Tuesday, December 1, 2009
Friday, October 23, 2009
Boost Investment Profits: Learn Forex Trading
If the stock market has been a rough ride this year, learn Forex trading and get your investment portfolio back on track. The benefits are greater than playing the stock market and, unfortunately, the losses can be just as great. However, if you educate yourself and increase your understanding of the market, trading currencies in the Foreign Exchange market could be a very lucrative shift in your investment strategy.
The Forex, or FX which is an abbreviated reference to the Foreign Exchange market, is the biggest money market in the planet. It's even larger than the stock market. Due to the Forex factors, which include low volatility, good liquidity and the ability to leverage, you can gain and lose money very quickly.
The fundamentals of Foreign Exchange are fairly simple. It's the simultaneous purchase of currency, such as the US dollar while selling another currency, such as the Japanese Yen. Currencies are always traded in twos and are traded electronically. The Forex market isn't in a physical place, such as the New York Stock Exchange. They're referred to as an OTC market, or "over-the-counter."
It's important when you're first starting out to identify which global currencies are most often traded. These are generally from countries with stable administrations, credible banking systems and low inflation. Those currencies include the US Dollar, Swiss Franc, Australian and Canadian Dollars and The Euro.
There was a time when money trading was an activity which was restricted to institutions such as banks, hedge funds and big corporations. Because of the Internet, the Forex market is now accessible by individual investors. Some of these traders are in it for the sheer speculation, hoping to cash in on profits gained from instant fluctuations in exchange rates. Others are seeking a way to protect their investments from adverse fluctuations in rates in the future. Businesses in particular fall into this second category trying to hedge against risk should future exchange rates fall dramatically.
The Forex market is open all day long over a five day week. This is to accommodate trades across the globe in all time zones. This allows investors the freedom to trade at any time of the day, capitalizing on a market that changes, virtually, when the wind changes direction.
If the Forex market has captured your imagination, speak to your financial adviser to ensure that you have a good understanding of currency trading. You'll want to minimize your losses when you first get going. There are many websites on the internet where you can practice Forex trading by making simulated trades without using real money.
The Forex, or FX which is an abbreviated reference to the Foreign Exchange market, is the biggest money market in the planet. It's even larger than the stock market. Due to the Forex factors, which include low volatility, good liquidity and the ability to leverage, you can gain and lose money very quickly.
The fundamentals of Foreign Exchange are fairly simple. It's the simultaneous purchase of currency, such as the US dollar while selling another currency, such as the Japanese Yen. Currencies are always traded in twos and are traded electronically. The Forex market isn't in a physical place, such as the New York Stock Exchange. They're referred to as an OTC market, or "over-the-counter."
It's important when you're first starting out to identify which global currencies are most often traded. These are generally from countries with stable administrations, credible banking systems and low inflation. Those currencies include the US Dollar, Swiss Franc, Australian and Canadian Dollars and The Euro.
There was a time when money trading was an activity which was restricted to institutions such as banks, hedge funds and big corporations. Because of the Internet, the Forex market is now accessible by individual investors. Some of these traders are in it for the sheer speculation, hoping to cash in on profits gained from instant fluctuations in exchange rates. Others are seeking a way to protect their investments from adverse fluctuations in rates in the future. Businesses in particular fall into this second category trying to hedge against risk should future exchange rates fall dramatically.
The Forex market is open all day long over a five day week. This is to accommodate trades across the globe in all time zones. This allows investors the freedom to trade at any time of the day, capitalizing on a market that changes, virtually, when the wind changes direction.
If the Forex market has captured your imagination, speak to your financial adviser to ensure that you have a good understanding of currency trading. You'll want to minimize your losses when you first get going. There are many websites on the internet where you can practice Forex trading by making simulated trades without using real money.
How To Profit When Investing In The Stock Market
If you have been trading stocks for any length of time, I guarantee you've noticed how quickly the market can fluctuate This makes it difficult for many people to choose a good company to invest in and even more difficult to profit in the stock market once they have invested money. In the following article, we will discuss some important information about how to get ahead when you invest in the stock market.
Unfortunately, only a few people are able to buy and sell at the right time. Because it is now so easy to buy and sell stocks via the internet, there are many people who get ahead of themselves, so to speak, and end up trading at the wrong times. In reality, there is no stock market investment that is one hundred percent guaranteed, therefore, you must be able to recognize the best opportunities when you invest in the stock market to get ahead. Maximum profits can only be achieved when you learn to spot these moments. Never gamble all that you have with just one company, especially if you are a newbie to the stock market. As a newcomer, you can get ahead by starting out with small investments as opposed to large stock market investments. Once you have a better understanding of the stock market and can find some of its behaviors, you will be able to make smarter decisions when investing. If you are not ready to lose any money, do not invest in any company that you are not comfortable with. It is a smart idea for any guru or newbie of the stock market to make comfortable buys and sells. Of course, you will have to take some risks when you invest in the stock market, but the key is to avoid the losers in the stock market if you want to get ahead. Missing out on a good stock will not hurt you as much as investing in a losing trade.
To minimize losses and maintain profit, stock market investing gurus often use a technique that is known as the stop loss. In this technique, stock market investors will hang on to a stock while it is rising, or doing its best. At that time, they maintain a mental selling price should they need to liquidate their shares for cash at any time. This may be a strategy that you are interested in learning if you plan to spend any time trading in the stock market. However, you will want to have sufficient experience in the stock market before attempting this sort of strategy. This is undoubtedly not a technique that you will want to try while just learning how to invest in the stock market.
Unfortunately, only a few people are able to buy and sell at the right time. Because it is now so easy to buy and sell stocks via the internet, there are many people who get ahead of themselves, so to speak, and end up trading at the wrong times. In reality, there is no stock market investment that is one hundred percent guaranteed, therefore, you must be able to recognize the best opportunities when you invest in the stock market to get ahead. Maximum profits can only be achieved when you learn to spot these moments. Never gamble all that you have with just one company, especially if you are a newbie to the stock market. As a newcomer, you can get ahead by starting out with small investments as opposed to large stock market investments. Once you have a better understanding of the stock market and can find some of its behaviors, you will be able to make smarter decisions when investing. If you are not ready to lose any money, do not invest in any company that you are not comfortable with. It is a smart idea for any guru or newbie of the stock market to make comfortable buys and sells. Of course, you will have to take some risks when you invest in the stock market, but the key is to avoid the losers in the stock market if you want to get ahead. Missing out on a good stock will not hurt you as much as investing in a losing trade.
To minimize losses and maintain profit, stock market investing gurus often use a technique that is known as the stop loss. In this technique, stock market investors will hang on to a stock while it is rising, or doing its best. At that time, they maintain a mental selling price should they need to liquidate their shares for cash at any time. This may be a strategy that you are interested in learning if you plan to spend any time trading in the stock market. However, you will want to have sufficient experience in the stock market before attempting this sort of strategy. This is undoubtedly not a technique that you will want to try while just learning how to invest in the stock market.
Wednesday, October 7, 2009
Options strategies
An option strategy is implemented by combining one or more option positions and possibly an underlying stock position. Options are financial instruments that give the buyer the right to buy (for a call option) or sell (for a put option) the underlying security at some specific point of time in the future (European Option) or until some specific point of time in the future (American Option) for a price (strike price), which is fixed in advance (when the option is bought). Options strategies can favor movements in the underlying stock that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility. The option positions used can be long and/or short positions in calls and/or puts at various strikes.
