Archive for October, 2008
October 31st, 2008 at 07:43pm
Under Guest+ Option Trading+ Stock Market
The stock market trading is information driven. The level of successes or failures
one achieves is a function of the volume of information in the arsenal of an investor. It is
an established fact that information is the greatest asset to investment success. To
have good success in the stock trading business, one must as a necessity know how
to gather and utilize every bit of information at our disposal. Knowing where to get
appropriate information is very essential to the stock trading venture. Presented
below are some sources where an investor can obtain relevant information for his or her
investment decision:
• From companies interim and audited financial performance reports in newspaper and magazines publications.
• From staff, suppliers, and creditors working in the company of interest. They could be friends, neighbors, acquaintance, old school mates etc
• Through a company end of year audited report.
• From auditors and accounting firms.
• From manuals, journals, and newsletters.
• From Stock Exchange in house publication daily official list, daily summary, weekly
Stock market report, and monthly Stock Market review.
• Through the electronic media such as radio and television broadcast.
• Attending Annual General Meetings even as proxy.
• Attending conferences, seminars, and symposia.
• From the internet especially finance related sites such as CNNmoney, Googlefinance,
Yahoofinance and etc.
• From Stock broking firms, financial houses, banks, company executives, and any other good means.
• From regulatory agencies.
By admin
October 27th, 2008 at 04:14pm
Under Option Trading
Talk to any traders, they will most probably quote you that options trading belongs to one of the riskiest type of trading. The mechanism of option trading is complicated enough to put many investors off, not to mention, taking a deeper perspective of what is beneath this mysterious and yet feared world of option trading.
Like many investors, I started off my trading experience with shares, or stock trading, conventionally thought of as the safest and easiest form of trading until I was exposed to the wonderful world of options trading a few years back. I have never looked back since then.
There are basically two types of options in options trading, the call option and the put option. Basically, a seller of a call option has the obligation to deliver 100 shares of the underlying once the option is being exercised. On the other hand, a seller of a put option will have 100 shares of the underlying being put to him upon exercised of the option.
In options selling, the seller of the option, be it a call or a put option, will have time working for him. He can make money if he is right, of course, and also make money even if he is wrong! However, when he is too wrong, then adjustment to his strategy will come in for the repair and in most cases, will make that losing trade into a winning trade too!
I started out options trading using the covered call strategy, the most conservative strategy that is believed to exist. As I explored more into the options world, I discovered another strategy which I thought is more powerful than the covered call strategy, at least that is my belief! That is, selling put options.
Covered call on stock option and selling a put option against an underlying will put the investor at the same amount of risk. If the stock goes to zero, the covered call writer will bear the full risk of his investment going to nil while the put option seller will also suffer the same fate with his put option being exercised against him.
Selling a put option against an underlying gives one the opportunity to possess the underlying at a price one is comfortable with and does not mind holding on to. For example, for an underlying share ‘A’ trading at $24 at this moment, I would sell a put option either in the current month or next at says $22. Out front, I will be collecting the premium from the sale of the put option. If the underlying price stays anywhere above $22, the put option sold will expire worthless and I stand to pocket the premium for free!
On the other hand, if the underlying drops to say $22, the put option sold will still expire worthless. The break-even point is $22 – the premium collected. However, if the share price drops to below $22, one must be prepared to buy the underlying at a discounted price of $22. Actually, the effective price you actually bought the 100 shares is $22 – premium. Good deal right?
Two cases here: First, with the put option expiring worthless, we will do the same thing again next month, selling put option against the underlying. Second case, the option is being exercised and the shares being put to us. The strategy of selling put option will be transformed to a covered call strategy in which we now write or sell call option against these 100 shares that we now owned.
I have found this strategy profitable, consistent and simple to use. Of course, depending on one’s appetite for profit margin and investing habit, this strategy could be worth your consideration. Good luck!
About the Author
uktank is the creator of the website http://www.anybodycanberich.com, which deals with options trading, specifically options selling.
By admin
October 23rd, 2008 at 11:45pm
Under Guest+ Option Trading+ Stock Market
A trading account at a brokerage firm allows you to buy and sell a full range of securities available on the open market, but choose your broker carefully.
