Option Trading and Record Keeping

I often think about other people who trade options as much as I do all day. I wonder if they use the best discount brokers that area available and most importantly, how do they keep records of all their trade?

The point of record keeping in the complex profession of option trading in my opinion is just about the most important thing there is. How can you know if you're successful in trading options if you don't know your profits and losses per stock, per trade type, per day, per month for a whole year? For me the answer has always been a combination of 3 methods. The first method of course would be to use a spreadsheet to keep a current total of all stocks I own. I keep another spreadsheet to record all my expenses for every month, and this is vital to know the grand total of all income sources and expenses including trading fees.

The most important tool I use for all my stock and option trading is Microsoft Access. Using the Access database is the perfect tool for recording each stock or option trade. For options I have a column that represents the number of contracts for each option trade and for options one contract represents 100 shares of stock. If I buy and option contract then the contract number would be negative and if I sell then the contract number would be positive. The other columns in the table would be for the price of the option and the trade fee, so to calculate the total for any option trade would be (100*Price*Contract) - Trade fee. Using SQL (Structured Query Language) has allowed me over the years to display very important statistics and reports to let me know how I am doing for any stock or option trade type or strategy and summarizing performance by stock, option, month, day or year has been very easy to accomplish.

The most important point is how can you really know how you are doing if you don't keep records? You might get a stock put to you and then sell it at loss, but then know that overall because of the option premium you received for selling the PUT that actually you made a profit on that trade overall. Without keeping records, you would never know how you really did for any specific complex option trade.

With any profession record keeping is vital to know how you are really doing, but with the difficult profession of option trading, keeping records is just about the most important thing you can do.

Option Trader, Biographer, Screenwriter, Retired IT professional.

By: Djelloul On 5:58 AM

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The New Investor Vs Stock Market 2015-2016

I write this as a "heads up" to the new investor, especially those who intend to start investing money in the stock market in 2015 or 2016. We're all a new investor sometime and all subject to the same misconceptions, illusions and mistakes when we start investing money in the stock market. Here's a simple guide to investing money as the market unfolds in 2015 and 2016.

If you start investing money in the stock market before you have a handle on such things as P-E ratios, dividend yields and past market cycles consider yourself a new investor. Ditto, if you don't feel that you really understand the big picture - even if you have been an investor for several years (like millions of other folks). I write this as a former financial planner who worked with many uninformed (new) investors... because most people who start investing money in the stock market do it uninformed.

Many new investors get excited when the market makes new highs. If you were excited by the new highs in the market in 2014, take a deep breath and push your emotions (like greed) aside before investing money in the stock market in 2015 and beyond. Don't be afraid of "missing out" because stocks are NOT cheap (P-E ratios are not low) while dividend yields ARE low. There are few bargains around. After more than five consecutive good years the "herd instinct" has taken over on Wall Street. If you became a new investor since the financial crisis ended in early 2009, you have probably been misled by what you've seen.

You may now be a member of the herd and overly optimistic about the future. That's what often happens to new investors who start investing money in the stock market at or near a market low. Those who "luck out" with timing their first time out are vulnerable to future market shock. "It's better to be lucky than good" is likely to work for the new investor only once. Don't push your luck in 2015 and beyond.

Market cycles have always been a major part of the game, and few new investors really have a perspective on market trends. The newbie who gets lucky often credits his or her success to stock picking. The simple truth is that it's easy pickings if you start investing money in the stock market when a new uptrend sweeps prices higher. On the other hand, if you start investing money when a major downward trend takes hold, your odds of taking big losses are about 99%.

To succeed over the long term you need to take emotion out of the picture and keep an eye on the horizon in search of EXTREMES. For 2015 and beyond, there are a couple of extremes that could signal a change in trend from up to down. How long can interest rates be stuck at record lows while the stock market rallies to new highs? Lower interest rates have traditionally been the key to stimulating the economy and sending corporate sales, profits and stock prices higher. Presently at near record lows, rates can't go much lower. This might not be a good time to start investing money in the stock market.

Forget about optimism and pessimism. Rising interest rates hurt corporate sales and profits; and lower profits can make P-E ratios skyrocket overnight. In other words, stock PRICES vs. EARNINGS (P-E ratios) can rise quickly when profits fall, making stocks expensive. If you are a new investor beware: now is probably not a good time to start investing money in the stock market. It is a good time to learn.

