Investments & Trading

Trends And Timing In The Stock Market

2010-09-01T19:25:00.001-07:00

From grizzly stock market veterans all to the way to savvy market observers, almost every one would concede that in the business of trading two things are of the essence: timing and trends.

Trends are important because they affect the market in big sweeping tides. Timing, on the other hand, is the learned investor’s inner business radar at work. The more experienced he is, the better is his sense of timing.

Market trends

Market trends are the tendency of particular stock prices to go up or down for considerable periods of time – triggered by some big events, influential persons, or sometimes whatever is the current fashion.

A simple case in point is the September 11 terrorist attack. It had set off a trend where stock market prices for tech companies went down.

Product demands

World events would also have great effects on the stock market. Oil crises and some political problems in concerned countries would definitely have an effect on world oil prices.

To those who have to buy oil and gas, the prices would go high. Those with investments in oil stocks would be raking it in because of the high demand and the high price. Demand for a product affects the price of its stock.

Price fluctuations

The first factor that influences price is the basic law of supply and demand. If the company has only a few shares of stock to sell, and there are a lot of interested buyers, there would a rise in price.

Working the other way around is the fact that when there are a lot of shares but few interested buyers, the stock’s price goes down.

Outside factors

Usually, big world events affect stock market trends – wars, the economy, oil prices and currency collapses. New oil discovery does the same influence on the market, albeit the other way around.

The upward movements in prices of certain market sectors that last for months or years are nicknamed bull trends. Those that are on the down movement trend in prices are called bear trends.

Timing

Timing is that special knack of investors who knows the exact time to buy or to sell any stock. For most investors, timing is simply being alert.

They watch market prices closely, keeping an eye on the rise (or decline) of prices looking for a trend. If they see a trend and the market is rising, they tend to hold onto their stocks.

On the other hand, if the market price of a stock seemed to go on a downward roll, most investors tend to sell their shares because they want to hold onto the profits they have already made.

Timing, for most investors, is actually identifying the trends in the market needed to identify in turn the right time to buy or to sell. The enterprising investor takes advantage of news about the economy, interest rates, conflicts and many others.

Last words

Timing and trends in stock market mean many different things to different investors. Those who want to make a quick dollar do their buying and selling regularly. However, if you are investing for the future, you do not look at the market the same way as everybody.

Online Stock Trading: Gaming The Stock Market In A Down Economy

2010-06-02T08:56:00.000-07:00

Trading stocks online has become the new way of doing business. Ordinary everyday citizens such as you and me can now trade stocks like the pros without paying the ridiculous broker fees that are often associated with trading on the stock market. This doesn’t mean there are no fees involved or that you won’t be discouraged from capriciously trading stocks. What it does mean is that you will be able to trade stocks, as you may have never been able to do before because the costs involved in trading were so high that only the wealthiest among us could really afford to work the market to any real advantage.

You will find quite a few companies that are going to compete for your business when it comes to empowering you to trade stocks online. It is best to go with a business that offers education and advice in addition to the ability to trade. There are many big names in the brokerage business that are getting in touch with the technology of today and offering full service brokers and financial advisors in addition to offering new online services that include Internet trading.

If you decide to go with some of the bigger names in the business you should understand that you will pay a little more than you would pay going with many of the lesser name firms and trading companies. The good news is that the bigger names have more to loose after working for decades to establish themselves and develop a good reputation among traders. This means that they are not going to be “fly by night” and are going to work to make sure you have the best possible service from them for your future in the stock market trade.

Many of these firms in addition to offering the ability to buy, sell, and trade online will also offer financial planning for retirement, future expenses, and advice on how to create a fixed income from your investments. They will offer many tips, hints, and advice free of charge on their website while also promoting the services they offer through discounts in hopes of gaining your business for some of the higher ticket transactions that really pay their bills.

Online investment services offer consumers the opportunity to invest with lower commissions and fees which means you bring more of the money home when all is said and done and spend far less on fees and expenses associated with investing. By saving these fees you may be doing yourself a huge service but keep in mind that the invaluable advice of a broker can often mean the difference between mild successes and wild successes. If you can manage the fees it is a good plan to at least consult with a broker or financial advisor or planner once or twice a year in order to get the most out of your investment money.

Online trading is great but you will find that it lacks the personal service you can expect from a financial advisor or a stockbroker. Very little has such a profound impact on your financial future than the ability to receive and follow expert advice. While there is much to read on the Internet by way of advice on investing in the stock market there is also a lot of conflicting information just as there is a great deal of misinformation. This is something that, when possible, is best left to the experts at least until you manage to learn the ropes and have a few successful trades under your belt.

If you have the heart of gambler however, then it is your money you are playing with and your future you are investing. If you are not spending more than you are willing to lose then there is no harm in trying your hand at investing through online brokerage services. You never know but there may be a nice pay out eventually.

How much do you Gamble on the Stock Market?

2010-05-03T09:03:00.000-07:00

Are you addicted the high risks of the stock market? How about taking risks? There are many who are literally addicted to gambling and the stock market is their drug of choice. There are many options available for their gambling pleasure and the tables, it seems, are always open with various markets around the world opening up to US money and the prevalence of Internet trading venues that are available to the average investor through nothing more sophisticated than a computer and a modem.

Day trading is a particular draw for those who are addicted to gambling through trading stocks. It provides the ups and downs very similar to the roll of the dice or the ringing of the slot machines and instant hits and misses. It can even be addictive for those who have never set foot in a casino. Of course this type of investing isn’t the only investing that is very much like gambling. Any high-risk investment is going to bear some similarities, especially those that offer high payouts to those who do succeed on occasion.

The problem is that that addictive gambling can be devastating to friends, family, and finances. If you suspect that you or someone you love has a gambling problem you need to either get help yourself or encourage them to get help. There are many ways that this can be accomplished and anonymous help can be found online. Day traders have gained so much notoriety as potential gambling addicts that gamblers anonymous has begun a support group specifically for those who are addicted to gambling via day trader trading.

If you have the personality that is easily addicted to things such as lottery tickets, slot machines, chocolate candy bars, etc. this doesn’t mean that you can’t ever trade on the stock market it just means that it might be a good idea to avoid some of the higher risk trading and stick with more slow and steady options such as mutual funds, CDs, and the like. Your rewards are likely to be better over time and you aren’t likely to experience the ups and downs that go along with activities that closely resemble gambling.

An addiction to gambling is a serious problem that can ruin a family financially. It is imperative that you get the help you need if you discover that you have a gambling problem. The first suggestion is to close up all stock market accounts that could lead to temptation. Removing temptation is always a great first step when fighting any addiction. You also need to seek support. There are many groups around the country such as gambler’s anonymous that can provide you a close knit support group whenever temptation strikes. If your local chapter has a group that is designed specifically for those who are addicted to gambling through day stock trading that might prove to be the best choice to help you on the road to recovery from your addiction.

If you have been addicted to gambling in the past you should also avoid the temptation that day trading may present. Addictions may be overcome but they are never cured and temptation for many can prove to be the fatal downfall. Do not allow your gambling addiction to take control of your life once again by entering into the world of day trading after working so hard to overcome your addiction in the first place and build a life after the sometimes devastating effects that addictions can bring.

Gambling is nothing new to the world and there is nothing wrong with having the sort of personality that likes to take a gamble on occasion. In fact, there needs to be a little bit of that personality type in every day trader. It’s when the gambling becomes a problem and takes over your life and your ability to make rational decisions about the money and the risks you are taking that it crosses the line between gambling and a gambling problem that borders on or is a gambling addiction. If your gambling is a problem get help straight away.

Different Types of Stock

2010-04-23T13:34:00.000-07:00

The different types of stock are what confuse most first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Common Stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.

Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.

The most upscale type of stock is of course Preferred Stock. Preferred stock isn’t exactly a stock. It is a mix of a stock and a bond. The owner’s of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.

How to Know When to Sell Your Stocks

2010-01-15T19:50:00.000-08:00

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out – especially for first time investors. The good news is that if you have chosen your stocks carefully, you won’t need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop – and you may even be advised by your broker to do this. But this isn’t necessarily the right course of action.

Stocks go up and down all the time, depending on the economy…and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things – all combined – affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once you’ve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell – especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

Trading Volume Stocks: What One Day Can Bring

2009-11-04T19:39:00.000-08:00

Financial experts love to use jargon that confuse and infuriate the newbie. Education is key- before making any trade transaction you should know a little about the market, how it works and the definitions that are associated with it. Taking the time to arm yourself with just a little bit of education can save you some heartache and embarrassment later on. It does not matter whether you trade online or with a traditional broker, you do need to know a few things before you begin.

For instance: the basic definition of the word "volume" when related to stocks is simple. It is the number of stock shares that are traded usually over the course of one trading day. If there are fewer trades than usual for that time period, then they say that the volume is "thin". Likewise, more trading is "heavy". The amount of trading will influence market prices either up or down as stocks change hands. The more trading (heavy trading) that goes on, the higher the price for that stock will rise and vice versa.

Researching the volume of a particular stock before making a transaction is a wise idea and can be done in a number of ways from the traditional to the more modern. In the old days, this information was only available through a broker, but times have changed and many people now handle their own stock portfolios with no financial consultant involvement at all. The do-it-yourself investment wizard can find out a stock's previous day volume by looking in the newspaper or online. Online is probably the better choice if you are dealing with a stock that seems to be having wide variables- information is updated frequently, in some cases as often as every half hour or less.

Knowing volume of your particular stock can be important for several reasons. First, it can give some indication how many buyers and sellers are involved with it. The higher the volume, the more movement has been reported. A sudden jump or decline in volume, especially in one that has been typically steady may indicate an event, either positive or negative that may affect the entire market. Of course, not every little spike or valley on the volume chart of a stock will indicate a major change and sometimes there is little or no reason at all for the change. Do not make any major decisions to buy or sell stocks based on one day's volume information, however. You need to track the stock's average daily volume for several days before finalizing a decision.

How to Know When to Sell Your Stocks

2009-09-25T17:41:00.000-07:00

Trading Stocks Online: Does the Ease of Use Make it More Dangerous?

2009-06-18T12:03:00.000-07:00

The majority of American homes have at least one computer, and of those, most are connected to the Internet for at least one hour or more each day of the year. Because of the ease of having the entire world right there at your fingertips, more and more business is conducted from the home - from ordering Junior's birthday gift to performing job duties. It was only a matter of time before the financial world started grabbing some of the Internet action- now a large portion of every day's trading actions are performed online. Whether you go through a broker or execute your trade on your own, online trading can be an interesting way to manage your investments.

Because the Internet is there twenty-four hours a day, it can become very easy to get carried away by the whole online trading concept. Before you even log onto the first site, and before you even look at the first trade online, there are some things you must know and understand. Knowing these basics can make your online trading experience satisfying and hopefully, financially rewarding.

If you have never worked with stocks before it might be advisable to work with an online broker before going out on your own. The stock market should not be a learn-as- you-go experience, especially not with the current state of the economy. Do your research if you wish, but work with a broker until you are more confident in your own abilities.

You should talk with your broker about your own personal investment goals. Know what all of the risks are when dealing with the stock market. And by all means, know your own limits. Do not try to trade above your financial capabilities- if you choose the wrong stock, or the market fluctuates you can put your family in real financial danger.

Online trading can allow you to research and buy your stock in one simple step, or to do the research only, using a broker to buy the actual stock. Beyond the other tips that apply to all stock trading, both traditional and online, there are other special considerations for online trading, including knowing that you might not be able to instantly execute or cancel orders- both may be delayed by as much as a few hours. You also need to know if quotes and other information given is delayed or given in real time. (This will usually be clearly denoted on the stock site.) What are the limits to your trades- do you have a daily cap while working online? And because you are dealing with an entity that sometimes has technical issues, you must ask about website crashes and what that can mean to your ability to make or cancel orders.

Finally, before making your first trade with an online company, check out their privacy policy, find out about commission and transaction fees and review the customer service and complaint policy.

Article Written By J. Foley

Price Trading: Gambits, Tactics and Good Business Sense

2009-06-05T10:40:00.000-07:00

Price trading can be tricky at best, even for the most astute financial mind. Watching the tracking trends of certain stock and thinking you have it predicted down to the last few percentage points of accuracy, only to have it fall completely off the charts, is not only heart breaking, it can also lead to financial ruin. Although trend trading can provide an educational leg-up on the competition, it does not always stop the trader from being faced with financial doom when a market takes an unexpected and therefore unpredictable header toward the basement.

The economy is in a major downward spiral, and most indicators are showing that, however some price trading charts are showing some stocks are in fairly stable shape. How this can be should be a puzzle to all but the most novice among us. The stock futures are showing down trends, and the realistic and responsible trader will adjust trading activity to reflect this.

Price trading charts are often confusing and more, they contradict themselves. Using financial software for analysis of these charts can help, but even that may prove to be ineffective when there is just too much data for the computer to sort through. Price trading can be lucrative, if you know what you are doing, and can make sense of what the market is doing.

With price trading, the main consideration is timing. You must make your move, no matter what financial instrument you are dealing with, at the optimum time to gain the best price. Knowing that there will be a huge demand on one stock in one week's time and holding onto that stock to sell during the rush makes sense, but selling it one week before the demand hits does not. As with any financial activity, especially with the current economic situation, you must know your limits and your financial caps. Do not exceed your own budgetary limits and put yourself at the risk for financial ruin. Do not make trades that you do not fully understand. Do your homework and the necessary legwork before beginning any trading activities. Work with a broker before heading out to take on the financial world on your own. Take educational seminars and read all of the financial information that is available to you, either in hard copy or online.

Do not allow yourself to get caught up in the thrilling rush of one or two successful trades. A little financial knowledge can be a bad thing, especially if it leads to risky, undisciplined behaviors on your part.

Article Written By J. Foley

Consumers feel better, and so does the stock market

2009-05-27T10:23:00.000-07:00

12:29 PM, May 26, 2009

Consumers are feeling somewhat better, and that's making investors feel better too.

The stock market rose for the first time in a week today as unexpectedly strong consumer-confidence data sparked optimism that spending by Americans could support a hoped-for second-half economic recovery.

The Dow Jones industrial average is up about 175 points, bolstered by stocks of consumer-discretionary companies such as restaurant, hotel and clothing chains. Earlier in the day the blue-chip gauge was up by almost 220 points.

An index of consumer sentiment spurted this month to 54.9, its highest level since September, according to the Conference Board, a New York-based research group. That was up from a revised 40.8 last month and far outdistanced the 42.6 level anticipated on average by economists.

“While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us,” said Lynn Franco, who heads the organization’s consumer research center.

The increase, the third in a row since the index hit a low in February, partly reflected an improved perception of the employment market.

The so-called expectations index, a measure of the conditions consumers foresee in the coming months, surged to 72.3 from 51.

Investors hope that resilient consumers can help pull the economy out of recession later this year and pad badly bruised earnings at major retailers.

“Higher consumer confidence plus the boost to disposable income in Q2 from a tax cut and extra Social Security payments make it more likely that a 'breakout' number on retail sales will be recorded soon after the weak readings of the last several months,” economists at UBS wrote in a note to clients.

Consumer-discretionary stocks are up more than 3.5% today, the best performance among 10 major sectors tracked by Standard & Poor’s Corp.

Hotel chains are doing especially well. Starwood Hotels & Resorts Worldwide has climbed 8.8% today, Wyndham Worldwide is up 8.4% and Wynn Resorts is up 6.7%. In other sectors, Home Depot is 4.4% higher and JPMorgan Chase is up 5.6%.

But there is only so much that consumer confidence alone can help stocks. One reason consumers are feeling better is that their portfolios have rebounded sharply since stock indexes hit multiyear lows in early March. So today’s rally is relying on something akin to a perpetual energy machine.

Moreover, there are big questions as to whether consumers can come to the market’s rescue.

The most obvious is the continued free fall in housing prices, which was reinforced with new data released Monday.

The widely followed S&P/Case-Shiller index of home prices in 20 cities slumped 18.7% from March 2008 through March 2009. (Los Angeles was off 22.3%.)

More than that, the job market remains weak and consumers have boosted their saving and begun whittling their debt.

“The type of environment we’re in, and coming out of, is unlike anything we’ve seen in our lifetimes,” said Dan Greenhaus, market analyst at Miller Tabak & Co. in New York. “How consumers perform in a massive deleveraging phase remains to be seen.”

-- Walter Hamilton
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Day Trading For a Living

2009-05-21T06:18:00.001-07:00

Some people love numbers, and the thought of learning a whole new language of technical jargon thrills them to no end. They think with the analytical side of their brain at all times, and can be counted on to see the big picture, no matter what else is going on around them. These people have the super speedy brains of a numbers-based genius, nerves than can be slightly shaken, but never stirred, and just a touch of brass; they are the perfect person to take on day trading for a living.

Do not get the idea that these are just some kind of young, hip cowboy types that roam in making trades at random, raking in the big financial rewards as they do so- they must truly know their stuff and they have to have an innate sixth sense ability before heading out into the day trading world. That world, by the way, is online, so heading out is a misnomer as well. Day trading activity takes place daily, online with the more short-term trades that they move quickly. They are literally traders, rather than investors, but can reap huge rewards in a relatively short period of time. Of course, day trading for a living does carry some fairly large monetary risks, so you must know a little about the market, your limits and what your loss cap is before even beginning.

Day traders do not always buy and sell their stocks in the course of the day, some may be held onto for a few days or even a week or more, in an activity commonly known as "swing trading". Doing day trading for a living will probably encompass both types of trading activity, especially on days when certain stocks are fairly flat. Knowing the trends of stocks is always a wise idea, and while the day trader moves quickly, without the wait and see approach of a more traditional trader, they do know and understand these trends.

Before thinking about day trading for a living you must know more than just the stock market and your own capabilities. A day trader must function under certain regulations which include minimum equity requirements for a day trader account, as the day trade buying power of that account and what defines a trader as a day trader. You do not want to begin your new career with SEC trouble looming over your head. Check out the regulations and the requirements. Do your homework and possibly buy and download the applicable software to your home or office computer. Day trading for a living can be lucrative, or it can be the financial death of you, know what you are getting into before you get into it.

Article Written By J. Foley

Stocks Finish Higher, Led by Techs

2009-04-04T08:07:00.000-07:00

The market posted its fourth straight weekly gain despite more gloomy news on the labor market and a decline in service-sector sentiment

U.S. stocks closed higher Friday, sending the market upward for a fourth straight week. The advance was led by tech issues after Research in Motion (RIMM) posted robust fourth-quarter results.

On Friday, the 30-stock Dow Jones industrial average finished higher by 39.51 points, or 0.50%, at 8,017.59. The broad S&P 500 index moved up 8.12 points, or 0.97%, to 842.50. The tech-heavy Nasdaq composite index added 19.24 points, or 1.20%, to 1,621.87. On the New York Stock Exchange, 21 stocks were higher in price for every 10 that declined. Nasdaq breadth was 16-11 positive.

Treasuries plunged. The dollar index eased. Gold and crude oil futures fell.

The stock market's higher close followed earlier bouts of profit taking, as investors digested news of another hefty drop in nonfarm payrolls in March while preparing for next week's start of the first-quarter corporate earnings season. The gains extended rallies from earlier this week that drove all three major market indexes up more than 20% off their bear-market lows in early March.

Federal Reserve Chairman Ben Bernanke discussed the Fed's balance sheet, which has expanded in bid to help the economy work out of recession.

In a speech Friday, Federal Reserve Chairman Ben Bernanke said the Fed has used its balance sheet "prudently," in conjunction with a multiplicity of new programs. He also cited the drop to record lows in mortgage rates as a sign that the Fed's actions are having their intended effect.

Bernanke also indicated the Fed has taken care to design its programs so that they will be unwound as markets and the economy revive. The speech detailed the various Fed programs as it essentially retooled its balance sheet to meet the needs of the credit markets.

In economic news Friday, the U.S. ISM nonmanufacturing index slipped to 40.8 in March from February's 41.6. The index is up from its all-time low of 37.4 in November 2008, but is well off its 49.6 print a year ago. However, the business activity index improved to 44.1 versus 40.2 (it was 52.2 in March 2008). New orders fell to 38.8 from 40.7. The employment index slid to 32.3 from 37.3. New export orders dipped to 39.0 from 40.0. Prices paid fell to 39.1 from 48.1. The composite manufacturing and nonmanufacturing edged down to 40.3 from 40.9.

"The data disappointed expectations for modest improvement and that should give Treasuries a little boost at the expense of stocks," says Action Economics.

U.S. nonfarm payrolls lost 663,000 jobs in March, and a bit stronger than the 650,000 expected. The unemployment rate rose to 8.5% from 8.1% the month before, though about as expected. While February's 651,000 decline was not revised, January was revised down to -741,000 (previously 655,000), with job losses averaging 685,000 in the first quarter. Average hourly earnings rose 0.2%. Average weekly hours dipped to 33.2 from 33.3. Total goods-producing sector lost 305,000 jobs, with a 161,000 decline in manufacturing, and an 126,000 drop in construction. Business services lost 133,000 jobs. Only health care added jobs, about 8,000.

"The headline data were about in line with forecasts. While the data indicates the job weakness continues, the report failed to realize the worst fears of a greater than 700,000 drop in jobs," says Standard & Poor's senior economist Beth Ann Bovino.

The persistent rally of stock market

2009-03-30T13:47:00.000-07:00

The stock market
enjoyed an unusually strong week with the BSE Sensitive Index finishing 12.06% or 1,081.81 points higher, and the Nifty ending
10.74% up. The CNX Midcap Index underperformed the main indices with a relatively modest gain of 5.77%.

Tata Steel was the biggest winner among the index stocks with a 26.9% gain. The other index stocks to go up included ICICI Bank, HDFC Bank, Sterlite Industries and State Bank with gains falling between 19.3% and 18.0%. None of the index stocks declined last week.

Unitech was the biggest winner among the more heavily traded non-index stocks with a 33.2% gain. The other non-index stocks to go up included PNB, Aban Offshore, Lanco Infratech, Axis Bank, Sesa Goa, JSW Steel and Yes Bank with gains falling between 32.4% and 23.6%.

Akruti City was the biggest loser among the more heavily traded non-index stocks with a 51.6% loss. The other non-index stocks to go down included Edserv Softsystems, MindTree, Crompton Greaves, Tulip Telecom, Everonn Systems , Firstsource Solutions and Gujarat NRE Coke with losses falling between 22.1% and 2.9%.

Intermediate Trend

The market remains in the intermediate uptrend which started on March 6 when the Sensitive Index made a bottom at 8,047. The levels below which the uptrend would end are now a considerable distance down at 8,867 for the Sensitive Index, 2,739 for the Nifty and 3,190 for the CNX Midcap Index.

These would be revised upwards to the level where the next minor decline bottoms out. Most global markets are in fairly strong intermediate uptrends, and are typically somewhere between their one-month and three-month highs.

Long-Term Trend

The market's long-term trend is down. The index has been in a 3,300-point range between 7,700 and 11,000 since the end of October, without any clear sequence of rising or falling tops and bottoms. It would therefore be best to take 11,000 as the level to cross for the Sensitive Index for a bull market confirmation. The corresponding level for the Nifty is 3,250, and that for the CNX Midcap Index is 4,000. (Figures have been rounded upwards).

Almost 25% of the market's heavily traded stocks are now at two-month highs or better, and over 15% are above their 200-day moving averages. These could be the first signs that the bear phase may have already ended. In any event, quite a few stocks may have already left the worst behind them.

Trading & Investing Strategies

The market is currently in an intermediate uptrend, and long-term investing should be put on hold until the next intermediate downtrend develops and has run for a week or two. It will be a good idea to hold on to past and recent investments, and not get out of them as this rally progresses. This portfolio building exercise suggested over the last few months is simply to buy stocks at low levels, and not in anticipation of an early end to the bear market - even though this now looks like a distinct possibility.

Global Perspective

The major trends of all global markets remain down, but the intermediate trends of almost all the markets are up. The Dow would enter a bull market (major uptrend) if it were to climb above 9,500. The Shanghai Index has crossed its 200-day moving average, and a global bull phase will become a real possibility if other indices follow suit.

The BSE Sensitive Index had lost 37.5% in the twelve months that ended on Thursday, keeping it at the 21st place among 35 wellknown global indices considered for the study. Chile continues to head the list, but with a 11.6% loss. New Zealand, South Korea, Israel and Spain follow. The Dow Jones Industrial Average has lost 35.6% and the NASDAQ Composite has lost 30.4% over the same period. (These rankings do not take exchange rate effects into consideration).

(The author is an independent technicals analyst)

Sifting for Gold Among High-Profit Stocks

2009-03-23T13:28:00.000-07:00

It's time to draw up a shopping list in preparation for the market's recovery. Here are 56 solid stocks that offer compelling value, relative to bonds, based on earnings yield. Topping the list: WellPoint.

THE DAY WILL COME when you will want to own stocks again. Really, truly, it will. After last week's strong showing, maybe you are already feeling a little left out. Bear-market rallies will eventually give way to a full-blown bull market. And when that time comes, you don't want to miss it. For that to happen, it is vital to prepare a blueprint to help guide your investment choices.

