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

Continue Reading

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

Continue Reading

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

Continue Reading

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

Continue Reading

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

Continue Reading

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

Continue Reading

Growth And Value What S The Difference

While the majority of American investors understand the importance of diversifying across growth and value investments, few are able to achieve a passing grade on a test of their knowledge of the differences between the two, according to a new American Century Investments survey.

Test your knowledge with the Growth & Value IQ quiz below:

1. Which best describes a growth stock?

a) Stock that offers guaranteed rate of growth tied to consumer price index.

b) Stock in a company specializing in agriculture, lumber, landscaping, and other organic products.

c) A stock in a company demonstrating better than average profit and earnings gains.

d) All of the above.

2. Which best describes a value stock?

a) Stock in fast-growing company specializing in high-value, low-cost products, like a discount retailer.

b) Stock in a company specializing in valuable goods, like precious metals and jewelry.

c) Stock that has a low price-to-book ratio.

d) All of the above.

3. Which statement is true?

a) Value stocks outperformed growth stocks between 1927 and 2001.

b) Smaller company value stocks outperformed larger company value stocks between 1927 and 2001.

c) Maintaining a portfolio with a combination of growth and value stocks generally is considered a prudent investment approach.

d) All of the above.

4. During periods of strong economic expansion, which fund generally performs better?

a) Growth.

b) Value.

c) Neither.

d) Both.

5. Generally speaking, value funds outpaced growth funds in 2000 and 2001.

a) True.

b) False.

6. Generally speaking, growth funds outpaced value funds during the 1990s.

a) True.

b) False.

7. Which type of fund is more likely to invest in stocks paying a significant dividend?

a) Growth.

b) Value.

c) Neither.

d) Both.

8. Higher price-to-earnings ratios normally would be associated with stocks in which type of mutual fund?

a) Growth.

b) Value.

c) Neither.

d) Both.

9. What kind of stock is described in this example: “Established baked-goods company with strong balance sheet and good cash flow experiencing temporary drop in reaction to changes in senior management.”

a) Growth.

b) Value.

c) Neither.

10. What kind of stock is described in this example: “Software company, enjoying steady sales increases, is in the process of rolling out an eagerly anticipated update to a popular software application.”

a) Growth.

b) Value.



Key: 1(c); 2(c); 3(d); 4(a); 5(a); 6(a); 7(b); 8(a); 9(b); 10(a). – NU

By: Samory Borry On 3:15 PM

Continue Reading

Stock Market Window Dressing The Art Of Looking Smart

As investors, and we all are investors these days, it is important that we understand the idiosyncrasies of the Stock Market pricing data we use to help us in our decision making efforts. On Wall Street, investing can be a minefield for those who don’t take the time to appreciate why securities prices are at the levels that appear on quarterly account statements. At least four times per year, security prices are more a function of institutional marketing practices than they are a reflection of the economic forces that we would like to think are their primary determining factors. Not even close… Around the end of every calendar quarter, we hear the financial media matter-of-factly report that Institutional Window Dressing Activities” are in full swing. But that is as far, and as deep, as it ever goes. What are they talking about, and just what does it mean to you as an investor?

There are at least three forms of Window Dressing, none of which should make you particularly happy and all of which should make you question the integrity of organizations that either authorize, implement, or condone their use. The better-known variety involves the culling from portfolios of stocks with significant losses and replacing them with shares of companies whose shares have been the most popular during recent months. Not only does this practice make the managers look smarter on reports sent to major clients, it also makes Mutual Fund performance numbers appear significantly more attractive to prospective “fund switchers”. On the sell side of the ledger, prices of the weakest performing stocks are pushed down even further. Obviously, all fund managements will take part in the ritual if they choose to survive. This form of window dressing is, by most definitions, neither investing nor speculating. But no one seems to care about the ethics, the legality, or the fact that this “Buy High, Sell Low” picture is being painted with your Mutual Fund palette.