Calls increase in value as the underlying stock increases in value. Likewise puts increase in value as the underlying stock decreases in value. Buying both a call and a put means that if the underlying stock moves up the call increases in value and likewise if the underlying stock moves down the put increases in value. The combined position can increase in value if the stock moves significantly in either direction. (The position loses money if the stock stays at the same price or within a range of the price when the position was established.) This strategy is called a straddle. It is one of many options strategies that investors can employ.
A call option is a financial contract between two parties, the buyer and the seller of this type of option. It is the option to buy shares of stock at a specified time in the future.[1] Often it is simply labeled a "call". The buyer of the option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument (the underlying instrument) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or "writer") is obligated to sell the commodity or financial instrument should the buyer so decide. The buyer pays a fee (called a premium) for this right. Call options are most profitable for the buyer when the underlying instrument is moving up, making the price of the underlying instrument closer to the strike price. The call buyer believes it's likely the price of the underlying asset will rise by the exercise date. The risk is limited to the premium. The profit for the buyer can be very large, and is limited by how high underlying's spot rises. When the price of the underlying instrument surpasses the strike price, the option is said to be "in the money".
Call options can be purchased on many financial instruments other than stock in a corporation. Options can be purchased on futures on interest rates, for example (see interest rate cap), and on commodities like gold or crude oil. A tradeable call option should not be confused with either Incentive stock options or with a warrant. An incentive stock option, the option to buy stock in a particular company, is a right granted by a corporation to a particular person (typically executives) to purchase treasury stock. When an incentive stock option is exercised, new shares are issued. Incentive stock options are not traded on the open market. In contrast, when a call option is exercised, the underlying asset is transferred from one owner to another.
Stock Options
Option (finance): In finance, an option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price. In return for granting the option, the seller collects a payment (the premium) from the buyer. A call option gives the buyer the right to buy the underlying asset; a put option gives the buyer of the option the right to sell the underlying asset. If the buyer chooses to exercise this right, the seller is obliged to sell or buy the asset at the agreed price. The buyer may choose not to exercise the right and let it expire. The underlying asset can be a piece of property, or shares of stock or some other security, such as, among others, a futures contract. For example, buying a call option provides the right to buy a specified quantity of a security at a set agreed amount, known as the 'strike price' at some time on or before expiration, while buying a put option provides the right to sell. Upon the option holder's choice to exercise the option, the party who sold, or wrote the option, must fulfill the terms of the contract.
Every financial option is a contract between the two counterparties with the terms of the option specified in a term sheet. Option contracts may be quite complicated; however, at minimum, they usually contain the following specifications:
Every financial option is a contract between the two counterparties with the terms of the option specified in a term sheet. Option contracts may be quite complicated; however, at minimum, they usually contain the following specifications:
- whether the option holder has the right to buy (a call option) or the right to sell (a put option)
- the quantity and class of the underlying asset(s) (e.g. 100 shares of XYZ Co. B stock)
- the strike price, also known as the exercise price, which is the price at which the underlying transaction will occur upon exercise
- the expiration date, or expiry, which is the last date the option can be exercised
- the settlement terms, for instance whether the writer must deliver the actual asset on exercise, or may simply tender the equivalent cash amount
- the terms by which the option is quoted in the market to convert the quoted price into the actual premium–the total amount paid by the holder to the writer of the option.
Types of Options:
The primary types of financial options are:
§ Exchange traded options (also called "listed options") are a class of exchange traded derivatives. Exchange traded options have standardized contracts, and are settled through a clearing house with fulfillment guaranteed by the credit of the exchange. Since the contracts are standardized, accurate pricing models are often available. Exchange traded options include:[4][5]
1. stock options,
2. commodity options,
3. bond options and other interest rate options
4. stock market index options or, simply, index options and
5. options on futures contracts
§ Over-the-counter options (OTC options, also called "dealer options") are traded between two private parties, and are not listed on an exchange. The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, at least one of the counterparties to an OTC option is a well-capitalized institution. Option types commonly traded over the counter include:
1. interest rate options
2. currency cross rate options, and
3. options on swaps or swaptions.
§ Employee stock options are issued by a company to its employees as compensation.
Employee Stock Option:
An employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder's interest with those of the business' shareholders. If the company's stock rises, holders of options experience a direct financial benefit. This gives employees an incentive to behave in ways that will boost the company's stock price.
Employee stock options are mostly offered to management as part of their executive compensation package. They are also offered to lower staff, especially by businesses that are not yet profitable. They can also be offered to non-employees: suppliers, consultants, lawyers and promoters for services rendered.Employee stock options (ESOs) are non-standardized calls that are issued as a private contract between the employer and employee. Over the course of employment, a company generally issues vested ESOs to an employee which are struck at a particular price, generally the company's current stock price. Depending on the vesting schedule and the maturity of the options, the employee may elect to exercise the options at some point, obligating the company to sell the employee its stock at whatever stock price was used as the strike price. At that point, the employee may either sell the stock, or hold on to it in the hope of further price appreciation or hedge the stock position with listed calls and puts.
Types of Employee Stock Options:
In the U.S., stock options granted to employees are of two forms, that differ primarily in their tax treatment. They may be either:
- Incentive stock options (ISOs)
- Non-qualified stock options (NQSOs or NSOs)
Thursday, September 10, 2009
Australian Securities Exchange
The Australian Securities Exchange (ASX) is the primary stock exchange in Australia. The ASX began as separate state-based exchanges established as early as 1861. Today trading is all-electronic and the exchange is a public company, listed on the exchange itself.The Australian Securities Exchange as it is now known resulted from the merger of the Australian Stock Exchange and the Sydney Futures Exchange in December 2006.
The biggest stocks traded on the ASX, in terms of their market capitalisation, include BHP Billiton, Commonwealth Bank of Australia, Telstra Corporation, Rio Tinto, National Australia Bank and Australia and New Zealand Banking Group. The ASX is a public company, and its own shares are traded on the ASX.
HOW TO START TRADING IN ASX:
First-time Investors: Starting in the sharemarket seems daunting to many people but in reality once you have learnt some basic information it is straight forward. Below is a step-by-step guide put together by our education experts to help you start investing.
1)Sign up with MyASX: MyASX is a collection of free sharemarket services. With MyASX you can play Sharemarket Games, create Watchlists, subscribe to monthly email newsletters, learn how to start and run an investment club and access free online classes.
To access these services, you must be registered.
2)Online education: Learning how to invest is an important skill. By working through these ASX classes you wil develop a base of knowledge that will help you understand how to invest and determine what might be a suitable investment for you.
Audio visual presentations - covers sharemarket fundamentals. Presentations run for a few minutes.
3) Research: Simple research involves things such as reading financial newspapers, considering world events and watching how markets and the price of individual companies react. Share trading and financial education seminars help new investors keep up to date with a variety of sharemarket topics.
4) Find a stockbroker: Once you have a basic understanding of how the market operates and an awareness of some companies you will need a stockbroker. There are a couple of things to consider before you start looking for a broker, such as how much money you would like to invest in the market or whether or not you will need help to decide which shares to invest in.Our Find a broker search engine allows you to select the products, services and types of investments you are looking to get from a broker.
Types of brokers:
Full service brokers
Offering advice on buying and selling securities, make recommendations, provide research and compile tailored investment plans. They typically charge a higher brokerage fee as a result of the advice and other services offered.
Accredited advisers are also available for options, warrants and futures.
Non-advisory brokers:
Offering no recommendations or advice regarding the appropriateness of your decision, hence their brokerage fees tend to be lower. This is an attractive option for investors confident in their sharemarket knowledge and trading decisions. They are typically either internet based or telephone based.