Jeremy Grantham, market seer and chief investment strategist of Boston money-management firm GMO, stressed the importance of being ready for the inflection point in a recent piece titled "Reinvesting When Terrified." He concluded that "you absolutely must have a battle plan for reinvestment and stick to it," all the more so when prospects appear their darkest. GMO now forecasts healthy long-term returns of 10% to 13% for equities.

There is no question that in an environment in which assets are still being repriced and balance sheets restructured, caution is wise. No one is suggesting investors should double down on the market -- but it is probably time to start averaging down.

DRAWING UP A PLAN OF ACTION and setting certain investment parameters before heading into what is arguably still a war zone should offer investors some protection against losses while positioning portfolios to capture potentially powerful returns. If you are skeptical of the ability of stocks to outperform ever again, as a case in point Grantham recalls the 105% return in the Standard & Poor's 500 for a six-month period beginning in June 1933, long before unemployment peaked and bank failures ran their course.

In a five-month period during the 1974 bear market, he points to the 148% advance in equities in the U.K. Moreover, during the Great Depression, there were six advances of 20% or more before full recovery took hold.

To help you with your blueprint, we created a screen based on the earnings yield of a stock -- the earnings per share for the most recent 12-month period, divided by the current stock price. This percentage, which is the inverse of the price/earnings ratio, provides a way to compare stocks with bonds or money-market instruments. The higher the yield relative to fixed-income securities, the better the value of the stock. Ray Dalio of Bridgewater Associates has said the key piece of advice he would offer to investors would be to consider the earnings yield of a stock before making an investment.

Understanding that the earnings outlook for a company isn't etched in stone, most of the stocks in our screen, with just a few exceptions, are expected to produce decent -- if not exceptional -- long-term earnings growth, a factor that will only enhance the rate of return compared with bonds. Last week's huge Treasury-market rally made these stocks look more attractive.

WE HAVE SCREENED FOR COMPANIES whose earnings yield is at least twice that of the 10-year Treasury's recent 2.8% level (it was trading at 2.61% on Friday). We chose that multiple to take into consideration the extra risk associated with stocks. Right now, the stock market as a whole, as measured by the S&P 500 and its earnings yield of 9%, appears to be undervalued in relation to bonds as measured by that 2.8% Treasury-yield yardstick.
Table: Better Than Bonds

We wanted to isolate those companies on the best financial footing, so we weeded out those with debt-to-total-capitalizations higher than 40% and debt-to-equity ratios greater than 60%. To underscore our emphasis on stability, only companies with market values higher than $15 billion made the final cut.

You might wonder why we didn't just screen for dividend yields -- which investors typically use when making a decision on buying a stock. Our thinking is that with companies increasingly slashing or suspending dividend payouts to conserve cash flow and bolster liquidity in these troubled times, this is fast becoming an unreliable indicator of a stock's potential investment return.

Not surprisingly in the current environment, only two financial companies made it to our final screen. They are property-casualty company Traveler s (ticker: TRV), with an earnings yield of 15% and mean long-term earnings-per-share growth estimated at 8.5%, and Warren Buffett's financial conglomerate Berkshire Hathaway (BRKA), with interests in insurance as well as manufacturing, media, consumer-discretionary and retail sectors and an earnings yield of 7.5%.

Travelers' conservative management of its investment portfolio, stable personal-lines business, manageable debt load, and strong balance sheet has helped it weather the current downturn well, and should give it an edge in a recovery.

Berkshire Hathaway is, well, Berkshire Hathaway (see Barron's, "Don't Count Out Berkshire Hathaway," March 2). Despite pressure on its investment portfolio from an ill-timed foray into the oil patch through a ConocoPhillips (COP) stake -- Conoco also makes it onto our long-term list -- and Buffett's staunch support of some beleaguered banks, plus some derivative bets that so far appear to have backfired, Berkshire ended 2008 with $24 billion in cash. And it continues to be well-positioned to take advantage of others' travails. One area Buffett now finds attractive is high-yielding investment-grade corporate bonds.

Only one utility makes our list: Duke Energy (DUK), a pure-play electric utility sporting a 9.9% earnings yield and estimated mean long-term earnings growth of about 4%. Duke has ample liquidity to support growth and see it through this economic crisis. Investors will likely be drawn to its solid balance sheet and geographic diversity, as well as its 7% dividend yield -- which in this case appears to be sustainable.

Most heavily represented on our list are companies in the health-care and information-technology sectors. Indeed, Nos. 1 and 2 on the list of 56 companies are managed-health-care companies WellPoint (WLP), with an earnings yield of 17.2%, and UnitedHealth (UNH), boasting an earnings yield of 16.8%.

After a difficult couple of years, WellPoint is on track to improve its shareholder returns. New management is in place, claims inventories are down, and reserves have been strengthened. The company is expected to generate free cash flow of $3 billion in 2009, and to repurchase up to $2 billion of its shares this year.

Topping the list of info-tech stocks is Hewlett-Packard (HP), whose earnings yield is 12.9%. Hit hard by the global downturn and frozen IT budgets, the computer-printer giant posted lower-than-expected revenue in its fiscal first quarter, and reduced its earnings outlook. But synergies from its acquisition of EDS as well as share gains should provide meaningful earnings support. When spending does tick up, Hewlett-Packard is well-positioned to benefit (see the Dec. 29, 2008 Barron's "How HP Prints Profits"). Meantime, it ended the first quarter with $11.3 billion in cash; operating cash flow was $1.1 billion. Also, the company has $7.9 billion remaining in a share-repurchase program, after buying back $1.2 billion of its shares in the prior quarter. Needham & Co. has called Hewlett-Packard "a must-own name in large-cap tech."

There are few media companies that make the grade, but one that does is News Corp . (NWS, Class B), owner of Dow Jones, which publishes Barron's. News Corp. shares have been battered by the deep advertising recession affecting the entire newspaper industry. Also, when Peter Chernin, Rupert Murdoch's longtime second-in-command, announced recently he would leave the company, concerns were raised about succession plans.

Still, the company's balance sheet is in fine shape, with a manageable debt load and cash available to cover its obligations through 2015. News Corp. is expected to generate $2.2 billion in free cash flow this year. At 8.1%, its earnings yield is about 2.9 times the yield of the 10-year Treasury. The stock could benefit if management chose to buy back shares, a signal that the worst for the media industry and economy might be over. At least one analyst has a price target of $14 on the shares, which would indicate a roughly 100% move from current levels.

Our screen, while not foolproof, is compelling for the values it has turned up among companies representing a wide range of sectors. The size and standing of the companies as well as their sound balance sheets and potential for growth should result in meaningful returns for those investors with an action plan in their pockets.

E-mail comments to mail@barrons.com

Making Sense of the Stock Market's Wild Ride

2009-03-16T10:03:00.000-07:00

Fortunes are won and lost from day to day in a volatile market that shows no signs of settling down soon

By Ben Steverman

Once again, the wild stock market has made fools of those who would try to predict its direction.

Amid buckets of bad news and a gloomy mood on Wall Street, stocks took a violent swing to the upside. In just three days, the broad Standard & Poor's 500-stock index advanced 10.7%, which is more than what stocks rose in four of the last five years.

That followed a scary descent for the S&P 500 to the lowest levels in more than 12 years. From Jan. 6 to a low on Mar. 6, the S&P 500 dropped 29%.

All this volatility makes stock market investors look like they can't make up their minds. If stocks prices change so much from Monday to Thursday, investors apparently don't know what U.S. companies are really worth.There are two common ways of explaining the market's recent rally, and both underscore investors' extreme uncertainty and skittishness.
Citigroup Memo

The first explanation is based on theories about how markets work. For one thing, stocks rarely fall day after day without a break. Stocks "were more oversold than [they've] been in my 13 years on Wall Street," says Dave Rovelli, managing director of equity trading at Canaccord Adams. "We were due for a rally."

Stocks seemed to react to a Mar. 9 letter from Citigroup (C) Chief Executive Vikram Pandit, touting his troubled bank's performance in the first couple months of 2009. But to Rovelli, that was just a trigger to a rally that would have started eventually anyway. The S&P 500 had declined in 13 of 16 trading sessions from Feb. 13 to Mar. 9.

Richard Sparks of Schaeffer's Investment Research agrees. "The market was ripe for a rally," he says.
Shift in Market Psychology?

The rebound was driven not by long-term investors but by traders with a very short attention spans. "It's driven by big money, momentum players," Sparks says. "It's such a tough market to trade," that these market participants focus on "very short-term time periods." Traders jump on market trends, but those moves don't last long and can turn on a dime.

The volatility is most striking in the financial sector. From Mar. 10 to 12, one measure of the financial sector, Financial Select Sector SPDR (XLF) rocketed 30% higher. The same index had lost half its value from the beginning of the year to Mar. 9. Professional traders are no doubt making—and also losing—a lot of money on these rapid moves. Successful traders must be "nimble enough and right enough," Sparks says.

Some wonder, though, if the past week marked a significant shift in market psychology. Dan Genter, president of RNC Capital Management, says the recent rally doesn't just reflect the moves by short-term traders but also by long-term investors who are beginning to put money into the market.
Pricing In Worst-Case Scenarios

Stocks—particularly bank stocks—were trading at absurd prices. "All these companies are not going out of business," he says. By falling to 1996 levels, stocks priced in a worst-case scenario for both the economy and for earnings prospects. At those levels, "unless you think the world is coming to an end, it's difficult not to be bullish long-term," says Uri Landesman of ING Investment Management (ING).

Few in the market believe the world has solved its economic and financial problems—quite the opposite. But, Genter says, "it's not just in freefall anymore." He hopes that, by dropping to an extreme low this month, stocks now have a new low below which they're unlikely to fall again.

Landesman says the market needs to see a strong rally from these levels. Or, he worries, stocks will lose their momentum and fall back again. Rovelli also warns of more volatility ahead, particularly in the next couple weeks as bullish and bearish traders battle over the direction of the market.
Long-Term Volatility?

The wild ride could last much longer than that. Scott Jacobson, an expert on volatility and chief investment strategist at Capstone Sales Advisors, says high volatility in the stock market tends to last for two to four years during and after a recession. "I'm sure we have two years of volatility at least," he says.

The problem with a volatile stock market is that it doesn't just reflect investor uncertainty. Wild swings also cause uncertainty and confusion among the investing public, who see their retirement nest eggs grow or shrink erratically from day to day.

Market observers often say the stock market is supposed to move higher six months before the economy does. But, from this standpoint, it's impossible to know whether the market's newfound optimism is a harbinger of things to come, or simply a temporary rest stop on the market's trip ever lower.

Steverman is a reporter for BusinessWeek's Investing channel.

Forex Maestro

2009-03-06T11:37:00.000-08:00

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How to select a Forex Broker

2009-02-16T16:55:00.000-08:00

The decision of which brokerage firm is best for you is as important in the Forex market as it is in the Stock Market. The way of evaluating the various firms differs slightly between the two markets, however. Forex trades do not involve commissions, but they do have what are known as spreads, which is the difference between the price a currency can be purchased and the price for which it can be sold at a given point in time.

This spread (which is expressed in "pips") is how the brokerage makes its money, so it serves the same purpose for them as a commission. You can be pretty certain that the spreads vary between brokerage firms just as widely as commissions do in the Stock Market, so investigate this carefully before making your selection.

Most brokerages dealing with the Forex market are involved with large financial institutions where the funds are available to provide sufficient leverage for their clients. It is still important to make sure your firm is reliable. They should be registered as a FCM (Futures Commission Merchant), and regulated by the CFTC (Commodity Futures Trading Commission).

Most firms offer widely varied packages of tools that assist you in making trading decisions and understanding the market better. They provide information and research that is available to you in many different formats. It is wise to take a little time to study these tools, and to find the ones that are most helpful to you. They are going to end up being very important and you need to be comfortable with them.

Look for a firm with a wide variety of account and leverage options. The ability to use the Forex market's advantages in leverage is one of the things that makes it the most attractive to you as an investor, and you want to have the maximum flexibility here. Although there are a few unethical firms operating, a few references and inquires should be able to identify them. This selection process is worth a little effort and an investment of time. It is an investment that is going to the most likely to pay off.

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Despite grim news, market has best week of the year

2009-02-08T20:08:00.000-08:00

COMBINED NEWS REPORTS
February 8, 2009

More jobs were lost in January than in any month since December 1974. The unemployment rate is the highest since September 1992. President Barack Obama said the economic downturn "could not be more serious." Wall Street's reaction? Let's party.

Despite the grim economic news, the Dow and the S&P 500 index had their best week in more than a month. The Nasdaq composite index had its biggest weekly gain since November.

The Labor Department said the nation lost 598,000 jobs last month and the unemployment rate climbed to 7.6 percent. If part-time employees, discouraged workers and others are factored in, the unemployment rate would have been 13.9 percent in January, highest on record.

"People are thinking ahead to what are these numbers going to look like in June," said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "Main Street is in free fall, which is where Wall Street was in September and October. Wall Street since mid-October has been flat, and that's what Main Street might look like by spring or early summer."

The Dow Jones industrial average closed Friday at 8,280.59, a gain of 3.5 percent for the week. The Nasdaq composite index finished at 1,591.71, up 7.8 percent. The S&P 500 index ended at 868.60, a rise of 5.2 percent.

Much of the last week's big rally was attributed to hope that a bank-rescue plan, scheduled to be unveiled Monday by Treasury Secretary Timothy Geithner, will lift the economy from recession.

"All focus right now is now is really on Washington," said Dan Cook, senior market analyst at IG Markets

Advantage of Forex over Stock and Commodity Markets

2009-01-15T15:46:00.000-08:00

When one begins to discuss the advantages of investment in the Foreign Currency Exchange Market (Forex) over the Stock or Commodity Market, it is quite easy to sound like a cheerleader and with the same kind of bias. The Forex market offers so many advantages that it is not hard to understand its popularity.

The Forex Market operates 24 hours a day. It is a truly world wide market, and when the sun goes down in one trading center, it is coming up in another. The Forex market, although it has its trends and cycles, is not locked in the Bear vs. the Bull market mentality of the Stock Exchange.

Since all Forex trades involve the exchange of one currency for another, one currency's hard times opens the door for a profit in another currency. The market is not adversely affected by rising interest rates. When a nation raises rates, generally the currency is strengthened, while rising interest rates tends to depress the stock market.

The combined number of different stock issues on the NYSE and NASDAQ exchanges totals 8000. That is a lot of stocks and it is time consuming to keep up with even a portion of them.

There are four major currencies, and only about 34 second tier currencies, to consider in the Forex. Brokerage firms do not stand between you and profit in the Forex. Not only are the brokerage and commission fees almost non-existent, but analysts in the Forex tend to actually analyze in the currency market and not dictate or control the rise and fall of the market.

When the two markets are compared, the Forex certainly looks like the better investment choice.

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How to Formulate a Profitable Trading Plan In The Forex Market

2009-01-03T09:37:00.000-08:00

Investments & Trading

There is no magic formula that ensures profit on any type of investment. The forex market is no exception to this, but there are some steps you can take when devising your own personal investing plan that will not only make profit a more likely result, but will insulate you somewhat from disaster.

* Select Your Term: There are three basic time frames within the forex market dealing with the length of time a position in a certain currency is held. They are long term, medium term, and short term. Each has its advantages and disadvantages. The short term position holder, sometimes known as a scalper, will be making rapid fire trades often exchanging currencies back and forth within a single day. The long term trader will hold on to his currency for months or even years. The medium term trader usually holds his positions for a few days or a week. The advantage of the medium term is that it requires the least amount of capital to realize profit. Leverage is only needed to boost that profit, whereas in both long and short term trading, it is needed to both protect the investment, and insure any chance of profit. Although medium term is recommended for the beginning investor, and involves less risk, you need to identify which is right for your personal plan, and stick to it. A plan that tries to use all three at once will most likely lead to confusion.

* Learn to Use Technical Analysis: The forex market lends itself very well to statistical analysis. Trend following is an example of a type of analysis that can guide the investor in making profitable decisions. Technical analysis of the market includes monitoring price movement as well as a large number of indicators. There are programs available where this large amount of data can be crunched in any way that fits your own individual plan and your own needs. You are going to need to find the right way to access and organize the data required for the execution of your own individual investing strategy.

* Learn to Perfectly Time Your Trade: One of the features of the forex market is the ability of the investor to insulate himself from drastic market swings. This is partly because of the 24 hour nature of the market. With the exception of weekends, there is a forex market operating somewhere day and night. A good trading plan should include both "stop loss" and "take profit" orders. These are simply instructions to change your currency position when either your profit or your loss reaches a certain point. The stop loss order is more easily understood. This is simply bailing out before things get too bad. The take profit approach usually meets with more resistance, and it is true such an order might prevent you from making even more profit should a volatile change keep propelling the value upward. Volatile is volatile, however, and what goes up fast may come down faster. As you can not monitor your account twenty four hours a day, you want to know that if your profit point is reached while you are soundly sleeping, at least your expected level of profit will be realized.

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5 stock experts foresee 2009 rebound

2008-12-30T20:37:00.000-08:00

By Adam Shell, USA TODAY
NEW YORK — With the stock market on track for its worst year since 1931, Wall Street strategists are predicting a rebound in 2009.

A review of year-end '09 targets for the Standard & Poor's 500 index by five top market strategists found that nearly all expect double-digit percentage gains, despite another year of sharp swings. The most bullish projections call for a 24% gain from current levels.

Wall Street's gurus, however, were also bullish heading into 2008. While most predicted a stormy first half, none forecast the financial hurricane that engulfed investors. The S&P 500 is down 39.3% in 2008, the worst since a 47.1% drop in 1931, S&P says.

But predicting a rebound may be based on more than hope. Stocks have snapped back sharply after past historic declines. After stocks bottomed out after an 89.2% drop in July 1932, for example, the Dow Jones industrials rallied 93.9% the next two months, Dow Jones Indexes says.

Similarly, the S&P 500 rebounded 25.2% in 1938 after falling 38.6% in 1937, S&P says. After the 2000-02 bear market bottomed, the S&P 500 rebounded 26.4% in 2003.

One caveat: The S&P 500 fell 15.2% in 1932 after its record 1931 decline.

The strategists are betting on:

•An economic recovery. At some point after mid-2009, a rebound should occur, says Thomas Lee, U.S. equity strategist at JPMorgan Chase. But Lee says investors shouldn't rush back into stocks immediately.

He expects a rally early in the year on initial optimism about the bailout plans. Then he expects a pullback because of headwinds such as weak earnings. He says tailwinds such as lower gasoline prices, fiscal stimulus and a stabilization of the housing market will help stocks by year's end.

•Government stimulus plans. "The size of the global policy response to stabilize both the financial system and the growth outlook is virtually unprecedented," writes Abhijit Chakrabortti, strategist at Morgan Stanley.

•A repeat of history. "When this bear market ends, be prepared for a fast and furious partial recovery," S&P's chief investment strategist Sam Stovall writes in his 2009 outlook. Historically, the S&P 500 has recouped, on average, 33% of its bear market losses 40 days after a bottom.

Stick to your plan in a volatile market

2008-12-27T20:35:00.000-08:00

Posted: Dec. 27, 2008 7:33 p.m.

Fourth quarter 401(k) statements will be arriving soon like a lump of coal in everyone's stocking.

Falling home prices have kept investors nervous since the fourth quarter of 2007. But when Lehman Brothers filed for bankruptcy protection in September, things went from bad to worse.

What made this stock market drop so painful is that, this time, there's been almost no safe place to put your money. Everything dropped simultaneously. Diversification, meant to lower portfolio volatility, was rendered completely ineffective by panic selling in all asset classes.

In terms of magnitude, it's the third-worst drop in stock market history (-51.9%), if we use Nov. 20 as the bottom. The other two drops that were bigger: Sept. 7, 1929, to June 1, 1932 (-86.2%), and March 6, 1937, to March 31, 1938 (-54.5%). This has driven many 401(k) portfolios down 30% to 40% for the year.

So what's a 401(k) investor to do?

Don't let emotions dictate your investment decisions. Fear is a powerful motivator, but bailing out of the market now is not the answer. Today, stocks and corporate bonds are 30% cheaper, on average, than they were six months ago. Foreign stocks and bonds are even more depressed. While prices may still go lower, it's hard to see how selling long-term assets at some of the most depressed prices in the past 120 years will turn out to be a good idea.

Don't try to time this market. Sure, there's a chance that the market will drop more in 2009, but there's no way of knowing if that will happen or how far it might drop. What we do know is that historically, after a bear market bottom is reached, the bounce back is usually swift and significant. In fact, after 20 bear market bottoms that date back to 1903, the market rebounded an average of 46% over the next twelve months.

Develop a plan. 2008 will be, from this point on, the year financial planners use to illustrate the importance of having a proper saving and investing strategy for retirement. Those who started too late, saved too little or invested too aggressively as they neared retirement now face the reality of having to work longer or accept a lower standard of living.

Stick to your plan. Keep investing during lousy market periods, even if it feels unnatural. While your current asset-allocation strategy was probably no help avoiding a collapse in the value of your 401(k) account, that's not a good reason to abandon it now. It's impossible to know which fund category will bounce back first, so a diversified strategy is still your best approach to recover from this bear market.

Rebalance your portfolio back to your original target allocation between stock and bond funds. Say you had adopted an investment strategy that allocated 80% of your savings to a diversified portfolio of stock funds, and 20% to bond and stable value funds. Because of the beating stock funds have taken this year, your portfolio is probably now closer to 60% stock funds and 40% bond and stable value funds.

Because I believe we're close to the bottom, consider selling some of your bond and stable value funds now and purchasing more shares of stock funds to reallocate your holdings back toward your original target allocation of 80/20. Rebalancing gradually over the next six months will lessen the importance of the timing.

How you respond to this sharp drop in the markets could have a profound effect on how financially secure you are in retirement. History suggests that we are now looking at one of the most opportune times to invest that we've seen in a long time.

Michael J. Francis is president and senior investment consultant of Francis Investment Counsel LLC, a registered investment adviser based in Pewaukee. He can be reached at michael.francis@francisinvco.com.
The information in this article is for informational purposes only. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Francis Investment Counsel does not offer personal tax or legal advice.

Rebuild retirement savings with 401(k) and smart use of stocks

2008-12-25T19:57:00.000-08:00

The bear market and the economic slump have caused most 401(k) retirement savings to have a major meltdown this year.

Not only has the financial mess caused retirement investments to plummet in value, it also has caused a growing number of employers to suspend their 401(k) company match.

But as gloomy as it all seems, you shouldn't spend the winter hiding under your blankets. After you put away your holiday decorations, it's a good time to regroup and learn from this year's pitfalls and mistakes.

Here are some tips for rebuilding your retirement savings in 2009:

Make sure you can sleep at night
FIND MORE STORIES IN: CDs | Enron | Vanguard | Hewitt Associates | Employee Benefit Research Institute | Pamela Hess | Center for Retirement Research | Jack VanDerhei | Christopher Jones | Financial Engines

As difficult as the year was, you may have learned some important things about yourself. You may be far less willing to take risks than you think.

"We've been through one of the most rapid and extreme bear markets in history," says Stephen Utkus, principal at Vanguard's Center for Retirement Research. "And if that wasn't a test of your risk tolerance, I don't know what would be."

If you're still comfortable with your asset allocation, then your risk and return are in a good balance. But if you've lost much sleep this year, you know it's time to reduce your risk and adjust your investment priorities.

Don't panic

After the worst financial crisis since the 1930s, you need to start 2009 by making a candid assessment of your retirement plan, Utkus says. If that means investing less in stocks, fine. Just be aware that you may have to increase your savings over the long term to compensate for the lower returns you'll get from bank CDs and money market funds.

If you shifted money in a panic, however, you might want to reconsider. So far this year, 401(k) trading activity has risen to 6%.

"It's only 6%, but it's very high, relative to other years," says Pamela Hess, director of retirement research for Hewitt Associates. "And there has been a lot of emotional selling."

Not surprisingly, most have moved their money into stable value funds and money market mutual funds. That may seem safe. But if you're planning to get back into stocks, don't think you'll be able to time the market. Most people simply sell low and buy higher.

"They really risk missing the upside," Hess says. "Then they are locking in an inferior return."

Start the year by making sure you have a smart financial strategy — and don't rely on the past when you plan for your future.

"Everyone says, 'The market is going down, therefore I shouldn't invest in equities,' " Utkus says. "You should think about how to be best positioned going forward, as opposed to spending too much time looking out the rearview mirror."

And most planners say that if you have a long-term investment horizon — 20 years or so — you should have most of your assets in stocks.

Diversify

Some plan participants were too aggressive in their investments by investing only in one kind of stock — small-company stocks, for example. When the market collapsed, their retirement savings did, too.

It's even more risky to be too concentrated in company stock, says Christopher Jones, chief investment officer for Financial Engines, which provides advice to 401(k) plan participants.

Even though the Enron debacle should have provided a cautionary tale about investing in company stock, that's still a major problem, Jones says. Many plan participants continue to invest 100% of their 401(k) money in company stock.

