Penny stock investment is profitable but also very risky; given that such stocks are more susceptible to influence in the stock market and this make them generate much profit in a very short time. They can also suffer terrible lose in a very short time and this is the reason picking penny stocks requires the knowledge of all the major indicators to guarantee maximum profit.
It is important to put in place an effective penny stock pick system which can generate only lower priced stocks.
The pattern of the market is such that it repeats itself every several years, as evidenced by the fact that we go in and out of recessions every 7 years or so on average, so by finding overlaps in stock behavior between the entire past scope and in current real time market data. The stock picking system should be able to put together a remarkably accurate depiction of how the market will behave and react in the nearest future and make a very strong penny stock pick here and there.
A good penny stock pick can generate 500% and even more in a very short time frame. It is much easier for penny stocks to appreciate than blue chip stocks. However, picking such penny stock should not be without due understanding of their fundamental technical strength.
To develop your understanding of the stock picking secret, it is advisable you compare the value of such stocks in relation to the change in time, the lowest price and the highest price and you will be convinced that a good stock pick system can boost the value of your portfolio more than you expected
You can be rich buying and selling cheap stocks.
Newton Oderhohwo is the CEO and senior investment and stock analyst of Stock Exchange Profits inc. member of investor's intelligence group int'l and runs a periodic commentary on stock investments and making money in shares.
Tuesday, September 22, 2009
Learn More About the Stock Market
Have you ever wanted to know more about trading stocks but were intimidated by the idea? Perhaps you had some ideas about investing but were afraid to commit the finances, or just didn't have the finances to commit. There are a number of sites online that make learning about the stock market easy, and some can actually allow you to try out your ideas without committing real money. And the best part is, a lot of them are completely free!
The idea is very similar to the popular phenomenon of fantasy sports. Most of the sites are set up in a contest environment and some even offer cash prizes for the most successful participants. You are usually given a certain budget - often a large, round number like $100,000 or even $1 million - and are allowed to buy and sell stocks just like a broker on Wall Street! The sites are very realistic, charging you "fees" for each transaction and allowing advanced transactions such as selling short and limit buying and selling.
One small drawback to the sites is that most of the quotes are on a 15 minute delay, which can be quite burdensome if you're buying and selling stocks short term. That's where the limit options on the sites come in handy, allowing you to set prices at which you are willing to buy or sell a particular stock. These purchases and sales are made in real time.
Starting a "fantasy" portfolio is a fantastic way of learning about the market because you are able to see exactly how your decisions affect the bottom line of a group of stocks. By watching your portfolio on screen for any length of time, it becomes evident that the market is so volatile that most people would be wise to adopt a long term philosophy, as prescribed by most experts.
These sites are also great because they serve as social networking sites as well, allowing you to befriend other "fantasy" investors of varying skill levels. It's a pleasant environment in which to ask questions and exchange ideas with others that are also interested in learning about the stock market.
It is strongly suggested that if you are going to attempt to play the market short term, or "day trade" as it is often called, you should try to find a site that has real time quotes. If you can't, you may have to use a third party financial site that does offer real time quotes in conjunction with the site where you have your portfolio. If not, you will be almost completely reliant on the "limit" functions mentioned earlier, which removes the fun of "pulling the trigger" in the moment.
Of course, there are other ways of learning about the stock market, such as books, online research, or even taking a class, but you aren't going to have any more fun than spending a million dollars on whatever stocks you want and learning from that!
Lucy Bushman is an accomplished niche website developer and author.
To learn more about the stock market, please visit Online Stocks Today for current articles and discussions
The idea is very similar to the popular phenomenon of fantasy sports. Most of the sites are set up in a contest environment and some even offer cash prizes for the most successful participants. You are usually given a certain budget - often a large, round number like $100,000 or even $1 million - and are allowed to buy and sell stocks just like a broker on Wall Street! The sites are very realistic, charging you "fees" for each transaction and allowing advanced transactions such as selling short and limit buying and selling.