Today's extremes: extremely low interest rates, and almost six straight years of rising prices without a major change in trend. A significant uptrend in interest rates will make new investors out of all but the old heads (like myself). That's what makes 2015 and 2016 scary. That's why you might want to think twice before you start investing money in the stock market in 2015 and beyond. Learn now. Later, when prices are low and the uninformed herd is selling, is when you want to start investing money in the stock market.

By: Djelloul On 5:55 AM

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Have You the Nerves for Stock Trading?

Stock Trading, can be a great home based business. Many try but most give up quickly as it is not usually an overnight successful business. To succeed you need to devote some time and effort to master the right skills. It is advisable to gain knowledge from experienced traders as this type of home based business is rarely one you can learn yourself.

The top traders are successful because they have learnt to hone in on their skills with dedication and apply good old-fashioned practice. They have learnt what works and what does not.

So how do you start to master this online home business?

• This type of industry requires steady nerves. If you are the type of person who can stay calm when others around you are fearful, then you will do well. Successful traders know that like playing poker it is imperative not to panic when things start going wrong, but to remain in control.

• It is preferable you learn from a reputable broker and has proven to be consistently successful. Check that they offer a trading platform that you can understand, is a lot to master. This is not a business you can hurry results. Many beginner traders get impatient because they want instant results, so will change to another trader platform. This not to be recommended because you will receive conflicting information, get frustrated and worst of all lose money.

• Once you put money into your online trading account, the most important thing to remember is that this money is at risk. So use money that is definitely not required for your daily living expenses, such as bills, groceries etc. Consider your trading money as if it were holiday money. Have the same attitude toward trading. That way you will be able to accept small losses. The ideal is to focus on your trades and accept any small losses you make, then you will be much more successful in the long run.

• Choose a trader program which gives a full money back guarantee and contact email for support so you can get answers quickly.

It really is a case of success breeds success and your confidence will grow. Stock trading can be great way to make money online, as a home based business. You will become a profitable trader only though if you take your time and accept that there will be a steep learning curve.

Wendy Heyworth lives in Tauranga New Zealand
Wendy has had a successful varied business background from sole operator business to directorship in multi-national businesses. She now has her business working from her home.
She inspires and empowers others to seek out opportunities to work from home.

By: Djelloul On 5:46 AM

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The New Investor Vs Stock Market 2015 2016

I write this as a "heads up" to the new investor, especially those who intend to start investing money in the stock market in 2015 or 2016. We're all a new investor sometime and all subject to the same misconceptions, illusions and mistakes when we start investing money in the stock market. Here's a simple guide to investing money as the market unfolds in 2015 and 2016.

If you start investing money in the stock market before you have a handle on such things as P-E ratios, dividend yields and past market cycles consider yourself a new investor. Ditto, if you don't feel that you really understand the big picture - even if you have been an investor for several years (like millions of other folks). I write this as a former financial planner who worked with many uninformed (new) investors... because most people who start investing money in the stock market do it uninformed.

Many new investors get excited when the market makes new highs. If you were excited by the new highs in the market in 2014, take a deep breath and push your emotions (like greed) aside before investing money in the stock market in 2015 and beyond. Don't be afraid of "missing out" because stocks are NOT cheap (P-E ratios are not low) while dividend yields ARE low. There are few bargains around. After more than five consecutive good years the "herd instinct" has taken over on Wall Street. If you became a new investor since the financial crisis ended in early 2009, you have probably been misled by what you've seen.

You may now be a member of the herd and overly optimistic about the future. That's what often happens to new investors who start investing money in the stock market at or near a market low. Those who "luck out" with timing their first time out are vulnerable to future market shock. "It's better to be lucky than good" is likely to work for the new investor only once. Don't push your luck in 2015 and beyond.

Market cycles have always been a major part of the game, and few new investors really have a perspective on market trends. The newbie who gets lucky often credits his or her success to stock picking. The simple truth is that it's easy pickings if you start investing money in the stock market when a new uptrend sweeps prices higher. On the other hand, if you start investing money when a major downward trend takes hold, your odds of taking big losses are about 99%.