"They look at the stock market and say that they've done better in their company stock," he says. "The fallacy, of course, is that it doesn't guarantee anything about the future."

Make sure that you have a well-diversified portfolio that includes broad-based stock funds, such as those that track the S&P 500-stock index.

"Don't confuse bad investment results in the past with a good financial incentive going forward," says Jack VanDerhei, research director of the Employee Benefit Research Institute.

Be mindful of your age

When you're 30, you can put all your money in stocks because you'll have plenty of time to make up for losses. When you're 55, it's much harder to make up those losses. Many employees who are close to retirement are now suffering because they had overly invested in stocks.

But if they'd invested in a target-date fund, they would be in better shape. These funds invest in a mix of stocks, bonds and money funds based on when you plan to retire, and they're managed by professionals who make disciplined investment plans.

Nearly half of 401(k) plan participants who are ages 56 to 65 had portfolios that had at least 20% more in stocks than target funds designed for that age group did, says VanDerhei.

Many companies now use target-date funds as the default option for 401(k) automatic enrollment — but that generally involves younger employees, who are newly enrolled. Older plan participants should consider moving their 401(k) money into target-date funds, especially if they don't believe they have the financial acumen to accomplish their asset allocation on their own, VanDerhei says.

Keep saving

Even if the stock market calamity has made you feel frightened and demoralized, you should try to stay in the game, Hess says.

Then you can take advantage of the pretax savings that you have in a 401(k) plan. And if your company offers a matching contribution, you also can take advantage of that.

"You should make sure that you are saving enough to get every last penny of your company matching contribution," Jones says.

Unfortunately, more than 20% of the workers who participate in their plan don't contribute enough to get the full company match, according to Hewitt Associates.

Keep the big picture in mind

A growing number of employers are suspending their company match. That creates worries and resentment among workers, And some are considering dropping their 401(k) plan entirely.

But keep in mind that most companies, unless they go into bankruptcy, will eventually reinstate their matching contribution. And the responsibility for retirement savings was yours, anyway, says Sheryl Garrett, a financial planner in Kansas City, Mo.

"Companies have to cut where they think it inflicts the least amount of pain on their employees and their business," she says. "Cutting into your retirement nest egg temporarily is their way of trying to stay viable and continue giving you a paycheck."

Don't cash out

Younger employers tend to cash out their 401(k) plan when they switch jobs. Big mistake.

For most, if they have $10,000 or less in their plan, it looks like free money, and retirement seems far away, Hess says.

But if a 25-year-old has just $5,000 in a retirement account that earns a 7% average rate of return, it will be worth $74,872 when the worker reaches 65 — even without adding any more money, according to Hewitt.

Take charge

Most people are passive investors, Hess says. It would be great if they took a more active role in their savings.

By Christine Dugas, USA TODAY

In the past, many workers had a pension plan, so 401(k) plans were a supplemental benefit.

"Now, they are our main savings vehicle, and so it's important to have a plan and stick with it," Hess says.

If you need help, you should check out the tools and advice that your employer offers, or talk to a financial planner. But start out the year with a good retirement plan.

"Keep in mind that for most Americans, a 401(k) plan is the bedrock of their retirement saving," Jones says.

"You are responsible for making the investments and for bearing the consequences of the investment risk."

You Can Make Money in Any Market

2008-12-24T07:58:00.000-08:00

By John Rosevear
December 23, 2008

Do you know what gets me about the recent stock market blowup?

Somebody out there made a bundle off it.

I know, it's hard to believe. Most folks' retirement account balances are way down. Every single stock mutual fund (all 11,579 of them) is down this year, and highfliers from Akamai (Nasdaq: AKAM) to Apple (Nasdaq: AAPL) -- and that's just the beginning of the alphabet -- are way off their recent highs.

But somewhere out there are investors who made money this year. Lots of money, in some cases.

Many are professionals, of course -- hedge fund managers and others with access to sophisticated tools and strategies -- but others are just ordinary individual investors like you and me. Like you and me ... except that they've learned to use tools and strategies we haven't.

Like going short.

The long and short of it
Most mutual funds aren't allowed to short stocks -- to borrow and sell them, in other words, betting that they'll be able to buy the stock back at a lower price and make money on the difference. Many individual investors avoid the practice as well. The risks are high, the upside is limited, and shorting can't be done at all without a margin account, which excludes most retirement accounts.

But sometimes shorting a stock -- or a sector, or an index -- is a prudent investment. Markets go down as well as up, as we've seen recently. Sectors fall out of favor. Companies sometimes appear headed for disaster long before the wider market catches on, as was the case with Lehman Brothers for a while. Bubbles appear, become evident to some, and then pop.

Shorting banks, oil, or other commodities earlier this year would have been an excellent move, and the weaknesses in all three of those areas were visible to some folks at the time. But how many profited? A lot fewer, because shorting is dicey, and, as I mentioned previously, it's a strategy unavailable to most who do their investing via IRA accounts.

But that's changing. New tools allow investors to take short positions without the need for a margin account. These offer great opportunities for the informed -- along with some new risks.

Enter the short ETF
Most investors are familiar with ETFs. Exchange-traded funds track a wide variety of indexes and are traded throughout the day, like stocks. In recent years, companies like ProShares have created families of short ETFs -- investments that go up when the indices they track go down. (And -- this is important -- vice versa.)

The selection has grown rapidly. ProShares alone offers an extensive selection covering all the major U.S. and international indices, sectors from financials to industrials to health care, commodities including gold and crude oil, major currencies, and more.

Be careful of that lever
Many of these are leveraged, or what ProShares calls "UltraShort," so for every 1% move down in the underlying index, the fund is supposed to go up about 2%. They don't track precisely in practice, but close enough to work out well if you're right, and to cost you a bundle if you're wrong (although unlike a true short position you can't lose more than your original investment). Still, tread very carefully with these products.

The lack of precision has been an issue for some short ETFs. While a fund like UltraShort Oil & Gas (NYSE: DUG) is designed to inversely track an index that includes obvious sector heavyweights like Chevron (NYSE: CVX), Schlumberger (NYSE: SLB), and ExxonMobil (NYSE: XOM), the fund's actual holdings are complex derivatives, not short positions in those stocks. The "black box" aspect can be a turnoff for some.

Nonetheless, these ETFs remain useful tools -- not the one fund to carry you to retirement, but a way to take a well-thought-out position on the market, in a sector, or on a currency or commodity. But for once, I'll advise you to think in the short term on these investments. Long is the way to bet long term, as this bear market won't last forever.

Putting it all to work
I've used short ETFs in a small way in the past few months. Most significantly, in the midst of the market crash in early October, I threw a portion of my portfolio's cash position into UltraShort S&P 500 ProShares (NYSE: SDS), which acted as a sort of brake on my portfolio as the declines continued. In that case, the double leverage was exactly what I wanted -- to have a big effect with a relatively small investment.

More recently, I've explored using both long and short ETFs to take longish-term positions on currency movements and sector strengths. The Fool's new $1 million real-money portfolio, Motley Fool Pro, is employing similar strategies using ETFs and short positions together with a core stock portfolio, and I've learned a lot by following its investments.

If you're interested in learning more about Motley Fool Pro and long and short strategies using ETFs, the service will be reopening soon, but for 10 days only. To learn more, and to get your private invitation to join, simply enter your email address in the box below.
"The most exciting development in my lifetime!" 15 years ago, Motley Fool founder David Gardner uncovered a secret that changed how he'd invest forever. It can make you money in up, down, and rollercoaster markets. To learn more, enter your email address now.

Fool contributor John Rosevear owns shares of Apple. Akamai Technologies is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. The Motley Fool has a disclosure policy.

Forex Training is a Must For Anyone Serious About Turning a Profit in The Market

2008-12-21T20:30:00.000-08:00

Investments & Trading

No matter how well you did in school or what kind of IQ you have, we all need specialized training in certain areas. The forex market is no exception to this. Forex training should be a prerequisite for anyone considering getting serious about trading world currencies for profit.

Is formal training truly necessary? After all, there are plenty of books and online articles on the subject. Wouldn’t it be enough to read them on your own and getting into the market without going through the hassle of official training?

Well, look at it this way. You could read manuals on how to fly a plane, but you probably wouldn’t want to try it for real without getting some hands-on training first in a simulator. By the same token, you shouldn’t jump into buying and selling currencies without getting some training first. You might be able to manage successfully without it, but you’ll be so much better prepared with it.

Forex is a complicated, highly nuanced financial area, and the people who are experts in it are aware that the average person knows almost nothing about it. To help share the wealth of information, the experts have devised a number of training systems on the Internet and elsewhere.

Many forex training systems offer simulators or practice accounts. In these, no real money is involved. It’s pure simulation, giving new traders an up-close-and-personal look at the market without any financial risk. In these demos, you get all the charts, figures and other data you’d get if you were doing it for real. It’s excellent practice for the real thing.

Forex training is seldom free, however. Depending on the type and depth of training, it can be anywhere from $50 to several hundred dollars. How much training you need depends on how serious you are about joining the marketplace. If you truly want to make money buying and selling currencies, it might be wise to get as much training as possible. On the other hand, if you intend to do it as a hobbyist, and if you limit your investments up front to adjust for the learning curve, you might do well enough with just the basic training.

Either way, you owe it to yourself to follow the training lessons carefully. Learn as much as you can from the resources available to you. It will help you turn a profit when you get into trading and help you minimize your financial losses.

Article Writt4en By J. Foley

Wall Street dips on Morgan woes

2008-12-18T06:35:00.001-08:00

Stocks churn - and briefly pull into positive territory - but an afternoon rally doesn't hold, and all three major indexes end the day lower.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: December 17, 2008: 6:06 PM ET

NEW YORK (CNNMoney.com) -- Stocks ended lower Wednesday as investors tried to shrug off a bigger-than-expected loss from investment bank Morgan Stanley, but an afternoon rally failed to hold traction.

Wall Street took a hit Wednesday in the wake of the severe losses from the nation's second-largest investment bank, but sentiment was still buoyed by the Federal Reserve's rate-cutting announcement Tuesday. At this point in the recession, investors are not easily flustered by yet another loss booked by a financial giant.

The Dow Jones industrial average (INDU) lost 99.8 points, or 1.1%. The broader Standard & Poor's 500 (SPX) index ended down 9 points, or nearly 1%, and the Nasdaq composite (COMP) shed almost 11 points, or 0.7%.

Stocks started the session sharply lower and battled back to positive territory briefly, but in the final hour of the session, stocks gave back all of their earlier gains.

One analyst said that Wednesday's volatility was in line with the market's recent turmoil. "One thing you have to keep in mind is the volatility that we have seen over the past couple months," said Ed Clissold, senior global analyst at Ned Davis Research.

Wall Street's sharp drop at the open was anticipated, given the big gains on Tuesday, when the Dow jumped 360 points, or 4.2%. Even if investors had not been dealing with the news of the massive Morgan losses, stocks would have snapped lower in reaction to the sharp gains on Tuesday, a market observer said.

Harry Clark, chief executive and founder of the Clark Capital Management Group, said the market "is taking bad news in stride these days." While massive financial-sector losses weigh on investor sentiment, Clark said that the market is looking for a recovery.

Clissold echoed the sentiment that the market has been braced for negative news. "When a large financial company reports bad earnings, investors for the most part treat that as what would be expected," Clissold said.

Investors were also still digesting the decision from the Federal Reserve Tuesday to cut the key lending rate to record low levels as it pledged to consider further ways to spur economic activity.

Meanwhile, market breadth was positive. Advancers beat out decliners 3-to-2 on the New York Stock Exchange on volume of 1.34 billion shares. And advancers just beat decliners on the Nasdaq, with a volume of 2.16 billion shares.

Company news: Before markets opened on Wednesday morning, Morgan Stanley (MS, Fortune 500) posted a staggering $2.3 billion loss for the fourth quarter, which was far greater than the $298 million loss that analysts were expecting, according to Thomson Reuters.

The loss was even worse than what analysts were bracing for and was yet another indication that every part of the financial sector has been battered by stock-market volatility and credit-market weakness.

The announcement from Morgan Stanley comes the day after rival Goldman Sachs (GS, Fortune 500) posted a $2.1 billion loss - the company's first since it went public in 1999.

Fed rate cut: Wall Street's pullback Wednesday came on the heels of a rally on Tuesday precipitated by the Federal Reserve cutting its key lending rate to the lowest level on record.

The U.S. central bank lowered its key interest rate to a range of between 0% and 0.25%. The rate cut was the 10th time the central bank has slashed rates in the past 15 months.

The central bank has attempted to juice the economy, which officially fell into recession at the end of 2007, with an aggressive rate-cutting campaign.

However, now that the key lending rate is near zero, the central bank may have to find other ways to spur the slumping economy. In fact, in the Fed's rate-cut statement released on Tuesday, the agency indicated that it would consider purchasing its own long-term Treasurys.

"The Fed has really stepped up," Clark said.

He added that investors have taken comfort in the central bank's moves, as evidenced by Tuesday's rally on Wall Street and improvements in the credit markets.

Another analyst echoed the sentiment. "The Fed has clearly signaled it is going to do whatever is necessary to get the debt markets functioning properly again, which is going to be key for the equity markets," Clissold said. In the long run, Clissold said that a return to health in the credit markets is essential to a broader recovery.

Government debt, currencies: Long-term Treasury prices soared Wednesday, continuing Tuesday's rally that happened in the wake of the Fed's announcement that it would consider buying its own long-term debt.

The goal of the government in stepping in and buying its own debt would be to help the troubled housing market find some footing. Thirty-year mortgages typically move in lockstep with the yield on the benchmark 10-year Treasury note.

Lending rates continued to decline. The overnight Libor rate declined to 0.13% from 0.16% on Tuesday, while the 3-month Libor rate dropped to 1.58% from 1.85%, according to Bloomberg.com. Libor, or the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend money in London.

The improvements in Libor rates are one indicator of credit-market pressures easing. "They have been coming down for the last two months and they are finally down where they should be," Clark said.

Auto bailout: U.S. automakers are still awaiting news from the Bush administration as to the status of their plea for a $14 billion bridge loan.

General Motors (GM, Fortune 500) and Chrysler LLC have warned that they are within weeks of running out of cash. After the Senate failed to approve a bailout package for the automakers, the Bush administration said it would consider tapping the $700 billion bailout fund Congress approved for the banks and Wall Street.

Meanwhile, the auto finance firm GMAC doubled the amount of capital it has raised, moving it closer to qualifying for much-needed federal funds. If GMAC can obtain enough funds to qualify as a bank, then it could obtain funds as a part of the $700 billion bailout bill.

Oil: Oil settled for the day down $3.54 to $40.06 a barrel, a 4 1/2-year low, after OPEC announced it will cut oil production by 2.2 million barrels a day as of Jan. 1 to boost oil prices. Crude oil prices have slid from record highs as the global economic recession has chipped away at demand for energy.

Oil prices have fallen nearly $100 a barrel since the record highs reached over the summer, and the cartel hopes that the production limit will stabilize oil prices.

The new production cut comes on top of a 2 million-barrels-a-day cut that was previously announced, bringing production levels down by 4.2 million barrels per day from September levels.

Other markets: In currency markets, the dollar fell to a 13-year low versus the yen and also weakened against the euro. The greenback rose slightly against the British pound.

COMEX gold for February was up $25.80 to $868.50 an ounce.

Gas prices rose Wednesday after breaking an 86-day streak of declines over the weekend, according to a daily survey of gas station credit-card swipes. The price of regular unleaded rose $0.6 cents to a national average of $1.667 a gallon from $1.661 on Tuesday, according to motorist group AAA. To top of page
First Published: December 17, 2008: 10:35 AM ET

Advantages of Using Online Forex Trading

2008-12-16T21:21:00.000-08:00

Investments & Trading

If you want to invest in Forex then you need to know the advantages of using online Forex trading.
Earlier people had difficulty in investing Forex trading because during these days only large financial institutions were allowed to invest in Forex. There was no space for the small traders.
But due to invention of computers the doors for small investors opened and they were given a chance to invest in forex market. This type of trading is called online trading.

There are many sites that offer the facility for online trade. You can also take the benefit of stock trading. These websites are operated by forex trading companies. These companies have experts that would proper guidelines for forex trading. If you are a beginner then these experts would provide you necessary guidelines about the investment. It would assist you about the ways that are used for forex trading.

There are some sites that provide the facility for trading starter kits. But this facility would be provided only if you open an account with this site. They would provide you an opportunity to learn the different types of trading courses that would help you to earn huge profits in short duration of time. Some sites would provide simulators that help to simulate the procedure of trading in forex. They would treat you as new born babies and they would try to teach you the basic steps of forex trading.

Forex trading is open for 24hours a day. The professional forex brokers would take care of your account. They would help you to keep keen watch on the market. They would provide you assurance about the investment that you have made, also give you assurance that you have invested at the right place at the right time. Thus you can say that they would provide you necessary security.

You would not have any difficulty in operating the forex market. You would not face any problem in accessing the data and to analysis the online forex sites. They would keep on updating the data and the price of the stocks. If you want to contact your brokers then the sites have forums or online chat that can be used for contacting the authorized person. It is considered to be the fastest and the easiest method to contact the forex broker that can provide their guidelines whenever you are in need.

These sites would help you to analyze the current data. You can examine this data from your house. You don’t need to visit your broker to collect the information about the data.
If you want to collect the information about the forex then you can explore yourself. There are many websites that would provide you the necessary details about the forex market. Thus you would not have any difficulty in collecting the necessary information about forex trading. These sites would help you to select the best trader. You can select these traders by making comparison between different traders.

Article Written By J. Foley

Fed cuts rates to record low range of zero to 0.25%

2008-12-16T19:59:00.000-08:00

Fed cuts rates to record low range of zero to 0.25%
Senior Federal Reserve official outlines scope of new programs
By Greg Robb, MarketWatch
Last update: 5:02 p.m. EST Dec. 16, 2008
Comments: 1380
WASHINGTON (MarketWatch) -- The Federal Reserve pulled out all the stops in its campaign to save the U.S. economy Tuesday, slashing interest rates to just above zero and promising to try an array of new economic measures to stimulate spending.
The central bank's Federal Open Market Committee established a target range for the federal funds rate of zero to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%.
Rates would need to be kept low "for some time," the central bank said.

'The Fed will employ all available tools to promote the resumption of sustainable economic growth.'

— Federal Reserve

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the funds rate has "hit rock bottom."
U.S. stocks leaped after the decision, with the Dow Jones Industrial Average closing up 359 points. Read Market Snapshot.
A senior Fed official told reporters that the Fed has switched tactics and will now focus on aiding credit.
The Fed has already targeted a few debt classes for assistance. The senior officials said that other classes, including below triple-AAA quality debt, may be purchased.
The official said the program was not quantitative easing as practiced by Japan in the 1990s.
While Japan simply wanted to increase the quantity of money, the Fed wants to focus on the asset side of the balance sheet.
The moves are just about as aggressive as the central bank could be on monetary policy.
The Fed gave clear signals that it has moved on to other measures beyond setting interest rates in its fight to keep the economy rolling.
Josh Shapiro, chief economist at MFR Inc., said the Fed is "petrified" about the economic outlook.
But the senior Fed official said that economists at the central bank generally are in agreement with Wall Street economists about the duration and depth of the recession.
After two quarters of very weak growth, the economy should start a slow recovery after mid-year, the official said.
The Fed statement said that inflation should continue to moderate in coming months.
The senior Fed official said that deflation, or a general price decline, was not a major risk at the moment, but that price data would be watched carefully.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth," the central bank pledged in its policy statement.
Going into next year, the focus of the Fed's policy will be to support financial markets and stimulate the economy "through open market operations and other measures that sustain the size of the Fed's balance sheet at a high level."
So the key will be the quantity of money in the system, not the price.

The Fed's balance sheet has risen to $2.25 trillion over the past two months from $850 billion and has made promises to spend about a $1 trillion more.
The Fed is using the money to ease strains in the market for the debt of Fannie Mae and Freddie Mac and mortgage-backed securities issued by these GSEs.
These purchases may be expanded, the Fed said.
"The FOMC is also evaluating the potential benefits of purchasing longer-term Treasury securities," the Fed said.
Some economists have questioned the necessity of buying longer-term Treasury securities, with the prices already low.
By February, the Fed is also going to begin buying credit card debt and student loans. This template could be expanded. Under this plan, the Treasury is assuming the risk of loss while the Fed is making the purchases.
Economists applauded this laser-beam approach.
Adding "$100 billion here and $100 there strategically injected into the right places" can have a big impact, said Steve Stanley, chief economist at RBS Greenwich Capital.
Other markets are clearly on the Fed's radar screen.
"The Fed will continue to consider ways of using its balance sheet to further support credit markets and economic activity," the statement said.
The senior official said that lower quality assets could be purchased.
The Fed's moves followed some of the worst economic data in decades reported in the past few days, including monthly consumer sales numbers that fell the most since 1932.
The vote to lower the fed funds rate was unanimous. End of Story
Greg Robb is a senior reporter for MarketWatch in Washington.

When it Comes to Smart Investing, All World News is Forex News

2008-11-17T06:54:00.000-08:00

Investments & Trading

Forex traders know one of the advantages of their field is that the forex market is open 24 hours a day, five and a half days a week. But a 24-hour marketplace means there’s forex news coming in constantly, too. With so much information coming from so many markets literally at all hours of the day, it can be hard to keep up with all the news available to you.

But at the same time, an informed trader is a successful trader. To make informed decisions on when to buy and sell currencies, you’ll have to keep an eye on all the news you can get your hands on. Many Web sites make it relatively easy for you by corralling the forex news into one place, often dividing it into subcategories for easy navigating. Any forex trader, whether new or experienced, should find a news source he likes and check it often.

Many of these forex news sites also offer commentary and analysis, beyond just a simple ticking off of the latest rates. Here you’ll find experts talking about the issues involved and perhaps offering insights beyond what you would have come up with on your own. Some news sites charge a registration fee for access to all their materials, but it can be worth it in the long run.

Aside from running 24 hours a day, another reason there is constantly a stream of forex news is that so many factors can influence a currency’s strength. Natural disasters, government actions and other things -- both foreseeable and not foreseeable -- can cause a nation’s currency to go up or down in relative value. An experienced trader will look at all this news and know how to predict what effect it will have.

Often, forex news isn’t labeled as such. Any economic news at all can affect the forex market; a sharp-eyed trader is on the lookout constantly for news that might impact his trading. In other words, a good trader will have to be an expert on world affairs, monitoring political, social and other developments in other countries. All of this, combined with the more specific forex news dealing with the details of exchange rates and so forth, gives you the information you need to be successful at currency trading.
Article Written By J. Foley

Possible Future of Stock Exchanges

2008-10-16T11:24:00.000-07:00

Investments & Trading

Possible Future of Stock Exchanges By J. Foley

With the electronic age firmly entrenched and the Internet and basic computer usage a fact of life, many people are taking a look at how computers are changing the workplace. Where most elementary schools may have had one or two computers in an entire school, some schools now have a laptop for every student. And while the average workplace use to have slow and clunky terminals, they have now been replaced with lightning fast machines capable of running a dozen complex programs at once.

One workplace that has been somewhat shielded by this evolution is the floor of the New York Stock Exchange. Some consider this to be highly ironic, since the floor of the exchange is where the shares in the very computer companies that seem like they are taking over the world are traded.

The recent expulsion of Richard Grasso as head of the NYSE was seen as an ominous move by many specialists who work at the exchange. Grasso, while far from an ideal leader, was famous for trying to keep the individual traders employed when they could most likely be replaced by a newly designed computer system.

With the appointment of new exchange boss John Thain, a possible revamping of the entire trading system is expected, but how many jobs will it cost and what will it look like?

A major sign of impending change happened in April of 2005 when a company called Archipelago Holding merged with the New York Stock Exchange and the two became a publicly traded company. Archipelago is an electronic trading network, and it’s thought by many who work on the floor of the NYSE that this merger is the final nail in the coffin for the hundreds of people who carry on the tradition of floor selling that has been going on for over 200 years.

The possible evolution of the NYSE may not even be up to those that run it. As other markets across the world in places like Hong Kong, Frankfurt and London upgrade their trading methods and begin to phase out trading by people in favour of computers, an upgrade may become necessary to just keep up. Since the computer can process trades significantly faster than a human, the NYSE may have to do away with the traditional floor trader just so that the exchange remains competitive and relevant.

While the constant sea of change is inevitable, the future of the floor trader at the NYSE looks bleak. It is not known if there will still need to be traders to input the trades into the computers or if that phase of the trade will somehow be automated, as well. The only thing that is known for sure is that change will continue to happen and unless we learn to anticipate it, those that don’t will be left behind.

Article Written By J. Foley

Let A Professional Do All The Work For You With A Managed Forex Account

2008-08-11T17:30:00.000-07:00

Investments & Trading

Let A Professional Do All The Work For You With A Managed Forex Account By J. Foley

No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.

The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.

Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.

Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.

As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.

Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?

Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.

Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.