A more subtle form of Window Dressing takes place throughout the calendar quarter, but is “unwound” before the portfolio’s Quarterly Reports reach the glossies. In this less prevalent (but even more fraudulent) variety, the managers invest in securities that are clearly out of sync with the fund’s published investment policy during a period when their particular specialty has fallen from grace with the gurus. For example, adding commodity ETFs, or popular emerging country issues to a Large Cap Value Fund, etc. Profits are taken before the Quarter Ends so that the fund’s holdings report remains uncompromised, but with enhanced quarterly results. A third form of Window Dressing is referred to as “survivorship”, but it impacts Mutual Fund investors alone while the others undermine the information used by (and the market performance of) individual security investors. You may want to research it.

I cannot understand why the media reports so superficially on these “business as usual” practices. Perhaps ninety percent of the price movement in the equity markets is the result of institutional trading, and institutional money managers seem to be more concerned with politics and marketing than they are with investing. They are trying to impress their major clients with their brilliance by reporting ownership of all the hot tickets and none of the major losers. At the same time, they are manipulating the performance statistics contained in their promotional materials. They have made “Buy High, Sell Low” the accepted investment strategy of the Mutual Fund industry. Meanwhile, individual security investors receive inaccurate signals and incur collateral losses by moving in the wrong direction.

From an analytical point of view, this quarterly market value reality (artificially created demand for some stocks and unwarranted weakness in others) throws almost any individual security or market sector statistic totally out of wack with the underlying company fundamentals. But it gets even more fuzzy, and not in the lovable sense. Just for the fun of it, think about the “demand pull” impact of an ever-growing list of ETFs. I don’t think that I’m alone in thinking that the real meaning of security prices has less and less to do with corporate economics than it does with the morning betting line on ETF ponies… the dot-coms of the new millennium. [Do you remember the "Circle of Gold" from the seventies? Isn't GLD, or IAU, about the same thing?]

As if all of these institutional forces weren’t enough, you need also consider the impact of tax code motivated transactions during the always-entertaining final quarter of the year. One would never suspect (after watching millions of CPA directed taxpayers gleefully lose billions of dollars) that the purpose of investing is to make money! The net impact of these (euphemistically labeled) “year end tax saving strategies” is pretty much the same as that of the Type One Window Dressing described above. But here’s an off-quarter buying opportunity that you really shouldn’t pass up. Simply put, get out there and buy the November 52-week lows, wait for the periodic and mysterious “January Effect” to be reported by the media with eyes wide shut amazement, and pocket some easy profits.

There just may not be a method to actually decipher the true value of a share of common stock. Is market price a function of company fundamentals, artificial demand for “derivative” securities, or various forms of Institutional Window Dressing? But this is a condition that can be used to great financial advantage. With security prices less closely related to those old fashioned fundamental issues such as dividends, projected profits, and unfunded pension liabilities and perhaps more closely related to artificial demand factors, the only operational alternative appears to be trading! Buy the downtrodden (but still fundamentally investment grade) issues and take your profits on those that have risen to inappropriately high levels based on basic measures of quality… and try to get it done before the big players do. To over simplify, a recipe for success would involve shopping for investment grade stocks at bargain prices, allowing them to simmer until a reasonable, pre-defined, profit target is reached, and seasoning the portfolio brew with the discipline to actually implement the profit taking plan.

Yeah, I do miss the days when there were just stocks and bonds, but maybe I’m just a bit too old fashioned. Interesting place Wall Street…

By: Samory Borry On 3:13 PM

Continue Reading

Profitable Trading System

After you have found a profitable trading system that you already back-tested, how can you be sure that this system will produce the same gains in future?

Nobody can predict the future, your system can easily make losses in next years or can be no tradable.

There are some tests you must do before accepting a trading system, these tests swill show the robustness of your system and when passing these tests, it will be more likely to show gain in future.

Test 1 : Make sure that you put liquidity rule, that your entry and exit prices are realizable.

Test 2: Examine again your trading systems and your rules (This is very important).

I made dozen of trading systems that showed great results but after more examination, it showed that i cannot follow them in real life.

Check if there is one stock that made very big gain, the system will maybe become no profitable without this stock.

Test 3: Change twice or 3 times the date of begin for the simulation, if it still show good results then it has passed the test 3.