5)Monitor your investments: Once you have invested you will need to monitor the portfolio performance.Depending on your objectives you may monitor once a year or several times a day. Watchlists will help you keep track of the value of a number of shares and other securities quickly and easily.
Dividends:Your companies may also pay dividends from time to time. You may need details about the payments for tax purposes. Detailed dividend information is available from the Dividends pages.
6) Keep learning: Smart investors never stop learning. ASX classes, newspapers, television programmes, stockbroker research publications, company announcements are all good sources of information for investors.
ASX has a pre-market session from 07:00am to 10:00am AEST and a normal trading session from 10:00am to 04:00pm AEST.
The biggest stocks traded on the ASX, in terms of their market capitalisation, include BHP Billiton, Commonwealth Bank of Australia, Telstra Corporation, Rio Tinto, National Australia Bank and Australia and New Zealand Banking Group. The ASX is a public company, and its own shares are traded on the ASX.
HOW TO START TRADING IN ASX:
First-time Investors: Starting in the sharemarket seems daunting to many people but in reality once you have learnt some basic information it is straight forward. Below is a step-by-step guide put together by our education experts to help you start investing.
1)Sign up with MyASX: MyASX is a collection of free sharemarket services. With MyASX you can play Sharemarket Games, create Watchlists, subscribe to monthly email newsletters, learn how to start and run an investment club and access free online classes.
To access these services, you must be registered.
2)Online education: Learning how to invest is an important skill. By working through these ASX classes you wil develop a base of knowledge that will help you understand how to invest and determine what might be a suitable investment for you.
Audio visual presentations - covers sharemarket fundamentals. Presentations run for a few minutes.
3) Research: Simple research involves things such as reading financial newspapers, considering world events and watching how markets and the price of individual companies react. Share trading and financial education seminars help new investors keep up to date with a variety of sharemarket topics.
4) Find a stockbroker: Once you have a basic understanding of how the market operates and an awareness of some companies you will need a stockbroker. There are a couple of things to consider before you start looking for a broker, such as how much money you would like to invest in the market or whether or not you will need help to decide which shares to invest in.Our Find a broker search engine allows you to select the products, services and types of investments you are looking to get from a broker.
Types of brokers:
Full service brokers
Offering advice on buying and selling securities, make recommendations, provide research and compile tailored investment plans. They typically charge a higher brokerage fee as a result of the advice and other services offered.
Accredited advisers are also available for options, warrants and futures.
Non-advisory brokers:
Offering no recommendations or advice regarding the appropriateness of your decision, hence their brokerage fees tend to be lower. This is an attractive option for investors confident in their sharemarket knowledge and trading decisions. They are typically either internet based or telephone based.
5)Monitor your investments: Once you have invested you will need to monitor the portfolio performance.Depending on your objectives you may monitor once a year or several times a day. Watchlists will help you keep track of the value of a number of shares and other securities quickly and easily.
Dividends:Your companies may also pay dividends from time to time. You may need details about the payments for tax purposes. Detailed dividend information is available from the Dividends pages.
6) Keep learning: Smart investors never stop learning. ASX classes, newspapers, television programmes, stockbroker research publications, company announcements are all good sources of information for investors.
ASX has a pre-market session from 07:00am to 10:00am AEST and a normal trading session from 10:00am to 04:00pm AEST.
Friday, September 4, 2009
CANADA StockMarket
Canada's New Stock Exchange, known as CNSX, is an alternative stock exchange in Canada. The CNSX offers simplified reporting requirements and reduced barriers to listing. It is an alternative for microcap and emerging companies. It had been known as CNQ until the organization re-branded itself in November, 2008.
The CNSX is located in Toronto, Canada and maintains a branch office in Vancouver. Responding to the consolidation of stock exchanges in Canada, CNSX's founders identified the need for a low cost, streamlined stock exchange – with an extremely high standard of disclosure. CNSX's unique market model matches enhanced disclosure and streamlined issuer regulation with leading edge technology to meet the needs and characteristics of emerging companies, their investors and investment dealers. This model, combined with comprehensive regulatory oversight, provides an efficient new marketplace that fosters integrity, transparency and liquidity for trading equity securities.
Here is the information just to know the trading basics.
HOW TO START TRADING:
New Issuers: The web site makes it very easy for emerging companies to apply to CNSX. All the necessary Issuer forms and regulatory documents are available, for downloading in PDF format, from the site’s Issuer Info area. And consistent with our principles of openness and disclosure, all CNSX Issuer Policies are easily accessible, and downloadable, in PDF format. These Policies are designed to facilitate the ability of small-cap companies to list their securities for trading on CNSX's stock exchange. We have avoided unnecessary and overly burdensome requirements which, for many companies, can be a real impediment to conducting their own business. Once approved for listing on CNSX, all Issuers have direct access to manage their company web page in the Disclosure Hall through the use of a secure extranet service. For example, Issuers maintain an updated list of press releases, media announcements, capitalization info, etc. through their extranet connection.
Dealers: Investment dealers assisted in the development of the CNSX Trading Rules and the opportunities CNSX's market model provides for Market Makers. Market Makers are authorized dealers who are required to maintain liquidity by entering bids and offers for designated securities, to facilitate a continuous two-sided market. In this hybrid market model all orders are entered into a central limit order book for execution by the automated trading system.
CNSX’s trading rules and operational procedures are designed to ensure full price and time priority. In addition Market Makers receive order flow from non market makers and their clients, concentrating the available liquidity to facilitate active trading of junior stocks.
CNSX Approved Traders may apply to CNSX to become a Market Maker for any number of CNSX Issuer securities. Simply download the PDF Application and send it in; in most cases applications for Market Maker will be processed within 24 hours.
Investors:Investors and other interested members of the general public will appreciate the enhanced disclosure provided by Issuers as well as the functionality and capabilities provided by cnsx.ca.
Investors are able to follow their CNSX investments directly online through the Trading Summaries on the Home Page, or in the Market Activity area of the CNSX web site. Also, a stock search, by name or symbol, is easily accessible from any page on the web site. Users will also appreciate the Investor Info area of the site. This area is divided into three sections: Glossary of Terms; Investment Risk; Investor Education.
The Traders - Inside Canada's Stock Market
Gold Diggers of 1929 : Canada and the Great Stock Market Crash
The CNSX is located in Toronto, Canada and maintains a branch office in Vancouver. Responding to the consolidation of stock exchanges in Canada, CNSX's founders identified the need for a low cost, streamlined stock exchange – with an extremely high standard of disclosure. CNSX's unique market model matches enhanced disclosure and streamlined issuer regulation with leading edge technology to meet the needs and characteristics of emerging companies, their investors and investment dealers. This model, combined with comprehensive regulatory oversight, provides an efficient new marketplace that fosters integrity, transparency and liquidity for trading equity securities.
Here is the information just to know the trading basics.
HOW TO START TRADING:
New Issuers: The web site makes it very easy for emerging companies to apply to CNSX. All the necessary Issuer forms and regulatory documents are available, for downloading in PDF format, from the site’s Issuer Info area. And consistent with our principles of openness and disclosure, all CNSX Issuer Policies are easily accessible, and downloadable, in PDF format. These Policies are designed to facilitate the ability of small-cap companies to list their securities for trading on CNSX's stock exchange. We have avoided unnecessary and overly burdensome requirements which, for many companies, can be a real impediment to conducting their own business. Once approved for listing on CNSX, all Issuers have direct access to manage their company web page in the Disclosure Hall through the use of a secure extranet service. For example, Issuers maintain an updated list of press releases, media announcements, capitalization info, etc. through their extranet connection.