To succeed over the long term you need to take emotion out of the picture and keep an eye on the horizon in search of EXTREMES. For 2015 and beyond, there are a couple of extremes that could signal a change in trend from up to down. How long can interest rates be stuck at record lows while the stock market rallies to new highs? Lower interest rates have traditionally been the key to stimulating the economy and sending corporate sales, profits and stock prices higher. Presently at near record lows, rates can't go much lower. This might not be a good time to start investing money in the stock market.

Forget about optimism and pessimism. Rising interest rates hurt corporate sales and profits; and lower profits can make P-E ratios skyrocket overnight. In other words, stock PRICES vs. EARNINGS (P-E ratios) can rise quickly when profits fall, making stocks expensive. If you are a new investor beware: now is probably not a good time to start investing money in the stock market. It is a good time to learn.

Today's extremes: extremely low interest rates, and almost six straight years of rising prices without a major change in trend. A significant uptrend in interest rates will make new investors out of all but the old heads (like myself). That's what makes 2015 and 2016 scary. That's why you might want to think twice before you start investing money in the stock market in 2015 and beyond. Learn now. Later, when prices are low and the uninformed herd is selling, is when you want to start investing money in the stock market.

By: Djelloul On 3:29 AM

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Simple Tips for Making a Killing in the Stock Market

Trading on the stock market is a great way to achieve financial independence but the road is littered with obstacles and hurdles that will most certainly see you lose your investments. Yes you can make money on the stock market but without the right advice as I say will make you a stock market loser no doubt. We don't want you to be a loser, so here are some simple tips to becoming a winner.

First of all, it's best to employ a broker to handle all your trades. A broker can execute all your trades for you, and nowadays you can find a broker online. Some people still prefer to have a broker via telephone and that's fine. The problem with online trading is that it can be too easy to make a bad trading decision. Worth mentioning it is best that you never take stock tips from a broker. You are the trader and your decisions are your own and not the brokers.

Although you can employ a broker to do all your analytical work for you, that is perform some technical analysis, I find it is best to use charting software. Such programs have databases that can analyse historical data at the click of a mouse and it will save you countless hours of having to trawl through newspapers every day to find the information you need. I won't recommend and particular software here although the one I use is called Sharescope. With it I can filter new market highs and lows as well as draw trend lines.

It's all good having the right software on your computer and sound fundamental and technical analysis but without an exit strategy you are sure to close trades just before they become profitable. Far too often the trader will base the closing of his trades on pure emotion. It's emotion that causes the market changes but when it comes to making an exit, you must have a strategy set in stone before you make the trade. This way you can cancel out any bad decisions based on your emotions. And even stories on the news can see you make bad decisions and therefore losing trades.

Trading isn't easy, and the road to success with it can be long and sometimes you can feel like you are going to lose your entire investment because of one or two losing trades. Stay strong, stay focussed on the long term and you will eventually find your way in the world of stock market investing.

By: Djelloul On 3:22 AM

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Have You the Nerves for Stock Trading ?

tock Trading, can be a great home based business. Many try but most give up quickly as it is not usually an overnight successful business. To succeed you need to devote some time and effort to master the right skills. It is advisable to gain knowledge from experienced traders as this type of home based business is rarely one you can learn yourself.

The top traders are successful because they have learnt to hone in on their skills with dedication and apply good old-fashioned practice. They have learnt what works and what does not.

So how do you start to master this online home business?

• This type of industry requires steady nerves. If you are the type of person who can stay calm when others around you are fearful, then you will do well. Successful traders know that like playing poker it is imperative not to panic when things start going wrong, but to remain in control.

• It is preferable you learn from a reputable broker and has proven to be consistently successful. Check that they offer a trading platform that you can understand, is a lot to master. This is not a business you can hurry results. Many beginner traders get impatient because they want instant results, so will change to another trader platform. This not to be recommended because you will receive conflicting information, get frustrated and worst of all lose money.

• Once you put money into your online trading account, the most important thing to remember is that this money is at risk. So use money that is definitely not required for your daily living expenses, such as bills, groceries etc. Consider your trading money as if it were holiday money. Have the same attitude toward trading. That way you will be able to accept small losses. The ideal is to focus on your trades and accept any small losses you make, then you will be much more successful in the long run.

• Choose a trader program which gives a full money back guarantee and contact email for support so you can get answers quickly.

It really is a case of success breeds success and your confidence will grow. Stock trading can be great way to make money online, as a home based business. You will become a profitable trader only though if you take your time and accept that there will be a steep learning curve.