Instructions
Difficulty: Moderately Easy
Things You’ll Need:
• Financial Calculator
• Brokerage Accounts
• Paper And Pencils
• Personal Financial Software
Gathering Information
Step1
Call several major brokerage firms in your area and ask for the broker-of-the-day, duty broker or new accounts broker. Be ready to take careful notes of each conversation.
Step2
Ask each broker about the firm’s minimum deposit for opening a trading-only or cash account and what account features are offered (for example, the ability to trade on margin).
Step3
Inquire about account fees, broker compensation and whether the firm provides any online services. Ask for brochures.
Step4
Thoroughly discuss what costs, such as commissions, are negotiable. This is important!
Choosing the Brokerage
Step1
Review the information you have gathered and rank the top three brokerage firms.
Step2
Call the brokers, top-ranked firm first, and make appointments to visit their offices during market hours.
Step3
Tour each office and note the availability of research materials, a customer computer terminal and a cashier station for processing deposits and checks.
Step4
Choose the firm that you feel offers the most resources and services that you will use for the best cost.
Opening the Account
Step1
Take home the documents requiring your signature for opening an account and carefully read all the terms and conditions to which you will be agreeing.
Step2
Open your account only after having all your questions answered and making sure you understand critical information regarding your account’s cost, features and limitations.
Step3
Get copies of all signed documents relating to your account
Tips & Warnings
• Deposits in the money market funds of brokerage accounts get better returns than bank saving accounts, but they are not FDIC-insured.
• Traditional brokers are compensated for assets under management and trading activity. If you maintain an account with a low balance and few trades, don’t expect much attention from your broker.
• Check your brokerage statements carefully and correct errors immediately to avoid possible tax-reporting problems later.
• Don’t depend entirely on brokerage record keeping. Have a system for filing all brokerage statements, confirmations and related documents
eHow Article: How to Open a Trading Account at a Brokerage Firm.
eHow Personal Finance Editor
By admin
October 23rd, 2008 at 10:54pm
Under Guest+ Option Trading+ Stock Market
Trading stocks online can seem overwhelming as there are many sites out there which offer their services. Cheap online stock trading does not identify a reputable company. In fact it may produce just the opposite. Continue reading below to find the best methods for trading stocks online.
Instructions:
Step1: Trading stocks online comes with the same risks as any other stock trading company. The benefit is that you can trade real time from the privacy of your own home. Remember that this is a risky business and there is no guarantee of return on your investment. Consider the risk and the amount of the investment before proceeding further.
Step2: Research. The first step to finding cheap online stock trading is to know the market. If you are not already versed in knowledge of this field, you can find all the information you need online, just be careful to only pull information from reputable site so as to avoid false information. Also try to avoid sites belonging to online stock brokers until you have a good idea what you are getting into. This will keep you from being swayed to their company based on false promises.
Step3: Once you have a good idea of the market, begin to check into various companies that trade stocks online. See what types of investor tools they offer. What types of resources and advice do they have available and what are the qualifications of the person providing the information? These are the types of things that must be considered otherwise you may inadvertently trust your money to the advice of someone who does not know what they are doing which could have devastating repercussions.
Step4: Once you have researched online stock trading sites, it can be beneficial to seek information outside of the site. Search for reviews from google or yahoo by adding in keywords like scam and review to the name of the company. If there are a number of people claiming that the company has a bad reputation, you may want to consider trading stocks through a different company. There are many reputable companies out there to trade through.
Step5: Once you have made a decision on an online stock trading company read through as much of their material as possible. Make sure to familiarize yourself with all of their tools so that if you need to make a change to your portfolio you will not have to wait for help from the company. Everything you need should be able to be done at a moment’s notice and online.
eHow Article: How to Find Cheap Online Stock Trading, by Anthony Delgado
By admin
October 21st, 2008 at 12:16am
Under Option Trading+ Stock Market
Article Source: http://www.Free-Articles-Zone.com Many private traders deem that options are thought to be traded by experts with good mathematical skill. There are two reasons why many private traders think so, that are. trading options are too risky and difficult. Many private traders think that it is easier to just trade stocks or futures. So, a simple question, if trading futures or buying stocks looks so much easier and less complex to do, then why options are available to be traded? The actual reason is that options, which are unlike other trading vehicle, can offer a trading edge to the private traders and allow them to cover almost any investment strategy and risk profile with flexibility. In many ways, options are the most superior trading vehicles that many traders use nowadays. To trade options, you certainly do not need to be an expert in financing.