Dealers: Investment dealers assisted in the development of the CNSX Trading Rules and the opportunities CNSX's market model provides for Market Makers. Market Makers are authorized dealers who are required to maintain liquidity by entering bids and offers for designated securities, to facilitate a continuous two-sided market. In this hybrid market model all orders are entered into a central limit order book for execution by the automated trading system.
CNSX’s trading rules and operational procedures are designed to ensure full price and time priority. In addition Market Makers receive order flow from non market makers and their clients, concentrating the available liquidity to facilitate active trading of junior stocks.
CNSX Approved Traders may apply to CNSX to become a Market Maker for any number of CNSX Issuer securities. Simply download the PDF Application and send it in; in most cases applications for Market Maker will be processed within 24 hours.
Investors:Investors and other interested members of the general public will appreciate the enhanced disclosure provided by Issuers as well as the functionality and capabilities provided by cnsx.ca.
Investors are able to follow their CNSX investments directly online through the Trading Summaries on the Home Page, or in the Market Activity area of the CNSX web site. Also, a stock search, by name or symbol, is easily accessible from any page on the web site. Users will also appreciate the Investor Info area of the site. This area is divided into three sections: Glossary of Terms; Investment Risk; Investor Education.
The Traders - Inside Canada's Stock Market
Gold Diggers of 1929 : Canada and the Great Stock Market Crash
NewYork Stockmarket
New York Stock Exchange (NYSE) is the largest stock exchange in the world by United States dollar value of its listed companies' securities.As of October 2008, the combined capitalization of all domestic NYSE listed companies was US$10.1 trillion.The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext.The New York Stock Exchange (sometimes referred to as "the Big Board") provides a means for buyers and sellers to trade shares of stock in companies registered for public trading. The NYSE is open for trading Monday through Friday between 9:30am – 4:00pm ET, with the exception of holidays declared by the Exchange in advance.
Closed-End Investment Companies (CEICs) were the dominant form of investment companies in the United States during the early part of this century, but interest
Greater than 50% of US households invest in the stock market, 70% are real estate owners, and virtually all participate in the broader financial markets. As med
For most Americans, a 401k plan is their first exposure to investing. Many of us are relying on the stock market to provide for us in our retirement yet at the same time, most of us are afraid of the stock market. It's a valid concern. How can something so important to our financial future be so completely unpredictable?pWhen Michael Alexander first started investing in the stock market, he noticed that few analysts seemed to have much knowledge of what the market has done in the past. While no one can give precise answers to questions about the future of the market and be right all the time, Alexander feels that it's possible to gain an understanding of the future of the stock market by studying its past.pAnalyzing years of historical data for patterns of behavior that might repeat in the future, Alexander provides strong statistical evidence for a cyclical pattern in the stock market. These Stock Cycles show that long periods of poor stock returns have always followed long periods of good returns.
Closed-End Investment Companies (CEICs) were the dominant form of investment companies in the United States during the early part of this century, but interest
Greater than 50% of US households invest in the stock market, 70% are real estate owners, and virtually all participate in the broader financial markets. As med
For most Americans, a 401k plan is their first exposure to investing. Many of us are relying on the stock market to provide for us in our retirement yet at the same time, most of us are afraid of the stock market. It's a valid concern. How can something so important to our financial future be so completely unpredictable?pWhen Michael Alexander first started investing in the stock market, he noticed that few analysts seemed to have much knowledge of what the market has done in the past. While no one can give precise answers to questions about the future of the market and be right all the time, Alexander feels that it's possible to gain an understanding of the future of the stock market by studying its past.pAnalyzing years of historical data for patterns of behavior that might repeat in the future, Alexander provides strong statistical evidence for a cyclical pattern in the stock market. These Stock Cycles show that long periods of poor stock returns have always followed long periods of good returns.
Wednesday, September 2, 2009
National Stock Exchange of India
The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock exchange. It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading.[1]. NSE has a market capitalization of around Rs 47,01,923 crore (7 August 2009) and is expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end.[2]Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities[3]. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have taken a stake in the NSE.[4] As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India [5]. In October 2007, the equity market capitalization of the companies listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities.[6]It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%.
ORIGINS:
The National Stock Exchange of India was promoted by leading Financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.
MARKET:
Currently, NSE has the following major segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
In addition to this, NSE is also planning to launch interest rate futures contracts
Stock Market Capitalization And Corporate Governance in India
China Stockmarket
China's stock market is the third largest in Asia. Western banks and investment firms have a strong presence in Shanghai. Now that China has become a member of the World Trade Organization (WTO), the growth of the Chinese stock market is eagerly watched. This informative guide explains the development of the market, examines key policies, and recounts major scandals. It analyzes the different types of investors--institutional and individuals--and maps out the likely development of China's stock market over the next ten years.
The Efficiency Of China's Stock Market
The Efficiency Of China's Stock Market
Friday, August 28, 2009
Beginners Stock Trading: Day, Swing, And Position Trades
It is important that you choose a trading strategy before you get too deep into beginners stock trading. You have to evaluate your financial goals, mindset, and time commitment. Failing to do so can end in disaster. There are three basic strategies that you can ascribe to. The primary differences are the amount of time you can commit to trading, and the amount of time you hold onto shares before selling. These methods are known as Day Trading, Swing Trading, and Position Trading
Day trading is the fastest-paced strategy, and subsequently, takes the largest time commitment, in beginners stock trading. In this strategy, you are buying stock and turning around and usually selling it within that same day. As a day trader, you look for large, quick moves in a stock price and try to capitalize on that movement. Also called scalping, the goal is to make quick gains by getting in, ride the upward movement, and getting out…all in a matter of minutes or hours. Rarely does a trade last a full day. Day traders typically look for significant happenings around the company, as those events can ignite the volatility that they’re after. Such events can include the announcement of mergers or partnerships, release of new products, positive results from product testing, or other noteworthy news. Many day traders look to the over the counter markets and penny stocks, as their moves and volatility can be even more pronounced. To be successful at making these quick trades you need to have a watchful eye, and plenty of time. A day of volatility can wipe out all of your profit, if you look away for too long. This method is typically left for the experienced investor with plenty of time available.
Swing trading is a medium-paced beginners stock trading strategy, requiring less time commitment than day trading. With this method, traders are buying stock and typically selling it within a couple days or holding it up to a couple of months. As a swing trader, you look for trends in a stock and try to tag along for that continuing movement. As with day trading, stock trends for swing traders stems from company news. Oftentimes, the same news that sparks a sharp upward trend that day traders seek will actually continue its influence at a less frantic pace. As trades last longer, swing trading takes less of a time commitment. Stocks should continue to be monitored, though not as closely as with day trading. Checking in once every day or two is typically sufficient.
Position trading is a long term strategy, requiring very little time commitment. This beginners stock trading strategy is typically used when monitoring retirement accounts, or saving for other long-term goals. Position traders buy stocks and hold it for months, if not years, before selling. A slow-and-steady gain is the name of this game. Industries that are growing, as a whole, would help narrow down your search. And certainly, well-established, blue chip stocks are best suited for this type of long term growth. Time commitment on these trades is minimal. Checking your account once a week is fine.
These beginners stock trading methods should be reviewed carefully. If you do not have the time to commit, then do not let the allure of a quick profit pull you to day trading. You will lose money if you cannot watch your trades! On the other end of the spectrum, do not monitor your position trades as you would your day trades. That can cause excess worry, and you may sell out too early, because of a small amount of volatility. Swing trading tends to fit most investors for beginners stock trading. It has the balance of a medium time requirement alongside a decent profit potential.