Wendy Heyworth lives in Tauranga New Zealand
Wendy has had a successful varied business background from sole operator business to directorship in multi-national businesses. She now has her business working from her home.
She inspires and empowers others to seek out opportunities to work from home.

By: Djelloul On 3:18 AM

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A Managed Forex Account

These are forex accounts that are not traded by you, but by a money manager on your behalf.  This is a similar situation to employing an investment advisor to trade equities and bonds on your behalf.  It is suitable for use if you do not have sufficient knowledge or time to trade yourself.  Many traders do not want to learn the often complex and intricate mechanisms of this large financial market.  Individuals who prefer having a professional manage their funds would prefer this type of account.

The Advantages of a Managed Forex Account

One of the most important advantages of a managed forex account is that your money is held by your broker and not by your manager.  This gives the money manager the responsibility to do the trades for you, but he or she will not have the authority to withdraw money from your account.

The other advantages linked to this type of account are:

• Large brokerages offer you extensive experience in this market which you have access to.  Your money manager will inspect your portfolio on a regular basis and diversify your investments if necessary.

• You do not need to have experience in the forex market as your manager will be doing your trades.  This provides you with a knowledge base based on practical experience which is to your advantage.

• You will normally receive a daily report on all the positions you currently hold.

• The possibility of showing profits irrespective of the state of the market is increased by using this type of account.

• Through your money manager, you will have access to the market 24 hours of every day.  If you choose to trade personally, there is always the possibility that you may miss out on a profitable trade because you were not online at the time.

Disadvantages of a Managed Forex Account

Since you are not personally managing your account, you may face several risks.  The risk of being scammed is high as you may have chosen to use an untrustworthy broker.  You may be assigned a money manager who is incompetent and this could cause you to lose funds.

Scammers should be quite easy to recognize as they will constantly request deposits from you.  Their main aim is to get as much money out of you as possible.  To avoid this risk, obtain details from your broker as to the manner in which your account will be managed.

Check if you have been assigned a normal account as the account will then be a personal one and in your name.  This means that all the funding you put in will go to the broker.  If you are assigned to a pooled account, your funds are normally sent directly to the money manager who is responsible for pooling funds received from various clients into an account that he or she controls.

One of the scariest aspects of a managed forex account is that you could lose all your money through incompetence.  To avoid this, you should ensure that you read and understand your contract before you sign on the bottom line.  You must be aware of who will be handling your account and the methods they intend using.

By: Djelloul On 4:29 AM

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A Beginners Guide To Trade Currencies Like A Professional

With many people over the last few years having money just sitting in the bank earning next to nothing due to the very lower interest rates that the banks now offer, some have taken up trading on the currency markets. Once only the home of the big investors and governments, people can now get involved themselves for as little as $50 with some brokers. Now that amount is not something that is going to make you rich, but you need to start low and work your way up. Making money from trading the Forex markets can be as difficult as you make it.

When you do some research into trading on the Forex markets you have probably come across numerous pictures that show the currency pair moving up and down, and then it is probably covered in lines, and underneath is a number of graphs. Well unless you understand all of them and how they work, switch them off. Do not fill your trading screen up with all kinds just to try and make it look good. The best advice a professional trader will give a beginner is to setup the screen to show one currency pair that is trending, shown in candlestick mode, with nothing else on the trading screen.

This means that you are setup to just watch the way the currency pair behaves, and this will give you a feel for the way the markets move. If you are a beginner, then you should not be looking to be doing any scalping (very short term trades), so your timeline should be at least 1 hour, but preferably 4. This is to teach you to be patient, if you are watching shorter timelines and a market looks like it is going against you, then you are likely to bail out at a loss. Whereas people who have patience will have no interest when the market turns against them, as when they look at the screen after an hour it has recovered in their favor.

You may have to spend a long time staring at the market, but once you have entered a trade, walk away and do something else. You have either set a stop loss as a value, or you may time your trades, and bail out after a set time. It is recommend you use a set value though.

Some people prefer to set a trade and leave it for a day before they decide to take action on it, and if you really want to go for the long term then you would be looking at being in the marker for weeks. If you do that and get it right then it can really pay off big time. Whatever timeline you decide to start with though, stick with it, if you keep changing it then you will not get the feel for any of them. When you see a professional trader on TV, you will not see them flicking through various screens and constantly changing settings.

