Archives for January 2020

When you start out, it is always nice to get some help. No matter what you are doing, it takes some time to learn your way and people that have been there before always have a better vantage. The same is true when getting stock tips from someone who has already been investing in the stock market. Talking with someone who has already established their investment philosophy can help you to avoid some common problems. Here are 10 stock tips for you to follow:

Stock Tip #1 – Know How Much You Can Afford To Invest

The term for this is called risk premium and it’s called that for a reason. Investing is a risk and you should only put in an amount that you can comfortably afford to lose and not affect your quality of life. Hopefully you won’t lose any but you can’t look at it that way.

Stock Tip #2 – Know Your Limitations

This is different from how much you can invest. Can you stick with an investment strategy? Do you make rash decisions when you are nervous? Do you pay attention to details? The honest answers to these kinds of questions will help you prepare for the next tip.

Stock Tip #3 – Create A Trading Plan

A stock trading plan is the first tangible thing you will do. This is where you will outline your strategy, your long-term goals, and your techniques for managing profits and losses. You cannot put too much in your trading plan; this is your contract with yourself for how you will trade.

Stock Tip #4 – Choose A Stock Broker

For this one you need to do some research and refer back to #2. What are your tendencies? If you manage yourself very well, you can choose a broker who charges and offers less. If you are willing and able to do your own research, get stock quotes and the like you will need less support than someone less disciplined.

Stock Tip #5 – Test Your Plan

Who says you can’t get something for nothing? It’s called paper trading and it is a way of playing the stock market for free. Your broker will probably have a demo trading account where you can do all of the normal things but your money is virtual. This will allow you to test your trading plan before you spend your hard-earned money.

Stock Tip #6 – Develop A Trading System

This goes hand-in-hand with the next one. A stock trading system is a method of charting and analyzing stock movements in order to determine when to buy and sell. The best trading system available is Japanese Candlesticks and the Candlestick Forum is the best place to learn it.

Stock Tip #7 – Do Your Homework

Trading relies heavily on understanding the financial condition of a company and its standing in the market. Fundamental and technical analysis are the tools to help you….make sure you take advantage of them!

Stock Tip #8 – Win Gracefully And Be A Poor Loser

What does that mean? A poker player once told me that it is better to win small than to lose big….that might actually be the best investment advice. Winning gracefully means to take what the market gives but get out just a little too early. Likewise, no investor should be satisfied with losing money. It is important to always have and follow a stop loss strategy.

Stock tip #9 – Remember the ultimate goal.

Stock trading is about making money. This isn’t an ego trip or some way to out-do your buddies at work for bragging rights at the water cooler. If you stick to the plan you will do just fine in the long run.

Stock tip #10 – Never stop learning.

Who has been teaching you?  Have your read anything by Warren Buffett?  Did you find out what Benjamin Graham thinks about defensive investing?  How about letting me teach you what I know about Japanese Candlesticks?  If you learn from the people that went there first you don’t have to make the same mistakes.

Conclusion

There is a tried-and-true set of steps to learning about the stock market. Follow the stock tips that others give you can be the first step in becoming a successful trader.

Stock market investing strategy using candlestick signals

What is the best stock market investing strategy? The strategy that consistently puts the probabilities in the investor’s favor. Candlestick signals can be applied to produce the best stock market investing strategy for the day trader as well as the long-term investor. Candlestick signals contain investor sentiment that is simply common-sense investment analysis in a graphic form. What are the elements of a stock market investing strategy that most investors lack? A platform for demonstrating when it is time to buy and when it is time to sell. Fundamental research tries to find the companies that have a long-term positive prospect. Good management, good earnings growth, and an industry that has growth potential. Unfortunately, most fundamental recommendations do not have any timing element. Candlestick signals can dramatically improve the returns for a fundamental stock market investing strategy. Buying a good long term position at the wrong time can diminish overall returns dramatically.

A stock market investing strategy for most technical trading methods utilizes indicators that illustrate what investor patterns/perceptions have produced as far as price patterns in the past. These trading techniques usually rely upon ‘assuming’ reversals may occur at specific levels. Candlestick signals greatly enhance a stock market investing strategy by eliminating the “assumption.” If a price is expected to reverse at a major technical indicator such as Fibonacci numbers, trend lines, or moving averages, candlestick signals can provide a huge benefit. The best stock market investing strategy results from not just expecting a reversal to occur at a certain technical level, but being able to actually interpret correctly what investor sentiment is doing at those levels. Candlestick signals produce a powerful insight into a change of investor sentiment. Being able to evaluate what is actually happening at a technical level, versus needing a few days to confirm that a reversal has occurred, creates a very profitable advantage.