Day trading is the fastest-paced strategy, and subsequently, takes the largest time commitment, in beginners stock trading. In this strategy, you are buying stock and turning around and usually selling it within that same day. As a day trader, you look for large, quick moves in a stock price and try to capitalize on that movement. Also called scalping, the goal is to make quick gains by getting in, ride the upward movement, and getting out…all in a matter of minutes or hours. Rarely does a trade last a full day. Day traders typically look for significant happenings around the company, as those events can ignite the volatility that they’re after. Such events can include the announcement of mergers or partnerships, release of new products, positive results from product testing, or other noteworthy news. Many day traders look to the over the counter markets and penny stocks, as their moves and volatility can be even more pronounced. To be successful at making these quick trades you need to have a watchful eye, and plenty of time. A day of volatility can wipe out all of your profit, if you look away for too long. This method is typically left for the experienced investor with plenty of time available.
Swing trading is a medium-paced beginners stock trading strategy, requiring less time commitment than day trading. With this method, traders are buying stock and typically selling it within a couple days or holding it up to a couple of months. As a swing trader, you look for trends in a stock and try to tag along for that continuing movement. As with day trading, stock trends for swing traders stems from company news. Oftentimes, the same news that sparks a sharp upward trend that day traders seek will actually continue its influence at a less frantic pace. As trades last longer, swing trading takes less of a time commitment. Stocks should continue to be monitored, though not as closely as with day trading. Checking in once every day or two is typically sufficient.
Position trading is a long term strategy, requiring very little time commitment. This beginners stock trading strategy is typically used when monitoring retirement accounts, or saving for other long-term goals. Position traders buy stocks and hold it for months, if not years, before selling. A slow-and-steady gain is the name of this game. Industries that are growing, as a whole, would help narrow down your search. And certainly, well-established, blue chip stocks are best suited for this type of long term growth. Time commitment on these trades is minimal. Checking your account once a week is fine.
These beginners stock trading methods should be reviewed carefully. If you do not have the time to commit, then do not let the allure of a quick profit pull you to day trading. You will lose money if you cannot watch your trades! On the other end of the spectrum, do not monitor your position trades as you would your day trades. That can cause excess worry, and you may sell out too early, because of a small amount of volatility. Swing trading tends to fit most investors for beginners stock trading. It has the balance of a medium time requirement alongside a decent profit potential.
Friday, August 7, 2009
Nasdaq Canada Market
Nasdaq Canada is a subsidiary of the Nasdaq Stock Market Inc. Putting into simple words, this is the Nasdaq Stock Exchange extended within Canada. Through the Nasdaq Canada Canadian investors have immediate trading access to all Nasdaq listed stocks which allow to raise capital more efficiently. Initially Nasdaq Canada has been regulated jointly by the NASDR and the Quebec Securities Commission (CVMQ) and was opened on 21 November 2000 in Montreal, Quebec, Canada. At the same time as Nasdaq initiated its trading platform in Canada the Nasdaq Canada Index was created. The ticker symbol of this index is ^CND. Already by the end of 2000 year 142 companies were listed on the Nasdaq Canada.
At the beginning only ten Canadian brokerage firms participated in the Nasdaq Canada trading platform: Scotia Capital Markets, CIBC WorldMarkets Corp., TD Securities, BMO Nesbitt Burns, Canaccord Capital, Capital Casgrain & Company, Mouvement Desjardins, NBC International, Inc. (USA), Pictet Overseas, Yorkton Capital (USA). All these brokerage houses were able to trade more than 5,000 public companies listed on the Nasdaq Stock Exchange at that time.
The first president of the Nasdaq Canada was Helen Kearns. Helen M Karens was responsible for leading the overall operation, growth, and development of the company. A native of Montreal, Ms. Kearns had over 20 years experience in the Canadian capital markets as a specialist in underwriting and financial advisory services for high growth, new economy companies. However, on July 2004, as the Nasdaq announced the closing of Nasdaq Canada's office in Montreal and moving all its operations to New York City. Adams Nunes has become a new leader of the Nasdaq Canada.
At the current moment NASDAQ is the largest U.S. electronic stock market. More than 3,000 Canadian and U.S. companies are listed on this exchange. You may find companies from the different market sectors including but not limited by technology sector, retail sector, communications, financial services, transportation, media and biotechnology
"Research in Motion Limited" (RIMM), "Open Text Corporation" (OTEX), "Pan America Silver Corporation" (PAAX), "SXC Health Solution Corporation" (SXCI), "Silver Standard Resources, Incorporated" (SSCI) are some of the biggest Canadian companies traded on the Nasdaq Canada stock market.
Beside Nasdaq Canada Canadian public companies are listed and traded on the Toronto Stock Exchange (TSX) – one of the biggest Canadian stock markets. TSX Group also owns the TSX Venture Exchange (previously called Canadian Venture Exchange) which is located in Calgary, Alberta and has offices in Montreal, Vancouver, Winnipeg and Toronto.
At the beginning only ten Canadian brokerage firms participated in the Nasdaq Canada trading platform: Scotia Capital Markets, CIBC WorldMarkets Corp., TD Securities, BMO Nesbitt Burns, Canaccord Capital, Capital Casgrain & Company, Mouvement Desjardins, NBC International, Inc. (USA), Pictet Overseas, Yorkton Capital (USA). All these brokerage houses were able to trade more than 5,000 public companies listed on the Nasdaq Stock Exchange at that time.
The first president of the Nasdaq Canada was Helen Kearns. Helen M Karens was responsible for leading the overall operation, growth, and development of the company. A native of Montreal, Ms. Kearns had over 20 years experience in the Canadian capital markets as a specialist in underwriting and financial advisory services for high growth, new economy companies. However, on July 2004, as the Nasdaq announced the closing of Nasdaq Canada's office in Montreal and moving all its operations to New York City. Adams Nunes has become a new leader of the Nasdaq Canada.
At the current moment NASDAQ is the largest U.S. electronic stock market. More than 3,000 Canadian and U.S. companies are listed on this exchange. You may find companies from the different market sectors including but not limited by technology sector, retail sector, communications, financial services, transportation, media and biotechnology
"Research in Motion Limited" (RIMM), "Open Text Corporation" (OTEX), "Pan America Silver Corporation" (PAAX), "SXC Health Solution Corporation" (SXCI), "Silver Standard Resources, Incorporated" (SSCI) are some of the biggest Canadian companies traded on the Nasdaq Canada stock market.
Beside Nasdaq Canada Canadian public companies are listed and traded on the Toronto Stock Exchange (TSX) – one of the biggest Canadian stock markets. TSX Group also owns the TSX Venture Exchange (previously called Canadian Venture Exchange) which is located in Calgary, Alberta and has offices in Montreal, Vancouver, Winnipeg and Toronto.
Timing the Market for Profitable Stock Investment
It is a fact that we can use the market's trend as an ally in the buying and selling of our stock positions. This is possible because the market signals when it is starting a new bullish trend or a new bearish trend. You can know whether or not the market will support you if you bet on a stock rising, or on a stock declining. Investors can learn to time the market profitably.
A few years ago, there were many news articles about "Market Timing" and the notion that it is illegal. In their ignorance, reporters blurred the difference between illegal and legal "timing." The illegal form of timing was in reference to the way some portfolio managers bought mutual funds. Legal fund investing involves making purchases before the market closes (when the closing price of the fund is not yet known). You purchase with the knowledge that the price of fund shares will be determined at the close of market. It is illegal to buy mutual fund shares after 4 p.m. at 4 p.m. prices. The illegal activity that was in the headlines involved "investors" doing just that. They were being granted yesterday's prices on securities known to have already moved up overseas. Rather than market-timing the correct term for the activity is late-trading. In describing this activity, then New York Attorney General Eliot Spitzer said "Late trading is unambiguously criminal." Actually, there is no real timing going on except that shares were bought late at earlier prices. For example, they lock in a 4 p.m. price of a U.S.-based fund (after 4 p.m.) that holds foreign shares whose prices are "stale"--that is, they were current at the time of the foreign market's prior close but were not yet marked up by the fund to reflect market gains after the foreign market re-opened. Then they sold those shares at the marked-up prices. It is illegal for funds to permit these "under-the-table" transactions. To do so is to cheat other investors.