By: Djelloul On 4:25 AM

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Why Forex Is The Best Market For New Traders

It is my belief that Forex is hands down the best market for new traders. When everyone thinks about trading, they automatically think about the Stock exchange. What they don't understand is that it cost a lot of money to actively day trade the stock market. By law, the SEC, requires a large minimum balance for day traders. In this article, I will give you several examples why new traders will find it easier to trade the Forex market as day traders and as other short time frame based currency traders in this market.

There are some inherent advantage to Forex. The first benefit is that you can fund an account with a broker with as little as $5 and as much as a million. Forex makes it so that any trader, no matter their account size has an opportunity to trade. Another advantage of Forex is the fact that you have a lot of leverage you can use, you can use up to 1:400 leverage with some Forex brokers. Leverage is the same as buying with margin. Stock brokerage accounts do not provide this amount of leverage. All short term traders need high leverage to make the most out of their small incremental wins.

More opportunities to trade equals more money that can be made. The stock market opens at around 8 in the morning and closes before 5 pm, that is a short window to trade and makes it so that anyone with a day job can't trade. Forex doesn't have this problems. Forex is a 24 hours market that you can trade anytime of day. It is a global market with participants from all around the globe trading  at every hour of the day, it never closes. You can trade before work and after work.

Open crossover is another reason why Forex is so great. Although, the Forex market is open 24 hours, it does have several opens. An open is when a countries banks start trading. For example, London's open is at 3 am EST and the US open is at 9 am EST. There are also opens for the Asian countries too. What this means that their is a ton of liquidity being pumped into the market through out the day. When these trading periods cross over you have a ton of people moving the market. For day traders and scalpers this is a goldmine.

As you can see, Forex is the best market for a new trader to trade. They will find greater success in Forex than in any market. It is also easier to open an account and get high leverage in Forex. One of the great benefits of Forex is that it is a 24 hour market that you can trade day or night. A new trader can go to work in the day and come home and trade during his or her leisure time. It is a market that gives the trader the advantage.

By: Djelloul On 4:22 AM

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Why Use A Foreign Exchange Calendar?

Foreign exchange trading is more often than not based on assumptions determined by a volume of data.  It is possible to predict the future by the use of historical forex information, however, care should be taken when this is done.  The volatility of this financial market makes it difficult to predict the future.  You should consider using a foreign exchange calendar to provide you with an edge when you predict trends.

Events

One of the economic events that is currently affecting forex rates is the rate of unemployment.  News releases on this and other economic factors that affect financial markets are constantly being made available.  Some of the other events that you should be aware of for effective trading are non-farm payrolls, interest rates and consumer price indices.

Be Aware When Trading

Your trading method is an important factor, but it is also important that you keep up to date with current events and future events that will have an effect on your trading options.  If you are not aware of the latest economic trends, you may be unaware of adjustments that may be necessary to improve your strategy.  The use of technical analysis methods is highly dependent upon the current trends and global events.

Although you may be making consistent profits with your current strategy, if you ignore potential risky events, you could be putting your money at risk.  The use of a calendar will allow you the opportunity to access readily available information which you can prepare for.  This will help you avoid any sudden changes that could potentially turn the tide against you.

The calendar is used to keep up to date about major announcements released by different countries across the globe.  If you are aware that an announcement is pending, it is best not to trade.  The best method is to abstain from trading for at least two or three hours before you expect an economic data release for your trading currency pairs.  For example, if you are trading GBP/USD and you are aware of an impending event such as interest rate announcements, you should refrain from trading before it is released.  This will aid you in avoiding the major slides that often take place when the announcement is finally released.

Currencies generally experience a huge swing just before these major announcements.  Once the market settles down, the trend will be reversed.  You do not want to get caught up in these fake signals as it might cause panic.  It is advisable to check the signals once the market has had time to settle which should be about half an hour after the event.

When you use a foreign exchange calendar, you will be able to mark the events that you feel are relevant to your trading pattern.  You will have the opportunity to highlight the main announcements linked to your trading pairs.  Many of the websites where you are able to access the calendar have tutorials on how to effectively use the calendar.  They also indicate when you should make your trades and explain how the economic announcements may affect your trades.