A perfect stock market investing strategy is having immediate confirmation at important technical levels. The candlestick signals create a double benefit. It provides immediate recognition that a reversal is occurring, allowing investors to get in to a trend at its earliest stages. It also provides lower risk stop-loss strategies. One of the biggest problems most investors encounter is their own ego. If they have made a decision to buy a position, because of their mental prowess, it becomes very hard to close a position that does not work. Candlestick signals create an excellent format for stop-loss procedures. Simple logic dictates the closer the entry point after a candlestick buy signal, the smaller the price move against the position for executing the stop-loss. Stop-loss procedures, using candlestick signals, are very simple. It takes all the emotion out of coming back out of a trade. If the candlestick buy signal was the indication that the buyers were now in control, prices coming back down through that signal would immediately tell us that the bears were still in control.

All investment professionals advise us to cut our losses short and let our profits run. But did you ever notice that they never tell you how to do that? The candlestick signals make that very simple to implement. The Candlestick Forum provides a highly informational e-book on how to use candlestick signal stop-loss procedures correctly. Of course, all investors want to be in winning trades. But reality shows us that not all trade

When considering the basics of stock market investing, there are generally three different investment options. Stocks, bonds, and cash. Does this sound simple? Well, unfortunately it gets very complicated from there. You see, each of these investment options has numerous types of investments that fall under it.

There is much to learn about each different investment option. Investing and trading can be intimidating for the beginner investing in the stock market for the first time. On the bright side, the amount of information that you need to learn has a direct relation to your investment style. There are basically three types of investors: aggressive, conservative, and moderate. The different types of investment options also cater to the two levels of risk tolerance: low risk and high risk.

Aggressive investors use a stock market investing strategy that involves greater stock volatility, which is higher risk. They also tend to invest in higher risk real estate and business ventures. For example, if an aggressive investor puts his or her money into an older apartment building then invests more money renovating the property, they are running a risk. They expect to be able to rent the apartments out for more money than the apartments are currently worth or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine and in other cases, it does not. It is a risk.

Conservative investors often invest in cash. Conservative investment options may include mutual funds, interest bearing savings accounts, money market accounts, CDs and US Treasury bills. These long term investing options are relatively safe, low risk investments that grow over an extended period of time.

Moderate investors often invest in bonds and cash and may occasionally participate in the stock market. Moderate stock market strategies include low or moderate risks. Also, moderate investors often invest in low risk real estate.

Before you start investing, it is very important that you learn about the different investment options and what those investments can do for you. Pay attention to past trends and understand the risks involved. History actually does repeat itself and investors know this first hand. Find a convenient Internet investment service that provides real time market information and gives you round-the-clock access to your account for secure and easy stock market online investing. Access trusted sources of research and investment information to keep you informed and up to date about mutual funds, equities, and fixed income investments. Be sure that you can obtain current company news and invest from any personal computer with Internet access and the appropriate Internet browser.

Help with Investing with Candlestick Signals

Where do most people get help with investing? When they start their investment activity, it is usually by getting information from where ever they can. That involves depending on a stockbroker or other investors. Getting help with investing from those sources is usually the blind leading the blind. Candlestick signals create a huge benefit for those that need help with investing. The signals were developed while incorporating common sense and logical investment practices into a graphic depiction. An investor, whether just beginning or with many years of experience, will obtain an education on what the correct procedures are for investing when using candlestick signals. Buy low, sell high. That is the true concept for investing. However, where most investors need help with investing is getting through the emotions. Reality demonstrates that most investors panic sell at the bottom and buy exuberantly at the top.

The information provided in a candlestick signal reflects pure common sense. High profit trades can be identified by simply evaluating what the candlestick signals/patterns reveal. One of the highest profit trades is a breakout. What do the candlestick formations reveal in a breakout? The normal process of what most investors do after a big price move! A breakout is usually the result of news that will dramatically change the perspective of the price potential. That news could be company specific or world events. More than likely, whatever created the breakout will be influencing the price of the stock for the next few weeks. Being able to analyze what the candlestick formations are revealing will help with the investing of a breakout situation.

