An Introduction to Stock Trading
January 22nd, 2009 by admin
How often have you heard people say that investing in stocks and shares is like gambling? The truth is that investing in stocks is gambling in the same way as doing any business is gambling because there is always an element of risk in every business. Read the rest of this entry »
Popularity: 78% [?]
Posted in Stock-Trading-Online | No Comments »
The Top 10 Trading Rules For Trading Penny Stocks
November 18th, 2008 by admin
While increasing your chances for profit, these top 10 trading rules for day traders are among the best ways.
Prepare early.
Don′t jump into your trading day unprepared. Every day, give yourself at least half an hour to list some stocks you chose based on research from the evening before. Then look at how these were traded the day before and decide if you want to go through with your chosen trades.
Pick trading times wisely.
Setting a trading schedule you’re comfortable with is important, but you still need to base it on market realities. Statistics show most traders are more successful in the mornings and later afternoons. Avoid trading in the last hour of the day, though. The markets tend to get a little out of control at the end of the day and the chances of a successful trade go down.
Set a number of trades.
Over-trading is an excellent way to increase your risk of loss. What’s more, it takes up your time and increases your stress level. Instead, set a maximum of between 10 to 15 trades per day and stick to your limit.
Manage your risk.
Done right, day trading can be downright boring. You should limit your risk well enough that you’re not constantly on the edge of your seat. That means setting your entry points and exit points before you make a trade and always having reasonable stop-loss and take-profit orders in place.
Trust your indicators.
You watch the indicators for a reason. They’re there to direct you based on thorough, emotion-free data analysis. No trading system is right all the time, but following yours faithfully is likely to give you better results than just going with your gut.
Get out of any trade you don′t feel good about.
One of the top ways day traders lose money is by hanging on to a losing stock hoping their luck will turn around if they just wait a few more minutes. To avoid this, before you enter a trade, simply put dollar value limit on the loss you’re willing to take.
Check your mood.
A few hours into your trading day, check how you’re feeling. If you’ve made a few mistakes and you’re starting to get frustrated or anxious, call it a day. If every thing’s going well, feel free to keep on trading.
Beware of greed.
You may not think of yourself as a greedy person, but the prospect of earning hundreds or even thousands in a short period can make anyone a little money-hungry. Don′t let your desire for a quick profit overwhelm your common sense.
Commit to learning.
Unless playing with money is your hobby, you’re involved with day trading for profits. Reaching the level of professionalism that it takes to make solid profits consistently takes several years of continuous learning.
Don′t go it alone.
Along with educating yourself on the fundamentals of day trading, keep up with what successful traders are doing right now. Investigate their trading philosophies and strategies and see how you can apply them to your own trades.
Following these top 10 trading rules for day trading isn′t going to help you get rich quick, but it could go a long way towards keeping your investment capital safe and developing your ability to make profitable trades day after day.
Popularity: 61% [?]
Posted in Stock-Trading-Online | No Comments »
How to Get Involved in Momentum Trading
November 18th, 2008 by admin
The momentum trader jumps on and rides the momentum of the stock train until a profit is reached. The trader sells his stock and looks for the next momentum trading opportunity. It can be quite the roller coaster ride.
Where does a momentum trader find his information? There are a variety of sources that traders use, and most of them are online. The momentum trader is always searching for the latest company information and follows all of the online chat rooms devoted to trading and momentum trading in particular. Day traders and Mytrader are excellent sources for online trading data gathering.
The successful momentum trader is looking to find out which companies are releasing their earning statements and whether the release will be positive or negative. The trader needs to find out what the forecasters are thinking will happen based upon the earnings release because whether it is really good news or really bad news for the company, it is all good news for the momentum trader. The momentum trader is looking for stocks that are going to skyrocket or plummet, and both are just as good.