In the book “The New Market Wizards” written by Jack Schwager, concludes that nobody can win without an edge, even you have the world greatest discipline and money management skill. If you trade futures on the All Ordinaries Share Price Index (SPI), you have to know exactly what is your trading edge; particularly, if you are a professional floor trader. With the trading edge, you should able to see the buy and sell orders that coming into the trading pit and also who is buyer and seller. Besides, the speed of execution of your orders and the transaction costs also should able to see. The popularity of the stocks, options and futures is increasing; therefore, many people trade these products. Only a small proportion of these traders apply a real trading edge. The main reasons for the unsuccessful of many private traders in the financial markets are due to the lack of a trading edge, poor risk management and insufficient capital. The key point here is to find an edge, utilize it consistently and use the right risk and money management techniques. When the odds are in your favor, it is better that you learn how to trade options. It is also importantly when the odds are not in your favor, make sure you stand aside. You are doing yourself with the best possible chance of success if you doing so. Trading systems are as many as traders. We won’t trade a system if it doesn’t provide us with some sort of edge. If you have a system, which is able to give you an edge, why not further enhance your edge by trading options in a right circumstance. Before placing a trade, try to get as many factors that going in your favor as possible. By practicing this, you provide yourself with a much greater chance to success in the long run.
Without doubt, with any form of trading, there are no absolute guarantees. You can’t help compared to the many of the people who do not know anything about options and trade without an edge. But, you have a better chance to succeed in the long run and reach your financial ambitions. Flexibilities that can be offered by options are as follows:
i) Profit gained from an accurately anticipating rising or falling market.
ii) With a relatively small disbursement, your potential returns can be greatly magnified.
iii) If the market goes to the way that you anticipate, you have unlimited profit potential, whilst you limit your risk by choosing an amount that you afford to risk.
iv) Profit still can be gained by correctly picking options where the market will not go.
v) Profit gained from flat or non-trending phases markets.
vi) Profit gained by letting the time passes by.
vii) Profit gained at an increasing rate when the market moves further in your favor.
Extremely flexible trading tool is option. You can use options trading strategies that are precisely suit your view of market, whilst sewing them closely to your personal risk tolerance level.
People who trade options for a living and as their business will try to understand and apply the principles, which have been outlined in this article. They do so because they know that there is an edge for then to be gained compare to the people who don’t. They are similar to the typical casino gambler if they do not trade with edge; their money will be destined to be lost ultimately. They are exactly like the casino itself if they trade with trading edge. For those people who trade the markets to make their living, you probably don’t have the chance to talk with them. Their occupation looks exotic and these people are imagined as weird mathematical geniuses who could give their money to Kasparov to run it in a chess tournament. The flair of occupational options traders couldn’t be going beyond from the veracity. Although many of the professional options traders who involve in the financial markets are intelligent people, they were not in the genius category. Nevertheless, they have one thing in common among them. They knew and applied certain unique principles in their options trading. The principles that they utilized offered then an edge to successfully trading in the market. Therefore, throughout their options trading life, they earn a good living.
You don’t have to be a professional options trader. The edge offered from the principles to the professional options traders also available to the private traders as well. Practically, these principles can be learnt and applied by yourself and the odds can be helped to put it more squarely in your favor. All the advantages that most of the professional options traders have may not be possessed by you. By using the same principles that they used, you can learn to make your trading more selective. In this way, you too can benefit from a trading edge.
About the author:
Alexander Chong -
Author of “Workable Option Trading Strategies”
http://www.makemoneystocks.com/
By admin
October 11th, 2008 at 08:45am
Under Guest+ Option Trading+ Stock Market
Trade the trend for the trend is your friend is a popular slogan in the stock market trading. For an investor to profit in his or her stock trading efforts, such one must make a deliberate effort to learn and understand the trend trading strategy.