What are the most effective breakouts? Ones that have had a relatively flat trading range, a range that has illustrated no investor interest one way or the other. All of a sudden, the price gaps up dramatically; usually with an inordinate percentage gain. The problem is not finding a breakout; the problem is how to trade a fast-moving price situation. This is where many investors need help with investing. This is also where candlestick signals can make the entry level much easier to execute. The Candlestick Forum provides a highly informational training CD on how to use candlesticks and breakouts effectively.

As illustrated in the IFO chart, the breakout was clearly obvious. The previous trading range had been very dull. Whatever news made a price break out was strong enough to influence the price for the next few months. In the case of InfoSonics Corp. IFO, no severe profit taking occurred until the price had already tripled, moving from the $5 area up toward the $15 area. The day after the gap up breakout illustrated quick profit taking but by the end of the day it closed at the top end of the trading range. This clearly demonstrated that although the price of the stock was up 50%, the buyers were still coming in.

IFO

Blue Dolphin Energy Company, BDCO, revealed some profit taking after the price moved up 250% in the first two days. The profit taking never came back into the gap up bullish candle that illustrated the breakout. Positive trading after two days of pullback, followed by a gap up in price, again clearly illustrated that the Bulls were trying to get into this position as quickly as possible. What made the breakout so compelling? Notice the Fry Pan Bottom type pattern that occurred prior to the breakout. This indecisive trading pattern will usually be followed by a very decisive rally.

With all of the technical analysis and research that goes into commodities investing, it is possible that the most important decision you will make doesn’t concern oil futures or the NASDAQ 100. Every trade you will make has one thing in common; while you might not always buy or sell, you will always be in contact with your futures broker. Your futures broker will be a part of everything you do and this fact makes your decision crucial.

The choice of futures brokers for commodity trading is not simply selecting to start a business relationship with a person, but it includes understanding the investment philosophy and available service of the futures brokerage firm. When choosing commodity futures brokers, there are several concepts to consider:

• Type of brokerage or the clearing arrangement
• A history of ethical business practices
• Amount of time doing business
• Level of commissions
• Level of service

Type of Brokerage Firm

Primarily there are two types of clearing arrangements for futures brokers, namely Futures Commission Merchants (FCM) and Introducing Brokers (IB). An FCM is a group of futures brokers that accepts orders to buy or sell options or futures contracts and accepts money or other assets from customers in connection with such orders. An IB, on the other hand, is a commodity broker who delegates the work of the trade execution, floor operation and back office operations to a FCM and acts primarily as an intermediary for your investment options.

History of Ethical Business Practices

Think about it this way; you will trust your commodity broker with a lot of money. Shouldn’t he or she have a history of doing things the right way? In addition, the brokerage firm should always have your best interests in mind and resolve any problems in a fair way. A good way to check this is to contact the National Futures Association and find out if the broker has any disciplinary actions against him or her; a few minutes worth of checking might be your best investment advice.

Amount of Time Doing Business

80% of all businesses go under within the first five years. A beginner investing makes enough of his or her own mistakes; a futures broker is even more vulnerable. Because of this, it is wise to choose someone who has five or more years in the business, giving them time to establish their investment abilities.

Level of Commissions

One of the most common investing mistakes is not knowing the cost of doing business. Commodity trading creates a lot of trades, so the cost can accumulate quickly. It is a wise investment basic to know how much the commissions run for your trades; you can easily find this out before deciding on your futures broker.

Level of Service

You need to ask yourself; how much help do I need? If you are learning to invest, you will likely need more involvement from your futures broker; if you have a lot of experience, you might need less. It is important to decide this because the level of support varies whether you are using a discount futures broker or a full service brokerage firm. Either way, it is important to honestly evaluate your current abilities and choose based on your needs.

Conclusion

Selecting a futures broker and a brokerage firm are very important decisions; no brokerage firm can guarantee that you will make money but it is a very important part of the process. You will find that choosing a futures broker for your commodities trading that will handle your account with the highest degree of integrity and professionalism will enhance your trading experience.

If you only listen to the slang, you would think that the stock market is like swapping cooking recipes…. “If you’ll give me your recipe for your mom’s Apple Pie, I’ll give you mine for Baked Eggplant.” The phrase “stock trading” in market talk means to buy or sell shares. While the technical explanation of a system that can manage the stock trading of over one billion shares per day would be staggering, there is still a general explanation of how to invest in stocks.