Article Written By J. Foley

Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns

2008-07-31T16:18:00.000-07:00

Investments & Trading

Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns By J. Foley

You would be forgiven in thinking that with all the professional managers, funds and resources.at their disposal that investment funds would win head over heels against the smaller investor like you and I. In fact this is not at all the case – smaller investors have several advantages over the big funds and have every chance of beating their returns on investments. Here’s why:

The individual investor does not have to invest millions and so they can invest in small caps (tiny growth companies) that have the potential to grow many times over. These stocks are typically far too illiquid for funds to enter.
The smaller investor can get in and out of a stock with the simple click of a mouse or a phone call (and get roughly the same sale price per share). The larger funds have to gradually sell their holdings in a company (they may have millions of shares to offload – not an easy or quick thing to achieve).
Individual investors can effectively trade positions for small gains – something that larger funds simply do not have the ability to do.

On top of this, the internet has more or less facilitated the smaller investor to have access to the same information at the same time as the big city fund managers. Arguably, the individual investor also has the added advantage of speed – a fund manager may have to get approval in order to buy into a company (not a case for the individual investor) and cannot take advantage of special situations (such as buying on breaking news and so on).

Remember however, if you really want to become a “professional investor” – one who is savvy enough to beat the market and essentially make a living from investments then you need to learn as much as you can about how the market works, how to analyse companies, the part psychology plays in driving markets and how to create an investment/trading system that’s right for you. Even the masters of investing such as Warren Buffet and Jim Slater all started from scratch. Warren Buffet once did not know what the PE of a company meant. Jim Slater once did now know how to read the balance sheet of a company. They educated themselves and discovered how to pick stocks that have excellent potential – you could be doing the same. The first step to investment is to invest in yourself and your education. To offer an overused yet apt phrase – KNOWLEDGE IS POWER!

Article Written By J. Foley

Mutual Funds:Tax and Distributions

2008-06-20T14:20:00.000-07:00

Investments & Trading

Mutual Funds:Tax and Distributions By J. Foley

Most investors would agree that mutual funds are a great way to help create a nest egg, save for retirement or for your kids’ college education. There are, however, an entire series of taxes that are levied against investments of all kinds, including mutual fund investments. While they may not always seem fair, they are a fact of life and the more you know about all the various forms of taxes, the better prepared you’ll be to deal with them.

While there are fees associated with some mutual funds when you open the account, and taxes for capital gains as the money appreciates within the mutual fund, there are also a series of taxes associated with the distribution of earnings from the mutual fund back to you. These distributions can take on several different forms, such as capital gains, income dividends and interest. A mutual fund is legally obligated to give out all of the investors income and the money that the fund made. But what exactly is an income dividend?

Income dividends usually include dividends, capital gains and interest that is earned by the mutual fund company minus the expenses and fees are taken out. The distribution associated with capital gains is usually made once per year to the shareholders. These capital gains come from a year of good performance by the mutual fund. When a mutual fund company pays out dividends to their shareholders, the NAV or net asset value of your mutual fund will go down, but you can also take that dividend pay out and buy more shares if you’re happy with the performance.

There are ways to help avoid the tax liability of reinvesting your dividends back into your mutual fund. Most distributions done by mutual fund companies is done near the end of the year. If you don’t want to spend the payout on Christmas presents, you can reinvest the money, but you should do it after the record date. This will help you avoid extra tax liability on your dividends.

Paying taxes on your distribution is a pain. But if your mutual fund is performing well, a small tax on your earning won’t hurt so bad. This is another reason why intelligent, well managed investing is so important. Not only do you have to worry about your fund going up and down in price, but also tax liability. That’s why it pays to invest wisely and use a disciplined approach.

Article Written By J. Foley

What is Automatic Investing?

2008-05-19T17:09:00.000-07:00

Investments & Trading

What is Automatic Investing? By J. Foley

For many, the idea of investing in mutual funds, stocks and bonds is appealing, but it all seems too complicated. Too much jargon, too much danger, too much hassle. Thankfully, the companies that run mutual funds know this and have come up with a way for new investors who may not have a big wad of cash to invest right off the bat.

It’s called automatic investing and it is highly recommended for those new to mutual funds and for those that want to invest but don’t have a lot of up-front funds.

Automatic investing is done through a mutual fund company, and what happens is, you sign up to purchase a set amount of funds either every month or every few months (usually quarterly). You buy a bit at a time, whatever you feel you can afford, and your shares are managed by the mutual fund company. It is a great way to watch a nest egg form from money you didn’t even know you had.

A great part about automatic investing is that most mutual fund companies are so excited to get new investors in, they will waive most if not all transaction and investment fees for those that are signing up for automatic investing. They understand you may not have a lot of extra cash to throw away on fees and they want you to get your feet wet with mutual funds.

Maybe the best part about automatic investing is that it is a very disciplined form of investing. Instead of opening up an E-Trade account and investing from your home computer, an investment expert at the mutual fund company that you invest in will handle your shares and in this case, it is probably best to let the experts handle it. It’s extremely tempting to chase mutual funds when investing yourself. You hear the latest news about funds that may be surging and its tempting to take your money and jump on the hottest fund, but disciplined, long-term investing is a much more beneficial way to go.

Whichever company you choose to use for automatic investing will supply you with a prospectus that will outline all of the fees that may or may not be associated with your account. This is key since you’ll need to know what any possible cost might be for things like early withdrawals.

For many, automatic investing takes the guesswork and the fear out of mutual fund investing by allowing a large amount of money to build up over time. Contact a mutual fund company to see if automatic investing is right for you!

Article Written By J. Foley

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Finding a Forex Broker in a Crowded Marketplace

2008-04-23T10:59:00.000-07:00

investments & trading

Finding a Forex Broker in a Crowded Marketplace By J. Foley

So you want to get involved in the foreign exchange market, or forex. You’re itching to trade one currency for another and make some profit. But you can’t just barge into Citigroup of Merrill Lynch and start throwing euros and yen around. To participate, you need a forex broker.

The preeminent forex broker for day traders (i.e., average Joes) is Advanced Currency Markets, or ACM. To many people, the Swiss company, founded in 2002, is synonymous with “forex broker,” trading about $70 billion a month.

There are dozens of other brokers, though, who service day traders. It’s done almost exclusively online, and in fact ordinary citizens rarely got involved with forex trading at all until the computer boom of the 1980s, and then exponentially more with the advent of the Internet in the 1990s. Since then, forex brokers have proliferated.

As you might expect, levels of reliability and competence vary from one broker to another. The Internet is rife with unsavory types seeking to take advantage of suckers, so you would do well to investigate thoroughly any broker you’re planning to use. Does their Web site look professional and reassuring, or is it riddled with dead links and spelling errors? Google the broker to see if they’ve been mentioned in news articles. Ask about their track record. And above all, avoid anyone who promises things that sound too good to be true, or who downplay the financial risk involved in forex trading.

Look for a broker that seems to genuinely want your business. Does the firm have customer service representatives available? Is there a phone number you can call to speak to a live person? The Web site should explain things clearly. If the site is full of language that seems designed to go over your head, look for a different broker.

If you set up an account with an online forex broker, it will work like this. First, you must apply for an account, which most brokers allow you to do online. This is to verify your identity and the validity of your bank accounts and financial records. Some brokers also require you to download their forex trading software, while others let you use whatever software you prefer. You will also have to transfer a minimum deposit to your account with your new broker. The minimum can be anywhere from $100 to $2,500.

Ideally, the broker you choose should offer service and support when you need it but should mostly simply stay out of the way and let you conduct your business. If you can find a forex broker who is professional and helpful, your experience in the forex market should be full of smooth sailing.

Article Written By J. Foley

Online Forex Forums Connect Traders Around The World

2008-04-07T17:53:00.000-07:00

Investments& Trading

Online Forex Forums Connect Traders Around The World By J. Foley

Most forex trading is done online, with investors looking at forex charts, considering trends, and making decisions. There’s very little interaction, even via the Internet, with other human beings. That’s one of the reasons that many traders also spend time in forex forums, chatting with other investors and sharing tips.

There are dozens of forex-related forums and message boards on the Internet. Some are tied to brokerage firms, while others are just freestanding forums on forex-related sites. Since the market is active 24 hours a day, you can usually count on the forums being busy at all hours too.

As mentioned, one of the reasons for visiting forex forums is simply psychological: Humans like to interact with other humans, especially when their day jobs require them to be alone with a computer for hours at a stretch.

Furthermore, there are a lot of emotions involved in trading. It’s real money, after all, and often large amounts of it. Online forums give traders a place to discuss the psychological effects of long-term trading, how it can become addictive and nerve-racking, and what impact it has on everyday life. You could think of message boards as being a sort of support group for traders, or the equivalent of the office water cooler.

Forex forums have more practical uses, too, of course. Traders find the tips and strategies offered by their fellow traders to be invaluable. Forums are often rife with people more seasoned and experienced than the average person, which benefits the newcomers. And many experienced traders enjoy visiting the forums because it gives them a chance to share their wisdom with others.

Forex forums are also useful for gauging the general mood of the marketplace. The charts and rates give you the cold, hard facts. But many times making a decision to buy or sell comes from the gut, based not just on the numbers but on how the market FEELS. The forums are a place to see what other traders are thinking right now. Do they feel optimistic? Pessimistic? Are things looking up? Are they discouraged? All of this information can be taken into account when considering a trade.

ForexFactory.com and ForexForum.net are two very popular, widely visited message boards. There are dozens of others out there, too. All forex forums give traders a chance to connect with their colleagues and to learn from one another.

Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!

Article Written By J. Foley

The Stock Market Correction Of 1987

2008-03-16T10:11:00.000-07:00

Investments & Trading

The Stock Market Correction Of 1987 By J. Foley
The events of October 19, 1987, at the time, were looked upon as a full-fledged stock market crash. In retrospect, no depression or even a recession was sparked by this dramatic fall in prices, but the event is historic nonetheless. One of the aspects that makes it so memorable is the fact that to this day, no one really knows what caused it. There are many different theories as to the reason of the correction, but its all speculation.

The ’87 correction, known now as Black Monday was the first ever global stock market crash. The final numbers are staggering, with the Hong Kong stock exchange losing over 45 percent of its value, the Australian stock market losing almost 42 percent of its value, the UK lost over 26 percent, while the New York Stock Exchange lost 22.6 percent.

The October 1987 fall ended up being the second biggest single day percentage drop in the history of the stock market. The biggest one day decline happened in 1914 when the Dow Jones lost just over 24 percent. This drop was attributed to the fact that the market had been closed for four months due to World War I prior to that day. The biggest point loss in history was the first day of trading after the attacks of September 11th, when the Dow lost over 680 points.

Starting in mid-August of that year, the Dow began to correct itself. A series of 100+ point drops plagued the market over the next two months, but the drops were always followed by recoveries. Even days before the October 19 drop, there had been a major dip, and the next day, stocks were back up. It wasn’t until the Black Monday collapse that stocks went down and stayed there.

Possible causes for the crash are usually broken down into a few different categories, including market psychology, illiquidity, overvaluation and program trading. Other possible causes for the correction are attributed to a major storm in the UK which happened on the previous Friday. The storm did not allow traders in the UK to finish their days work and this caused many in the US and around the world (especially in Hong Kong where the crash first started to happen) to sell.

While time has shown the events of October 1987 weren’t quite as bad as some had feared, dramatic market corrections are a part of investing and while they can be terrifying when they happen, they shouldn’t take a savvy investor by surprise.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!

Article Written By J. Foley

Want To Learn Forex ?

2008-02-26T09:39:00.000-08:00

Investments & Trading

Want To Learn Forex ? By J. Foley

It isn’t hard to learn forex, but it does take time and dedication. The principles involved are fairly easy from a mathematical standpoint, and the basic way that the system works is straightforward enough once it’s been explained to you. But the details and nuances of the market can make it daunting.

The first step as you set out to learn forex should be to do some basic reading on how the foreign exchange market works. The foreign exchange Wikipedia article is good basic reading, and there are plenty of Web sites that offer overviews to help you learn the fundamentals.

Plenty of books have been written on the topic, some of which will help you and some of which just want your money. Try the public library first: Books are free, and if they’re in the library, they were probably published by legitimate publishing houses with legitimate editors and researchers. The information will be more reliable than something you get from a Web site where a guy wants you to buy his e-book.

After that, you have a number of options, all of which will help in different ways. You can make your choice depending on what your own learning process is usually like, whether you’re a visual learner or prefer written instruction, for example.

There are many forex seminars held in major cities, sometimes for free. In these, experienced traders offer tips and strategies to new traders trying to learn forex for the first time.

There are also online courses available, which you can take at your own pace over the course of several weeks. These almost always cost money, and the quality varies. (Remember, you usually get what you pay for.) Some of these courses come from brokers who want you to learn the system so you can start trading with their companies, so it’s in their own best interest to train you well.

You should also consider a demo account, which can help you practice through a realistic simulation of currency trading. You get the full experience of trading without any of the financial risk.

Many firms also offer mini forex accounts, which are real accounts with real money, only with much smaller amounts. For example, instead of a minimum starting investment of $1,000, the minimum might be only $100. This lets you learn forex through actual hands-on practice, but with a risk that is much smaller than usual. You can quickly see if you’re cut out for trading or if it’s just not in your constitution to handle the emotional roller coaster.

Once you learn, forex can be fun and exciting, not to mention financially lucrative. It is necessary to learn, though, and not just jump in blindly.

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Article Written By J. Foley

The Buttonwood Agreement – The Forerunner To The NYSE

2008-02-09T09:41:00.000-08:00

Investments & Trading

The Buttonwood Agreement – The forerunner to the NYSE By J. Foley

When we think of the current New York Stock Exchange, images come to mind of the Big Board, ticker tape and incredible amounts of stress. But it didn’t always use to be that way. There was a time when a group of men met under a shady tree in the spring to found what would become one of the most powerful and well known exchanges in the world.

The story of the Buttonwood Agreement actually goes back even further than 1792. Two years earlier, then Secretary of the Treasury Alexander Hamilton (pre-duel) issued a then staggering amount of $80 million in war bonds to help pay for the rising costs of the Revolutionary War. It would be these bonds that would play a key role in the founding of the Buttonwood Agreement.

A major reason for the founding of the Buttonwood Agreement was that securities trading in New York City at that time was a bit disorganized. Auctioneers would deal in commodity trading, land speculation and foreign currency exchange, but the Buttonwood Agreement sought to organize and streamline the trading so that it could be done in one place.

Two years later, on May 17, 1792, a group of 24 prominent New York City business men met outside of 68 Wall Street in lower Manhattan and put together the Buttonwood Agreement. With a simple two-sentence contract, they formed the New York Stock & Exchange Board and the first securities to be traded were those very war bonds that Alexander Hamilton had issued two years prior. The first company to be listed on the new exchange was the bank of New York. The original home for the new stock & exchange board would be the Tontine Coffee House, which was owned by Hugh Smith, one of the 24 founding members. Other founding members included well known New York business men such as Charles McEvers Jr, John Bush, Alexander Zuntz and Ephraim Hart.

In 1817, the adopted name of the New York Stock & Exchange Board was formally adopted, as well as a comprehensive constitution and bylaws, and later in 1863, this name was shortened to the name we know today, the New York Stock Exchange.

It’s amazing to consider that the billions of dollars that trade hands every day on the floor of the New York Stock Exchange started as a group of business men looking to organize colonial American commodity trading under a tree. But it’s true, and their legacy is felt every single day and it will continue to be felt for as long as the NYSE stands.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!

Article Written By J. Foley

A Good Forex trading Strategy Can Mean The Difference Between Failure And Success

2008-02-01T10:09:00.000-08:00

Investment & Trading

A Good Forex trading Strategy Can Mean The Difference Between Failure And Success By J. Foley

No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.

The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.

Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.

Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.

As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.

Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?

Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.

Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.

Article Written By J. Foley

Securities Exchange Commission

2008-01-04T11:52:00.000-08:00

Investments & Trading

Securities Exchange Commission By J. Foley

The United States Securites and Exchange Commission was founded in 1934 in response to the great stock market crash of 1929. Congress created the SEC in the hopes that it would serve as an independent and non-partisan agency that would help regulate the dealing of securities in the USA. Thanks to the crash of 1929, Congress also enacted many new securities laws that the SEC was created to enforce.

The main job of the SEC is to enforce a series of laws, most of them enacted from 1933-1940 that help protect investors of securities and the economy as a whole. Congress has given the SEC the right to bring civil cases against companies that they feel have committed a series of crimes, such as insider trading, fraud, or companies that have given false information. The SEC also works hand-in-hand with local police, the FBI or the CIA in pursuing criminal charges when the proper laws have been broken.

One of the ways that the SEC gathers information about various companies so that it can see if any of them have broken the law is be requiring that publicly held companies submit reports four times a year and then an annual report, as well, showing their financial numbers. The companies also file reports with the SEC that outline how the business did that year and how it expects to do in the future.

These reports are absolutely vital to investors when trying to figure out which company to invest in. The capital markets are notorious for upheaval and these reports are essential for investors who are trying to figure out which companies are safe to invest in and which ones aren’t.

The SEC allows anyone to read these reports and they are available via an online system to read at any time. The SEX also uses this same system so that individual investors may file complaints against a company that they feel might be breaking the law. This allows every day citizens the chance to call attention to a possibly crooked company.

A recent pop culture reference to the SEC came from the now-defunct television show Arrested Development, when the pilot episode featured the SEC boarding a yacht to confiscate documents related to the Bluth family business.

The SEC is a vital government agency that helps companies walk the straight and narrow and helps individual investors make educated decisions about the right companies to invest in. If you’re thinking about investing in the capitals market, a visit to the SEC online system is an absolute must.

Article Written By J. Foley

Where Can You Buy Mutual Funds?

2007-12-19T17:07:00.000-08:00

Investments & Trading

Where Can You Buy Mutual Funds? By J. Foley

For those that are new to investing and have decided that mutual funds are the way to go, the next logical question is how do you go about purchasing them? There are many different ways to go about investing in mutual funds, and you have several different options to choose from.

One of the most popular ways to buy mutual funds is directly from the companies. The type of fund you want to look for is a no-load mutual fund. No-load funds are free from fees and additional costs that load funds tend to have. Since you’re going directly through to the fund company, you will save a transaction fee that you would normally have to pay through a broker, and since you aren’t paying any fees, all of your money goes towards investing.

Going about investing directly is easy. Once you’ve chosen the company you want to deal with, you simply fill out an application, enclose a check for the amount you want to invest and mail it in. It couldn’t be easier.

Another popular way to buy mutual funds is online through a broker or through a mutual fund superstore. Most of these online superstores like T. Rowe Price or Wells Fargo (there are many others, as well) don’t charge any transaction fees for their services because the fund you end up buying will reimburse them. Be careful though, these online superstores often sell funds that do carry transaction fees or they carry load mutual funds that can come with some steep fees of their own. Make sure you read all the fine print and know what you’re investing in before you buy it.

Maybe the most common way of buying mutual funds is through your work’s retirement program. Your 401(k) account is most likely tied to mutual funds so you may already be a seasoned mutual fund investor and not even know it. To find out more about the funds your retirement plan invests in, you can visit the website of the fund that your 401(k) invests in.

If you have signed up for a 529 College Saving Plan, than you’ve bought into mutual funds. These brand new plans are made for families who are trying to help their kids through college. Their main benefit is the tax laws that are used for withdrawals from the plan. In most cases, if money is taken out for education expenses, it’s tax free. This is an ideal plan for most families who are worrying about paying for college.

A final way that you can invest in mutual funds is with a financial advisor. While this way would be a bit more costly since you would have to pay the advisor, you are bound to make the best mutual fund investment choice for you.

Buying mutual funds in this day and age of the Internet is easier than it has ever been. But be careful, make sure you crunch the numbers and make an educated choice and you can be well on your way to financial freedom with mutual funds!

Article Written By J. Foley

Online Investing

2007-12-05T09:33:00.000-08:00

Investments & Trading

Online Investing By J. Foley

The world of stock trading has changed dramatically over the last 20 years. Trades that use to take more than a week to process now take only moments. While once you needed to have a stock broker to make a trade for you, now, from the comfort of your own computer, you can make as many trades as you like, and at a much lower commission than your grandfather would have paid to make the same trade 50 years earlier. The world of online trading can be very tempting to many. Investing is a lot like gambling, with possible huge profits and even bigger losses possible. But how do you know if online investing is for you?

The first question you need to answer is do you have money to burn? Of course, none of us want to toss our money down the drain, but you have to be prepared for the worst. Most online investors are armed with a copy of the New York Times, online subscriptions to several investment websites as well as strong word of mouth from family and friends, but even with all this information, some investments don’t go the way you want them to. Make sure you have room in your budget so that you can afford to lose some and still be secure. Online investing can be addictive, so you should know when to stop.

Be prepared to arm yourself with as much information as possible. While it’s true that even the most informed traders make mistakes, the more you know, the less likely this will happen. This means immersing yourself in reliable, timely and knowledgeable advice. If you’re not willing to take the time to properly educate yourself, you might want to leave investing to your broker.

A good investor has to learn to be patient. While it is tempting to take on the human herding instinct and put your money on the latest trend or the most fashionable stock, those investors that are confident and patient usually come out on top.

If you’re new, stick to blue chip stocks. There is a reason they are called blue chips, they have shown slow and steady growth over long periods of time. There is no such thing as a safe stock, but blue chips are the closest thing you’ll find. A good tip is to always leave a portion of your investments in blue chips, so if the rest of your investments go south, you’ll have something to fall back on.

Online investing can be exciting and fun, but it can also be terrifying for a newbie. Do the research, develop some patience and stick to familiar ground and online investing can be a great way to develop your portfolio without having to bow to mainstream brokers.
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Article Written By J. Foley

What is a Prospectus and How Do I Read it?

2007-11-20T09:52:00.000-08:00

Investments & Trading

What is a Prospectus and How Do I Read it J. Foley

When you first buy into a mutual fund, most people have a thousand questions. How has the fund performed in the past year? How do the fees work and which ones do I have to pay? Are there any penalties for withdrawing my money early? What happens if the fund goes out of business? All the answers to these questions are listed in what is known as a prospectus.

A prospectus is simply a book or pamphlet that lists all the information about a fund. Every mutual fund company gives out a prospectus, and sometimes, if the performance for a particular fund hasn’t done well recently, it will even come with bad news about that fund. A prospectus must be accurate. The United States Securities & Exchange Commission checks on the validity of the statements in all financial documents released by investment firms to make sure they are honestly showing people what the fund has done and what they think it will do.

When you open the front cover to a prospectus, they usually hit on three different topics right off the bat: the fees that this fund charges, the objectives of the fund and the performance of the fund. While there are other concerns when you look at a prospectus, these three things are the most important.

Most companies will present the fee schedule in an easy to read graph. Remember, the fund must disclose all fees, there can’t be any surprises.

A mutual fund prospectus is also required by the SEC to list their performance. They must list this information, even if it’s not up to the expectations of the fund. It can usually be found within the first few pages of the prospectus. Most of this data is presented in the form of a table so that reading it and understating it is simple. Also, there is no shame whatsoever in asking questions. Every investor had to start somewhere and if you don’t ask questions about a particular mutual fund before investing in it, you might just be throwing your money away.

There will likely be more information in your prospectus as well, including profiles of the managers that handle the fund, as well as the founders of the investment company and so on.

A prospectus is like a bible for whatever mutual fund you choose to invest in. With oversight provided by the SEC, a prospectus must be a honest document that shows you exactly what you’re getting yourself into with every mutual fund.

Curious About The First Commercially Available Stock Trading “Robot” Which Earns $346.77 Per Week (Managing $1000 Capital

Article Written By J. Foley

What A Forex Rate Is And How To Read It

2007-11-07T13:26:00.000-08:00

Investments & Trading

What A Forex Rate Is And How To Read It By J. Foley

When we talk about the forex rate, we’re talking about the relative value between two currencies -- how many of one the other is worth, in other words. For forex traders, the forex rate is the basic information they use to do their job. The rate is to a forex trader what nails are to a carpenter.

If you plan to get involved in forex trading, reading and understanding the forex rates is absolutely vital to your success, like learning the basics of addition before becoming a mathematician.

A forex rate is always expressed in pairs, followed by a number. The number is how many of the second currency you’d get for one of the first one. For example, you might see USD/EUR: 0.7928. That means that one U.S. dollar is currently worth .7928 euros. If you were to exchange $100, you’d get 79.28 euros for it. Since the number in this rate (0.7928) is less than 1, that means the second currency is currently stronger than the first one -- that is, the euro is stronger than the U.S. dollar.

Forex traders look at rates constantly throughout the day. They carefully examine trends in various currencies’ performance, noting which are going up and which are going down. If a rate suggests, say, that the British pound is starting to increase in value compared to the euro, a trader might swap his euros for pounds. Then, when new rates show the pound has become very strong, he can swap back again, turning a profit because the pound is now worth more than he “paid” for it.