Test 4: Change values of some parameters or variables you have in your trading system rules, you must change one value and then back-test, change another and then back-test…

If the results are not affected very badly then it passed the test 4.

Test 5: Try to restrict the system from buying 20% or more of stocks you previously bought when doing the back-test. Then re-run the back-test. To pass this test, system must show pretty the same results as before.

Test 6: Equity chart must have a good look, check some statistic values like sharpe ratio, sortino ratio, standard deviation, maximum drawdown, average day for gains recovery…

It depends on the risk you are willing to take but choose only systems that have : higher sharpe ratio, higher sortino ratio, lower standard deviation, lower maximum drawdown…

Exclude systems that have very big max drawdown, standard deviation and average day for gains recovery.

The must important factor i think is average day for gains recovery.

Its the average number of day that you must wait until your equity value will goes back to the same level before the drawdown happen.

Big values will let you wait for long times before recovering gains and for sure many traders will abandon their trading system, and that’s the worse thing that can happen to a trader because just after that, the system will show excellent results. (That’s always happen)

Theses tests are very restrictive and you will reject maybe all your trading systems, but when trading you will put your money, real money, so i think you must be very selective to make all chance in your side.

By: Samory Borry On 3:11 PM

Continue Reading

How the Stock Market Saved My Life

Most people know the stock market to be a rough and challenging world but in reality it is a savior. For many people the only experience they have with the stock market is staying away from it but I guarantee you that you can make money as long as you put in a little bit of effort. What most people don't understand about the stock market is that it isn't the most experienced that are making the most money, it is the people who take the time to do the proper research.

Why the stock market saved my life

A while back I went making a lot of money every month to making nothing because of the changes in the internet and my local businesses but the stock market was the only thing that was still there I could adjust quickly enough to make money that very day. What I learned from the stock market is to trade when others are trading and take a firm position.

What did this mean for me

What this meant was while so many people where looking at the casino business from afar I wanted to get up close and dive right into my favorite stocks. I chose to buy 2 different casino stocks that own more than 6 hotels and casinos in Las Vegas because I knew that the Las Vegas tourists would be flocking the city very soon.

What happened next

The next thing I knew I was sitting on more than $5,000 of pure profit from my 2 stocks and that was only within 4 weeks of buying them. The thing about this money was that I traded the stocks over and over again until I got as much money as I could out and now I am just holding the stocks as a long term gain.

The stock market is more than just a way to make money, it is my savior because I know there is nothing else out there that can make me that much money that fast without doing anything. Do you know of anything that will make you $5,000 in less than 1 month without doing anything? Probably not and that is why the stock market should be there in case you need it too.

By: Samory Borry On 11:41 AM

Continue Reading

Real Forex Traders Learn To Like Losses

As a forex trader you have to learn how to take losses. Period. Don’t be a crybaby. Learn how to take losses.

Learning how to take losses is one of the most important lessons you must learn if you want to survive as a trader. Nobody is 100% right all the time.

Losses are inevitable. Even Michael Jordan and Tiger Woods lose sometimes and they’re considered the best in their field.

There will be trading streaks where you’ll have a number of successful consecutive trades, but that will eventually come to an end you will take a loss.

As that point it’s very important not to lose your head, you must remain in control of yourself. Don’t have a cow man.

Take a break. Calm down and relax. Take a chill pill dude.

Until you’ve regained a clear mind and an ability to think logically again, stay out of the market.

Don’t whine about your loss and never carry a prejudice against a loss.

The key to manage losses is to cut them quickly before a small loss becomes a large one.

I repeat. The key to manage losses is to cut them quickly before a small loss becomes a large one.

Never ever think that you will never lose. That’s just ludicrous. Losses are just like profits, it’s all part of the trader’s universe.

Losses are unavoidable. Get over the loss and move on to the next trade.