However, true "market timing" is not illegal. In fact, it is highly regarded among some professional investors as an effective way of improving risk-adjusted returns in portfolios of mutual funds and stocks. I have used these techniques and have found them to be quite effective. Legitimate "market timing" involves the use of probability models and various algorithms to make investments when risk is low (or when the probability of continuance of a new up-move is high), and sell them when risk is high (or the probability of continuance of a new down-move is high). That is, market timing is a legitimate tool used for "timing" purchases and sales with a goal of optimizing risk-adjusted returns for a portfolio. Its roots are in models of momentum, probability, and statistical analysis. It is not the same thing as the procedures known as "fast-trading" or "rapid trading." Theoretically, positions could be held for many months or even years. This form of "timing" can be very profitable and of lower risk than buying and holding through a market's gyrations…and it is legal.
Most professionals warn investors against market timing. That's because most investors haven't got a clue about how to do it correctly. They feel the market is going up so they invest. They are afraid the market is going to fall so they sell everything. Most of the time, they sell when they should be buying or buy when they should be selling. For the vast majority of investors, market timing is a roadmap to disaster. This tendency to market time is also manifested even among some investors who hire professional advisors. They call their advisor and say "take me out of the market…I don’t feel good about it." In doing this, they are overriding the advisor's disciplines and models and imposing on the investment process the rule of emotion (trading disciplines can be designed to make a profit whether the market is trending up or down). Stockdisciplines.com received calls like this when it was in the investment advisory business. Emotions are almost always out of sync with what should be done in the market. Those who act this way are attempting to time the market without the tools necessary to do the job right. Even though the advisor may have the tools and discipline to do the job right, the client says, "don't use them…we'll use my feelings instead." This kind of investor is like the pilot who finds himself flying in the fog. Rather than using his instruments (the best way to get to a destination under the circumstances), he decides to ignore his instruments and fly by the "seat of his pants." The outcome is almost certain to be disastrous. A pilot in the fog can feel that the airplane is rising when it is actually flying level. To compensate, he is likely to put the plane into a shallow dive, and end up smashed on the side of a hill. He may feel the plane is veering to the left when it is actually veering slightly to the right. To compensate, he may head out over the ocean rather than toward his destination. By the time he realizes he is over water, he may be too low on fuel to make it back. In the same way, people who invest by how they feel are not using the proper guidance instruments. They underestimate what it takes to move in and out of the market advantageously. Professionals use instruments (indicators) to guide their timing of purchases and sales. Advisors, traders, and investors with the most consistently profitable transaction record rarely base any market decision on their feeling about the market.
An example of a single indicator that might be used in concert with others involves two simple moving averages. More specifically it involves the 10-day and 20-day simple moving averages of a market index. A person would simply watch for the 20-day moving average to rise after the 10-day moving average has crossed it to the upside. The fact that the 10-day average is above the 20-day average tells you that the shorter-term trend is supporting that of the longer-term trend. That is, there is not currently a significant trend developing that is counter to that of the 20-day average and that might cause the direction of the 20-day average to reverse. A person could use the opposite configuration of these moving averages to signal that a bearish stance is appropriate. Of course, this moving average crossover system is an example of only one of the tools that might be employed. To determine whether the market will support a bullish or bearish stance on investments, a variety of tools could be used.
Once it is determined that the market's internal stability is sufficient to support individual stock trends, there remains the problem of knowing which stocks to select and when. Many of the same indicators (but not all of them) can be used for individual stocks that were used for monitoring the market in general. It is important to recognize that no single market-measuring or stock-measuring tool known to man is perfect. There is a certain amount of fuzziness in the meaning of all of them. That is why the expert market timer uses a variety of indicators. Each one paints a part of the picture. That is also why we track a variety of indicators. The indicators are the science part of market timing. However, in the final analysis, the human side of the equation is just as important. Individuals and their own particular interpretive acumen must meld with the instruments they use in order to make profitable trading decisions. The way individuals and their instruments "dance together" is what determines the success of the market-timing enterprise. The same thing is true with regard to the timing of purchases and sales of individual stocks. The more individuals use their instruments and study the relationship between their readings and what happens in the market, the better the two will "dance" together.
A few years ago, there were many news articles about "Market Timing" and the notion that it is illegal. In their ignorance, reporters blurred the difference between illegal and legal "timing." The illegal form of timing was in reference to the way some portfolio managers bought mutual funds. Legal fund investing involves making purchases before the market closes (when the closing price of the fund is not yet known). You purchase with the knowledge that the price of fund shares will be determined at the close of market. It is illegal to buy mutual fund shares after 4 p.m. at 4 p.m. prices. The illegal activity that was in the headlines involved "investors" doing just that. They were being granted yesterday's prices on securities known to have already moved up overseas. Rather than market-timing the correct term for the activity is late-trading. In describing this activity, then New York Attorney General Eliot Spitzer said "Late trading is unambiguously criminal." Actually, there is no real timing going on except that shares were bought late at earlier prices. For example, they lock in a 4 p.m. price of a U.S.-based fund (after 4 p.m.) that holds foreign shares whose prices are "stale"--that is, they were current at the time of the foreign market's prior close but were not yet marked up by the fund to reflect market gains after the foreign market re-opened. Then they sold those shares at the marked-up prices. It is illegal for funds to permit these "under-the-table" transactions. To do so is to cheat other investors.
However, true "market timing" is not illegal. In fact, it is highly regarded among some professional investors as an effective way of improving risk-adjusted returns in portfolios of mutual funds and stocks. I have used these techniques and have found them to be quite effective. Legitimate "market timing" involves the use of probability models and various algorithms to make investments when risk is low (or when the probability of continuance of a new up-move is high), and sell them when risk is high (or the probability of continuance of a new down-move is high). That is, market timing is a legitimate tool used for "timing" purchases and sales with a goal of optimizing risk-adjusted returns for a portfolio. Its roots are in models of momentum, probability, and statistical analysis. It is not the same thing as the procedures known as "fast-trading" or "rapid trading." Theoretically, positions could be held for many months or even years. This form of "timing" can be very profitable and of lower risk than buying and holding through a market's gyrations…and it is legal.
Most professionals warn investors against market timing. That's because most investors haven't got a clue about how to do it correctly. They feel the market is going up so they invest. They are afraid the market is going to fall so they sell everything. Most of the time, they sell when they should be buying or buy when they should be selling. For the vast majority of investors, market timing is a roadmap to disaster. This tendency to market time is also manifested even among some investors who hire professional advisors. They call their advisor and say "take me out of the market…I don’t feel good about it." In doing this, they are overriding the advisor's disciplines and models and imposing on the investment process the rule of emotion (trading disciplines can be designed to make a profit whether the market is trending up or down). Stockdisciplines.com received calls like this when it was in the investment advisory business. Emotions are almost always out of sync with what should be done in the market. Those who act this way are attempting to time the market without the tools necessary to do the job right. Even though the advisor may have the tools and discipline to do the job right, the client says, "don't use them…we'll use my feelings instead." This kind of investor is like the pilot who finds himself flying in the fog. Rather than using his instruments (the best way to get to a destination under the circumstances), he decides to ignore his instruments and fly by the "seat of his pants." The outcome is almost certain to be disastrous. A pilot in the fog can feel that the airplane is rising when it is actually flying level. To compensate, he is likely to put the plane into a shallow dive, and end up smashed on the side of a hill. He may feel the plane is veering to the left when it is actually veering slightly to the right. To compensate, he may head out over the ocean rather than toward his destination. By the time he realizes he is over water, he may be too low on fuel to make it back. In the same way, people who invest by how they feel are not using the proper guidance instruments. They underestimate what it takes to move in and out of the market advantageously. Professionals use instruments (indicators) to guide their timing of purchases and sales. Advisors, traders, and investors with the most consistently profitable transaction record rarely base any market decision on their feeling about the market.