The morning equity options pages must be examined to see whether there are a lot of written calls out for a particular company. This indicator is a significant factor in whether a stock price increase or decrease is anticipated to occur. The momentum trader is also monitoring online news channels to see if any one company is generating a significant amount of buzz. Those are companies that he will want to watch closely.
The trader will make of list of companies to watch for the day to see
whether the stock prices of his companies are increasing as the market prices are going down. He will compare how the stocks are doing in comparison of how they were expected to do for the day. The stocks that are moving quicker than any of the other stocks are the ones that the trader will focus on because they represent the biggest potential for profits.
The next step is to look at the stock charts to examine the momentum of the stock as to how it performed between open and closing prices. The momentum trader is looking for a breakout stock. Once that stock has been identified, the momentum trader will buy. This is where you need to have nerves of steel. Once the stocks have been purchased the momentum trader is betting that the stock continues on its fast ride, but that doesn’t always happen. Sometimes momentums fizzle and sometimes continue their ascent or descent. When the stock orders start backing up or when the bidding slows down, the trader sells his stock and turns a nice profit.
Popularity: 45% [?]
Posted in Stock-Investment, Stock-Trading-Online | No Comments »
Is Momentum Trading For You?
November 18th, 2008 by admin
Of course, that may be just the reason why you shouldn’t get involved. Momentum traders find stocks that are on an upward or a downward swing when they invest in the company. They make money by buying low and selling high or by buying high and selling higher. But as with any kind of investing, there are no guarantees.
Momentum traders must do a lot of work to gather their information.
They must read business papers and the online news sites to see which companies are creating the most buzz. The companies that are releasing new products or that must hold a news conference to explain a product failure are going to be of particular interest because they have the greatest possibility of a momentum run.
As a momentum trader you will need to closely follow corporate earning releases and pay attention to what the business forecasters are predicting. In short, it can be a pretty time consuming endeavour. The good news is that as a momentum trader, you aren’t just looking for companies whose stock is doing well. A company whose stock is about to nosedive is perfectly suitable for your purposes.
Once you have narrowed down your selection of stocks your research is not over. You now have to take the time to analyze the stock’s EPS earning per share) also known as accelerated earnings. Seeing how well a stock did over the past three quarters is an excellent barometer of what the stock’s potential is. You will have to check out the morning equity options pages to determine if there have been an excessive number of written calls out on the company you are researching because the higher number of calls can indicate whether a stock price increase or decrease is anticipated to occur.
You are looking to find a breakout stock so the initial morning trading must be watched very closely to see if there is one stock that stands out. Watch the current bid/ask price and the total daily volumes. If you can identify a stock then it is time to buy. Now this is the most difficult part of momentum trading. You are now going to ride the momentum train and although it can be very exhilarating, it is not for the feint of heart.
Once you have clicked the buy option, you simply have to watch and wait to see how the stock does. Will the momentum continue or will the stock just fizzle out? That is something that happens to the best of momentum traders. Sometimes you pick a dud and the best thing to do is cut your losses and get out.
Do you have nerves of steel? Do you have plenty of time to spend reading the business news, Wall Street Journal and a plethora of other sources from the Internet? There is the potential to make a great deal of money with momentum trading, but you must know and understand yourself before deciding to jump into the fray.
Popularity: 11% [?]
Posted in Stock-Trading-Online | No Comments »
Stock Market Data Calculations - Trading Stocks on the Rise, a Quick Study
March 3rd, 2008 by admin
Anyone who watches the stock market has seen (almost on a daily basis) stocks that rise a significant and enticing amount. You can′t help but wonder “How can I get in on this? - I would be set for the month” (or week depending on what you expect from trading). Before I continue I must explain that this concept is day trading in its purest and riskiest form. However, it is terribly tempting to contemplate, so lets explore the numbers to see if we can find some answers to this question.
To start we need a more specific question - lets entertain the example question: If a stock goes up say 3% one day and then 5% the next, what does it do the third day? (This question was not chosen at random, various attempts at this calculation have shown that these values over a 2-day range provide the most, and therefore steadiest, data. I also think it is the most intuitively reasonable question for exploring this type of data).