By: Samory Borry On 12:33 AM

Continue Reading

Forex Currency Trading

You can develop into a better and more profitable trader by applying some of the more imperative forex currency trading rules consistently with an appropriate amount of discipline. There are few principles that can help to perk up your chances of success if they are understood, practiced, and implemented in your trading on a regular basis and these rules have been learned in the trenches, mostly through testing and scrutinizing the common mistakes nearly every trader makes when starting out in the forex currency trading business. The first step is to set up and apply specific goals and objectives.

The majority of forex traders who often find themselves on the losing end of a trade make the same common and recurring mistakes. Most forex traders don’t have a clear direction, never take the time to develop a sound business plan and lack a formal written strategy for putting a well thought out plan in place. In forex currency trading, the primary goal is clearly to make money, but it’s important to have goals that are not strictly money related as well. Your personal objectives and ambitions should be very specific and measurable to you, but they should include the characteristics that are needed for the trading.

Having a clear-cut idea of what you want to accomplish in your trading and the precise time frame you want to achieve it, make your efforts more focused. In order to establish a track record of winning trades, you need to develop discipline and a personal forex currency trading system that makes sense for you. The spread generally referred to as the bid/ask spread is what brokers charge instead commission fees. Forex brokers are typically linked with large banks due to the large amount of capital that is required to operate in the forex market. Leverage is a ratio of total capital available to actual capital which is the amount of money a broker will lend you for trading. Finally you should select a trading account that fits your budget.

Basic Forex trading strategy begins with fundamental and technical analysis. Fundamental analysis is mainly used to anticipate and better understand long-term trends in the currency market. Technical analysis is widely used to examine the forex because it identifies and measures sustained trends. Successful traders use a combination to make more accurate predictions. Once you have the knowledge of how the forex currency trading works open a demo account and paper trade to practice until you have what it takes to make a consistent profit. It’s important to take the time to build, test and implement a sound trading plan before you put capital at risk.

By: Samory Borry On 12:30 AM

Continue Reading

Currency Rates You Have To Know The Trends If You Expect To Earn On Forex

Currency rates and the differential between countries and over time is the meat of the foreign exchange game. They are constantly changing and the better your ability to predict these changes the more money you are going to make over time in this market. So naturally a few tips in this area are worth their weight in gold.

So what are some of the things that should be learned when attempting to understand the changes in currency rates? What affects currency and the perception of their value up against the currency of any number of other countries? I make no guarantees in this article but hope to point you in a few worthwhile directions so that you can understand and therefore profit in this goldmine of a market.

Before I start I want to mention the potential for profit if you understand and are willing to put some time into mastering the factors involved in the changing currency rates. Perhaps the most important thing to understand is that thought this market has been around for a long time relatively few people are taking advantage of it. The market is not saturated and therefore there is a lot more room to compete and be at the top of the game. Why is this? For one thing it just has never been as flashy as the stock market. Part of this is how things have played out in the media and in our economy. Industry is for some reason valued more than the overall economy and the public’s perception of striking it rich is stronger in the stock market. It is true that the potential to strike instant riches is greater in the stock market with new companies forming and old ones failing far faster than countries are forming and failing. However the potential for constant and predictable gain is more in forex.

Why? Well for several reasons. One the currency rates, or in other words the value of a currency is dependent on something that is far easier to evaluate and predict. The chief operator in this game is the overall economy of that country, which is far more stable and predictable than the ability of a company to earn a profit in the cutthroat world of business. You can judge with far more accuracy how a current event or change in leadership is going to affect an economy globally than you can how a company will perform.

The main reason for this is the information differential that there is more information available on current events and the lives and values of governmental leaders than there are on private companies. This is due to the concentration of the media in this area and the fact that it is more important for a company to be private in order to not give an advantage to their competition.

So in order to be good in the currency rates game you have to read your newspaper and have a general idea of the public and global perception of an event and a government and how these things will affect the economy of a country. Something that we do almost every day anyway.

By: Samory Borry On 12:25 AM

Continue Reading

Free Stock Picks: A Proper Perspective

Remember the good old days of investing? Days when you would call your stockbroker, ask his advice and then invest accordingly? Those days are long gone thanks to the Internet and self-directed investing apps. Today a good many investors rely more on free stock picks than sound advice from investment professionals.