There are two basic forms of stock trading. They are:

Electronic

There is a concerted effort to move more trading to the computers and off the trading floors. This effort is meeting with resistance. Most markets, most notably the NASDAQ, trade stocks electronically. The futures’ markets trade in person on the floor of several exchanges, but that’s something to discuss at a different time. Here are the benefits of successful trading done electronically:

• The electronic markets use large computer networks to match buyers and sellers, rather than human brokers. Many large institutional traders, such as hedge funds, mutual funds, and so forth, prefer this method of trading.
• For the individual investor, you frequently can get almost instant confirmations on your trades, if that is important to you. It also facilitates further control of stock market online investing by putting you one step closer to the market.
• You still need a broker to handle your trades – individuals don’t have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.

Exchange Floor

If you think of traditional stock market basics, you are probably visualizing the floor of the New York Stock Exchange. When the market is open, you see hundreds of people rushing about shouting and gesturing to one another, talking on phones, watching monitors, and entering data into terminals. It could not appear any more out of control. At the end of the day, the markets work out all the trades and get ready for the next day.
Here is a step-by-step walk through the execution of a simple trade on the stock market floor:

• You tell your broker to buy 100 shares of ABC Corp at market.
• Your broker’s order department sends the order to their floor clerk on the exchange.
• The floor clerk alerts one of the firm’s floor traders, who find another floor trader willing to sell 100 shares of ABC Corp.
• The two agree on a price and complete the deal. The notification process goes back up the line and your broker calls you back with the final price. A few days later, you will receive confirmation of the transaction in the mail.

The markets handle tremendous amounts of stock market information. They are fast and efficient and they provide traders with the ability to find and make transactions in the blink of an eye. Even with beginner investing, stock trading can be as easy as mom’s Apple Pie.

In order to understand what the stock exchange is, it is important to first understand what an exchange is. An exchange is an institution that hosts a market where stocks and bonds, options and futures, and commodities are traded. It is where buyers and sellers can come together during specified hours to trade on business days. Rules are enforced by the exchange for you to learn depending on which exchange you choose to use when you begin investing in the stock market. A few exchanges include the American Stock Exchange, the London Stock Exchange, the NASDAQ, and the New York Stock Exchange (NYSE). These are among the most popular exchanges. There are also rules that are enforced by them and include regulations on the brokers and firms that work with them.

The origination of the Stock Exchange can be dated back to the 17th century. It is said that a group of stock brokers started to set up grounds on their own at the corner of Thread Needle Street and Sweetings Alley so that they could begin to buy and sell securities. By the 19th century the two primary functions of the exchange included buying stock, selling stocks and shares and also raising money for new ventures.

A stock exchange also provides facilities for the issue and redemption of securities and also provides for the payment of income and stock dividends. In order to be able to trade a security on an exchange, a company must be listed. Companies that are not listed on an exchange are sold Over the Counter (OTC). These companies are typically smaller and riskier because they do not meet the requirements to be listed on a stock exchange. This is actually the usual way that bonds are traded.  In dealing with Over the Counter trading brokers and dealers have to negotiate directly among themselves via the internet or via the phone. (There are no traders waiting to buy or sell unlisted securities). The National Association of Securities Dealers (NASD) monitors the transactions to ensure there is no illegal activity or stock price manipulation. The securities that are traded on an exchange include shares issued by listed companies, bonds, unit trusts, and other investment products. The original offering to investors of stocks and bonds is completed in the primary market, while the trading is completed in the secondary market. The stock exchange is the most important component of the stock market and is determined by supply and demand. Supply and demand is influenced by many factors that in turn affect the stock prices.

Of the stock exchanges, the NYSE is the largest and the oldest in the world. It is because of this and the fact that it is the exchange in which most major U.S. Blue Chip companies trade in, that it tends to control policy in playing the stock market. Blue chip stocks are issues of companies who are well established in their industry and who also have a reputation of producing earnings and paying stock dividends over a long period of time. Small cap stocks (as opposed to blue chip stocks) are.issues of companies that are not as established.

Penny stocks, .maybe just reading that phrase sounds the alarm of every stock buying tip you’ve ever received. They are risky, you can lose a fortune and they are merely scams to take your money. No matter what the complaint, many people are strongly opposed to investing in these shares and the companies that they represent. Yet a simple Google search will find you millions of hits on the phrase “penny stocks” and almost everyone knows someone who has either lost or made a bundle chasing the “next hot stock” in the penny stock world. With all of the interest, what is the fear, or fascination, with penny stocks?

