Bond Investing
Bond Investing for New Investors
When bond investing, it is important to understand the terminology involved to avoid investing errors. Bonds have lifetimes, referred to as the maturity of a bond. The maturity of a bond depends on the type of bond which can be anywhere from one month to fifty years. If the bond is callable, it means that the entity that issued the bond has the right to call the bond back in at any time they choose. This means they can buy the bond back before it matures. When bond investing you should also understand the term put provision. This provision allows the buyer to sell the bond back at face value before it matures. There are rules as to when this can be done however, and it is not a common provision. When trading and investing it is also important to understand the term convertible bond. This means that the bond can be converted into stock in the company that issued it. The price and the time-frame for conversion must be specified at the time the bond is issued. If you decide to purchase a convertible bond, when bond investing, you must be sure to understand the basics concepts of investing in stock. You should also know what secured and unsecured bonds are as well when bond investing. Secured bonds are backed by collateral by the company that issued the bond which then covers the value of the bond. Unsecured bonds are exactly the opposite and are not backed by collateral. They are also known as debentures and they are backed only by the creditworthiness of the entity issuing them.
There are several ways to conduct successful money management and participate in bond investing. You can buy bond funds, individual bonds, invest in money market funds, or you can purchase unit investment trusts. Bond funds are like stock funds, in that they offer professional selection and management of a portfolio of securities. A bond fund is actively managed and can be added to or eliminated from an investor’s strong portfolio in response to investor demand and market conditions. They also do not have a maturity date. Mutual fund investing is great for investors interested in long term investing. When bond investing, bond funds allow an investor to diversify risks across a broad range of issues leading to better investing. Individual bonds are bought and sold in the over-the-counter (OTC) market and some are also listed on the NYSE (corporate bonds). The OTC market includes hundreds of securities that are traded electronically and by phone by firms and banks. Money market funds are a pool of investments in highly liquid, short-term securities. These funds typically consist of securities having maturities of three months or less and may include municipal bonds, a COD, and U.S. Treasuries. When bond investing, it is important to note that money market funds are not insured by the U.S. government. Bond unit investment trusts offer a fixed portfolio of investments in municipal, mortgage, corporate bonds, or government bonds. This trust is not actively managed and typically ends when the last investment matures.
There is a lot of additional information that you should know about bond investing in order to conduct successful portfolio management and portfolio diversification. Be sure to do your homework before you begin investing in order to avoid making investing mistakes!
Market Direction: How does an investor discover the 'power' moves? It becomes a simple search process when knowing what the candlestick investor should be looking for and what everybody else is watching. The signals make it obvious coming when a reversal should occur. Having the knowledge of what each signal indicates allows an investor to anticipate when a breakout move might occur. A Doji, followed by a gap up, is a very common power move indicator. If that information can be applied to chart patterns or indicators that everybody else is watching, the candlestick investor has the advantage of knowing when to enter a trade and whether that trade is going to be a strong move.
ABX is a chart that demonstrates a definite change of investor sentiment. A Doji, followed by a gap up, when the stochastics are in the oversold condition is a prime candidate for a strong up-move. Additionally, a close above the T-line adds more credibility to a reversal having occurred. The T-line had been acting as a resistance for the past two months. That would have been more confirmation for candlestick investors being aware of the effects of the T-line. A down trending trend line being breached would have been a factor also. The trend line is probably being watched by many investors. A gap-up through that level, after a Doji, allows the candlestick investor to start establishing a position immediately, with the expectation the other investors watching a breach of a trend line would start adding to this position in the next day or so.
ABX
The same scenario can be applied to the Gold chart. An obvious pennant formation had the potential of breaking out one way or the other. A gap-up from a Doji off the 50 day moving average and the prices gapping above the T-line makes for a high probability strong trade. The added dimension of it breaking up through the top of the pennant formation, a formation that many investors are aware of, creates a good entry into a position. The breakout through the pennant formation now has the prospects of many other investors witnessing the same thing. They start coming into the position over the next few days.
Gold
Common sense is the main premise for utilizing candlestick signals correctly. It is common sense investment practices that can be analyzed with the signals. The same logic can be built into the expectations of what to watch for during specific times of the year. When will big money funds make changes in their portfolios? Very likely at the beginning of the year. What will they put their money into? That can be easily identified by candlestick signals forming in specific sectors coming out of the chute at the first of the year. This year the continued buying of the solar energy companies was obvious. The mining companies, especially in gold, showed very strong buy signals on the first day of the year. Knowing what to look for and when to look for it allows an investor to establish positions immediately in areas that big money is coming into
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The Candlestick Forum Team
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