Do not misunderstand; free stock picks have their place - just like advice from paid professionals. However, any investor able to think for himself uses every investment resource with proper caution. No single source of advice or information is foolproof, nor should it be trusted without question. That includes free stock picks.

Why They're Good

The good thing about free picks, and particularly U.S. stock picks, is the fact that there are so many experienced people out there doing the legwork for you. That means the investors writing the daily stock articles will be right from time to time. They also have some market insight that the casual investor lacks, providing them a better glimpse into the future of a given stock.

Free picks are useful inasmuch as they give you more information to work with. A good strategy is to take picks from several different analysts and compare them against one another. If all of them generally agree on a specific stock, that's something to seriously consider when making investment decisions. If they are all over the board regarding another, it tells you to stay away.

Why They're Not Good

The problem with free stock picks it that the analysts offering them have no real incentive to make sure they are as accurate as possible. They can advise according to any criteria they set for the day; criteria that can include, among other things, whether or not their favorite team won the game last night. Casual investors rarely track the records of those offering U.S. stock picks for free, so they do not really know how well an analyst performs over the long haul.

That said, the number one rule of investing in stocks is to pay attention to long-term performance. Making good money off the stock market is a pursuit that is generally not achieved overnight. So when investors don't know the historic performance of a stock analyst, they also don't know if the analyst picks are worth anything.

What It Means to You

Self-directed investing is a great opportunity to take advantage of what the stock market has to offer. By all means, take into consideration the U.S. stock picks offered by analysts for free. Nevertheless, do your own homework on any stock you think you are interested in purchasing.

At the end of the day, self-directed investing comes down to the casual investor learning and understanding for himself. Free stock picks are just one tool in that process. As long as they are viewed with the proper perspective, such picks can be helpful. But if an investor bases his entire strategy on what analysts are putting out for free, he is just asking to lose his shirt.

By: Samory Borry On 5:42 AM

Continue Reading

Penny Stocks Explained

A "penny stock" isn't a literal term, but compared to the prices of higher stocks, it may seem like a bargain. Common stocks that cost less than $5 are usually called penny stocks, and while they have a lower individual price, investing in small stocks can be just as risky as any of the higher priced variety, if not more so in some cases. There are some misconceptions about penny stocks that should be cleared up:

·Penny stocks are not a "get rich quick" stock.

·Penny shares are not a guaranteed profit.

·Not every tiny stock is a bargain.

With that in mind, let's look at how to invest in penny stocks for the absolute beginner.

Getting Started

The first step is to do your research. There are a lot of stories about penny shares helping investors to get rich overnight, but you need to figure out what makes the most sense to you. There are brokers that actually specialize in handling penny stocks. These brokers may be able to point you toward some stocks to watch, but do your own research before you make an investment through the brokerage. Learn how to read the company financial statement.

Also, think about investing in a small stock that is listed on the NASDAQ. If you have absolutely no experience in investing in the stock exchange, then these are the stocks that are going to have the most "security," although it is still not a sure thing. Stocks that have been de-listed are usually indicative of a company that is going through some financial turmoil, and what you want is something that is a little more stable, whether you're investing in tiny stocks or larger offerings.

Keep Researching

After you've made your investment, stay on the lookout for other good tiny stocks and how they're performing on the market. Because penny stocks should account for 1/10th of your investment portfolio or less, these aren't going to be your prime performers. Instead, they're a way to diversify your investment strategy and get in on some unique and affordable investment opportunities. The more research that you do on the subject, the easier it'll be to find the best penny shares for your investment strategy.

Awesome penny shares aren't usually obvious to the new investor. Your broker can most likely point you toward some options that are worth considering if you want to get the best bang for your buck.

By: Samory Borry On 5:33 AM

Continue Reading

Stock Market Investing Is Not Trading

There is a huge difference between investing and trading in the stock market. Although both involve owning stock, the effect on for market participants is very different. As an educator for investors, I get annoyed at all the people who talk about investing and then discuss or teach only short-term trading.