Forex rates are available everywhere on the Internet. Casual observers to the forex trading industry might glance at them for reference on hundreds of different Web sites. Regular traders, though, usually own software that keeps them up to date on rates throughout the day, without having to visit a particular site to get them.

This is important, because rates change constantly, and can be influenced by a wide variety of economic and political factors. The overall change over the course of a day usually isn’t more than a few percentage points either way, but there are minor changes regularly, and those minor changes add up in the long run. Experienced traders watch the rates for those tiny fluctuations, carefully observing whether there is a general upward or downward trend that requires their attention.

Article Written By J. Foley

Different Types Of Mutual Funds

2007-10-17T16:27:00.000-07:00

investments & trading

Different Types Of Mutual Funds By J. Foley

So, you’ve decided to jump into the mutual fund investment game. While mutual funds have shown themselves over time to be a safer bet than regular stock trading, there is always the chance you could lose your shirt. But the type of fund you choose will have a lot to do with the amount of risk you take on and the kind of return you’re looking for. For starters, mutual funds are usually broken down into six main categories.

Equity mutual funds allow you to invest in typical shares of common, everyday stock.

Fixed income mutual funds allow you to invest in corporate or government securities that usually offer a set rate of return on your investment.

Balanced mutual funds allow the investor to take on a fund that includes both stock and bond options.

Maybe the safest form of mutual funds are known as money market mutual funds. They offer a high degree of stability for your principal, as well as high liquidity if you need to back out.

Bond mutual funds are popular since they invest in tax free as well as taxable ones.

And finally, sector/speciality funds are used to help diversify your holdings within a particular industry.

Each of these types of funds can be both aggressive and risky with a high level of reward possible, or they can be safer and lower risk. It all depends on which fund you choose.

To break things down further, equity funds are usually divided up into four different categories: Growth and Income mutual funds, International mutual funds, growth mutual funds and aggressive growth mutual funds. Each different type of fund has a particular goal in mind. For some, it’s to aggressively pursue income, even in risky situations, while others seek to preserve the initial investment and only take smaller chances.

As you can see, the mutual fund landscape is filled with so many options, it can make a newbie’s head spin. But fear not, there is almost limitless information available on which mutual fund is right for your particular investment strategy. Not only do most mutual funds and those that run them have their own website, there is endless advice as to which fund is right for you on the Internet, as well. Don’t forget to utilize publications like the Wall Street Journal, as well as friends and family who might have had particular luck with a specific fund. Welcome to mutual fund investing! >"WARNING: Do Not Read This Unless You Are Already Rich!" ... Or Curious About The First Commercially Available Stock Trading "Robot" Which Earns $346.77 Per Week (Managing $1000 Capital.

Article Written By J. Foley

9-11 and the New York Stock Exchange

2007-09-25T12:22:00.000-07:00

investments & trading

9-11 and the New York Stock Exchange By J. Foley

Maybe no event in American history was as dramatic as the attacks of September 11, 2001. When the attack on Pearl Harbor happened, we had live radio broadcasts bringing updates, and the next days newspaper how photographs of the carnage, but with 9/11, we had live, crystal clear television pictures beamed right into our living rooms. While we still take pause to think of that horrendous day, the world’s financial markets took a hit like they never have before as the ripple effect from Ground Zero was felt all around the world.

When the attacks happened, and because of how close the World Trade Centers were located to Wall Street, trading wasn’t even started. Everyone that had shown up to work that day was told to stay inside until it was safe. Many people inside the exchange reported feeling the ground shake as the two towers collapsed, and the exchange became a refuge for those fleeing the giant cloud of dust, smoke and debris that appeared once the towers fell.

The buildings that hold the New York Stock Exchange were not damaged during the attacks, but a major telephone bunker than held the phone system for the entire area located near the World Trade Center was severely damaged, hence making communication on the floor of the exchange impossible.

The stock market remained closed until September 17. It would turn out to be the longest that the market would remain closed since 1933 and the Great Depression. During it’s first day of trading after the attacks, the market lost over 680 points, the single biggest one day drop in the exchanges history. While the drop only accounted for a little over 7 percent, it is still considered a major event. By the end of that first week back open, the Dow Jones had lost over 1360 points or 14 percent of its value. It would go down as the worst week in market history. The total money losses during that time were estimated to be around 1.2 trillion.
The events of September 11 led to a dramatic increase in security around the exchange, as many feel it could be a target in future attacks.

The events of 9/11 will live on in the minds of everyone who lived through it. For those who had shown up for a day at work on Wall Street, the event is difficult to forget. The NYSE came through it stronger and so did the nation.

Article Written By J. Foley

More About Day Trading

2007-09-06T11:58:00.000-07:00

investments & trading

More About Day Trading By J. Foley

You don’t need to know everything about day trading to succeed as a day trader. Whatever percentage you choose to ride on a single day trade, the idea is to ensure that no single trade is really going to significantly affect your day trading float, positively or negatively. You need to position yourself so that you can endure long strings of losses, and maintain your day trading system.

An experienced day trader will focus on the trade entry points, but also on the trade exit points. Some investors can become addicted to day trading. As long as you consistently follow the rules layed out by a well designed trading plan, you can count on steadily growing your trading account.

Every successful day trader must be flexible, alert and feisty. Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations. A day trader may sell a stock if it goes down only two or three cents.

Day traders aim to make small profits on a large number of 'intra-day' transactions. Don’t begin your day trading with money that you can not afford to lose. You can start Day Trading with as little as $750 if you decide to trade using a spreadbetting account rather than a standard broker.

Day traders, both institutional and individual, play an important role in the marketplace by keeping the markets efficient and liquid. Many day traders end up losing a lot of money because they fail to make trades that meet their own criteria. Day trading is like running any other kind of business. It requires planning and expertize. Are there effective methods for day-trading?

The general rules for day trading are always trade with the trend, always cut losses short , and never get emotionally involved in your trades. A Day Trader attempts to produce a profit within a single trading day. Risk management is crucial if you want to have any hope of becoming a successful trader.

Before starting out in the Forex daytrading market we need to make sure we understand the basics of daytrading. Day traders must watch the market continuously during the day at their computer terminals. Access to timely information and fast execution of trades is essential to day trade successfully.

Daytraders frequently find day trading to be exciting. Successful day-traders believe in their indicators but also are aware that nothing is 100% foolproof. Good day traders generally sell into good news and buy on bad news.

In the simplest terms, day trading is the purchase and sale, or sale and purchase, of a security on the same day. Day trading, the business of trying to make money by buying and selling stocks for oneself throught the day, is an extremely risky business. Day trading is not something to jump into without considerable thought.

As with all trading activities, daytrading carries a great risk. Is successful day-trading more luck than skill? Did you know that a successful trader can lose money on 9 out of 10 trades and still make money? Daytrading can be fun, but also stressful.

Curious About The First Commercially Available Stock Trading “Robot” Which Earns $346.77 Per Week (Managing $1000 Capital

Article Written By J. Foley

How Online Trading Education Can Make A Difference

2007-07-29T11:04:00.000-07:00

How Online Trading Education Can Make A Difference By J. Foley

Each online trader will trade in their own style, depending on whether they are
going to be long-term, medium term, short-term or day traders. Making a
decision on the type of trader you want to be, however, means you need to be
aware of the trading education available to assist you.

Stock charts

Stock charts are used and analysed by an online trader in order to help him
determine when to buy and sell stock. The main types of stock charts in use
include:

- Line charts: which, as the name suggests, is a line on a chart connecting
stock price over a period of time (can be minutes, hours, days, weeks,
months, or even years).

- Bar charts: similar to line chart, however the information contained is the
open, high, low and close price of the stock for one particular day.

- Reference chart – charts the stocks price and trading volume and is used to
plot where the stock price may go to.

- Candlestick charts – the information contained in candlestick charts is the
same as that you can find in bar charts; however, the display format is slightly
different.

Technical indicators

As there name suggests, technical indicators are used by stock traders to
track a stock’s previous performance in the hope that it may forecast where
the stock is going to go. This is done by making use of the stock charts
previously mentioned, plus additional analytical indicators which might have a
part to play.

It should be noted that technical indicators can be very confusing if you are
new to this type of information analysis. However, basic use is made of a:
- Bollinger band: which was invented by John Bollinger and uses 3 band lines
to track stock price fluctuations: an upper, centre and lower. The centreline is

the moving average, while the upper and lower lines are twice the plus and
minus standard deviations, respectively.

- Moving average: is a stock price/time series technical indicator. These can
then be calculated over short, medium and long term periods, as the need
requires, to determine where the stock may go and whether you should be
looking to maintain a short, medium or longer term position.

- Candle stick trend reversal: using a candle stick chart, a candle stick trend
reversal technical indicator will use the information in the chart to determine
when to buy in and sell out of a stock.

Keep in mind that there are other types of technical indicators in use, but the
above are the primarily the types used by new online stock traders.

Analysing the information

Assuming you have correctly analysed the stock chart and technical indicator
data, you should then be able to chart a stock’s movements – thereby
hopefully ensuring that you remain one of the 20 percent who make a profit
from online trading from Day One.

Article Written By J. Foley

Want To Learn How To Trade Like A Pro

Investing In Stocks ?

2007-07-13T19:20:00.000-07:00

investments & trading

Investing In Stocks ? By J. Foley

Stock investments are generally considered among the best ways of addressing inflation risk over the long term. Investments are the classic example of an undiversifiable risk because the stock market tends to have low returns just when the rest of the economy is also performing poorly. Stock investments are typically common stock, which is the basic ownership share of a company, and also primarily common stock in large-cap companies, while the fixed-income investments are primarily a wide variety of investment grade bonds. Stock investments are typically directed toward long-term capital appreciation, while bond and cash investments are intended to provide ongoing income with significantly less price volatility than stocks.

Market

Market dips, sometimes significant, are simply part of investing in stocks. Markets that lose momentum are sold, while sectors that turn up are purchased. good return for a long term and one should be careful in investing in those stocks which have higher market index. Even the bad stock with poor results would do well in the upcoming market and in the next year with good results.

One should build stock portfolio after considering the risks involved in market. There is rise in stock investments in the market nowadays due to the most advanced technologies available and the process is made easy to check fraud in the markets. When building a stock portfolio, you should carefully consider the risks of investing in the stock market and develop a diversified asset allocation strategy that fits your goals, investing time frame and risk tolerance. Other investment options include buying bonds and mutual funds, delving in real estate and trying your hand out at network marketing. While stock investments can indeed provide excellent returns in the long term, the stock market does indeed fluctuate.

Investments

Investments are the major source of income for many firms which lead to growth and financial status. Investments are not only applicable to firms but also individuals. Investments are not guaranteed a return, and some investments are worse than others. Investments can be a bit risky, but who ever got anywhere by not taking a chance. Investments in common stocks are effected by government policy which may adversely effect the value of the stocks, such as wage price controls, price caps, interest rate increases, tax increases, etc. Investments in a particular company may be impacted by changes in technology. Investments are stated at their purchase price with no impairment as the value of the company invested in exceeds the value paid and the Company does not have the ability to exercise significant influence over the investee’s operating and financial policies. Investments that offer potentially high returns are accompanied by higher risk factors.

Investors

Investors purchase stocks in the hopes that the value of the corporation will increase over time. Investors should pay close attention to press releases from a company. Investors can search the SEDAR site by date, document type, company name, or industry sector. Investors should consider their financial ability to continue purchases during periods of market fluctuation.

Its up to the people to understand and evaluate the best method used before making investment decision in the stock market. If you've decided that investing in stocks is right for you, where do you start to learn about the right stocks for you to invest in. The only strategy that has proven successful for investing in stocks is to pick wisely when you first invest and then hold on for the long term. When you’ve mastered the ropes, stock investments are sure to make some great returns.

All stock investments are risky, but growth stocks represent a gamble too huge for some investors. Good stock investments are always hard to come by but with free stock tips derived from something like disandvantages of stock options one can help learn to invest in the stock market or also learning to invest in the stock market. Most stock investments are higher in risk than bonds and money market securities, but also offer higher potential total returns. It has been proven, that over a long period of time, the market risks associated with stock investments are significantly reduced.
Remember that stock investments are generally meant to be long-term if you want to see any kind of significant return.

Article Written By J. Foley

Forex Trading Machine

Is Mutual Funds The Way To Go !

2007-06-04T14:37:00.000-07:00

investments & trading

Is Mutual Funds The Way To Go ? By J. Foley

Mutual funds can invest in many different kinds of securities. Mutual funds are liable to a special set of regulatory, accounting, and tax rules. Mutual funds are divided into two categories: closed-end and open-end. Mutual funds only trade at the end of the day because you trade mutual funds based on their net asset value (NAV). Mutual funds must update their prospectuses at least once a year, so always check to make sure you're looking at the most recent version.

Investors

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. Investors may enter a fund with an initial investment of as little as $500 or regular investments of as little as $50 or $100 per month, withdrawn automatically through investor checking or savings accounts. Investors typically purchase shares in small quantities through brokers at a small premium or discount to the net asset value; this is how the institutional investor makes its profit. Investors like to see not only the rate of return for an individual mutual fund, but also how that fund compares to other similar funds. Investors should be careful about investing in ETFs for income, and evaluate them the same way you would evaluate a dividend-paying stock: Is the yield sustainable (What is the payout ratio).

Performance

Performance measurements are probably the single most selection feature of any stock mutual fund. Performance data for periods of less than one year does not reflect the deduction of purchase and redemption fees. The performance of an actively managed fund largely depends on the investment decisions of its manager. Most mutual funds' investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts the future performance of investments appropriate for the fund and chooses those which he or she believes will most closely match the fund's stated investment objective.

Mutual funds offer two key benefits: diversification and professional management. Mutual funds are now popular in employer-sponsored defined contribution retirement plans (401(k)s), IRAs and Roth IRAs. Mutual funds issue redeemable shares that investors purchase directly from the fund (or through a broker for the fund) instead of purchasing from investors on a secondary market. Mutual funds generally sell their shares on a continuous basis, although some funds will stop selling when, for example, they become too large.

Mutual funds are subject to SEC registration and regulation, and are subject to numerous requirements imposed for the protection of investors. Mutual funds are also subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. Mutual funds and other investment companies allow individuals to pool their savings with those of other investors so they may benefit from professional investment management and diversification. Mutual funds are actively managed by a professional money manager who constantly monitors the stocks and bonds in the fund's portfolio.

Article Written By J. Foley

Forex Trading Machine

FOREX (Foreign Exchange Market)

2007-05-07T18:04:00.000-07:00

investment& trading

FOREX (Foreign Exchange Market) By J. Foley

The foreign exchange market is also known as FX or it is also found to be referred to as the FOREX. All three of these have the same meaning, which is the trade of trading between different companies, banks, businesses, and governments that are located in different countries. The financial market is one that is always changing leaving transactions required to be completed through brokers, and banks. Many scams have been emerging in the FOREX business, as foreign companies and people are setting up online to take advantage of people who don't realize that foreign trade must take place through a broker or a company with direct participation involved in foreign exchanges.

Cash, stocks, and currency is traded through the foreign exchange markets. The FOREX market will be present and exist when one currency is traded for another. Think about a trip you may take to a foreign country. Where are you going to be able to 'trade your money' for the value of the money that is in that other country? This is FOREX trading basis, and it is not available in all banks, and it is not available in all financial centers. FOREX is a specialized trading circumstance.

Small business and individuals often times looking to make big money, are the victims of scams when it comes to learning about FOREX and the foreign trade markets. As FOREX is seen as how to make a quick buck or two, people don't question their participation in such an event, but if you are not investing money through a broker in the FOREX market, you could easily end up losing everything that you have invested in the transaction.

Scams to be wary of
A FOREX scam is one that involves trading but will turn out to be a fraud; you have no chance of getting your money back once you have invested it. If you were to invest money with a company stating they are involved in FOREX trading you want read closely to learn if they are permitted to do business in your country. Many companies are not permitted in the FOREX market, as they have defrauded investors before.

In the last five years, with the help of the Internet, FOREX trading and the awareness of FOREX trading has become all the rage. Banks are the number one source for FOREX trading to take place, where a trained and licensed broker is going to complete transactions and requirements you set forth. Commissions are paid on the transaction and this is the usual.

Another type of scam that is prevalent in the FOREX markets is software that will aid you in making trades, in learning about the foreign markets and in practicing so you can prepare yourself for following and making trades. You want to be able to rely on a program or software that is really going to make a difference. Consult with your financial broker or your bank to learn more about FOREX trading, the FX markets and how you can avoid being the victim while investing in these markets.

investment& trading
Article Written By J. Foley

Day Trading Strategies

2007-04-21T16:48:00.000-07:00

investments & trading

Day Trading Strategies By J. Foley

While day trading is neither illegal nor is it unethical, it can be highly risky. As a trader you will probably fall into two main categories, traders who like to trade the breakout and traders who like to join the trend once established. Most day traders have their favorite markets.

You don’t need to know everything about day trading to succeed as a day trader. More important for the day-trader than others is to have the proper 'team' in place. Keep in mind a day-trader with a computer and access to the Internet already has access to a world of information.

Some day traders might buy and sell stocks in minutes, but might also hold some overnight or longer. During the day trading, a day trader will quickly buy a large number of stocks at a time and sell it once they see the stock gain within the day. Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest-rate futures, and commodity futures.

An investor needs to have a system that helps him to be prepared for all scenarios of a trade. Is Day Trading Right For You? Can day-trading be learned?

With the unlimited potential to earn of daytrading, comes the possibility of great financial loss. The Forex market is the largest financial market in the world with average daily trading of the currencies going over US$1.6 trillion. Day trading doesn't mean trading every day. Day trading simply means not holding any position beyond the current trading day.
Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations. Before starting out in the Forex daytrading market we need to make sure we understand the basics of daytrading. Even if you`re starting out with a small day trading float, you should practice good money management.

By simply changing the amount of capital you risk in your day trading, you can turn a system from returning 10% to returning a 100% per annum. As the prices go up and down, the day trader must be alert as to when to sell his stock or wait for the moment to hold on it. Your best chance to make money trading is by following the path of the best traders.

Access to timely information and fast execution of trades is essential to day trade successfully. You must know how to daytrade if you want to be a sucessful daytrader. Some websites have sought to profit from day traders by offering them hot tips and stock picks for a fee.

The application of Fibonacci to trading can be very complex, and take much time and experience to perfect. Day traders go bankrupt because they lose money, not because they don't make enough money. You’ll need to ascertain for yourself whether you are comfortable with the levels of risk inherent in daytrading..

Do you have the tolerance for the risk involved with day trading? Day traders typically hold stocks anywhere from only a few seconds to several hours but they never keep stocks overnight. Can day-trading be learned? Be aware that day trading does not offer the protection of an advisor who can tell you whether a particular investment is suitable to your financial goals.

investments & trading
Article Written By J. Foley

Practicing in the Forex Market

2007-04-08T10:33:00.000-07:00

investments & trading

Practicing in the Forex Market By J. Foley

So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.

To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the 'game', you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.

You will open an online 'account' using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make 'fake' trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.

The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.

investments & trading
Article Written By J. Foley

Investing for Retirement

2007-03-25T16:55:00.000-07:00

investments & trading

Investing for Retirement By J. Foley

Retirement may be a long way off for you – or it might be right around the corner. No matter how near or far it is, you’ve absolutely got to start saving for it now. However, saving for retirement isn’t what it used to be with the increase in cost of living and the instability of social security. You have to invest for your retirement, as opposed to saving for it!

Let’s start by taking a look at the retirement plan offered by your company. Once upon a time, these plans were quite sound. However, after the Enron upset and all that followed, people aren’t as secure in their company retirement plans anymore. If you choose not to invest in your company’s retirement plan, you do have other options.

First, you can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts. You do not have to state to anybody that the returns on these investments are to be used for retirement. Just simply let your money grow overtime, and when certain investments reach their maturity, reinvest them and continue to let your money grow.

You can also open an Individual Retirement Account (IRA). IRA’s are quite popular because the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks. A ROTH IRA is a newer type of retirement account. With a Roth, you pay taxes on the money that you are investing in your account, but when you cash out, no federal taxes are owed. Roth IRA’s can also be opened at a financial institution.

Another popular type of retirement account is the 401(k). 401(k’s) are typically offered through employers, but you may be able to open a 401(k) on your own. You should speak with a financial planner or accountant to help you with this. The Keogh plan is another type of IRA that is suitable for self employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that people typically find easier to administer than a regular Keogh plan.

Whichever retirement investment you choose, just make sure you choose one! Again, do not depend on social security, company retirement plans, or even an inheritance that may or may not come through! Take care of your financial future by investing in it today.

investments & trading
Article Written By J. Foley

The World Wide Forex Market

2007-03-05T17:48:00.000-08:00

investments & trading

The World Wide Forex Market By J. Foley

Forex is a trading 'method' also known as FX or and foreign market exchange. Those involved in the foreign exchange markets are some of the largest companies and banks from around the world, trading in currencies from various countries to create a balance as some are going to gain money and others are going to lose money. The basics of forex are similar to that of the stock market found in any country, but on a much larger, grand scale, that involves people, currencies and trades from around the world, in just about any country.

Different currency rates happen and change every day. What the value of the dollar may be one day could be higher or lower the next. The trading on the forex market is one that you have to watch closely or if you are investing huge amounts of money, you could lose large amounts of money. The main trading areas for forex, happens in Tokyo, in London and in New York, but there are also many other locations around the world where forex trading does take place.

The most heavily traded currencies are those that include (in no particular order) the Australian dollar, the Swiss franc, the British pound sterling, the Japanese yen, the Eurozone eruo, and the United States dollar. You can trade any one currency against another and you can trade from that currency to another currency to build up additional money and interest daily.

The areas where forex trading is taking place will open and close, and the next will open and close. This is seen also in the stock exchanges from around the world, as different time zones are processing order and trading during different time frames. The results of any forex trading in one country could have results and differences in what happens in additional forex markets as the countries take turns opening and closing with the time zones. Exchange rates are going to vary from forex trade to forex trade, and if you are a broker, or if you are learning about the forex markets you want to know what the rates are on a given day before making any trades.

The stock market Is generally based on products, prices, and other factors within businesses that will change the price of stocks. If someone knows what is going to happened before the general public, it is often known as inside trading, using business secrets to buy stocks and make money - which by the way is illegal. There is very little, if any at all inside information in the forex trading markets. The monetary trades, buys and sells are all a part of the forex market but very little is based on business secrets, but more on the value of the economy, the currency and such of a country at that time.

Every currency that is traded on the forex market does have a three letter code associated with that currency so there is no misunderstanding about which currency or which country one is investing with at the time. The eruo is the EUR and the US dollar is known as the USD. The British pound is the GBP and the Japanese yen is known as the JPY. If you are interested in contacting a broker and becoming involved in the forex markets you can find many online where you can review the company information and transactions before processing and becoming involved in the forex markets.

investments & trading
Article Written By J. Foley

Day Trading

2007-02-26T20:56:00.000-08:00

investments & trading
Day Trading By J. Foley

A Day Trader attempts to produce a profit within a single trading day. It takes tremendous discipline to be a day trader. Top daytraders have a proven day trading system.

Day trading can be stressful and requires determination and a keen business sense. Day traders also have high expenses, paying their firms large amounts in commissions, for training, and for computers. The most important question of a Trading System is how much to invest and how many positions to trade at the same time.

You need to master the psychology of day trading. An investor needs to have a system that helps him to be prepared for all scenarios of a trade. A trade needs to be completely planned in advance.

In the simplest terms, day trading is the purchase and sale, or sale and purchase, of a security on the same day. Day trading is a location-independent activity. Decide each day how much you are willing to risk in your day trading endeavours and stick to it.

Individuals who attempt to day trade without an understanding of market fundamentals often end up losing money. Behind all of the possible financial rewards of day trading lies the potential for financial disaster. Most day traders who trade for a living work for a large institution. Did you know that a successful trader can lose money on 9 out of 10 trades and still make money?

investments & trading
Article Written By J. Foley

Selling Your Stock : Is It The Right Time?

2007-02-18T09:37:00.000-08:00

investments & trading

Selling Your Stock: Is It The Right Time? By J. Foley

Selling your stock is the most important step in the entire investment process for it will determine your profit or loss. If you plan your strategy before you invest you can minimize your loss and maximize your gains. Some investors wish to ensure maximum profit and hold on to their shares, they fear if they prematurely sell off their stocks they might stand to lose. What they fail to realize is that the stock market is never stable and if it crashes they could incur a huge loss. There is no full proof strategy to prevent loss but the following will help you decide when to sell off your stocks.

Ask yourself: Am I in need of cash?
If you find yourself needing cash and the market is in your favor you can sell off. But after you   sell off, the share price may continue to rise, it is then that you regret your decision. The only precaution possible is not to invest money that might be required in recent future.

Is the company performance under question?
As an investor you look for stability, excellent management and reputation of a company when you invest. The company strategies could be   revised or the management overhauled, then you might reexamine your investment and decide to sell off your stocks if the company no longer holds promise.

Is the stock being over valued?