One small drawback to the sites is that most of the quotes are on a 15 minute delay, which can be quite burdensome if you're buying and selling stocks short term. That's where the limit options on the sites come in handy, allowing you to set prices at which you are willing to buy or sell a particular stock. These purchases and sales are made in real time.
Starting a "fantasy" portfolio is a fantastic way of learning about the market because you are able to see exactly how your decisions affect the bottom line of a group of stocks. By watching your portfolio on screen for any length of time, it becomes evident that the market is so volatile that most people would be wise to adopt a long term philosophy, as prescribed by most experts.
These sites are also great because they serve as social networking sites as well, allowing you to befriend other "fantasy" investors of varying skill levels. It's a pleasant environment in which to ask questions and exchange ideas with others that are also interested in learning about the stock market.
It is strongly suggested that if you are going to attempt to play the market short term, or "day trade" as it is often called, you should try to find a site that has real time quotes. If you can't, you may have to use a third party financial site that does offer real time quotes in conjunction with the site where you have your portfolio. If not, you will be almost completely reliant on the "limit" functions mentioned earlier, which removes the fun of "pulling the trigger" in the moment.
Of course, there are other ways of learning about the stock market, such as books, online research, or even taking a class, but you aren't going to have any more fun than spending a million dollars on whatever stocks you want and learning from that!
Lucy Bushman is an accomplished niche website developer and author.
To learn more about the stock market, please visit Online Stocks Today for current articles and discussions
Take the Mystery Out of Mutual Fund Jargon
We all know what it's like - you finally have some time and start reading, or you find a Web site that looks inviting and you come face to face with words, phrases, acronyms and technical terms that are just foreign to you. What do you do? If you're like most people, you forge ahead and try to discern and understand the intent and meaning of words and phrases that aren't in your everyday vocabulary, and then you kind of give up. Obviously that's not going to help achieve your investment objectives, goals and aspirations.
Here are a couple of examples that may help to illustrate the point. What's a "fed wire?" Should there come a time when you might need money quickly you can have cash sent to you overnight with a fed wire. This procedure involves the Federal Reserve System which is able to transfer monies form one bank to another overnight. The custodian of your fund is almost invariably a commercial bank and a member of the Federal Reserve System. By making arrangements in advance you can set up your fund account to use a fed wire to transfer money from the proceeds of a redemption (which you can arrange by phone) and send the proceeds to your bank where it will almost always be at your bank, in cash, the next business day. It's easy to do, just contact your fund's transfer agency (that's the shareholder service organization that maintains all of the records of all the shareholders of the fund you own).
Let's take it a step further and get a little more technical. What's the difference between ARMs and CMOs? Don't worry, it has nothing to do with either fingers or toes. The point is that there may come a time when having a convenient source or glossary of commonly used mutual fund terms may be helpful to you in arriving at a more informed investment decision. There's no doubt that you really can't know too much about anything that affects your financial future and well being.
A final note - has anyone ever spoken to you about a mutual fund withdrawal plan? You may have heard a great deal about how and which fund to invest in, but what about a system that allows you to withdraw a specific amount of money from your account either monthly or quarterly, which amount you can change or stop at any time (often with a simple phone call). Well, it can be done and many people enjoy this convenience while maintaining full control of the amount and frequency of regular, periodic cash withdrawals.
How can you get up to speed? It's really simple. The book, "Mutual Funds Today...Who's Watching YOUR Money?" contains a "Glossary of Commonly Used Mutual Fund Terms", which is available as a free download from http://mutualfundsbureau.com.
Dan Calabria, author of "Mutual Funds Today...Who's Watching YOUR Money?"
http://mutualfundsbureau.com
Here are a couple of examples that may help to illustrate the point. What's a "fed wire?" Should there come a time when you might need money quickly you can have cash sent to you overnight with a fed wire. This procedure involves the Federal Reserve System which is able to transfer monies form one bank to another overnight. The custodian of your fund is almost invariably a commercial bank and a member of the Federal Reserve System. By making arrangements in advance you can set up your fund account to use a fed wire to transfer money from the proceeds of a redemption (which you can arrange by phone) and send the proceeds to your bank where it will almost always be at your bank, in cash, the next business day. It's easy to do, just contact your fund's transfer agency (that's the shareholder service organization that maintains all of the records of all the shareholders of the fund you own).