First, the time involved to trade requires much more time than investing. Short-term trading is a full-time job. Day trading requires you to be at your computer screen during market hours. It is very difficult to hold another job that pays the bills while you do short-term trading. Even if you are swing trading, it is still very time intensive. However, with my investing I monitor my holdings for about 20 minutes per week.

Next, trading is extremely time-consuming and difficult to learn in the first place -- it is the hardest thing I have ever done in my life. Many successful day and swing traders took 3-5 years of at least full-time work and study to learn. I have heard of people doing it faster than that, but that is the exception and not the rule. Whereas you can learn to be an advanced investor in a few weeks in my courses. In 30 minutes you can learn a technique that offers 5-50% a few times a year when a special situation presents itself.

Next, the money involved to learn. Trading is a very high-risk, low-odds-of-success activity. The vast majority of traders lose some or all of the money in their accounts trying to get good at it. (If you don't believe me, look it up on Google. There is plenty of research supporting this claim, including the Johnson report, the Hieronymous study, and the Odean study.) I have listened to several successful traders blow out several large accounts before finally getting it right.

On the other hand, owning stocks for the long-term has a built-in likelihood of making a profit -- stock prices typically go up over time. There are ways to lose money investing, and there are ways to make more than buy and hold (I have spent the past 25 years researching what those strategies are), but even if you do not know them, the odds are with you at least for the long-term.

The essential problem with short-term trading is that you must first determine the direction of short-term stock prices, which can be very volatile over brief periods of time, then make a big enough profit to cover commissions and all the other times when you guess wrong. Believe me, it is not easy to do.

In the end, most Americans need to learn how to invest, not to trade. Make sure you go to the right place to learn better investing strategies.

By: Samory Borry On 5:30 AM

Continue Reading

Toying Around With Investment Ideas

So you've decided to secure your future by investing your hard-earned money in something you're not exactly sure of yet. Investment is a wise move if you want to guarantee the financial success of your future. It may be a little challenging at present, since majority of your money will go some place where you have no access to for a long time.

Investment involves risks and what makes it different from gambling or speculation is that investment involves a long-term outlook. Gambling is just sort term. Sure, you could earn hundreds of thousands in a matter of minutes but if you lose, you'll easily lose the same amount, if not bigger, faster. With investment, you have many avenues to explore and choosing the right one is such big of a risk that it needs weeks or even months of studying and preparation.

One concept you need to familiarize yourself with is implied volatility. Basically, implied volatility is the assumption of a stock's future unpredictability based on the price of its stock options. Volatility means instability and the higher the stock prices, the more unstable it becomes. As stock prices decrease, the less unstable it will be. Implied volatility is an indicator of what traders expect in stock prices. Low volatility translates to stock prices remaining stable and unchanged in the next few days and vice versa.

While implied volatility is one of the criteria to consider in choosing investment ideas, it shouldn't be the only factor to think about. Financial experts constantly predict money-making investment ideas and if you are planning to invest thousands of dollars, you should definitely try to catch up before you end up wasting your life savings on stocks that will be worthless in just a year or two. For instance, top experts expect this year to be a good idea to invest in high quality companies, meaning corporations backed with strong finances and visible growth in earnings.

Investing in China as an emerging market seems to be a wise move too and if you want to invest in gold, don't let anyone stop you. Merrill Lynch predicts that gold will rise around 20% higher before the year ends, being priced at around $2400/ounce by the end of next year. Also explore other precious metals such as silver and platinum as these are also expected to increase in value in the upcoming months. Real estate, on the other hand, is nothing to be worried about anymore. It seems that the industry has become more stable and mortgage rates are said to be at historic lows. Consumers are starting to invest in real estate more and houses no longer takes months or years to get sold. Finally, technology is always an area where investment is most likely to produce positive results.

If you are still unsure, you can always test financial strategies prior to executing your investment plans. It's your money and you've worked years to save that amount for yourself. Doing proper research is the least you can do to really secure your future and make sure that those dollars will be invested in stable industries or markets.