An example of a single indicator that might be used in concert with others involves two simple moving averages. More specifically it involves the 10-day and 20-day simple moving averages of a market index. A person would simply watch for the 20-day moving average to rise after the 10-day moving average has crossed it to the upside. The fact that the 10-day average is above the 20-day average tells you that the shorter-term trend is supporting that of the longer-term trend. That is, there is not currently a significant trend developing that is counter to that of the 20-day average and that might cause the direction of the 20-day average to reverse. A person could use the opposite configuration of these moving averages to signal that a bearish stance is appropriate. Of course, this moving average crossover system is an example of only one of the tools that might be employed. To determine whether the market will support a bullish or bearish stance on investments, a variety of tools could be used.
Once it is determined that the market's internal stability is sufficient to support individual stock trends, there remains the problem of knowing which stocks to select and when. Many of the same indicators (but not all of them) can be used for individual stocks that were used for monitoring the market in general. It is important to recognize that no single market-measuring or stock-measuring tool known to man is perfect. There is a certain amount of fuzziness in the meaning of all of them. That is why the expert market timer uses a variety of indicators. Each one paints a part of the picture. That is also why we track a variety of indicators. The indicators are the science part of market timing. However, in the final analysis, the human side of the equation is just as important. Individuals and their own particular interpretive acumen must meld with the instruments they use in order to make profitable trading decisions. The way individuals and their instruments "dance together" is what determines the success of the market-timing enterprise. The same thing is true with regard to the timing of purchases and sales of individual stocks. The more individuals use their instruments and study the relationship between their readings and what happens in the market, the better the two will "dance" together.
The Evolution of Stock Brokers with Online Trading
The fact is, only a registered (SEBI) stock broker can buy and sell shares in the stock market. Such an individual is registered on one or many stock exchanges and is authorized to transact on behalf of others. Apart from that, an online stock broker is very valuable to investors who are not technically inclined and have no or little prior knowledge of stock trading. Such investors can use their own online stock trading accounts to obtain necessary information and place online trades at any time of the day. Others, however, still require a human interface - a real person who will place trades on their behalf.
An online stock broker’s (online service of stock broker) services definitely transcend the traditional format of trading in stocks personally or via the telephone. By using an online stock broker, the investor no longer faces the constraints of location and busy telephone lines. Information technology has made stock market software reliable means of trading in stock on the Internet, and an online stock broker uses this on his client’s behalf. An online stock broker requires considerable working knowledge of the stock market to help investors trade in stocks. Though they are independent of established brokerage firms, they are still bound by the same SEBI regulations that govern offline as well as online stock firms. They have in-depth experience in dealing with actively traded commodities and stocks.
By using such a stock broker, one gains greater access and can also save money on stock trades. Because of this, there are now many investors in the stock market than there have ever been previously. There are now any number of investment choices available, and online brokers can leverage these by the power of the Internet coupled with their own expertise and experience. There can be occasional hiccups while using the services of one’s online stock broker. For instance, the accelerated growth of online trading can cause busy servers at certain times of the day. This makes it difficult to log on to one’s broker’s website. This is not a serious limitation, and invariably applies only to the first and last thirty minutes of a stock market day. Even this limitation will become history as online trading matures. The most successful traders often have as many as four or five brokers, though a single reliable broker suffices for those who only trade occasionally.
An online stock broker’s (online service of stock broker) services definitely transcend the traditional format of trading in stocks personally or via the telephone. By using an online stock broker, the investor no longer faces the constraints of location and busy telephone lines. Information technology has made stock market software reliable means of trading in stock on the Internet, and an online stock broker uses this on his client’s behalf. An online stock broker requires considerable working knowledge of the stock market to help investors trade in stocks. Though they are independent of established brokerage firms, they are still bound by the same SEBI regulations that govern offline as well as online stock firms. They have in-depth experience in dealing with actively traded commodities and stocks.
By using such a stock broker, one gains greater access and can also save money on stock trades. Because of this, there are now many investors in the stock market than there have ever been previously. There are now any number of investment choices available, and online brokers can leverage these by the power of the Internet coupled with their own expertise and experience. There can be occasional hiccups while using the services of one’s online stock broker. For instance, the accelerated growth of online trading can cause busy servers at certain times of the day. This makes it difficult to log on to one’s broker’s website. This is not a serious limitation, and invariably applies only to the first and last thirty minutes of a stock market day. Even this limitation will become history as online trading matures. The most successful traders often have as many as four or five brokers, though a single reliable broker suffices for those who only trade occasionally.
Investor or Trader: What's the Bottom Line?
"Buy and hold" say the long-term investors. "Sell losers quickly to cut losses" say the short-term traders. "We are in it for the long-term" say the investors. "Hold only rising stocks, and let profits grow" say the traders. Though most people who call themselves "investors" are not really disciplined, those who are disciplined have much in common with traders.
Most investors are happy if they get a return of 7% to 10% a year. Most traders feel like a failure if they have not achieved at least a 30% return. Investors feel elated if they get 15%. Traders feel the same if they get 60%. On rare occasions an investor will get a return of 30% to 35%. Some traders get occasional returns in excess of 100%. In general, seasoned traders aim for a return that is three to four times as high as that of an experienced investor.
Many "investors" buy shares in a few mutual funds. Mutual funds tend to hold onto stocks while they rise and fall. Other "investors" buy a basket of stocks and hold them while they rise and fall. Both of these groups will, on average, obtain performance that is not too different from that of the market as a whole. On the other hand, "traders" often beat the market's performance by a wide margin because they are selective, pay attention to timing, and do not ride their stocks up and down. They are disciplined in both their buying and selling. Stocks often evidence characteristic patterns of behavior when they are setting up for a meaningful rise. Traders learn to recognize those "setup" patterns. When a stock begins to fall they sell and buy another that has completed an attractive "setup" and that has just initiated a high-volume momentum surge.
Most traders will buy a stock then follow it up with a stop-loss order placed at a calculated distance below its current price. This "stop" is raised each day as the stock rises. These traders do not have to make a separate decision about when to sell because the stock sells itself when it drops to the stop price. For them, stop-placement defines one-half of their buy/sell activity. Our stockdisciplines.com traders use both primary and a backup selling systems. The primary system is usually a well-defined and sensitive discipline that can sometimes generate a sell signal before a well-placed stop is triggered. They also use a stop loss as a backup safety net in case their discipline does not sell quickly enough. You can benefit from their experience by doing the same thing. Stop placement should define at least one-half of your sell discipline.