By: Djelloul On 3:45 AM

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Best Online Forex Trading Practices for Beginners

Becoming a professional in any field requires dedication, experience and understanding of the field. After all, no one is expected to become a seasoned doctor within six months. In the same way, traders too cannot become experts at Forex trading within a few months. One also should not overlook the fact that the market competition is cut throat and there are seasoned traders that newbies are competing against. These traders have invested many years of their lives in this field to earn the amount that they do.

Therefore, newbies in the Forex market trading should learn and explore to the maximum their education and gains from the market. There are a few aspects which beginners in Forex trading should keep in mind. One of the foremost things to do is be vigilant as the market changes regularly. They should be well aware of the currency they are dealing in along with the market to be able to make money without any hassle. Traders can also make use of the different applications and software in order to monitor the markets and learn about:

a) Transaction tracking
b) Real time Forex quotes
c) Charts

Another important thing to do is opening a demo account. This account will help traders learn more about trading currency without putting at risk their own investments. The simulated view will allow new traders to make efficient use of their resources and teach them the much required traits like patience, etc. When dealing in the Forex markets, new traders have to make sure that they do not make decisions or get carried away due to sheer excitement. This is important in order to curb the risks of substantial losses.

They should also learn to evaluate trading and draw out the investment at the earliest in case they make a wrong decision which will have a positive impact in saving their investment in the long run. When it comes to learning they should make sure to go through the various online tutorials often uploaded by the broker agencies which will provide them with useful and up to date information about the trade and the market. In fact, by using online tools they can also communicate with the experts in the field. They can make the most of the tools by learning about topics like:

1. Risk management
2. Basic account functions
3. Trading using bots and much more.

The main aim of beginners in the Forex trading should be to maximize their knowledge about the industry and minimize their losses.

By: Djelloul On 2:25 AM

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How to Make Money With Forex

In order to make money in the Forex markets understanding its workings and operations is important. Traders make profit when the value of the currencies goes up and incur a loss if it comes down. Most traders exchange their investment portion into different currencies which they hope will increase in value. However, in order to do this, traders must have a complete understanding about how to analyze price movements. They should be well aware of the tried and tested trading policies, which are simple and flexible and can be implemented in a hassle free manner under various market conditions.

This may require traders to learn with the help of comprehensive courses. When opting for such courses traders must ensure that they offer appropriate features and cover aspects like on-going assistance or customer service. These will help traders in identifying and studying the defined and trusted strategies that will help them trade and make a profit. When learning the industry, it is always recommended that traders invest time in finding an actual Forex trader to learn from rather than depending on the computer generated software and tools.

New traders who are still in the learning phase must make sure that they do not diversify their trade much in the initial phase so as to reduce the risks of substantial losses. The Forex market has a very high volume which is equally liquid. If traders diversify or invest in more than one trade in the same session they will run a risk of losing concentration. This increases the chances of incurring a loss in the Forex markets.

The traders of the Forex markets can also make money through short selling. These individuals can short sell as soon as they detect an opportunity irrespective of the fact that they might not have the required volume in hand. However, in order to be able to learn and implement all this, traders must make sure to open a demo account and first make a profit using this account in the first few months. This way they will be exposed to real market scenarios but will not be putting at risk their own assets.

This will help them identify the various opportunities and threats that are prevalent in the Forex markets and teach them how to manipulate their trading strategies in order to gain profits. Making money in the Forex markets is not difficult for those traders who invest time and discipline themselves according to the tricks of this trade.

By: Djelloul On 2:20 AM

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Best Stock Investment Strategy for 2014

In putting together the best stock investment strategy for 2014 you can concentrate on finding the best stock investment or you can try to come up with the best strategy to deal with a market hitting all-time highs. Unless you have a real flare for stock picking, I suggest you focus on investment strategy.

There are two traditional ways to view the stock market: the fundamental approach and the technical school. The first approach tries to come up with the best stock investment or strategy by analyzing all kinds of economic and financial data like economic growth, unemployment and trends in corporate sales and profits. The technical school focuses only on the action in the stock market itself, like volume of shares traded and price trends.

I've followed this stuff for 40 years, sometimes in search of the best stock investment and sometimes (in my later years) paying more attention to investment strategy. Here's what I see in 2014 and beyond, combining both schools of thought.