The answer is: 87% (972 out of 1117) of occurrences had an average gain of 7.5% and a median of 9.5%
(6 months of data up to Feb. 22, 2008, 4493 stocks reviewed, next day value on high not close).
A great answer! But don’t start thinking you have found the holy grail of stock trading - it is fairly misleading - I′ll tell you why:
First: This study is flawed in the way it is performed as it only includes stocks that increased GREATER THAN 3 and 5% (not equal to or about), so it doesn’t differentiate between stocks gaining, for example, 4 and 6% and those with 11 and 9%. Also, it does not include a statement that the stock does not gain on the day before (the 3%) to eliminate stocks that have been rising for over 3 days in a row and removing redundant data.
Second and more importantly: This data cannot be taken at face value because it does not take into account 2 major factors which are necessary if we actually want to achieve these gains.
- If the stock in question move with enough volume, at a high enough value, so a trader can get in and out at these prices.
- If the trading occurred after hours or was the high so brief that a trade could not actually be performed.
To eliminate some of these factors I can refine my study by including some limiting factors:
- Close to open values are the same on the day in question (eliminates after hours trading)
- The stock did not gain > 3% on the day before (eliminates stocks increasing for more than 3 days)
- Average trading Volume > 50,000
- Average value > $1.00
The (better) answer becomes: 65% (134 out of 206) of occurrences had an average gain of 5.9% and a median of 4.4%.This provides slightly less exciting results, and it does not eliminate all the factors that may make this type of trade hard to accomplish (also the sample set has greatly decreased), but the results are still encouraging.
(My) Conclusion:
Don’t attempt this type of trade unless you are willing to risk everything for a potential 5% gain!
However, these numbers show that profit by this method is obtainable and the overall odds are in the traders favor. This short study is in no way a scientific or reliable study of this type of behavior. Results would likely vary if it was repeated a month or so from now. However, it does show a small sample of what the market is doing currently, and that this type of trading may just have some merit.
If you decide to take action on this data, I would advise you do your homework and practice, it is not for the faint of heart. One further word of caution (although I could give many): the prudent investor must know when to get out; these types of gains usually don′t last for long.
Alan L. Goosedange
Popularity: 6% [?]
Posted in Stock-Trading-Online | No Comments »
Stock Market 2008 - Industrial Sector Stock Picks
March 3rd, 2008 by admin
The industrials sector of the stock market is where I am most involved nowadays. While the big names like General Electric (NYSE: GE) and Caterpillar (NYSE: CAT) may not jump out at you as big gainers, plenty of these rock-solid companies have been hit unfairly, and I see value. As an added bonus, industrials companies often act as a hedge to thriving markets like agriculture. We’ve got some killer stock picks for this week, lets see what we can dig up.
Industrial Machinery - Harsco (NYSE: HSC)I may be a sucker for fallen stocks, but Harsco’s drop off their highs was especially unwarranted. You want proof? How about beating fourth-quarter earnings estimates of $0.70 with $0.74 and increasing 2008 guidance. How about topping revenue expectations by $75 million. Harsco manufactures in mill services and gas technologies.. they are the top dogs in a boring market, and I’m loving it. A whopping 70% of their sales are international, and even in a slowing world economy, an unusually high rate of recurring service revenues gives me confidence in Harsco’s ability to maintain earnings momentum. Don′t be concerned with rising costs and problems in home construction, Harsco’s end markets such as global steel production and non-residential construction are expected to remain firm in 2008.
