Posts Tagged ‘trader’

How To Buy The Best Stocks

Saturday, January 30th, 2010

Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These stock indexes generally only contain major blue chip stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW 30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to easily buy and sell at the price you want without having a delay. You will also get a smaller spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered highly liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to aviod stocks that are bellow as this usually means the company is in trouble, although with the bear market of 2008/9 there have been a lot of good stocks at bargin prices between and . Avoid buying a stock that is below at anytime.

Another consideration to make is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option in order to protect your stock.

Be very cautious about buying a stock just before it’s earnings release, stocks often drop significantly if you come out with a poor report. Earnings are released 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

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How To Trade Options Correctly

Saturday, January 30th, 2010

There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of cash fast, or can be used to grow your capital consistently month after month.

There’s also a lot of hype about how complicated it is and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their ETF trading course on options.

Lets cover a few of the basics about options and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.

When trading stocks your leverage is 1:1, if you go on margin you can get get 1:2 leverage, but thats about it. With options it is not quite as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.

So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.

However the downside is that a big loss can also happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk.

What I’ve just described is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much lower dependance on getting the stock direction correct, but it still matters.

So should you learn to trade options?, in my opinion you should not do directional option trades until you become very good at trading stocks. This is because you really need to be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.

Whereas if you want to do non-directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.

Learning how to trade options is a very useful skill you have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from ETF Trading System.

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Online Foreign Exchange Trading

Tuesday, December 15th, 2009

Online foreign exchange trading will possibly provide profits for all those contemplating making an investment in the forex market. To put simply, an online currency exchange trading method is a method for using currency exchange rates of currency from diverse countries to buy one state’s currency when it is under valued, and exchange it for another nation’s currency if it is of an ordinary or a higher value, with the difference being the profit. The currency market is also known as the net foreign exchange trading, currency market. The online currency exchange trading market is the biggest online financial market in the world, with a daily average turnover of well over US $1 trillion. It is the only market having trading automation software, such as Forex Autopilot.

Online currency trading provides an internet platform for individuals that want to speculate on the exchange rate between two currencies. In doing the trades, the investors will sell and buy the different currencies with all their effort, in an attempt at making the highest possible profit for their money. In online forex trading, the newest reports of the market should be available in events that may take place in different countries. The online currency exchange market is the biggest market in the world with a daily reported volume of almost 2 trillion making it one of the most enthralling markets for trading. The online foreign exchange trading members will be investing on the stocks and the forex.  

The foreign-exchange is when you purchase one currency and sell another at the same time. The main purpose of trading on any market is to buy low and sell high. The foreign currency trading market forex is no exception. The products traded on this market are rates of currency for different countries. Folks can invest in stocks and foreign exchange also. Online forex trading depends on the net investment trading regarding the economics, rates, and the policies of the central bank, anticipations of market players and many other causes. If the money supply keeps racing, the bank may step up an open-market to tighten the credit investment.

The most well liked markets are the ones among the foreign exchange market. The supposition is thanks to the large size and the disposition for the currencies to move in strong trends. The degree of leverage that’s available in an attractive aspect is that of the online trading currencies. The foreign exchange trading markets are becoming highly regarded these days because there are so many extra strategies that can be used to get into the markets which are not available through the New York Stock exchange.

We have to study where we’re going to put our money, so that we can earn more cash by making the right selections. It takes at least 2 months worth of trading on the US market to equal the trades that are going on in the currency exchange trading markets in one day. The high level of leverage can lead to enormous swings between profit and loss without correct risk management.

By knowing this the seasonable traders are also infrequently getting losses, and if lost this can not significantly affect one’s personal money well being, with the speculation in the foreign exchange market being conducted with risk capital funds.

Online currency trading can crop big amounts of profits in forex, but occasionally folks will tell us that in trading some place else we may get better profits. They have not studied the currency exchange market obviously. The most online foreign exchange trading options are sometimes used by a giant multinational corporation who can make steady profits on a consistent ongoing basis.

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