The fundamental data is luke-warm at best. We've recovered from an economic crisis and a deep recession, they say. But economic growth is weak and unemployment is still in the 7% range. Corporate profits have grown, while sales growth has been lackluster. The stock market has been hitting all-time highs, as our government has gone deeper in debt while keeping interest rates artificially low to stimulate the economy. This looks nothing like the best stock investment environment compared to past recoveries. Things just don't look right from a fundamental viewpoint.

Technically, the stock market has been in an upward trend for about 5 years, showing gains of over 150%. This has happened before. But there's something to consider when trying to put together the best stock investment strategy for 2014 and beyond. If the fundamental data does not really improve to support these gains by 2015, stock investors who jump in now might be showing up at the party late. The upside action could be coming to an end.

Here's what else has happened before. Many investors missed this market and have just recently jumped on the band wagon in search of the best stock investment to make up for lost time. This is not new, nor has it normally worked out well for the average investor. If you missed out, I have a suggestion for you.

Don't play "catch up". Sometimes it's best to stay safe and liquid - waiting for a future opportunity. In other word, your best stock investment strategy for 2014 and beyond could be a passive strategy. As I once heard Warren Buffet say, "every 5 years or so the stock market runs into trouble". This could be one of those times.

By: Samory Borry On 11:12 AM

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Trading and Investing As a Process

All too often traders and investors get caught up in popular strategies such as "red light/green light," "buy on the dip," or "stop and reverse SAR." They start trading and investing as soon as they have learned the new strategy taught at a seminar, trade show, or webinar. If they are lucky they may make modest profit during the first few trades, then suddenly they have a series of losses. They struggle and work harder, trying to force the strategy they learned to work. They become frustrated or angry at the market, market makers, Wall Street and anyone else they bump into.

Their losses go from a string of losses to chronic loss syndrome. This syndrome is a series of losses with an occasional profitable trade which continues to encourage them to keep trying. They go to more free weekend seminars, watch more free webinars, and wander around more trade show searching for answers. They are sure that it is some magical trick, or something they are missing that is causing the losses.

However the problem is much deeper than that, and it starts with the notion that a strategy is all that is needed to trade and invest successfully. Strategies are taught first because they are all in public domain, meaning they are free for anyone to learn. Also they are an easy subject to present at a free seminar. They are short, to the point, and make it seem as if the retail vendor, broker, or speaker is has the answer to their trading and investing problems.

The real culprit is the lack of a trading and investing process. A trading and investing process is not difficult to learn and in fact, makes trading much easier and simpler than struggling to use several strategies and guessing all the time, or waiting for some news event to try and jump into a stock to scrape perhaps a dime of profit from all that work.

What is a trading and investing process?

It is a set of rules with parameters and a complete process that you follow every time you trade and invest. This begins with how you find stocks, analyze stocks, select the best stock to trade, risk analysis, point gain potential, and risk to reward ratio. It includes using the proper order, the proper stop loss, the proper trailing profit stop, to exiting the trade with the most profit possible. It is about having a trading style first with a complete process, and an understanding of the 6 market conditions. Then it is applying the appropriate strategy for the particular market condition that is currently underway, and the strategy most suitable for the stock selected.

A trading and investing process is not just watching the major indexes, but also determining market conditions. The indexes only include a small number of the thousands of listed stocks. What happens beyond the index component stocks is far more important because index stocks are bought for charters, mutual funds, and by smaller investors, whereas the underlying stocks that are best for short term retail trading tend to lead the big blue chip stocks.

Indexes are a part of the overall analysis but they do not provide a complete analysis of what is going on in the markets. Using news, indexes, and guru opinions is what causes most of the losses for retail traders. Using a trading and investing process eliminates the problems that result from insufficient trading preparation and inadequate analysis.

By: Samory Borry On 11:03 AM

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The Most Important Stock Indicator

Overall the most important stock indicator is Volume. Candlesticks are an important price indicator, however candlesticks do not complete the chart analysis which is a crucial aspect of successful trading. There are three data that come from the market which are Price, Time, and Quantity. Price is represented on the chart by the candlesticks, Time is represented by the chart timeframe, and Quantity is represented by volume bars.

Quantity the data stream, has two primary types. The total number of shares traded at that time whether it is a millisecond or a year, and this is the total number of shares represented by volume bars. Quantity can also refer to the number of shares per transaction, but that is not discussed in this article.