Despite slight challenges in Mill Services in the most recent quarter, Harsco outperformed with strong gains in Rail & Mineral Technologies. I see nothing but upside in growth for 2008, and with a key acquisition possibility, Harsco could completely out-do themselves. Access Services has a nice hedge against a possible falling non-residential construction since about 25% of their industrial maintenance business is recurring. Very protected from a slow-down, and undervalued at $55 versus a target of $75… I put a purchase price at under $54 for Harsco. Conglomerates - 3M (NYSE: MMM)3M is big-time diversified, offering everything from scotch tape to respirator devices. After raising 2008 guidance, multiple firms have issued BUY upgrades from HOLD in January. Investment research firm Stern Agee believes that 10% EPS growth in 2008 appears done deal under virtually any scenario.” This kind up build-in security net from a further economic downturn is just what we want. 3M right now is the kind of excellent company that investors are a bit antsy about buying back into after a fall-off from previous highs of $95 to $75. I affirm that there is no problem here; get in now before the big movers start to buy the shares back up.
We love international growth in a bloated US market, and 3M has 65% growth overseas… 30% of that in high-growth emerging markets. They are the “no magic required” investment we want in 08′. None of their business segments should have ANY problem creating the level of growth built into current valuations, and Reuters has downside estimated at 5% compared to a 15%-17% upside. There certainly aren′t any bells and whistles about 3M, but their global footprint in emerging markets positions them well to benefit from steady business ventures with relatively low risk. With a target price at $95, and an appropriate purchase price at $77-$79, I feel that this conglomerate juggernaut is a winner.
Industrial Engineering - Jacobs Engineering Group (NYSE: JEC)In their most recent earnings release (January 21, 2008), management at Jacobs Engineering Group hinted toward strength in key end markets, such as energy, which leads me to believe they will be at least matching their 15% year-over-year growth initiative. Also in this call, they beat earnings estimates by a few cents and increased 2008 guidance, citing a favorable pricing environment among other factors. This positive outlook “includes variance in the U.S. Economy.” But what I like most about Jacobs is their visibility. Operating margins fared better than expected in a challenging environment, and backlogs increased to nearly $15 billion, yes billion. Granted, this stellar growth may be more of a challenge for the year, but I feel that they can at least produce strong gains in the second quarter. If guidance remains positive at this point, the sky is the limit.
JEC is undervalued in my opinion, and their continued performance hasn’t missed a beat. When the market turns, Jacobs should be ready to ride the bull. On top of a strong free cash flow position, they have virtually no debt. They operate in four sectors: oil & gas, chemicals, national government and infrastructure, each with plenty of potential. Energy seems to be their most anticipated gainer in 2008, suggesting that clients offer a “commitment to spending” amid low volatility incurred by oil prices. Add this in with a steady pipeline of products, and we see oil & gas well leveraged in the market. I target Jacobs at a one-year $96 tag, and feel an appropriate purchase price should be from $70-$73.
Ag. Machinery and Construction - Manitowoc (NYSE: MTW)I have been a fan of Manitowoc cranes for the past few quarters, now we finally have the market underpricing this company like we want. Manitowoc competes with Terex (NYSE: TEX), an excellent company by all marks with high growth potential. However, I feel that most analysts miss on the fact that Terex’s cranes are low quality… workers want Manitowoc! They have already capitalized on international demand, and smashed earnings estimates of 68 cents with 74 cents. Earnings reports also yielded that continuing operations performance rose 119% year-over-year and sales of cranes jumped 56%. Manitowoc’s management confirmed that despite worries about the housing construction market, MTW’s operations were indeed minimally exposed to the pain.
There is no reason for this trend to slow in 2008, and trading under $40 is just not fair. We all know that the agriculture market has been surging as of late. Manitowoc has a hand in producing related equipment, and is also a major player in the emerging Asian markets… where non-residential construction is constant. Management believes they can maintain strong growth by focusing on new product introductions, market share increases (achieved by cross-selling through its expanded distribution network), and improved penetration in Asia. Prior to the sell-off in late-2007/early-2008, the crane industry was seen as “in the middle of a multi-year up-cycle″ in demand and production. I expect this trend to continue now that shares of Manitowoc have unprecedentedly been crushed off their highs. I can see them hitting $54 a share, with an appropriate purchase price just under $39 for optimal value.