The index for evaluating trends in the stock market is the year low and year high of a stock. This index implies the highest price and the lowest price in which a share was sold or bought in the last 52 weeks .The up and down movement of share prices in the stock market follows a regular cycle. If the stock price goes up, it will definitely go down. Conversely, if it goes down, it will go up. All stocks listed in the stock exchange must as a matter of constancy experience their up and down moment, whether they like it or not. It is the character of the market. It therefore beholds that having an understanding of this strategy can create an astronomical profit for any investor.
It is important that an investor considers the price before he enters the stock market. Buying into a stock within the year high figure indicates that one is buying at a high price. Thus, negating the “Buy low”, Sell High” principle. On the other hand, it’s advisable that a potential investor buys into a stock when the price is “within” the year low in order to take good profit from such transaction.
To do this, create a table of stock(s) of interest against price(s) every week, and months over a couple of years. Detail study of the table will reveal a trend. That is, year high and year low that will follow a regular pattern. It is pertinent that after determining the best price to enter the market via the stock trend analysis, that we compliment it with an analysis of the present health of the firm for positive confirmation. Key index to look out for are PE ratio, Earning per share (EPS), Profit after tax, Quarterly Reports, etc. This information can be accessed readily via yahoo finance. Once done, the next step is to hit the google search box and look up all recent articles about the company in the press, recent contracted signed or revoked, takeovers, mergers, litigations, change in managements composition, insiders’ information; and any other report that can impact positively on the fortunes of any organization.
Trading the trend is a sure-fire strategy that can create obscene profit into your account. Once you get acquainted with this stock market trading tip, earning becomes easy and exciting.
By admin
October 4th, 2008 at 01:59pm
Under Guest+ Option Trading+ Stock Market
When primitive people have invented money, all they have in mind is to find some means to solidly show the actual exchange of goods or services between two persons or groups. Since then, any exchanges of goods have been centered on money, bearing the most tangible form of trade.
As time pass by, trading has significantly evolved in different industries where money is not the primary agent. Trading becomes a profitable venture; and had created a remarkable spot in the economy.
Today, there are many kinds of trading. Every type of trading depends on the kind of exchange that will take place. For instance, FOREX or foreign exchange trading focused on foreign currencies.
Among the many trading types, day trading has slowly etched a name in the industry. With its remarkable turn of profits, day trading has quite gained a good reputation.
What is Day Trading?
Day trading generally stands for the system of selling and buying financial tools such as bonds or stocks throughout the day.
In other words, day trading is a series of material exchanges that all happens within the day. Hence, in day trading, every piece of stock bought has its corresponding sale. The profit or deficit is identified on the discrepancies between the goods and the trade price.
The main concept of day trading is based on the premise that all of the transactions are carried out within the day to ensure that there are no changes on the current closing price.
Changes usually take place overnight, where the preceding closing price will be changed depending on the result of the day’s trading activities.
Sounds easy? Guess again.
Day trading may not sound complicated and may not even look perilous to one’s financial status. However, trading experts say that more people tend to lose during the day trading. Statistical reports show that nearly 90% of day traders spend more money without gaining something in return.
For this reason, it is important that every day trader should know how to deal with the matter intelligently. It takes some wits and quick thinking just to overcome any probable loss in day trading.
Here are some day trading tips for beginners:
1. Chop down shortfalls quick
The secret is to regain back what you have lost. Try to handle the situation positively and maneuver the condition to a constructive one. There is no use to cry over spilled milk. What you need to do is to reduce the losses with quick, sharp moves.
2. Go with the flow
Like traffic, taking the counter flow is not advisable in day trading. It would be better if you will just go with the flow. This means that you have to focus on the high-selling stocks and sell those that fall under “short-selling” stocks.
This is based on the belief that the development of stocks will continue to rise. Luckily, 8 out of 10 day traders find this strategy effective.
3. Control your emotions
Some day traders tend to be emotionally involved with their dealings.
In reality, day trading can really create hype. Hence, emotional people tend to act on impulse. Any good news will immediately alert day traders to expect a positive turnover of stocks. Hence, if you are too emotional, you may get excited and act without even evaluating the situation.
To avoid trouble, it would be better to control your emotions and analyze each condition first before making a move. If you lost, analyze the situation and identify where you have been wrong.
Do not take your defeats seriously. Keep in mind that an open mind is important to overcome problems encountered in day trading. This will help you achieve the profits that you want.
By admin