By: Samory Borry On 7:21 AM

Continue Reading

Financial Statements: Demystifying the Basics

Some things in life appear more difficult than they actually are. Analyzing a company's financial performance is simply one of them. Many a time we come across people who completely depend on others for their investment decisions, which can have far serious implications. Though it seems like an uphill task to many, company analysis is actually no rocket science. A little understanding of the fundamentals and an elementary logic is all it takes to identify the potential of the companies.

Firstly, you should be aware of the business of the company you have invested your money in or intend to invest. Its history, vision, products and services and its business model will give you necessary details regarding the functioning of the company. A thorough study of its introduction in the annual report, company's website and of course the internet will easily furnish you loads of information. So, if you are unable to grasp the way the company operates or its growth prospects, it is better to stay away from the stock. Herd mentality is definitely not advisable for a long-term investment.

Once you have a sound understanding of the company's operations and revenue earning methodology, turn to its financial statements. Again, this can be easily accessed from the company's website. There are three financial statements which are the Comprehensive Income statement, Balance Sheet and Cash Flow.

The Income Statement shows the revenue earned for the period, the expenses incurred for earning the revenue and the resultant after meeting statutory obligations is known as the net profit/ retained earnings or loss. It is on this amount that the company declares a dividend to the shareholders. The comparative analysis with past period statement helps you to analyze how the company is performing. The most important areas of focus in the statement are the ratio between net profit and sales (also known as the net margin) as well the gross profit and sales (also known as the gross profit margin). The higher they are, the better it is. Furthermore, other areas that deserve a check are the direct cost components, which imply the major costs driving the business. This will differ for each company, according to the industry it operates.

Then it's the Balance Sheet, which is a statement of the sources and application of funds as on the last day of the period. As a rule of thumb, the sources of funds must be equal to the application. You can ascertain the financial position of the company by examining various ratios like the Debt-Equity ratio and Debt-Asset ratio. A high proportion of debt implies that the company is financing its growth by borrowing aggressively. This is only justified if the revenue of the company also shows a significant growth. More debt also implies increased interest expense, thus the quantum of growth in revenue should be more than that of interest, or else it will lessen the earnings. Also, this ratio depends on the sector which the company belongs to. Manufacturing companies usually are more leveraged than service oriented companies. Meanwhile, the ratio between the current assets and current liabilities, ascertains the liquidity of the company.

The last one is the Cash Flow Statement. Showing the movement of cash for the period, this statement is divided into three sections which are cash from operating activities, cash from investing activities and cash from financing activities. You can very easily comprehend the cash positioning of the company with respect to the three main activities. The strong company derives more cash flow from operations than from investment or financing activities. The operational cash is the direct indication of the organic growth of the company.

Lastly, it is imperative to compare the financials of the target company with other companies in the same industry. Only then will you have a lucid idea about the performance of the company. Whether the change in financials is due to industry related factors or specific to the company can be easily determined.

While, there are other parameters to judge the overall performance of the company, a strong hold on its financial performance is the first and major step in this direction. By unearthing the stories behind these numbers you can truly empower yourself to judge the prospects of your portfolio.

By: Samory Borry On 7:15 AM

Continue Reading

How To Read Stock Symbols

Over the last ten years, an entire industry has developed covering, researching, and analyzing the stock market. Once considered a niche market, represented only by The Wall Street Journal and Bloomberg News, the financial media has experiences explosive growth. From cable news networks, like CNBC and financial aggregate sites like MSN Money, Google Finance, and Yahoo Finance, to popular broker and investment blogs, financial news is no longer niche. It is mainstream, accessible, and important for every investor.

Today, many investors are utilizing online platforms and discount investment firms in order to keep more of their money in their pockets. Brokers charge hefty commissions and fees, which can drain an investor's account. With some basic information and research, the average investor can make a profit without the help and assistance of a broker.

Basically, your stock represents your share in the ownership of the company and it is your claim on any future earnings and dividends. Buying stock in a company shows that you are interested in its long-term success. Profits are eventually paid out in dividends, and the more stock you own, the more dividends you receive. Choosing a successful stock means that an investor should have a basic understanding of basic business principles and models.