There are plenty of places to look for growth in 2008 out of the industrials sector. While I did not find any defense & aerospace companies particularly appetizing, I am bullish on the industry and would suggest looks at United Technologies (NYSE: UTX), Northrop Grumman (NYSE: NOC) and Lockheed Martin (NYSE: LMT). Agriculture giants like Deere & Co. (NYSE: DE) may make viable investments as well, but you must be wary of the premium you often need to shell out for shares of stock. Please feel free to email me any stock questions you may have. -The Net Fool
http://www.thenetfool.com - Turn Time Into Cash - I’m Bullish on the Net!
Popularity: 6% [?]
Posted in Stock-Trading-Online | No Comments »
Learn Stock Trading and Know When to Pick Stellar Stock Online
March 3rd, 2008 by admin
Learning how stock trading works is an important part of online investment. Even if you don’t plan to pursue stock trading as s full-time career, knowing when to pick stellar stock options is primarily based on knowing the ins and outs of online stock trading.
For beginners like you, it is essential to have a working background on online stock trading, or, instead of learning how to pick stellar stock, you might be the one being taken for a ride. The best way to learn all about online stock trading rests in your choosing a reliable and reputable online trading firm.
When picking an online stock trading firm, you may start by surfing one that offers free account registration, with a beginner level. Many stock firms would say that you don’t need to learn the ropes to pick stellar stock on the floor; all you need to do is sign up and type in your credit card information and they’ll do the rest — beware of such statements.
It is essential for you to learn how online stock trading works, so that you’ll know where your money is going and if it’s working for you, and not for the online trading firm. Be clear about what you want, and go for it. Don’t rely on sites and traders who state all you have to do is sign up and they’ll do all the rest. Fraud works by making you feel like you don’t have to worry about anything else, at all. An online site with beginner levels is one way of knowing that that site cares about its investors, and not just the profit.
Another key feature of a reliable online stock trading firm is its ability to give you access to real-time and delayed stock quote news, updates, tips, picks and stock analysis that will help you pick stellar stock options. Many online stock trading sites offer beginners with information that would help them learn how to manage their investments, and how to pick stellar stock using stock reports, day trading stock tip updates and information. This is essential, because the key to making great buy offers is information.
Many online brokerage sites offer real-time day trading stock tip and stock quotes to keep you informed of the shifts and movements on the floor. Some may even offer after hours stock tip and updates for your mutual fund options and stock investments. Just to be on the safe side, try searching for sites that offer the best ways for you to get firsthand information from the market. These sites offer day trading stock tip developments, stock quote data, and other stock trading information. Getting real-time stock information is essential especially for day trading and direct stock investments.
On the other hand, delayed stock quotes are often used for after hours trading on mutual fund stock options, as well as stock analysis and market projections. You can also use these information in developing your own stock trading strategy, while earning the experience to make the best day trading stock tip.
As a beginner, you may be handling relatively solid stock options just so you can get a feel of buying and selling stocks. Soak in as much information and experience you can. After some time, you’ll be able to move on to bigger and more volatile stocks, and your learning experience will make the difference between being able to pick stellar stock and mediocre ones.
Learn how you can pick stellar stock online. Find a stock market investing guide to help you get started with stock investing.
Popularity: 7% [?]
Posted in Stock-Trading-Online | No Comments »
Stock Trading - Making Money Trading the Flag Pattern
February 13th, 2008 by admin
You know that to succeed in the world of stock trading, you need to know when the price will go up or down, right? You know that you can’t just jump in here or there and expect to be profitable. This you know. But most likely you are searching for that perfect trade setup. You want that fool proof method of selecting trades.
Well, I’m here to tell you… that you have not found it yet.
And you never will.