Stocks may be over valued at times. The prices soar much beyond their original value and plunge all of a sudden, the intention is to buy back the shares when the market falls. If you wish to sell off an over valued stock it is more desirable than procuring an over valued one. The prices may keep rising after you sell off but then again you could have incurred a loss had you held on to your share.

Has the money doubled?

The general rule in the market is that you should sell off half your share once a stock doubles. Many investors follow this approach. It provides you with a sense of comfort that you have recovered the money that you invested .You play safe and at the same time have funds in the market to take risks with.  Is the stock price ever going to rise in the future?

Plummeting stock prices can be another reason to sell off. There are stocks that undergo a lot of fluctuation, prices reach a high or low instead of a steady increase. If you are unsure about the future of the stock and you have a niggling doubt so as to whether the stock price would rise or not, you might consider selling off. An intelligent decision would be not to have highly unpredictable holdings.

Do I have a better   investment opportunity?

As far as market returns are concerned if you sense a better opportunity sell off your current holdings in order to invest in a new company. You need to be well informed about the new company and compare your present holdings, analyze possible future returns and then sell off.

Have I reached my goal?

When you invest you have a certain target in mind. Once that financial objective is realized you can start selling off your holdings. If your investment plans have been successful it's time to enjoy your profits.

The above-mentioned strategies are not full proof as mentioned earlier but the cardinal rule is to weigh all the consequences before you sell your stocks. You must decide after surveying all other alternatives and do not hesitate to sell if they no longer hold promise.

investments & trading
Article Written By J. Foley

A Few Tips On Day Trading

2007-01-01T13:19:00.000-08:00

investments & trading

A Few Tips On Day Trading By J. Foley

Don't believe advertising claims that promise quick and sure profits from day trading. The NASDAQ officially defines "pattern day trading" as placing four or more round-trip orders over a five-day period. Day Traders utilize high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies.

Risk management is crucial if you want to have any hope of becoming a successful trader. Even if you`re starting out with a small day trading float, you should practice good money management. Generally, a day trader should have enough day trading capital to buy at least 1000 shares of any given stock on any particular day.

A novice day trader should normally have day trading capital of at least $20,000 to start, so this is not a business to undertake lightly. You need to trade stocks which will not make it hard for you to exit your day trading position quickly at a fair price. A day trader will rarely hold a tock overnight as there are many other opportunities and a stock that takes hours to move is not worth holding.

The benefit of day-trading can be summed up with one word: control. Day trading has become an online phenomenon in the last year which has resulted in manuals and courses on how to successfully day trade. Although day trading has become somewhat of a controversial phenomenon, its prevalence is undeniable.

While day trading has become popular, the characterizing of day trading as another mode of investing may be overstated. Limiting your losses when day trading is by far more important than making big profits. For the sophisticated investor day trading may be safe since such investors know what they are doing and are willing to absorb the risk of losing money. Day trading is not a get rich quick business.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Forex Markets - Trading Internationally

2006-12-04T16:03:00.000-08:00

investments & trading

Forex Markets - Trading Internationally

Forex market trading is trading money, currencies worldwide. Most all countries around the world are involved in the forex trading market, where money is bought and sold, based on the value of that currency at the time. As some currencies are not worth much, it is not going to be traded heavily, as the currency is worth more, additional brokers and bankers are going to choose to invest in that market at that time.

Forex trading does take place daily, where almost two trillion dollars are moved every day - that is a huge amount of money. Think about how many millions it does take to bring about a total of a trillion and then consider that this is done on a daily basis - if you want to get involved in where the money is, forex trading is one 'setting' where money is exchanging hands daily.

The currencies that are traded on the forex markets are going to be those from every country around the world. Every currency has it own three-letter symbol that will represent that country and the currency that is being traded. For example, the Japanese yen is the JPY and the United Stated dollar is USD. The British pound is the GBP and the Euro is the EUR. You can trade within many currencies in one day, or you can trade to a different currency every day. Most all trades through a broker, or those any company are going to require some type of fee so you want to be sure about the trade you are making before making too many trades which are going to involve many fees.

Trades between markets and countries are going to happen every day. Some of the most heavily trades occur between the Euro and the US dollar, and then the US dollar and the Japanese yen, and then of the other most often seen trades is between the British pound and the US dollar. The trades happen all day, all night, and thought out various markets. As one country opens trading for the day another is closing. The time zones across the world affect how the trading takes place and when the markets are open.

When you are making a transaction from one market to another, involving one currency to another you will notice the symbols are used to explain the transactions. All transactions are going to look something like this EURzzz/USDzzz the zzz is to represent the percentages of trading for the percentage of the transaction. Other instances could look like this AUSzzz/USD and so on. When reading and reviewing your forex statements and online information you will understand it all much better if you are to remember these symbols of the currencies that are involved.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Forex Trading, What The Hype Is All About

2006-11-24T16:29:00.000-08:00

investments & trading

Forex trading, what the hype is all about by J. Foley

Forex trading is all about making big money. Some investors have found it quite easy to make a large amount of money as the forex market changes daily. Forex, is the foreign exchange market. Online and offline you will find references to the forex market as FX as well. Forex trading takes place through a broker or a financial institution often where you are able to purchase other types of stocks, bonds and investments.

When you are thinking about getting involved in the forex markets you should know you are sending money to be invested with other countries. This is done to prop up the investments of people involved in certain types of hedge funds, and in the markets overseas. The forex market could have your money invested in one market one day, and the next day your money is invested in another country. The daily changes are determined by your broker or financial institution. When reading your statements and learning more about your account, you will find that every type of currency has three letters that will represent that currency.

For example, the United States dollars is USD, the Japanese yen is JPY, and the British pound sterling will read as GBP. You will also find that for every transaction on your account listing you will see information that looks like this: JPYzzz/GBPzzz. This means that you took your Japanese yen money and invested it into something in the British pound market. You will find many transactions from one currency to another if you have money that is scattered through out the forex markets.

Forex markets trading by investment management firms are the companies you can trust with your money. You want to find a company that has been dealing with forex trading since the early seventies, and not someone just new on the block so you get the most for your hard earned money. It is important that you beware of companies that are popping up online, and often times from foreign countries that are stating they can get you involved in the forex markets and trading. Read the fine print, and know whom you are dealing with for the best possible protection.

If you are interested in trading on the forex market, you will find limits for investing are different from company to company. Often times you will learn that you need a minimum of $250 or $500 while other companies will need $1000 or $10,000. The company you are dealing with will set limits in how much you need to open an account with their company. The scams that are online will tell you, that you only need a $1 or $5 to open an account, but you need to learn more about that company and where they are doing business before investing any money, this is for your own protection while dealing in forex trading and markets online.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Foreign Exchange Market Is Different From The Stock Market

2006-11-17T21:14:00.000-08:00

investments & trading

Foreign Exchange Market Is Different From The Stock Market By J. Foley

The foreign exchange market is also known as the FX market, and the forex market. Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market. The forex market is over thirty years old, established in the early 1970's. The forex market is one that is not based on any one business or investing in any one business, but the trading and selling of currencies.

The difference between the stock market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries. The

What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.

The difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country. The stock market is based on businesses and products that are within a country, and the forex market takes that a step further to include any country.

The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading, buying and selling are located in so many different times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs.

The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

FOREX : Trading Foreign Currency

2006-11-08T19:48:00.000-08:00

investment & trading

FOREX : Trading Foreign Currency By J. Foley

FOREX trading is all about trading foreign currency, stocks, and similar type of products. The currency of one country is weighed against the currency of another country to determine value. The value of that foreign currency is taken into consideration when trading stocks on the FOREX markets. Most countries have control over the value of that countries value, involving the currency, or money. Those who are often involved in the FOREX markets include banks, large businesses, governments, and financial institutions.

What makes the FOREX market different from the stock market?
A forex market trade is one that involves at least two countries, and it can take place worldwide. The two countries are one, with the investor, and two, the country the money is being invested in. Most all transactions taking place in the FOREX market are going to take place through a broker, such as a bank.

What really makes up the FOREX markets?
The foreign exchange market is made up of a variety of transactions and counties. Those involved in the FOREX market are trading in large volumes, large amounts of money. Those who are involved in the FOREX market are generally involved in cash businesses, or in the trade of very liquid assets that you can sell and buy fast. The market is large, very large. You could consider the FOREX market to be much larger than the stock market in any one country overall. Those involved in the FOREX market are trading daily twenty-four hours a day and sometimes trading is completed on the weekend, but not all weekends.

You might be surprised at the number of people that are involved in FOREX trading. In the years 2004, almost two trillion dollars was an average daily trading volume. This is a huge number for the number of daily transactions to take place. Think about how much a trillion dollars really is and then times that by two, and this is the money that is changing hands every day!

The FOREX market is not something new, but has been used for over thirty years. With the introduction of computers, and then the internet, the trading on the FOREX market continues to grow as more and more people and businesses alike become aware of the availablily of this trading market. FOREX only accounts for about ten percent of the total trading from country to country, but as the popularity in this market continues to grow so could that number.

investment & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Investing Mistakes To Avoid

2006-10-30T21:02:00.000-08:00

investments & trading

Investing Mistakes to Avoid By J. Foley

Along the way, you may make a few investing mistakes, however there are big mistakes that you absolutely must avoid if you are to be a successful investor. For instance, the biggest investing mistake that you could ever make is to not invest at all, or to put off investing until later. Make your money work for you – even if all you can spare is $20 a week to invest!

While not investing at all or putting off investing until later are big mistakes, investing before you are in the financial position to do so is another big mistake. Get your current financial situation in order first, and then start investing. Get your credit cleaned up, pay off high interest loans and credit cards, and put at least three months of living expenses in savings. Once this is done, you are ready to start letting your money work for you.

Don’t invest to get rich quick. That is the riskiest type of investing that there is, and you will more than likely lose. If it was easy, everyone would be doing it! Instead, invest for the long term, and have the patience to weather the storms and allow your money to grow. Only invest for the short term when you know you will need the money in a short amount of time, and then stick with safe investments, such as certificates of deposit.

Don’t put all of your eggs into one basket. Scatter it around various types of investments for the best returns. Also, don’t move your money around too much. Let it ride. Pick your investments carefully, invest your money, and allow it to grow – don’t panic if the stock drops a few dollars. If the stock is a stable stock, it will go back up.

A common mistake that a lot of people make is thinking that their investments in collectibles will really pay off. Again, if this were true, everyone would do it. Don’t count on your Coke collection or your book collection to pay for your retirement years! Count on investments made with cold hard cash instead.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

About On-line Trading

2006-10-25T18:29:00.000-07:00

investments & trading

About Online Trading By J. Foley

The invention of the Internet has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, shop online, bank online, and even date online!

We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.

Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.

If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.

You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.

It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.

Again, online trading is a beautiful thing – but it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Why The Smaller Investor Has Advantages Over Huge Multinational Funds

2006-10-11T18:52:00.000-07:00

investments & trading

Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns By J. Foley

You would be forgiven in thinking that with all the professional managers, funds and resources.at their disposal that investment funds would win head over heels against the smaller investor like you and I. In fact this is not at all the case – smaller investors have several advantages over the big funds and have every chance of beating their returns on investments. Here’s why:

The individual investor does not have to invest millions and so they can invest in small caps (tiny growth companies) that have the potential to grow many times over. These stocks are typically far too illiquid for funds to enter.
The smaller investor can get in and out of a stock with the simple click of a mouse or a phone call (and get roughly the same sale price per share). The larger funds have to gradually sell their holdings in a company (they may have millions of shares to offload – not an easy or quick thing to achieve).
Individual investors can effectively trade positions for small gains – something that larger funds simply do not have the ability to do.

On top of this, the internet has more or less facilitated the smaller investor to have access to the same information at the same time as the big city fund managers. Arguably, the individual investor also has the added advantage of speed – a fund manager may have to get approval in order to buy into a company (not a case for the individual investor) and cannot take advantage of special situations (such as buying on breaking news and so on).

Remember however, if you really want to become a “professional investor” – one who is savvy enough to beat the market and essentially make a living from investments then you need to learn as much as you can about how the market works, how to analyse companies, the part psychology plays in driving markets and how to create an investment/trading system that’s right for you. Even the masters of investing such as Warren Buffet and Jim Slater all started from scratch. Warren Buffet once did not know what the PE of a company meant. Jim Slater once did now know how to read the balance sheet of a company. They educated themselves and discovered how to pick stocks that have excellent potential – you could be doing the same. The first step to investment is to invest in yourself and your education. To offer an overused yet apt phrase – KNOWLEDGE IS POWER!

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

How Much Money Should You Invest?

2006-10-10T19:36:00.000-07:00

investments & trading

How Much Money Should You Invest? By J. Foley

Many first time investors think that they should invest all of their savings. This isn’t necessarily true. To determine how much money you should invest, you must first determine how much you actually can afford to invest, and what your financial goals are.

First, let’s take a look at how much money you can currently afford to invest. Do you have savings that you can use? If so, great! However, you don’t want to cut yourself short when you tie your money up in an investment. What were your savings originally for?

It is important to keep three to six months of living expenses in a readily accessible savings account – don’t invest that money! Don’t invest any money that you may need to lay your hands on in a hurry in the future.

So, begin by determining how much of your savings should remain in your savings account, and how much can be used for investments. Unless you have funds from another source, such as an inheritance that you’ve recently received, this will probably be all that you currently have to invest.

Next, determine how much you can add to your investments in the future. If you are employed, you will continue to receive an income, and you can plan to use a portion of that income to build your investment portfolio over time. Speak with a qualified financial planner to set up a budget and determine how much of your future income you will be able to invest.

With the help of a financial planner, you can be sure that you are not investing more than you should – or less than you should in order to reach your investment goals.

For many types of investments, a certain initial investment amount will be required. Hopefully, you’ve done your research, and you have found an investment that will prove to be sound. If this is the case, you probably already know what the required initial investment is.

If the money that you have available for investments does not meet the required initial investment, you may have to look at other investments. Never borrow money to invest, and never use money that you have not set aside for investing!

investments & trading
Article Written By J. Foley

Determine Where You Will Invest

2006-09-29T16:50:00.000-07:00

investments & trading

Determining Where You Will Invest by J. Foley

There are several different types of investments, and there are many factors in determining where you should invest your funds.

Of course, determining where you will invest begins with researching the various available types of investments, determining your risk tolerance, and determining your investment style – along with your financial goals.

If you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.

You will of course learn as much about the investment as possible, and you would want to see how past investors have done as well. It’s common sense!

Learning about the stock market and investments takes a lot of time… but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic – which is what stock brokers do. With access to the Internet, you can actually play the stock market – with fake money – to get a feel for how it works.

You can make pretend investments, and see how they do. Do a search with any search engine for ‘Stock Market Games’ or ‘Stock Market Simulations.’ This is a great way to start learning about investing in the stock market.

Other types of investments – outside of the stock market – do not have simulators. You must learn about those types of investments the hard way – by reading.

As a potential investor, you should read anything you can get your hands on about investing…but start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.

Finally, speak with a financial planner. Tell them your goals, and ask them for their suggestions – this is what they do! A good financial planner can easily help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals. Many will even teach you about investing along the way – make sure you pay attention to what they are telling you!

investments & trading
Article Written bY J. Foley
http://travelguy.typepad.com/investments

Choose A Broker

2006-09-23T19:53:00.000-07:00

investments & trading

Choosing a Broker By J. Foley

Depending on the type of investing that you plan to do, you may need to hire a broker to handle your investments for you. Brokers work for brokerage houses and have the ability to buy and sell stock on the stock exchange. You may wonder if you really need a broker. The answer is yes. If you intend to buy or sell stocks on the stock exchange, you must have a broker.

Stockbrokers are required to pass two different tests in order to obtain their license. These tests are very difficult, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.

It is very important to understand the difference between a broker and a stock market analyst. An analyst literally analyzes the stock market, and predicts what it will or will not do, or how specific stocks will perform. A stock broker is only there to follow your instructions to either buy or sell stock… not to analyze stocks.

Brokers earn their money from commissions on sales in most cases. When you instruct your broker to buy or sell a stock, they earn a set percentage of the transaction. Many brokers charge a flat ‘per transaction’ fee.

There are two types of brokers: Full service brokers and discount brokers. Full service brokers can usually offer more types of investments, may provide you with investment advice, and is usually paid in commissions.

Discount brokers typically do not offer any advice and do no research – they just do as you ask them to do, without all of the bells and whistles.

So, the biggest decision you must make when it come to brokers is whether you want a full service broker or a discount broker.

If you are new to investing, you may need to go with a full service broker to ensure that you are making wise investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades for you.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Mutual Funds : Better than Individual Stocks?

2006-09-13T20:23:00.000-07:00

investments & trading

Mutual Funds – Better than Individual Stocks? By J. Foley

Though it cannot be said in general that mutual funds are always better than individual stocks, it still cannot be denied that they usually involve lower risks, less money and generally yield lower but safe returns.

It all depends on the risk attitude of the investor. This is understood clearly by looking at the disclaimer attached with any mutual fund options that are nearly identical with that applicable to any other (kind of) stock. They have their advantages and loopholes like any other form of investment. And as in other forms of investment, one has to be fully aware of potential pitfalls and while driving high with mutual funds, has to be alert enough to avoid them.

Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds during the past few years.

Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired to invest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to be considerably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-term growth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year.

But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.

It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify.

Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing.

First, an investor gets into many funds that have significant mutual implications, thereby losing out on the full benefits of risk stretching that diversification affords.

Secondly, over-diversification may decrease your overall return. By hitting too many poor through mediocre funds, the investor reduces the return by missing the potential of a few well-managed funds.

It is true that mutual funds play it safe. This is because mutual funds are actively organized by a professional money manager who keeps constant checks on the stocks and bonds in the fund's portfolio. As this is her/his primary occupation, s/he can devote much more time to choosing investments than an individual investor. This provides the investor with the peace of mind that comes with informed investing without the stress of analyzing financial statements or calculating financial ratios.

But on the negative side, a mutual fund, unless open-ended, must remain confined within a fixed portfolio. Even with open ended mutual funds, the range of potential is often low as compared to what is available to an investor free to choose any stock s/he likes.

Besides, mutual funds some times come as load funds in which the investor has to pay the sales commission on top of the net asset value of the fund's shares. Also, the dollar-cost averaging strategy is just the same with mutual funds as to any common stock.

Of course, fixing such a plan can substantially reduce your long-term market risk and result in a higher net worth over a period of ten years or more.

Hence considering the stress, agony and risk that any stock may involve, mutual funds look a shade better than independent trading, if low but steady is ok for you.

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

The Importance of Diversification

2006-09-06T11:22:00.000-07:00

investments & trading

The Importance of Diversification By J. Foley

“Don’t put all of your eggs in one basket!” You’ve probably heard that over and over again throughout your life…and when it comes to investing, it is very true. Diversification is the key to successful investing. All successful investors build portfolios that are widely diversified, and you should too!

Diversifying your investments might include purchasing various stocks in many different industries. It may include purchasing bonds, investing in money market accounts, or even in some real property. The key is to invest in several different areas – not just one.

Over time, research has shown that investors who have diversified portfolios usually see more consistent and stable returns on their investments than those who just invest in one thing. By investing in several different markets, you will actually be at less risk also.

For instance, if you have invested all of your money in one stock, and that stock takes a significant plunge, you will most likely find that you have lost all of your money. On the other hand, if you have invested in ten different stocks, and nine are doing well while one plunges, you are still in reasonably good shape.

A good diversification will usually include stocks, bonds, real property, and cash. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.

This is okay, but if you can divide your initial investment funds among various types of investments, you will find that you have a lower risk of losing your money, and over time, you will see better returns.

Experts also suggest that you spread your investment money evenly among your investments. In other words, if you start with $100,000 to invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in bonds, and put $25,000 in an interest bearing savings account.

investments & trading
Article Written By J. Foley

Investing Mistakes to Avoid

2006-08-22T12:46:00.000-07:00

investments & trading

Investing Mistakes to Avoid By J. Foley

Along the way, you may make a few investing mistakes, however there are big mistakes that you absolutely must avoid if you are to be a successful investor. For instance, the biggest investing mistake that you could ever make is to not invest at all, or to put off investing until later. Make your money work for you – even if all you can spare is $20 a week to invest!

While not investing at all or putting off investing until later are big mistakes, investing before you are in the financial position to do so is another big mistake. Get your current financial situation in order first, and then start investing. Get your credit cleaned up, pay off high interest loans and credit cards, and put at least three months of living expenses in savings. Once this is done, you are ready to start letting your money work for you.

Don’t invest to get rich quick. That is the riskiest type of investing that there is, and you will more than likely lose. If it was easy, everyone would be doing it! Instead, invest for the long term, and have the patience to weather the storms and allow your money to grow. Only invest for the short term when you know you will need the money in a short amount of time, and then stick with safe investments, such as certificates of deposit.

Don’t put all of your eggs into one basket. Scatter it around various types of investments for the best returns. Also, don’t move your money around too much. Let it ride. Pick your investments carefully, invest your money, and allow it to grow – don’t panic if the stock drops a few dollars. If the stock is a stable stock, it will go back up.

A common mistake that a lot of people make is thinking that their investments in collectibles will really pay off. Again, if this were true, everyone would do it. Don’t count on your Coke collection or your book collection to pay for your retirement years! Count on investments made with cold hard cash instead.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Forex Trading : Should You Invest?

2006-08-15T14:23:00.000-07:00

investments & trading

Forex Trading - should you invest? By J. Foley

Forex trading is all about putting your money into other currencies, so you can gain the interest for the night, for time period or the difference in trading money all around. Forex trading does involve other assets along with money, but because you are investing in other countries and in other businesses that are dealing in other currencies the basis for the money you make or lose will be based on the trading of money.

Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.

A forex market will be present when two countries are involved in trading, and when money is traded for goods, services or a combination of these things. Currency is the money that trades hands, from one to another. Often times, a bank is going to be the source of forex trading, as millions of dollars are traded daily. There is nearly two trillion dollars traded daily on the forex market. Should you get involved in forex trading? If you are already involved in the stock market, you have some idea of what forex trading really is all about.

The stock market involves buying shares of a company, and you watch how that company does, waiting for a bigger return. In the forex markets, you are purchasing items or products, or goods, and you are paying money for them. As you do this, you are gaining or losing as the currency exchange differs daily from country to country. To better prepare you for the forex markets you can learn about trading and purchasing online using free 'game' like software.

You will log on and create an account. Entering information about what you are interested in and what you want to do. The 'game' will allow you to make purchases and trades, involving different currencies, so you can then see first hand what a gain or loss will be like. As you continue on with this fake account you will see first hand how to make decisions based on what you know, which means you will have to read about the market changes or you will have to take a brokers information at value and play from there.

If you, as an individual want to be involved in forex trading, you must get involved through broker, or a financial institution. Individuals are also known as spectators, even if you are investing money because the amount of money you are investing is minimal compared to the millions of dollars that are invested by governments and by banks at any given time. This does not mean you can't get involved. Your broker or investment advisor will be able to tell you more about how you can be involved in forex trading. In the US, there are many regulations and laws in regards to who can handle forex trading for US citizens so if you are searching the internet for a broker, be sure you read the print, and the information about where the company is located and if it is legal for you to do business with that company.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

What Is Your Investment Style?

2006-08-10T13:14:00.000-07:00

investments & trading

What Is Your Investment Style? By J. Foley

Knowing what your risk tolerance and investment style are will help you choose investments more wisely. While there are many different types of investments that one can make, there are really only three specific investment styles – and those three styles tie in with your risk tolerance. The three investment styles are conservative, moderate, and aggressive.

Naturally, if you find that you have a low tolerance for risk, your investment style will most likely be conservative or moderate at best. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor. At the same time, your financial goals will also determine what style of investing you use.

If you are saving for retirement in your early twenties, you should use a conservative or moderate style of investing – but if you are trying to get together the funds to buy a home in the next year or two, you would want to use an aggressive style.

Conservative investors want to maintain their initial investment. In other words, if they invest $5000 they want to be sure that they will get their initial $5000 back. This type of investor usually invests in common stocks and bonds and short term money market accounts.

An interest earning savings account is very common for conservative investors.
A moderate investor usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Many moderate investors invest 50% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments.

An aggressive investor is willing to take risks that other investors won’t take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns – either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market.

Again, determining what style of investing you will use will be determined by your financial goals and your risk tolerance. No matter what type of investing you do, however, you should carefully research that investment. Never invest without having all of the facts!

investments & trading
http://travelguy.typepad.com/investments
Article Written By J. Foley

Who Is Participating In The Forex Market Trades ?

2006-08-02T19:59:00.000-07:00

investments & trading

Who is participating in forex market trades? by J. Foley

The forex market is all about trading between countries, the currencies of those countries and the timing of investing in certain currencies. The FX market is trading between counties, usually completed with a broker or a financial company. Many people are involved in forex trading, which is similar to stock market trading, but FX trading is completed on a much larger overall scale. Much of the trading does take place between banks, governments, brokers and a small amount of trades will take place in retail settings where the average person involved in trading is known as a spectator. Financial market and financial conditions are making the forex market trading go up and down daily. Millions are traded on a daily basis between many of the largest countries and this is going to include some amount of trading in smaller countries as well.