A Definition of Penny Stocks

The best definition for penny stocks in the stock market comes from the Securities and Exchange Commission. According to the SEC, the term “penny stock” generally refers to low-priced (below $5), speculative securities of very small companies. To quote the SEC: “Penny stocks generally have market caps under $500M and are considered extremely speculative, particularly those that trade on low volumes over the counter. The Securities and Exchange Commission goes on to warn that, “Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them. Because it may be difficult to find quotations for certain penny stocks, they may be impossible to accurately price. Investors in these stocks should be prepared for the possibility that they may lose their whole investment.” This is not, nor ever will be, something a senior citizen wants to do with there retirement investing nor an investment for the causal investor.

Now you can see the fear factor but what is the attraction that can even draw in successful traders? For many people, penny stocks are Las Vegas, the lottery and the pot of gold at the end of the rainbow all rolled into one. For every average guy (or girl) that can’t buy Google stock at $500 or more per share, there are millions that can buy 5,000 shares of MEW Industries at $0.15 per share. Is MEW Industries going to make money? What do they make? Will they even still be in business tomorrow? Like plunking $3 into a slot machine or buying that lottery ticket with all of your favorite numbers, penny stocks give everyone the chance to make it big. The opportunity to turn your 5,000 shares of MEW Industries from a $0.15 stock to a $100 is just to appealing to most people as finding their way to the nearest casino.

The Risks Of Penny Stocks

Quite simply, the ultimate risk with penny stocks is that you can lose your entire investment; that statement right there should wake you up a bit! The risk to reward ratio for these stocks shows that while the possibility of great reward is there, the risk is very great as well. Lack of information to perform technical analysis, financial instability of the companies and scam artists all make penny stocks a virtual minefield of investing. Remember that after its fall from grace, WorldCom actually traded as a penny stock for a while and people actually bought it! In addition, using tricks like the “pump and dump,” unscrupulous traders with try to falsely lure investors with promises of a tremendous growth in a stock at which time they dump their shares for a large profit and leave the other investors holding the bag.

The key to investing in penny stocks

If you want to take a shot at it investing in penny stocks, caution has to be your rule.  First, don’t invest more than you can comfortably afford to lose and that doesn’t mean emptying your account with your broker! Select a reasonable amount as your risk premium. Second, make sure your trading plan is up to date and reflects the dangers of this type of investing.  Finally, learn before you invest! This is always true but more so when you are dealing with a marginal form of investing. Find companies that you can actually research and you will do much better.

Conclusion

Penny stocks are not for everyone. As appealing as they might be, the risks involved require that an investor dig into the data to protect him or herself from the associated stock volatility. So do your research, chart your targets, rub your lucky rabbit’s foot and proceed with caution!  Penny stocks can take you on a very exciting ride!

When picking stocks, your energy and time are better spent not worrying about the big ones that got away. Instead, the best investment advice I can give you is to use these two important personal commodities to find tomorrow’s winning stock picks.

If you are looking for individual sectors or stocks as investment options, start by thinking about what people are going to need more of in the near future and try picking stocks of companies that are leaders or trying to become leaders in those areas.

Some investors don’t want to mess with their portfolios and just want to try a small short-term gamble on something. This is perfectly OK, and probably prudent. The important thing is to know the difference between long term investing and short term investing because your stock picking goals with the two will probably be different.

A short-term speculative play with a loss of 10% might be too much of a loss because the idea of these plays is to get in and out very quickly because of stock volatility. And if you take hits of 30% to 40%, it won’t be long before your speculative capital is gone. Your long-term investments could probably survive a 20% drop in value if you are holding them for over 10 years.

Today is the time to think about the next big market downtrend because successful traders know it has to hit sooner or later. Some of the big name growth stocks may seem too high today, but for whatever reason, if they begin to head lower you should start to consider at what price level you would enter them and commit to buying them.
And remember that some people cannot make investment decisions because they think they can never do enough fundamental and technical analysis research in order to be confident about picking stocks. Face reality, we can never be absolutely sure of our stock picks because all of our investments involve some element of chance, greed and fear.

As long as you don’t put your entire stock trading plan in jeopardy, you may want to occasionally try picking stocks based on one of your hunches. Many times your instincts are right and when they are not, you can use this knowledge to learn how to invest better and make wiser stock picking decisions in the future.