Let's look at the difference in attitude between most investors and most traders. Most investors will hear of a stock that has been in the news lately because of a new product, technology, discovery, or potential cure. They will say to themselves something like "XYZ Co. is a great company. Someday they will cure cancer. I should buy some of that." Then they buy it. They believe in the company and its long-term growth prospects. During the following year, the stock may fall 5%, rise 17%, fall 15%, rise 20%, fall 10%, rise 17%, fall 7%, and finish the year up 17% from the original purchase price. The investor will be pleased with his decision and with the profit he has made. If a trader hears about the same stock, he will not do anything without first looking at a chart. He will observe that the stock is declining, and will not do anything until the stock nears support or until the stock completes a setup configuration that the trader likes. Then, as momentum begins to build, he will buy and follow the stock up with a stop loss. His approach will give him a high probability of capturing a good part of each rise and of avoiding most of each decline. His total return will be much higher, and his risk will be much lower. Why do we say his risk is lower?
We say his risk is lower because there is no guarantee that any stock will recover. If it doesn't, then buying and holding is riskier than selling immediately when the stock misbehaves. For example, many investors held on to LA Gear when it began to decline, refusing to take a loss when doing so would have allowed them to recover most of their money. They assumed they could get all their money back when the stock recovered. They told themselves that to "buy-and-hold" was the smart way to invest. They might have even patted themselves on the back and proclaimed that they were long-term investors, not "twitchy traders." LA Gear's stock eventually became worthless, and the entire amount invested simply evaporated (not just the small amount of loss that investors were hoping to regain). Genentech fell over 77% from its high (even though TPA was supposed to generate annual sales in the billions and Genentech had the patent rights). Yahoo dropped from $250.06 to $8.02 (over 96%). IBM fell over 76% from its high in 1999. CMGI sold for $163.50 before it plunged to .28. Broadcom was $274.75 before it dropped to $9.52. JDS Uniphase sold for $153.42 before it declined to $1.58. Unisys sold for $48.37 in 1987 before it dropped to $1.75. Each of these stocks had a good story. Some of these stocks no longer exist. None of them are even near their previous highs, and there are many others like them. Any stock can have a similar drop. To us, riding a stock down when it is headed for oblivion is assuming a great deal of risk. These investors cling to the mantra that buying and holding is the correct way to invest because they do not have a discipline for selling, just as they have no real discipline for buying.
High performance longer-term investors (names like Zweig, Dines, Sullivan, Weinstein, Granville, Murphy, and others come to mind) are similar to traders in many respects. In a good year, these people might earn 20% or more while the market rises 10%. They all advocate the use of stop-loss orders to protect assets. The main difference between them and traders is that they have a longer time-horizon, and their stop loss orders allow a greater range of price fluctuation. Like the sophisticated traders, the most sophisticated longer-term investors use stops that are no more distant from the price action of a stock than is appropriate for its volatility and the investor's investment time-horizon. The fact that they have a longer holding period does not mean they can be sloppy with their stop placement. Their targeted gains are much smaller relative to the time invested than those of top traders. They cannot afford to take large losses. Pattern-relevant stops and Volatility-adjusted stops are just as important to top investors as they are to top traders.
Most investors are happy if they get a return of 7% to 10% a year. Most traders feel like a failure if they have not achieved at least a 30% return. Investors feel elated if they get 15%. Traders feel the same if they get 60%. On rare occasions an investor will get a return of 30% to 35%. Some traders get occasional returns in excess of 100%. In general, seasoned traders aim for a return that is three to four times as high as that of an experienced investor.
Many "investors" buy shares in a few mutual funds. Mutual funds tend to hold onto stocks while they rise and fall. Other "investors" buy a basket of stocks and hold them while they rise and fall. Both of these groups will, on average, obtain performance that is not too different from that of the market as a whole. On the other hand, "traders" often beat the market's performance by a wide margin because they are selective, pay attention to timing, and do not ride their stocks up and down. They are disciplined in both their buying and selling. Stocks often evidence characteristic patterns of behavior when they are setting up for a meaningful rise. Traders learn to recognize those "setup" patterns. When a stock begins to fall they sell and buy another that has completed an attractive "setup" and that has just initiated a high-volume momentum surge.
Most traders will buy a stock then follow it up with a stop-loss order placed at a calculated distance below its current price. This "stop" is raised each day as the stock rises. These traders do not have to make a separate decision about when to sell because the stock sells itself when it drops to the stop price. For them, stop-placement defines one-half of their buy/sell activity. Our stockdisciplines.com traders use both primary and a backup selling systems. The primary system is usually a well-defined and sensitive discipline that can sometimes generate a sell signal before a well-placed stop is triggered. They also use a stop loss as a backup safety net in case their discipline does not sell quickly enough. You can benefit from their experience by doing the same thing. Stop placement should define at least one-half of your sell discipline.
Let's look at the difference in attitude between most investors and most traders. Most investors will hear of a stock that has been in the news lately because of a new product, technology, discovery, or potential cure. They will say to themselves something like "XYZ Co. is a great company. Someday they will cure cancer. I should buy some of that." Then they buy it. They believe in the company and its long-term growth prospects. During the following year, the stock may fall 5%, rise 17%, fall 15%, rise 20%, fall 10%, rise 17%, fall 7%, and finish the year up 17% from the original purchase price. The investor will be pleased with his decision and with the profit he has made. If a trader hears about the same stock, he will not do anything without first looking at a chart. He will observe that the stock is declining, and will not do anything until the stock nears support or until the stock completes a setup configuration that the trader likes. Then, as momentum begins to build, he will buy and follow the stock up with a stop loss. His approach will give him a high probability of capturing a good part of each rise and of avoiding most of each decline. His total return will be much higher, and his risk will be much lower. Why do we say his risk is lower?
We say his risk is lower because there is no guarantee that any stock will recover. If it doesn't, then buying and holding is riskier than selling immediately when the stock misbehaves. For example, many investors held on to LA Gear when it began to decline, refusing to take a loss when doing so would have allowed them to recover most of their money. They assumed they could get all their money back when the stock recovered. They told themselves that to "buy-and-hold" was the smart way to invest. They might have even patted themselves on the back and proclaimed that they were long-term investors, not "twitchy traders." LA Gear's stock eventually became worthless, and the entire amount invested simply evaporated (not just the small amount of loss that investors were hoping to regain). Genentech fell over 77% from its high (even though TPA was supposed to generate annual sales in the billions and Genentech had the patent rights). Yahoo dropped from $250.06 to $8.02 (over 96%). IBM fell over 76% from its high in 1999. CMGI sold for $163.50 before it plunged to .28. Broadcom was $274.75 before it dropped to $9.52. JDS Uniphase sold for $153.42 before it declined to $1.58. Unisys sold for $48.37 in 1987 before it dropped to $1.75. Each of these stocks had a good story. Some of these stocks no longer exist. None of them are even near their previous highs, and there are many others like them. Any stock can have a similar drop. To us, riding a stock down when it is headed for oblivion is assuming a great deal of risk. These investors cling to the mantra that buying and holding is the correct way to invest because they do not have a discipline for selling, just as they have no real discipline for buying.
High performance longer-term investors (names like Zweig, Dines, Sullivan, Weinstein, Granville, Murphy, and others come to mind) are similar to traders in many respects. In a good year, these people might earn 20% or more while the market rises 10%. They all advocate the use of stop-loss orders to protect assets. The main difference between them and traders is that they have a longer time-horizon, and their stop loss orders allow a greater range of price fluctuation. Like the sophisticated traders, the most sophisticated longer-term investors use stops that are no more distant from the price action of a stock than is appropriate for its volatility and the investor's investment time-horizon. The fact that they have a longer holding period does not mean they can be sloppy with their stop placement. Their targeted gains are much smaller relative to the time invested than those of top traders. They cannot afford to take large losses. Pattern-relevant stops and Volatility-adjusted stops are just as important to top investors as they are to top traders.
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