From the studies over the years, most trades in the forex market are done between banks and this is called interbank. Banks make up about 50 percent of the trading in the forex market. So, if banks are widely using this method to make money for stockholders and for their own bettering of business, you know the money must be there for the smaller investor, the fund mangers to use to increase the amount of interest paid to accounts. Banks trade money daily to increase the amount of money they hold. Overnight a bank will invest millions in forex markets, and then the next day make that money available to the public in their savings, checking accounts and etc.

Commercial companies are also trading more often in the forex markets. The commercial companies such as Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on are actively trading in the forex markets to increase wealth of stock holders. Many smaller companies may not be involved in the forex markets as extensively as some large companies are but the options are stil there.

Central banks are the banks that hold international roles in the foreign markets. The supply of money, the availability of money, and the interest rates are controlled by central banks. Central banks play a large role in the forex trading, and are located in Tokyo, New York and in London. These are not the only central locations for forex trading but these are among the very largest involved in this market strategy. Sometimes banks, commercial investors and the central banks will have large losses, and this in turn is passed on to investors. Other times, the investors and banks will have huge gains.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Determine Your Risk Tolerance

2006-07-27T14:03:00.000-07:00

investments & trading

Determine Your Risk Tolerance By J. Foley

Each individual has a risk tolerance that should not be ignored. Any good stock broker or financial planner knows this, and they should make the effort to help you determine what your risk tolerance is. Then, they should work with you to find investments that do not exceed your risk tolerance.

Determining one’s risk tolerance involves several different things. First, you need to know how much money you have to invest, and what your investment and financial goals are.

For instance, if you plan to retire in ten years, and you’ve not saved a single penny towards that end, you need to have a high risk tolerance – because you will need to do some aggressive – risky – investing in order to reach your financial goal.

On the other side of the coin, if you are in your early twenties and you want to start investing for your retirement, your risk tolerance will be low. You can afford to watch your money grow slowly over time.

Realize of course, that your need for a high risk tolerance or your need for a low risk tolerance really has no bearing on how you feel about risk. Again, there is a lot in determining your tolerance.

For instance, if you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping slightly, what would you do?

Would you sell out or would you let your money ride? If you have a low tolerance for risk, you would want to sell out… if you have a high tolerance, you would let your money ride and see what happens. This is not based on what your financial goals are. This tolerance is based on how you feel about your money!

Again, a good financial planner or stock broker should help you determine the level of risk that you are comfortable with, and help you choose your investments accordingly.

Your risk tolerance should be based on what your financial goals are and how you feel about the possibility of losing your money. It’s all tied in together.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Swing Trade : How To Profit From Swing Trading ?

2006-07-21T11:31:00.000-07:00

investments & trading

Swing Trading – How to Profit from Swing Trading? By J. Foley

Swing trading is a trading strategy where you hold stock positions for a short duration of time, but longer than a day trade. Swing trade positions can last anywhere from 2 to 30 days, and generally try to take advantage of short and mid-term movements in stock prices.

This is also quite risky though may seem to be less so than day trading. Since it is not even mid-term and you don't wait for long a time, it is possible that that stock falls as you wait and as you come to the pre-fixed end of your target holding period, you have to sell at a trough. It is also possible that the stock makes a turnaround immediately after you exit, and you either narrowly miss a huge profit or avoid a withering loss.

Before going in for swing trading, one needs to understand the difference between swings and stock market cycles.

A cycle is longer than a swing. A cycle is made of many short swings, up and down. There are swing trading firms making lucrative promises and publishing tall advertisements. Watch out or you may get into some disastrous mistake.

The general principle for winning is the same for all stock market entrants: sell the losers and let the winners ride! Longer term investors make profits by selling their appreciated investments, but they hold on to stocks that have declined, hoping for a rebound. Swing traders often do not have that long a time to get into rebound. They have to infer accurately when it is time to give up a stock within their projected time range.

A personal policy to sell after a stock has increased by a certain pre-fixed multiple often pays off in swing trading. But that way it may never fully ride out a winner. Therefore it is wise to allow for some degree of flexibility within this swing trading period.

It is best not to underestimate a well performing stock by sticking to some rigid personal rule. If you don't have a good understanding of the potential of your investments, your personal rules may end up being arbitrary and too limiting. Hence before entering this type of trading, do extensive research on the behavior of your selected sample of 'good' stocks.

On the other hand, it's equally important to be realistic about investments that are performing badly. That a stock will bounce back after a lingering decline can never be guaranteed. Hence the best time to sell has to be chosen wisely also, and the wisdom has to be carefully based on research. A standard strategy is to wait till the upswing goes on within the period you remain in the market, and then sell at the end of your chosen end time.

Being an active investor involves knowing the in-s and out-s of buying and selling stock. But for becoming a successful swing trader, there is no substitute to working hard watching and analyzing your personal portfolio. In order to obtain the gains and rewards from swing trading, you need to master the science of timing.

investments & trading
Article Written By J. Foley

Tools You'll Need : Day Trading Must Haves

2006-07-15T15:02:00.000-07:00

investments & trading

Tools you'll need: Day Trading Must Haves

Day trading previously had been only for the trading firms or the brokers who dealt in the physical market. But with the advent of the internet and a general advance of communication technology day trading has entered the homes of any interested individual who might have not visited the markets in person ever. But to be a successful day trader from your home you need to have the right gear. And by that we mean you need to have the proper hardware and software to build yourself a platform that could help you stay competitive against the market makers and other day traders. Following is a guide to the proper equipment you must have to do well.
Hardware
When you are trading online all you need is a good computer. You need to have only the basic items of hardware installed. But don't compromise on what you get yourself. Remember that while trading you would have to deal with a lot of numbers and figures and so you would require your computer to handle the data well. Get yourself a decent processor (anything above 1GHz) and plenty of memory. A 100GB hard disk drive is suggested as you would need to stack a lot of information. Higher memory also means better speed. Get yourself at least 1024MB of RAM as it would be necessary when you are crunching those numbers. You will of course need a modem to stay connected and a high quality video card would help you get the live feeds better.
As you would be dealing with a lot of data you should get yourself at least a 19" monitor. You can even go for split screen and use two monitors for a single screen shot.
Connection Speed
While you are day trading you are doing business real time. So you can't allow for any time lag. You would be placing your orders and quotes and you have to get them done on time or else you might miss out on good trading opportunities. So a dial-up connection isn't the best choice you have. To be a serious day trader it is always advisable to get a cable or DSL connection. That way you will get real-time data in your hand and can trade effectively.
Software
To make full use of the hardware you have got yourself you would also need the necessary software platforms to go with it. If you are in day trading you can go no where without the proper data in your hand. And even if you have the data you need to get the proper tools to store them well and have an easy access to them. The trading software platforms not only help you in getting the necessary data like the stock quotes, market indices, market stories and price alerts in real-time but they also store and present the data for you in an organized way so that it becomes much easier for you to make sense of it all when you read the spread sheets. You can buy these software platforms online or you can even get them from a few stores if you want to. You should however note that you may have to pay separately for access to the data that you need to download.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Training Basics For The Beginners

2006-07-06T19:03:00.000-07:00

ivestments & trading

Trading basics for the beginners by J. Foley
The Share market immediately conjures up stories of fortunes made and lost. A share makes the holder a partial owner of the company and different types of shares have different rights associated with them. If you are able to sell off your share at a price higher than your buying price, you make a profit but you also run the risk of incurring a loss if the share price falls. The business you invested in makes profit and they provide you part of it as dividend.
In the share market you are an anonymous player and many have made a reasonable profit. There is no unique formula to ensure consistent gain but before you venture into this market you should know the basics of stock trading.

What does trading stocks mean?

Buying and selling of stocks is referred to as trading in the financial market.

You have to approach a broker in order to trade. You can trade either electronically or on the exchange floor. Exchange floor scene must be familiar to you; the NYSE has been on television as part of news coverage innumerable times. It is here that your broker arranges for your shares to be ordered. . The floor clerk locates the floor trader from whom the shares can be bought. Once the price is agreed upon, the deal is finalized.

Electronic transaction is very common today. It is an efficient and fast method of stock trading. Here too you require a broker but you receive confirmations almost immediately .In online investing your broker will connect to the exchange network and search for a buyer or seller according to your order.
How are the stock prices determined?
The stock prices cannot be predicted, they depend on various factors like political unrest, if there is a huge demand for a particular share at a given time, prices can fluctuate, any event that could adversely affect the company will also cause the share prices to drop.

Before you decide on which stock to buy you must answer the following questions.

Do you know the company well enough?
What is the company's reputation in the market?
Have you gone through their annual report?
Do you have the confidence to invest in this company?
Is some negative news about the company circulating?
How are analysts predicting the future?
How is the management of the company?
What are their growth prospects?
Am I aware of the insider activity?
Is it an internationally renowned company?
How is their marketing strategy?
Have there been any changes in the management recently?
How consistent has been their performance?
Has there been a sudden shift in their production?
Whenever you invest you should be aware of your limits and remember not to exceed them. Share market involves a lot of risk , risk taking could either lead to fortunate gains or to bankruptcy.
You should avoid investing money more than you can actually afford.
Know about your investment well and do not blindly depend upon your broker.
Follow regular stock market quotes to keep yourself abreast of the market swings.

The share provides you with an earning power, gives you partial ownership of a company and the freedom to buy or sell at any moment. But if you are a novice in stock trading you need to play safe and equip yourself with a lot of information. Unless you are a seasoned player you should invest only after surveying all the alternatives and never go beyond your risk tolerance.

ivestments & trading
Article Written By J. Foley

Know The Language : Trading Room Jargon

2006-07-01T12:34:00.000-07:00

investments & trading

Know thelanguage: Trading room jargon by J. Foley
So you are considering taking the big plunge in to the trading market? You have done a lot of research on how to be successful in the market; what are the necessary hardware items and software platforms you have to have; what are the risks you are taking as you embark on the new profession. That's all good, but you can definitely do with a bit of knowledge about the regular trading room jargon that you will soon come across pretty regularly. And if you can't make sense of what you are hearing there is little chance you will go much further. So following is a list of terms that are regularly used in trading rooms which will help you to get at least initiated in the language.
Blue-chip stock
a reference to the blue chips used in the game of poker, such stocks are of established companies which have performed well regularly over a considerable period of time. Stocks of companies like IBM, GE are considered to be blue chip stocks.
Bottom fishing
to fish or buy stocks that have suffered significant decline in their prices or are continuing to do so.
going long
to buy and hold a stock for some length of time.
Going short
To sell stocks short, i.e., to borrow and sell stock which you do not want to own for the moment but intend to do so later on for a comparatively lesser price.
Uptick
Uptick means the next trade is at a price higher than the previous trade. However for certain transactions to be executed you have to do it on an uptick.
Downtick
Downtick means exactly the opposite of an uptick, i.e, the next trade is at a price lower than the previous trade.
Elves index
a much trusted index, Louis Rukeyser makes an index of the opinions on the general stock market for the coming 6 months. He polls 10 respected analysts every week (they are the same ones every week), to know what they assume the general trend will be, either bullish (+1), neutral (0), or bearish (-1). Obviously, the index range is -10 to +10.
Call money rate
Also known as the broker loan rate, this is the interest rate that banks lay on brokers to finance margin loans to investors. The broker in his turn charges the investor the call money rate plus a service charge. Investors who are willing to buy on margin will pay this rate.
Hope the above guide helps you in your future dealings with the stock market. It is always advisable to learn the language of the trade. The more comfortable you are the more easily would you be able to communicate, grasp and analyze what actually is going on in the market.
The above guide is only a sample and space here is too short to provide you with an extensive glossary. However there are other websites which are exclusively dealing on this matter which you can have a look at. But we would suggest you to keep a business dictionary near for ready reference as however much you know you can always come up against a new term which would make little sense to you.

investments & trading
http://travelguy.typepad.com/investments

What Is EPS ?

2006-06-23T08:02:00.000-07:00

investments & trading

What is EPS? Comprehensive information by J. Foley

EPS is the abbreviated form of 'Earnings per Share'. Of course there are other terms clipped as EPS: 'Extended Portfolio System' is one, for example. Those are not our concern here. In issues concerning the stock market, the direct concern is earnings from stocks. We take up EPS as Earning per Share and try to understand what it is.

In this sense, EPS is clearly a measure of average earning from shares transacted. Here's a simple formula for calculating EPS: divide the earnings available to common shareholders with the weighted average number of common shares outstanding during the year. The resulting quotient is called basic (or simple) EPS.

Often EPS is taken to be the single most important factor in the financial statement. Conventionally it is known as the "bottom line" indicator of financial performance. Other commonly used ratios such as P/E and dividend payout are also calculated on the basis of EPS numbers.

Basic EPS is shown in the income statement of a company when it has no outstanding securities convertible into common stock. When outstanding convertible securities are there, more complex rules are followed, which try to make EPS reflect the potential of such securities to dilute potential earnings of common shareholders.

The kind of importance popularly attached to EPS by users of financial statements is perhaps due to the fact that they are disclosed in the financial statements of public companies, and are liable to be scrutinized by auditors.

But then EPS is tedious and cumbersome to creators and scrutinizers of financial statements. Complex provisions of APB 15 and a host of amending pronouncements make it further complicated. The burden is worsened by SEC stipulation that 10-K reports include a supplementary schedule explaining the computation of EPS whenever it is not apparent in the financial statements.

A serious problem with ongoing standards is that basic EPS is subject to replacement on the income statement by two hypothetical EPS numbers: primary EPS, and fully diluted EPS.

Primary EPS is computed assuming that common stock equivalents were converted to common stock on the first day of the reporting period. The fully diluted EPS is computed assuming that all dilative securities, including the common stock equivalents, were converted.

When fully diluted EPS is less than 97% of basic EPS, these two EPS are the only per-share disclosures required under current accounting standards.
Concerns about the usefulness of dual EPS reporting are not limited to the relative merits of historical and proforma disclosure. Some of the specific rules governing the computation of primary and fully diluted EPS have also been questioned. The test used to identify common stock equivalent securities is among the most controversial of those rules.

Changing prevailing market conditions in relation to terms of particular securities are not considered in the computational rules for EPS. It implies that the appeal of a conversion feature relative to other security characteristics will vary, in different circumstances.

But then the meaning of common stock equivalent status and primary EPS remain confusing and questionable. There are other sophisticated methods that are also questionable, such as Options, Warrants, and the Treasury Stock Method.

So EPS is a popular method of measuring how things are going in the stock market, but the dependability of the measure is not too high because of the complicated procedures and unrealistic assumptions used for its derivation.

There are more comprehensive statistics and formulae that make life in the stock market simpler: the track of P/E ratio for example. Hence though as a primary indicator of performance one can use EPS to get an initial impression, you shouldn't depend much on it for a deep understanding of what's happening in the stock market.

investments & trading
Article Written By J. Foley
http://travelguy.typepad.com/investments

Day Trading : Tools You'll Need

2006-06-09T08:51:00.000-07:00

investments & trading

Day Trading : Tools you need by J. foley

Day trading previously had been only for the trading firms or the brokers who dealt in the physical market. But with the advent of the internet and a general advance of communication technology day trading has entered the homes of any interested individual who might have not visited the markets in person ever. But to be a successful day trader from your home you need to have the right gear. And by that we mean you need to have the proper hardware and software to build yourself a platform that could help you stay competitive against the market makers and other day traders. Following is a guide to the proper equipment you must have to do well.
Hardware
When you are trading online all you need is a good computer. You need to have only the basic items of hardware installed. But don't compromise on what you get yourself. Remember that while trading you would have to deal with a lot of numbers and figures and so you would require your computer to handle the data well. Get yourself a decent processor (anything above 1GHz) and plenty of memory. A 100GB hard disk drive is suggested as you would need to stack a lot of information. Higher memory also means better speed. Get yourself at least 1024MB of RAM as it would be necessary when you are crunching those numbers. You will of course need a modem to stay connected and a high quality video card would help you get the live feeds better.
As you would be dealing with a lot of data you should get yourself at least a 19" monitor. You can even go for split screen and use two monitors for a single screen shot.
Connection Speed
While you are day trading you are doing business real time. So you can't allow for any time lag. You would be placing your orders and quotes and you have to get them done on time or else you might miss out on good trading opportunities. So a dial-up connection isn't the best choice you have. To be a serious day trader it is always advisable to get a cable or DSL connection. That way you will get real-time data in your hand and can trade effectively.
Software
To make full use of the hardware you have got yourself you would also need the necessary software platforms to go with it. If you are in day trading you can go no where without the proper data in your hand. And even if you have the data you need to get the proper tools to store them well and have an easy access to them. The trading software platforms not only help you in getting the necessary data like the stock quotes, market indices, market stories and price alerts in real-time but they also store and present the data for you in an organized way so that it becomes much easier for you to make sense of it all when you read the spread sheets. You can buy these software platforms online or you can even get them from a few stores if you want to. You should however note that you may have to pay separately for access to the data that you need to download.

investments & trading
Article Written By J. Foley

Small Cap Stocks

2006-06-05T08:05:00.000-07:00

investments & trading

Smallcap Stocks By J. Foley

Small-cap stocks do not involve large amounts of money, and can avoid very high risk at initial stages. Even if you lose, you lose a small amount. Hence starting with small caps is not a bad idea.

Small-cap stocks are stocks with a relatively small market capitalization. Classifications such as 'large cap' or 'small cap' are only approximations that change over time. In fact, the definition of 'small cap' can vary among brokerages, but generally it involves a company with a market capitalization of between $300 million and $2 billion.

Below this, companies having a market capitalization between $50 million and $300 million, are called 'micro cap' stocks.

Even these aren't the smallest breeds. Nano-cap stocks are even smaller, and involve small public companies having a market capitalization of below $50 million. You may start with these also. But they escape the state regulatory oversight and there is no point in sticking to them.

The methods of learning the stock market apply to wider situations when you come out to penny cap, mid cap and large cap stocks. With rational research, dependable brokerage and your own attentive analysis, it is actually beyond the small cap stocks that you start exploring long-drawn high-return potentials.

One of the biggest advantages of initially investing in small-cap stocks lies in the opportunity to beat institutional investors. The institutional investors are not allowed below a certain minimum value quite high in relation to small cap stocks. Hence it is possible to avoid quite a few legal constraints while keeping up watchful learning of the pitfalls.

Secondly, it is good to initially trade in these stocks because you may want to put in small money in expectation of relatively high returns. If this is the case, case you must get to know the companies they represent thoroughly, before you take a single step.

The stocks that are traded at extremely low prices, sometimes even for under $1, may be considered small caps by nonstarters. In that sense even penny stocks are small cap stocks. But actually the term officially refers to low-capitalization companies ranging over a specified capitalization value.

And you have to be on the alert, small cap or not. Though traded at very low prices, they can be quite risky. Brokers and analysts often have cautioned about sudden unprecedented rises in the prices of small-cap stocks in recent times.

Most brokers dealing in this category do not have strong financial credentials. There are informal brokers also who come to help you. You get them in the neighborhood of the trading spot. They often look for you. Careful! As you are a beginner, you may easily be cheated. As these brokers do not have to abide by any authority control, frauds are rampant.

However, wise financial investors avoid them and their wares, though it is fully possible to make a profit in this market.
Another source of the high risk of this market is the wildly fluctuating prices. Hence the first tip is: try not to go on investing in these stocks for too long.

investments & trading
Article Written By J. Foley

Protect Your Stock Market Investments

2006-05-31T04:57:00.000-07:00

investments & trading

Protect Your Stock Market Investments By J. Foley

It is very easy to lose the entire stock market investment unless you have a rational approach to protecting them. Losing can be smooth and fast through misreadings and mistakes. Protecting your stock market portfolio is synonymous with being able to steer clear of these errors.

To protect your stock market investments, it is imperative that you limit the losses on adverse stocks. Accept that it is impossible to know for sure which way the stock is headed next. Hence a disciplined trading strategy is a must for limiting losses on stocks that don't go your way.

Taking a system of disciplined research for understanding your errors is necessary for protecting your stocks. Never indulge in too much risk taking. Investing is synonymous with taking risks; but the risks have to be calculated in relation to the potential returns. Every reasonable investor has a limit to his/her risk tolerance, and to be smart you have find out and respect your personal limit.

Straying past the tolerance limit can be disastrous. This may lead to bad decisions spiraling out of control, involving the pumping in of more and more money in stocks that don't even seem to be very good prospect.

Investors can avoid these problems if they will simply know where their level of risk tolerance is. It is easy to find. Just listen to your inner call for a caution.

Invest in anything unless you understand it thoroughly, will make your stock market investment insecure. There is nothing foolish in not understanding an investment prospect. If you don't understand it, call a pass. If you find you have made a wrong choice, accept that bad things happen and take a little loss rather than allowing it to become big by dragging it further.

Try to form an idea of the fair price and buy at that, and ignore market hysteria. Similarly, if nothing has fundamentally changed with the company you possess stocks of, except that the stock is dropping along with the market, good investors will not be frightened off a good price and prefer sitting tight to selling for a loss.

It is wise not to jump in or out reacting to any hot price signal. Experienced investors do that occasionally but that is likely to drag you to buy high and sell low, a position contrary to the collective wisdom on winning.

Everything that can lead to win-win spots in the stock market can protect your stock market investment. Buying low and selling high is, of course, a standard win-win proposition. To achieve that, one has to be serious, meticulously research-oriented and needs to document every move and the perceived reason behind it.

Avoid penny stocks, day trading and swing trading unless you are an expert in those areas. Analyze every wrong step you have ever taken, and figure out what would have been the best move, so that in similar future scenarios you are in a better position to take the right decision.

investments & trading
Article Written By J. Foley

Option Trading Strategy That Works !

2006-05-23T08:10:00.000-07:00

investments & trading

Option Trading Strategy That Works! BY J. Foley

An option is a contract conferring to the owner the right to buy or sell a specific stock at a specific price in the future.

'Call options' give the right to BUY the stock at a certain price, and 'put options' give the right to SELL the stock at a certain price. That particular price is called the 'strike price', and owner is allowed to buy or sell at that strike price at any time before the expiration date of the option.

Being an active investor in option trading requires knowing the in-s and out-s of buying and selling options. To win the gains and rewards from option trading, you will have to learn the basics of various trading methods. You need to get up to speed with various strategies and learn to use them efficiently, in order to survive in the options market. If you're averse to this kind of hard labor, you had better follow a mutual fund manager who will do this for you.

You should note that option stocks have some differences with share stocks or bonds. An option stock may consist of commodities or any marketable product. Option trading strategy involves taking contingent plans of action to buy and sell these options in a manner that entails maximum expected profit.

The profitability in this trade comes from the volatility (a measure of shift potential in prices) in the prices of these options. In general, when you experience very high option implied volatility (meaning downfall is highly imminent), selling should get priority over buying, because in these situations options become quite expensive.

What kind of strategy should you follow in options trading? Which stock do you invest in – should you just follow a tip, or quality, or analyze trends in the market to get the best deal?

For making profits in option trading, you must have a measure of volatility and your strike price at the right time. For beginners or those who have little time to spare, it is often wise to get a membership of agencies with expert trading advisers. They alert you when they see great trading opportunities, and also remain for you in their trading room to answer your questions. There are plenty of them these days.

Besides, there are good dependable software programs that analyze and measure volatility with acceptable accuracy. As for example, the OptionVue 5 options analysis software helps you survey all options according to specified criteria such as implied volatility and statistical volatility levels. It also helps to identify markets that might be tradable using a ratio writing strategy. Many different kinds of market are included in these programs, and trends are worked out on the basis of past six years' information.

'High implied volatility' is a situation when options are expensive in terms of historical average levels. Since option implied volatility eventually returns to its historical mean, it would make good sense to sell at this high volatility when it is at the extreme levels (say the 99th percentile).

Another strategy is to work out your contingent plan of action through your own analysis of volatility and the expected range of strike prices using software and detailed stock information.

By mixing and matching various options trading strategies cleverly, you can sometimes even profit from stocks that have little or no movement over time. This is not a very easy thing to achieve, though.

Sometimes even when there are consistent bull and bear debit spreads and high implied volatility, buying strategies are often very poorly priced. When it reaches a trough, the collapse in high-priced options right after a sharp drop in implied volatility takes out much of the profit potential.

So, as has been pointed out time and again, even if you are correct in timing a market bottom, there may be little to no gain from a big reversal move following a capitulation sell-off. There are strategies for avoiding this. One needs to learn these strategies from professionals or academics studying this sector, or from quality agencies. Option trading is a big money game, provided you play it right.

investments & trading
Article Written By J. Foley

Mutual Funds - Better Than Individual Stocks ?

2006-05-20T07:29:00.000-07:00

investments & trading
Mutual Funds – Better than Individual Stocks? By J. Foley

Though it cannot be said in general that mutual funds are always better than individual stocks, it still cannot be denied that they usually involve lower risks, less money and generally yield lower but safe returns.