The most efficient way to research stocks is to use their stock symbol. The stock or trading symbol is an abbreviation traders and investors use to identify a company. These symbols incorporate letters, numbers, or both. While most symbols are three letters, some are four, and occasionally, company's use only one letter as their stock symbol. These symbols were originally used on the ticker tape when stocks were traded on paper.

Some of the more popular symbols include AAPL (Apple), GOOG (Google), (KO) Co ca-Co la, and TGT (Target). Some companies inject some humor or some homage into their symbols. Southwest Airline pays homage to its home field, Dallas Love Field (LUV) with their stock symbol. Legendary piano manufacturer Steinway remembers the great Ludwig Von Beethoven with its symbol, LVB. Harley Davidson uses HOG and the auction house Sotheby's uses BID.

These symbols can change to reflect mergers and acquisitions as well. When Hewlett-Packard merged with Compaq the new company assumed the stock symbol HPQ. Wireless and internet giant ATT is represented simply by the letter T, reflective of the company's original business model.

Sometimes, the symbol is followed by a "period". This "behind the dot" notation and special codes are represented of the type of stock being offered. Class "A" stock is represented by the letter A, X indicates a mutual fund, and K notes common, or nonvoting stock. Pink sheet stocks and over the counter stocks (.PK), NASDQ small cap stocks (SC) and NASDQ National Market (NM) all have behind the dot notations.

Investors can find the stock symbols by executing a simple internet search, and use the stock symbols to keep track of the stock's activity and movement. Stock quotes are important when looking for real time stock quotes.

By: Samory Borry On 10:20 AM

Continue Reading

Stocks to Watch

Analysts, economists, and investors are starting to get a little "bullish" about the stock market again. After months of stock losses, the New York Stock Exchange, The Dow Jones Industrial Average, and the NASDQ are all beginning to finish the day, week, and month, with profits for investors. In the strictest terms, a bull market means that stock process are rising faster than the historical data indicates, but most analysts use the term to describe the market's upward swing. Many analysts are starting off the new year with a list of stocks to watch (and buy!).

Casual American luxury is a hot commodity in 2013. With Americans coming out of a recession, they have a little more spending money in their pockets, and analysts are expecting them to spend it on clothing. Economists and brokers feel that companies like Target are poised for even bigger growth this spring. American clothing and accessory icon Ralph Lauren strikes the right balance between comfort and elegance, and analysts are speculating consumers will open their (stylish) wallets for these quality goods.

While digital cameras and Instagram may be all the rage, analysts are betting consumers still like good old-fashioned photos. The photo developing, printing, and accessory company Shutterfly had a big holiday season, thanks for the number of holiday cards mailed, and experts believe consumers will continue to create photo books, print pictures, and create fun, photo related accessories. Last quarter shares climbed 17% and analysts expect this growth to continue, even with the holiday demand.

Although ZYNGA reported a quarterly loss, the gaming system software company beat Wall Street expectations, spurring a spike in stock price. Investors and analysts are betting that consumers and gamers will stay addicted to Words With Friends and FarmVille for a while longer. Panera Bread's income rose 34% last quarter, as the Bakery-Café's sales continued to grow. Investors believe consumers will continue to pay for higher quality, more nutritious convenience food and meals.

While the healthcare debate rages on, economists and investors are taking an ounce of prevention and investing in alternative and homeopathic remedies. Alternative medicine (think nutritional supplements and holistic healing initiatives) is a trend that will help drive the stock market this year. Green Mountain Coffee continues to dominate the K-Cup market, and that has investors feeling "perky" about this beverage in particular and the coffee industry in general.

There are a number of online resources that can help investors identify stocks to watch on daily, monthly, or quarterly basis. Google Finance, Yahoo Finance, Bloomberg News, and MSN Money are all excellent aggregate sites to help jump start your research. There are plenty of cable and financial news shows as well that focus on stock trends and identify which stocks to watch over the coming week. Finally, potential investors may want to study their own purchasing patterns. Many analysts believe that the best investing tips come from you own home. If you are buying something, chances are your friends and neighbors are too, and that can lead to big gains on the stock market.

By: Samory Borry On 10:15 AM

Continue Reading