. Ask yourself what is most important to your trading and see which system best fits your needs. There will probably be some tradeoffs. If you want the fastest speed, then you may have to give up charting, as this requires vast memory and slows the system down. If news is important, then you may end up paying an expensive monthly fee. Some systems are designed strictly for trading NASDAQ stocks, while others will let you trade anything from pork bellies to Japanese bonds. We found that systems designed to do a lot tended not to do anyone thing all too well. On the other hand, systems that were designed to just trade one market tended to serve their purpose well.
When evaluating Internet and Online systems, you must also decide what features or services are most important to you. News, charts, technical analysis, and market summaries are some features of interest. Systems that provide an abundance of these features may demand a greater commission in return for these services. Many traders are satisfied with the news available through CNBC. Anything more informative is likely to be costly and perhaps not worth the added expense. Market summaries are important and can be used to help determine relative strength and the overall trend. Information such as the change in key indexes could prove useful, but it is available on CNBC. Charting packages and technical analysis are nice if they don’t lead you to overanalyze each trade. Many good traders review this information outside of the market hours; others won’t make a trade without reviewing it first.
3. How much does it cost? All people like to feel as if they are saving money or getting a good deal. The real question here is, Are you really saving money if you trade with a super-low-cost provider? The answer lies somewhere between the old adages “You get what you pay for” and “Less is more.” While it is true that some of the fastest systems may cost a little more than others, the benefits of getting to stock fast far outweigh the extra cost of the trade. We would much rather pay $0.02 per share (or $20 per thousand) and be able to get executions when we want than $0.01 (or $10 per thousand), using a system that did not provide direct access to the market. On the other hand, if you are extremely active and you can save a couple of bucks by using a comparable system that may not have quite as many features, then you might be better off. Other things to consider are whether the firm is billing you by the share or by the trade. You will have to crunch the numbers and look at your average trade size to see which is better for you. The good news is that with increasing competition for customer accounts, the recent price trend has been on a downslide and some services will even let you trade for $10 a trade or cheaper. If they charge per ticket, ask them how they define a ticket. A market order could get filled at more than one price or in NASDAQ by more than one market maker. Some firms may consider this trade more than one ticket. If they charge per share, ask them if there is a minimum charge per trade. Ask if there is a charge for canceling an order. Also, ask if there are any additional charges, such as monthly fees or a minimum number of trades, before reaching a conclusion on this issue.
4. What types of hardware and software are needed? Some systems require that you have a computer equipped with the latest chips and expanded memory, while others may see your computer as a “dummy” terminal that simply sends your keyboard messages to a “real” computer that does the processing at another location. Most Internet trading systems are designed for use with regular computers and do not require a turbocharger to handle the workload. You will also want to check the baud rate of your connection. Remember that speed is a critical aspect for profitable trading. Fast high-quality modems and big high-resolution monitors are generally necessities with most systems.
You will also want to check if the firm charges you for use or installation of software. Most systems are free, and you should negotiate if you choose a system that intends to charge you.
Robert Daniels is an author for the website Daytrading Gapping Swingtrading:
http://www.daytrading-gapping-swingtrading.com
Daytrading Gapping Swingtrading website offers quality stock picks inside their stock trading chat room.
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January 4th, 2008 by admin
Part 1
One of the biggest mistakes an investor/trader will make is letting the stock broker choose him instead of the investor choosing the right broker. Being selective when choosing an agent can prove fruitful, ensuring you receive exactly the service and advice you deserve. There are many to choose from. Asking questions and screening can lead to a successful relationship for the investor and smooth out the rough roads on his investing journey.
Understanding the broker and his many functions is just one step in understanding the big picture of investing. Understanding one’s own goals and purposes is more important, at least from the trader’s viewpoint. What do you want to achieve financially? What areas do you want your investments? Are you comfortable with aggressive investing? Conservative investing? Do you really need a broker? As many traders as you have these days, you also have the same amount of different trading strategies. Will the trader need a different middleman if his/her strategies change?
Mastering a subject comes with the gradient accumulation of knowledge and experience on that subject. To assist those seeking a broker I’ve written a brief summary of guidelines and helpful hints. There are many questions, inquiries and investigative searches one can use to expose an agent’s intentions and purposes. These will help you weed out the undesirable individuals not having their client’s best interests at heart. These are not strict rules or policies but guidelines to help the trader arrive at his destination, which is making money through wise investments.
Having the right representative on your side is a huge asset. Each individual will have to examine his or her own personal situation to determine if these apply to their own plan on investing. My main focus here is Stock Brokers but these questions and investigations can be applied to many agents; Business, Commodity, Forex, Insurance, Mortgage, Real Estate, etc.
WHAT IS A BROKER?
Basically he is someone who is licensed to buy and sell securities (financial instruments including stocks, bonds, notes, mortgages, etc.) and derivatives (financial instrument whose value is based on another security) on the stock market for traders and investors, which could be either individuals or corporations.
Being a “Stock Broker” does not mean he is an all-knowing deity come to alleviate your financial woes. He has become such because he has a desire for investing and the markets and has invested the time in himself after a short study to obtain a “Series 7″ license. This by no means makes him an expert in investing. This comes with time, experience and the passion to learn and do more.
They are not at all hard to find. Good ones are more difficult to find and they will have at least the following characteristics;
Understands the stock market game. Executes orders with high efficiency. Knowledgeable in most trading strategies. Good communication skills with his clients. Charges reasonable commissions. Offers other assistance as needed. Holds his client’s trust as his biggest asset.
These assets are well worth having on your side when confronted with battling the stock markets.
Part of their job is to discuss and advise the client on investments and strategies. They should be able to explain in detail any aspect of investments and trades. He also needs to accumulate as much data about the client’s financial status and goals in order to assist the client in attaining these ambitions. Based on this data the agent then determines the best financial route to follow and advises the client to do so. When the client has the trades executed they are charged a commission (fee charged for carrying out a transaction). Commissions will vary depending upon the level of service provided. The higher the involvement of the agent, the higher the commission costs is the usual case, which is justifiable for good service.
Paying a higher commission is worth it if he is putting together trades that consistently turn into profits. On the other hand, paying a lower commission which produces mediocre or no profits makes no sense and leads to frustration for the investor and broker alike.
Of course saving on commissions is increasing your profit ratio, but don’t sacrifice your investment profits by employing a middleman who does not have your best interests at hand. Your main interest as a trader is to get all your trades executed efficiently and at the best commission cost possible for that service.
No matter what kind you employ, full service, discount or online, they must be efficient and quick to complete your trade in order for you to make a profit. A client’s portfolio performance has nothing to do with commissions, but the amount of trades executed does. How is he being paid? Is he pushing certain financial products on you to receive more commissions? A good broker always safeguards his client’s interests. Always.
There are three basic groups or types of agents; full service, discount and online. These groups each have different levels of service, advice, commission costs and each are unique depending upon the needs of the investor. Which service could best benefit you? Do you really need a broker? Is research and market advice really worth the extra commission cost?
J Nelson is a successful management administrator working within the customer service and finance industry for over 20 years. His interests also include photography, writing, astronomy and aircraft. J has written articles in regards to helping individuals overcome financial obstacles and finding workable solutions to those problems. Helping individuals locate real solutions is a very rewarding venture. Find out more at: http://stockinvestingreview.blogspot.com/
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