It all depends on the risk attitude of the investor. This is understood clearly by looking at the disclaimer attached with any mutual fund options that are nearly identical with that applicable to any other (kind of) stock. They have their advantages and loopholes like any other form of investment. And as in other forms of investment, one has to be fully aware of potential pitfalls and while driving high with mutual funds, has to be alert enough to avoid them.

Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds during the past few years.

Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired to invest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to be considerably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-term growth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year.

But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.

It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify.

Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing.

First, an investor gets into many funds that have significant mutual implications, thereby losing out on the full benefits of risk stretching that diversification affords.

Secondly, over-diversification may decrease your overall return. By hitting too many poor through mediocre funds, the investor reduces the return by missing the potential of a few well-managed funds.

It is true that mutual funds play it safe. This is because mutual funds are actively organized by a professional money manager who keeps constant checks on the stocks and bonds in the fund's portfolio. As this is her/his primary occupation, s/he can devote much more time to choosing investments than an individual investor. This provides the investor with the peace of mind that comes with informed investing without the stress of analyzing financial statements or calculating financial ratios.

But on the negative side, a mutual fund, unless open-ended, must remain confined within a fixed portfolio. Even with open ended mutual funds, the range of potential is often low as compared to what is available to an investor free to choose any stock s/he likes.

Besides, mutual funds some times come as load funds in which the investor has to pay the sales commission on top of the net asset value of the fund's shares. Also, the dollar-cost averaging strategy is just the same with mutual funds as to any common stock.

Of course, fixing such a plan can substantially reduce your long-term market risk and result in a higher net worth over a period of ten years or more.

Hence considering the stress, agony and risk that any stock may involve, mutual funds look a shade better than independent trading, if low but steady is ok for you.

investments & trading
Article written By J. Foley

Making Money From Stocks - Useful Tips

2006-04-26T07:06:00.000-07:00

Investments & Trading
Making Money from Stocks – Useful Tips By J. Foley

Making money from stocks doesn't involve a magic trick. It happens through maintaining consistent goals and sticking to them. We know of many 'successful trader' legends who purportedly made amazing amounts of money from stocks in a fairly short period of time. Remember, legends are legends and reality is reality. There is no magic formula for getting rich on stocks. You have to work hard, as in any other honest trade.

It is imperative to have a can-do attitude. The time to start creating wealth is right now, not next week or next year or after that vacation. Do not keep postponing. Good solid investments that you stick with for the long term are your best bet for creating lasting wealth. This takes discipline. Here are some common and ready tips.

Develop a system of disciplined stock trading and strictly follow it.
Avoid playing too much in the short term, and take a mid- to long-term approach.
Keep with a trend-following trading style.
Go for fully planned trades. Be ready for all scenarios in advance with a pragmatic and cool approach equally to bad times and good times.
Try to cut losses early, but do not panic over this.
Avoid fear and greed, the two greatest enemies of the honest stock trader.

All these rules are violated everyday by common traders who know no better, and who pay very little attention, if any, to money management.

The most important component of a trading system is money management. Even more than a good entry-exit strategy, one needs good money management – that is, the ability to solve rationally the most important question of a trading system: how much to invest and how many positions to trade at the same time.

An active investor has to know the in-s and out-s of buying and selling stock. In order to obtain the gains and rewards from trading, one must be ready to learn the basics of different trading methods. Otherwise it will be better to follow a mutual fund manager who does.

In that case also, it is usually said that the first step is to understand mutual fund expenses and the next step is to avoid them! Mutual funds are meant for people looking for minimizing the costs inherent in buying and selling stocks and minimizing risk and volatility in investments, and for maximizing purchasing power by pooling their resources with others.

But surprisingly, not all mutual funds have low expense ratios: many of them charge exorbitant fees. The common sense investor needs to be aware of the fees and expenses involved in any mutual fund investment.

Understanding the different ways to buy and sell stock in the market is the first step to make money from stock investments.

Dollar cost averaging is a good investment strategy for the reason that you are not overexposing your investment to the risks involved in timing the trading while you consistently invest on a regular, periodic basis.

Consistent investment is the route to take for becoming a winner, which is possible through dollar cost averaging. This actually takes advantage of market volatility so that you buy more stock when the price is low and less stock when the price is high.

Another important tip is you should generally avoid companies with high P/E (price-earnings) ratios.

A company's P/E ratio is a very common means for comparing and understanding the value of a company's stock. It is calculated by dividing the previous day's closing price by the adjusted EPS (earnings per share). But high P/E may be deceptive and it is wise to avoid being guided by this ratio.

Investors in stock who have turned wealthy know all this, because they have all developed their own disciplined approaches. A wealthy future with money from stocks is closer than you think if you keep with these tips.

Investments & Trading by J. Foley

How To Choose The Right Broker

2006-04-23T09:41:00.000-07:00

Investments & Trading
How to select the right broker? By J. Foley
A stockbroker is your agent in the stock market and he is licensed to buy and sell shares. Against this service he will charge a fee and this fee varies from broker to broker depending on the nature of service provided. Brokers provide you with the market research on domestic and foreign trends, help you plan your investment and regularly update you and advice you on shares, government bonds and other listed and non-listed investment opportunities.

What kind of broker am I looking for?
There are two main categories of brokers: full-service brokers and discount brokers.

A full-service broker provides step-by-step guidance to the customer. He will advice you on the purchase of shares, plan your financials, analyze your investment and provide full customer support. Because of these services full-service brokers charge more than discount brokers.

A discount broker on the other hand shall not advice you on the investment trends or provide you with detailed market research. He will carry out transactions according to your specifications. Discount brokers charge lower fees but you lose out on customer support. The success of the dealings will depend on how well you are informed about the market. Before you settle on a broker it is recommended that you survey   different companies for their brokerage and decide which is best for you.

Investors, who are stock savvy and capable of deciding which stocks they want to buy, approach discount brokers. But if they are not well informed about the company in which they wish to invest they will approach a full-service broker.   Where do I look for a broker?
If you have friends dealing in stocks they can recommend you some names. Market survey will also provide names of brokers with good reputation. Broker Referral Service maintained by The Australian Stock Exchange will provide you with the list of brokers. You can search for brokers online and commence trading.
What information should I gather from my discount broker? What are the charges for buying and selling shares? How will the broker be available to me: over the net of telephone? You need to clarify any doubts regarding their subscription fee. Sometimes brokers offer discounts if you are trading quite often with them. It is an incentive they offer as trader discounts. You should always enquire about perks offered to customers. Though you are aware of the nature of their services you should enquire if they provide any company research or market research data.

What information should I gather from my full-service broker?
Know about their charges. As they provide customer support and personal attention their charges will vary according to the nature of services provided. You should survey the market for their research capabilities. The advice you on investment strategies which is largely dependent on their market research skills.

Know how they intimate their clients about the latest investment trends. Many companies have regular updates that they mail their clients. Information is the key here; you must clarify these points before deciding on a broker.

Another important consideration before you open a brokerage account is that of minimum opening balance and maintenance fees. The minimum opening balance required by some companies is quite high. Some brokerage firms also charge a maintenance fee if your balance falls below a specified amount. Know the company policies in detail before finalizing your choice.

Each brokerage type has its advantages and disadvantages therefore you need to be well informed and sure about what kind of brokerage would be ideal for you.

Investments & Trading by J. Foley

How To Choose A Stockbroker

2006-04-21T11:33:00.000-07:00

investments & trading
How to Choose a Stockbroker By J. Foley

A stockbroker is a person who mediates buying and selling of stocks and shares. S/he is specifically trained to do this for investors in exchange for a fixed commission.

This commission, a percentage of the invested capital charged for the service, varies from broker to broker, or the firms they represent.

The stock market does not require buyers and sellers to assemble directly. Transactions are made mostly through these agents who charge a fee known as brokerage.

In general, the brokerage is determined at a flat rate per trade. But if you trade over a set limit, it may be charged as a percentage – for example, 0.11% for all online trades over $30,000 in value.

In most cases of buying or selling shares, you must use a broker who holds an authorized of Financial Services License, or is an authorized representative of such a license holder. But you have to know what type of broker suits your need. How do you locate the person and exactly what services shall you need as a share market investor?

You may need full-service or advisory brokers. These brokers ask for higher brokerage, because in addition to their normal handling services, they also make recommendations and give advice based on their own in-house research. They analyze your investment needs, help you to decide on short- and long-term goals, assess the risk tolerance you're prepared to take, and allocate your share portfolio accordingly.

Then there are discount brokers. These brokers do not offer advice or make recommendations. They only buy or sell the shares that you select. Their brokerage is expectedly lower than that of full-service brokers. You can buy or sell shares through a non-advisory broker online or by phone.

An advisory broker is of a great help if you're just starting out or have hardly any knowledge or time to research on investment possibilities. Some brokers do not charge for advice explicitly, but you can be sure that the fee is included in the higher brokerage they get from you each time you buy or sell shares.

Fees also vary according to the service you want. If you go for high-end services like ongoing portfolio management, you'll likely be charged ongoing management fees. If you only have small money to invest, it may be difficult to find a full-service broker accepting you as client.

You can find a broker to buy or sell shares by phone or online. For full service broker you have to move beyond the phone and go through an elaborate contract. Both full-service and online discount brokers can offer you a range of online tools charting portfolio management, and access to live market data.

It is best to take a rational position in choosing a broker. Compare the benefits and costs associated with different brokers and go for the one who generates maximum expected net benefit based on plausible turns of events over a relatively longer period of time.

Read a broker's Financial Services Guide (FSG) before your first meeting. Services offered can vary widely. Most online brokers offer shares, options and warrant trading but many of them don't trade futures, margins or international shares. Work out what services you really need. Do not pay for a service that you never want like trading international shares.

Choose a broker who offers automatically updated data known as real-time/dynamic market data, or at least instant (but not automatically updated) data known as live data. Some only offer 20-minute delayed updates.

Some discount brokers will charge a fee to access extra services like interactive charting or independent research. Work out the maximum expected net benefit for exactly the services you need. This is the best way to choose your broker.

investments & trading by J. Foley

How To Be a Successful Day Trader

2006-04-18T08:13:00.000-07:00

investments & trading
How to be a successful day trader? by J. Foley
For many people day trading is too intimidating a thing. That day trading is not everyone's cup of tea is true. But many just stay away from it due to the misconceptions they have regarding day trade. But if they had known better they might have considered investing more time and money on day trade. Because although the risks are high the rewards are also great. And the emotions you go through during a successful trade are rare.
It is a fact that not everyone can be a day trader. One needs to have a specific set of skills and a few character traits to be successful at this. One needs to have an analytical mind, he needs to be good at problem solving and should have the patience to learn from his mistakes. He should also know how to use his profits wisely and how to bounce back after a serious loss. Following are few of these basic character traits that we discuss in detail.
Confidence: If you plan to be a successful day trader you have to be confident. There are no two ways about it. Day trading means that you have to decide, and decide quickly. If you are not sure about your decisions, if you are plagued by self-doubt chances are you might miss out on the best trading opportunities of the day. You have to believe in your decisions and go ahead with them. And if you are generally an indecisive person it would be advisable for you to try out a different career.

Discipline: To be successful at day trading you need to have the discipline to make a plan for yourself and then stick to it. When you are dealing with stocks there is always the possibility that you may win big or lose big. But if you are a disciplined person you would know what your limits are and when you should stop. You would never let the emotions of greed and fear take control of you. Instead you should have the ability to leave the market as soon as you have reached your objective.
Decisiveness: People good at day trading never hesitate. They trade at the first opportunity they think is right. Being tentative would mean losing out on the best trading opportunities of the day.

Passion: Day trading generally involves a lot of analysis and understanding of the market. For which you have to closely follow the daily business news, you have to interpret various charts, crunch numbers and make sense of the quote screens. And you have to do all this in an extremely fast environment. So for someone who doesn't feel that passion for it, things can get extremely difficult.

Dealing with failures: When you start day trading you should get one thing clear in your mind – you can never expect to win every time here. You will lose from time to time. The only thing you have to make sure is that you win more than you lose over a period of time. If you are able to accept this fact then you can go ahead and be a day trader, but if you are terrified about losing then it's better for you not to venture in the markets.

Concentration: While you are at day trading you have to assimilate a lot of data which you have to analyze, arrive at decisions and then carry out them. And all this happens in real quick time. So you got to be able to concentrate and concentrate hard. You should have the stamina to do so throughout a day and if you are good at avoiding distractions you will make a good day trader.

investments & trading by J. Foley

Forex Trading Tips

2006-04-14T12:03:00.000-07:00

investments & trading
Forex Trading Tips By J. Foley

Forex trading is buying and selling the foreign currencies of different countries. It has a similarity with stock trading in that the foreign currencies behave like shares of the currency institutions of the countries. Like stock prices, these also move up and down with time-dependent volatility.

It is possible to buy a currency low, buy long and sell short another high currency. It needs meticulous pursuit of the exchange rates of currencies you want to trade. One needs to keep up a continuous scrutiny of the trajectory every particular currency vis-à-vis the other currencies, pair-wise.

It often has leverage enough to induce highly profitable arbitrage and hedging. Each internationally accepted currency has a market and the Forex market is the superset of all these markets taken together. Traders make their own basket or inventory of Forex and trade according to their anticipation of movements.

For example, the primary Forex statistics for the euro in relation to the German mark prior to 1999 reveals a lot of interesting features and profit potential of dollar or German Mark in relation the euro.
From the evidence it appears somewhat surprisingly that the euro lost ground against the US dollar in Forex spot trading, and in quite a few dimensions did not match the international transaction role of the German mark.

The euro changed the structure of the Forex market and increased market transparency through currency elimination. This exposed the dealers to higher inventory risks as their respective inventory imbalances became exposed easily to other dealers.

The increased inventory costs were recovered by the dealers in the euro markets through higher spreads. This made the euro a less attractive transaction medium than the German mark. This shows how trading in Forex involves both risk and profit potentials.

Earlier, the forex market was the trading ground of millionaires and billionaires only. Now with the introduction of online Forex trading, the average person is able to create amazingly large amounts of wealth from safe online investments in foreign currencies. Online forex trading is nothing but Forex trading transacted through internet links and email through a competent broker.

No technical know how, big "risk", or large investment, hard work is needed. Online forex trading investment lets you use your dollar to control an investment two hundred times as high, $1 to control an investment worth $200, $1000 to control $200,000 and so on and on worth of investment.

Through online forex trading, you are now able to invest your money to fetch more money for you like the millionaires and billionaires, instead of you laboring hard for your money.

Online Forex trading is real fun. It is often the most striking and profitable internet investing opportunity because you can do it from your PC or connected laptop from any place in any country in the world.
You don't need any stocks or big inventory in this trading. In online Forex trading, all you do is, just open an account with one of the brokers with as little as $300 or so. Of course, the larger your initial investment, the faster you stand to gain wealth.

Then you simply have to follow simple instructions to purchase and sell the currencies. You buy when the price of the currency is low. Within a few seconds or minutes, the price may go up, and you may sell it and make a profit. This way, by just buying, selling and trading these foreign currencies for about 3 or 4 hrs in a day, you can easily make $500-$1000!

Forex trading is easy money. Especially with the introduction of online trading, it is virtually a continuous upward money spiral for any alert person with a competent broker.

investments & trading by J. Foley

Day trading strategies - What Works ?

2006-04-09T11:20:00.000-07:00

investments & trading
Day Trading Strategies – What Works? By J. Foley

Day trading is a trading strategy where investors buy and sell a stock in the same trading day. That is, you will not hold a stock overnight because you are always in and out of positions within the day.

Day traders buy and sell stocks very fast over the day in the hope that their stocks will continue climbing or falling in value for the short duration during which they own the stock, enabling them to grab quick profits. Day traders usually work with borrowed money, with the expectation that they will reap higher profits through leverage, and at the same time they bear the risk of greater losses too.

To look for tips on what works, you have to look into the negatives and take precautions against them.

As day traders are usually the 'fast buck' type of guys, they often have a tendency to get swayed by tall talks from advertisers. This is where serious pitfalls keep looming. It is never a wise thing to believe in advertising claims that promise quick and sure profits from day trading.

Before starting day trading with a firm, you must gather hard statistics on how many clients have actually lost or made profits dealing with them. If the firm does not have this information, or refuses to give it to you, take a pause because you are in for extreme risks through ignorance.

Secondly, some websites claim to have earned good money from day traders by providing them hot tips and stock picks for a fee. Once again, don't take them at face value. Sounds that trumpet easy profits from day trading are often disastrously misleading. Check out these sources thoroughly before you take them on your side if you will.

It will be wise to check out day trading firms with your state securities regulator. As it is with all broker-dealers, day trading firms have to register with the SEC and the states in which they operate. Confirm the registration of the firms under your focus by calling your state securities regulator. Find out whether the firms have records of troubles with regulators or their customers.

Any day trader should be able to read ahead how much they need to make to cover expenses and break even. As this type of business is extremely risky, most investors often lack the time, wealth or the endurance necessary for making money along this line. Anybody intending to plunge in has to be prepared from the very beginning.

Day traders have to pay for the computer time and for the tips and advice from the day trading firms. The firms start earning the moment you enter but you are likely to end up losing unless you yourself watch out against the risks.

You may want to ride the momentum of the stock and get out of the stock before it changes course. But you do not know for certain how the stock will move. It is a freaky thing, and you have to be on continuous alert. It is often better to pick a mixed strategy of waiting till your earning increases by a certain multiple of your investment, and terminating whenever a reverse turn starts in the stock price.
To move out within seconds is another strategy you may follow, though even that short interval may generate huge amounts of money had you chosen the right stocks and the right length of interval. The best way to make it work is to work everything out for yourself in the painstaking old-fashioned way, instead of putting your sole trust in the day trading firms.

investments & trading by J. Foley

Day Trading Benefits - What Are They ?

2006-04-08T08:12:00.000-07:00

investments & Training
Day Trading Benefits – What are they? By J. Foley
Although previously considered to be the exclusive domain of floor traders only, day trading is now an option for anyone speculating on the market. With the advent of improved communication technology, affordable computers, the lure of large intra-day price swings and competitive commissions, day trading is gaining in popularity by leaps and bounds.
Day trading has often been vilified. There have been many pros who have openly condemned day trading. Even responsible institutions have at times raised serious doubts against day trading. But fact is, with real-time quotes available, improved computer technology, and next to nothing commission rates, day trading at his point of time makes ample sense.
There are definite benefits when it comes to day trading.
You don't have to be concerned about overnight news
This is a big plus with day trading. Since you are completing your trading within the span of a single day, it doesn't matter if something big happens overnight which you cant deal with the next morning when the markets already start in a bearish note. With day trade you know what you have made at the end of the day, whether you win or lose.
You don't run the risk of riding losses
Since you finish off with your trading within a day you may lose but you avoid losing more the next day as you don't hold on to your stocks. So if any stock of yours suffers significant losses over a few days you are not affected to a great extent.
You can capture large price swings
If you are into day trading it means you are always on the ball. So nothing that happens in the market escapes you. If any news or event results in large price swing of any particular stock you are there to capture it. A constant monitoring of the market is needed for this. You have to have the patience to wait for the event to happen. When the event nears you have to anticipate it through your analysis and instinct. And when it actually happens you have to grab the opportunity as quickly as possible.
You get instant feedback
With day trading you don't have to worry long as to what will happen to your money. You are buying and selling the same shares in a single day. So by the end of the day you know how much you have made that day. You may have made a profit or you may have lost. But whatever has happened the results are right there in front of you in the evening.
But, if you are thinking about being a serious day trader you should also be aware of the risks you are about to take.
You encounter significant intra-day volatility
At times stock prices suffer significant swings within a single day, but the swings generally get corrected over a period of time. Being a day trader you cant wait for the correction to take place and you may end up losing big time.
You need a sizeable investment
If you are seriously contemplating day trading you would be required to make a significant investment. You need to get yourself the best hardware around, the pretty expensive software platforms which are must-haves, you need to pay a sizeable amount to gain access to all the live quotes and news. So before you take the plunge, do some soul-searching and decide whether you are really that passionate about getting into this.

investments & trading by J. Foley

Basics Of Stock Trading

2006-04-07T18:41:00.000-07:00

Investments & Trading
Basics of Stock Trading By J. Foley

To "trade" is to buy and sell, according to the terminology of the financial markets. Stock trading involves buying and selling of millions of shares all over the world. It is a mystery how this large a volume and value of trade is accommodated in the system of trading. These financial markets are marvels of technological capacity.

If you're looking to invest in stocks, it is necessary that you have at least a basic understanding of how the market works. You don't have to know all of the technicalities of buying and selling stocks. Explaining the technical aspects of the markets is possible by tracing the appropriate links available in the web. The first and foremost necessity is to know how the exchange floor works, no matter whether you trade through the floor or electronically.

On the exchange floor, when the market opens, hundreds of people are seen rushing about shouting and signaling to one another, watching monitors, and entering data into terminals, talking on cell-phones. It looks like a complete fiasco.

However as the day draws to its end, the markets have successfully worked out all trade and are prepared for the next day. Here is a step-by-step presentation of the execution of a simple trade on the exchange floor of any major stock exchange.

You ask your broker to buy certain number of shares of a company at market.
The broker's order department passes the order on to their floor clerk on the exchange.
The floor clerk transfers it to one of the firm's floor traders who finds another floor trader wanting to sell this many shares of the company you wanted. The floor trader knows which floor traders transact in particular stocks.
The two converge on a price and complete the deal. The notification process travels backward along the line and your broker gets back to you with the final price. A few days later, you will receive the confirmation notice in the mail.

In electronic markets vast computer networks often reduce the work of human brokers in matching buyers and sellers. It lacks the charged up scenes of the bustling floors of busy stock exchanges, but it is efficient and fast. Quite a few institutional traders, mutual funds, pension funds, and the likes, prefer this method of trading.

As an individual investor, you can get almost instant confirmations on your trades at very low costs. It also helps you keep a tab on online investing by taking you closer to the market by one step.

Yet, a broker is still needed to handle your trades – individuals don't have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.

You then will need to infer the price behavior of stocks. Price is the immediate cost of a share. And this behavior is so uncertain that it keeps everybody in the game quite excited. This is what generates the profits or losses that are made by investing in this market.
Don't worry if you find it very difficult to infer the price, because it really is difficult. They frequently fluctuate all along the day. And there is no guarantee that in the morning a price will start at the point where it was at the end of the previous day, though it usually starts in the neighborhood.

Yet there are patterns to be figured out, and expectations often work. Depend on your intelligence and on a professional broker, and never stop short of understanding fully what caused a bad result when it occurs. Learn the practical lessons from your experience, record them in writing, and consult them whenever necessary.

investments & trading by J. Foley

Investments & Trading

2006-04-07T18:27:00.000-07:00

Welcome To My Investments % Trading Blog.A Full Range Of Tips And Information On Investments And Trading.

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Forex Maestro

How to select a Forex Broker

Despite grim news, market has best week of the year

Advantage of Forex over Stock and Commodity Markets

How to Formulate a Profitable Trading Plan In The Forex Market

5 stock experts foresee 2009 rebound

Stick to your plan in a volatile market

Rebuild retirement savings with 401(k) and smart use of stocks

You Can Make Money in Any Market

Forex Training is a Must For Anyone Serious About Turning a Profit in The Market

Wall Street dips on Morgan woes

Advantages of Using Online Forex Trading

Fed cuts rates to record low range of zero to 0.25%

When it Comes to Smart Investing, All World News is Forex News

Possible Future of Stock Exchanges

Let A Professional Do All The Work For You With A Managed Forex Account

Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns

Mutual Funds:Tax and Distributions

What is Automatic Investing?

Finding a Forex Broker in a Crowded Marketplace

Online Forex Forums Connect Traders Around The World

The Stock Market Correction Of 1987

Want To Learn Forex ?

The Buttonwood Agreement – The Forerunner To The NYSE

A Good Forex trading Strategy Can Mean The Difference Between Failure And Success

Securities Exchange Commission

Where Can You Buy Mutual Funds?

Online Investing

What is a Prospectus and How Do I Read it?

What A Forex Rate Is And How To Read It

Different Types Of Mutual Funds

9-11 and the New York Stock Exchange

More About Day Trading

How Online Trading Education Can Make A Difference

Investing In Stocks ?

Is Mutual Funds The Way To Go !

FOREX (Foreign Exchange Market)

Day Trading Strategies

Practicing in the Forex Market

Investing for Retirement

The World Wide Forex Market

Day Trading

Selling Your Stock : Is It The Right Time?

A Few Tips On Day Trading

Forex Markets - Trading Internationally

Forex Trading, What The Hype Is All About

Foreign Exchange Market Is Different From The Stock Market

FOREX : Trading Foreign Currency

Investing Mistakes To Avoid

About On-line Trading

Why The Smaller Investor Has Advantages Over Huge Multinational Funds

How Much Money Should You Invest?

Determine Where You Will Invest

Choose A Broker

Mutual Funds : Better than Individual Stocks?

The Importance of Diversification

Investing Mistakes to Avoid

Forex Trading : Should You Invest?

What Is Your Investment Style?

Who Is Participating In The Forex Market Trades ?