Volume bars should be represented on your charting software with green bars for up days and red bars for down days, because this provides exceptional analysis easily and quickly. If you use a solid color such as blue and do not differentiate up or down days, your analysis will be impaired and will take much longer. Each volume bar on a daily chart represents the total number of shares that traded hands that day, therefore one side of the trade and not both are represented in the volume bar.

Use daily charts and analyze end of day volume, because then you are analyzing the "consolidated" tape volume. This volume differs from intraday because it includes all volume from every trading platform and venue, not just the exchange volumes. ATS Dark Pools, Electronic Communication Networks for Electronic Trading aka Day Trading, and Regional exchanges all must report their data. All of this data is called the consolidated tape, which includes the total volume from all sources.

The total consolidated volume is an important part of making sure your stock chart analysis for selecting stocks is correct. With the consolidated volume provided at the end of the day from your charting software, you can quickly go through stocks using the basic criteria of at least 100,000 shares traded per day average. Always make sure that you check the volume for any stock you trade.

Avoid trading stocks that are illiquid. This means is there are so few shares traded per day that buying the stock can be very risky. Without sufficient volume, there is a lack of interest by the market participants and this can lead to weak picks, poor trading profits, or even losses. Illiquidity also skews any indicator you might apply to the stock, and lack of volume makes price action extremely volatile and unreliable. To determine if the stock has sufficient liquidity always study volume bars first before checking any other indicators.

By: Samory Borry On 10:54 AM

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How To Trade A Penny Stock

Do you know how to buy and sell a penny stock? Chances are, you do. If you know how to buy MSFT or GOOG then you're set - because the actual process is the same. You fire up your broker's website, like E*Trade or Scottrade, look up the symbol and execute the trade. Selling is the same too. Open the broker's site, find the stock in your portfolio and execute a trade to sell the stock.

So, if it really is that easy, what's this article all about?

There are a few differences between buying and selling a penny stock compared to a traditional stock.

First, not all penny stocks are listed, or supported, by your online broker. Because there is significantly more risk carrying penny stocks, some online brokers do not list them all. You might find a good penny stock you want to invest in, only to find it isn't listed by your broker.

To compensate for the risk, some online brokers charge more fees on top of the trading fee. This is typically a percentage of the trade's worth, or fixed amount per share. For example, to trade the micro stock ABCD, which is valued at $0.01, a broker may charge you 0.5% of the total trade value in addition to the $9.99 trading fee. If you bought 10,000 shares, it would cost you $110.49 ($100 for the stock, $9.99 for the trading fee, and $0.50 as a surcharge). These costs can add up as you add to your portfolio - especially if you trade in larger volumes.

Each broker has their own rules, but many surcharge on stocks valued at less than a dollar.

Also, you have to understand that sometimes selling (and even buying) a position in a penny stock can be much more difficult than a traditional stock. To buy a stock, there must be outstanding shares available. To sell the stock, someone must be willing to buy. Sometimes, depending on the stock, it may be hard for either condition to be true.

To protect themselves (and presumably you) most online brokers require you to put penny stock orders in as limit orders instead of a traditional market order. In a limit order, you specify a price (a cap) you want the stock to be at before the order executes. Because prices can fluctuate rapidly, chances are the price you see isn't necessarily the price the stock is at currently. For example, let's say ABCD is at $0.01 and you want to buy it but spend no more than $0.03 per share. You would enter a limit order of $0.03 and the trade would execute as long as the price was equal to or less than three cents.

A limit order to sell works the same way. When the price reaches let's say $.10, if you enter a limit order to sell at $.10, the trade would execute. Some brokers also allow you to specify the "low" point to sell at (limit loss or stop loss). For example, if ABCD falls below $0.02, sell the stock to cut your losses.

These are different from market orders which execute at the current market price. Again since prices rise and fall rather dramatically, these measures are in place to protect you.

I hope you have learned more about trading penny stocks - happy investing and good luck.

DISCLAIMER: I am not a licensed financial advisor, investment broker or analyst. I am just an amateur trader giving his amateur unbiased opinion and sharing with the community what works for me. Always use prudent investing, and never invest more than you can afford to lose - in other words, be prepared to potentially lose whatever you invest.

By: Samory Borry On 10:49 AM

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