There is a much better way to approach trading. Build a toolbox. No, not a physical toolbox, but a collection of winning trading methods. No one method is always applicable. You can’t always just find on trade set up. You need more than one. The flag pattern is a good pattern. Used properly it will make you money.
It’s easy to recognize. You’ll see it like this. The market has just made a run up. Then there is a small period where the market comes back down a little. The daily bars are smaller. And they are collectively form a squarish shape. This looks like a flag on the “pole” of the recent run up in price.
You trade it by simply placing a limit order above the flag. When the price breaks the flag, then you are ready to make money. The trend has resumed. Ride it on up. Place your stop at the base of the “flag″. Put it just underneath the flag formation.
That’s one of the great things of this. You can put a really tight stop in place, with a large profit potential.
Do you want to learn more about how I do it? I have just recorded a 25 minute CD called “How To Pick Winning Stocks - The Secret Formula”
Request your free copy here: Click here for your free CD.
Popularity: 12% [?]
Posted in Stock-Trading-Online | No Comments »
Stock Trading - How to Tell When the Market Has Put in A Bottom
February 13th, 2008 by admin
How do you know when a market has stopped falling and is ready to turn around and go back up? How do you tell when the market has bottomed? There are several techniques, and I will share them with you now.
1) You need to look at price and volume. The simplest way to tell that the market has bottomed is simply by looking at bars that get huge amounts of volume.
If the market has traded down very far but close up higher than the close and there is heavy volume that is a very strong clue that the market may have put in a bottom.
2) Has the market gotten choppy, like its hit an invisible glass floor? If so look back in the chart’s history. Has there been any other support or resistance in that area?
If so, then most likely is resting on that again. Wait for the price to break up, and there is your confirmation that the bottom has been put in. In fact what I just mentioned is the most important thing. If the market has put in a bottom, the best way to tell is to let the price tell you that by going up and staying up.
There is nothing worse than trying to catch a falling knife. You will cut yourself. The same is true of the market. You don’t need to pinpoint the exact bottom. You just need to find the place where it has turned around. You know for sure that it has turned, when it has turned. (Kinda obvious, huh?)
Do you want to learn more about how I do it? I have just recorded a 25 minute CD called “How To Pick Winning Stocks - The Secret Formula”
Request your free copy here: Click here for your free CD.
Popularity: 14% [?]
Posted in Stock-Market-Tips, Stock-Trading-Online | No Comments »
Stock Trading - Make Wall Street Pay You Money
February 13th, 2008 by admin
Let me introduce you to the idea of Wall Street paying you money. To get the stock market to pay you money you need to get to know the world of options trading. In the world of options trading, if you trade more than one option at the same time (buying one and selling the other) that is called a spread. If the spread costs you money, it’s a debit spread.
However, if it puts money in your account, it’s a credit spread. A credit spread is usually theta positive. That means that it makes money from the passage of time.
The passing of time is a sure thing. (Note: that does not make your trade a sure thing, but it does stack the odds in your favor).
ere’s the basics of a credit spread. You sell an option that is more expensive, and you buy a cheaper one.
Here is an example.
If ABC stock is trading at 100, and you sell a call option with a strike of 105, and buy a call with a strike of 110, then you are in an out-of-the-money credit spread. (This is called a bear call spread).
A bear call spread or a bull put spread (the opposite thing) are the simplest credit spreads. There are more complicated ones too. You can do an iron condor, or an inverted butterfly. Speaking of that, you hear a lot about the butterfly spread, but not much about the inverted butterfly. If you want to do something interesting, study about the butterfly spread. Then realize what would happen if you flipped that around.
I think you’ll like what you discover.
Do you want to learn more about how I do it? I have just recorded a 25 minute CD called “How To Pick Winning Stocks - The Secret Formula”
Request your free copy here: Click here for your free CD.
Popularity: 7% [?]
Posted in Stock-Trading-Online | No Comments »