Let's take it a step further and get a little more technical. What's the difference between ARMs and CMOs? Don't worry, it has nothing to do with either fingers or toes. The point is that there may come a time when having a convenient source or glossary of commonly used mutual fund terms may be helpful to you in arriving at a more informed investment decision. There's no doubt that you really can't know too much about anything that affects your financial future and well being.
A final note - has anyone ever spoken to you about a mutual fund withdrawal plan? You may have heard a great deal about how and which fund to invest in, but what about a system that allows you to withdraw a specific amount of money from your account either monthly or quarterly, which amount you can change or stop at any time (often with a simple phone call). Well, it can be done and many people enjoy this convenience while maintaining full control of the amount and frequency of regular, periodic cash withdrawals.
How can you get up to speed? It's really simple. The book, "Mutual Funds Today...Who's Watching YOUR Money?" contains a "Glossary of Commonly Used Mutual Fund Terms", which is available as a free download from http://mutualfundsbureau.com.
Dan Calabria, author of "Mutual Funds Today...Who's Watching YOUR Money?"
http://mutualfundsbureau.com
Successful Investments Using Mutual Fund Ratings
Understanding mutual fund ratings is another critical aspect of successfully investing in mutual funds. Using the ratings, you'll be able to know how well any fund is performing. The mutual funds that are performing the best will get the top numerical ratings. You can well imagine what kind of impact these ratings have on the decisions investors make. Unfortunately, the ratings are hard to come by because of the small number of companies which offer them.
Even With Ratings, Proceed with Caution
Even though ratings on mutual funds are based on what experts feel will be the growth and performance of the fund in the future, you can't just blindly rely on the ratings. There are just too many other factors that can also affect the way a mutual fund performs. A good indicator of how a fund will perform in the future is to study its past performance. However, there is no way to predict the future 100%.
If you can find an identical type of mutual fund so that you can study its performance, it may help give you ideas of how the similar fund will perform. Look for funds that invest in similar assets and perform on the same level. Funds that are this much alike generally perform in much the same way. You can know that if the identical fund you are tracking loses money, the fund you looked at initially will, too.
Most often, funds with higher ratings will outperform all other funds other than those much like themselves. Because two funds are based on the same assets, it stands to reason that they will continue to perform in much the same way.
Check Out Morningstar
Mutual fund rating systems, as mentioned before, are limited to only a few companies, because it's very difficult to develop a reliable criteria on which to rate the funds. It takes a long time to come up with a tool that will give reasonably accurate predictions. Therefore, if you use ratings in your decision-making process, you'll want a company with a long, proven track record.
One company you can rely on for mutual fund ratings is Morningstar. Morningstar uses a simple rating system which consists of recommendations based on the number of stars a mutual fund has been given. A one-star fund will be the poorest performer whereas a five-star fund will be at the top of the performance ladder. It doesn't take much investment expertise to understand a rating system like this one.
Like all rating services, Morningstar can only predict based on past performance. As you know, there's no assurance of future performance in any stock or fund. As long as you only use ratings to help you choose mutual funds which you will study in more detail before deciding to invest, you'll make playing the rating game into a winning proposition.
If you want to become a smarter investor MutualFundPlanning.com for more tips on mutual fund newsletters and fund selection tips and improve your portfolio today.
Even With Ratings, Proceed with Caution
Even though ratings on mutual funds are based on what experts feel will be the growth and performance of the fund in the future, you can't just blindly rely on the ratings. There are just too many other factors that can also affect the way a mutual fund performs. A good indicator of how a fund will perform in the future is to study its past performance. However, there is no way to predict the future 100%.
If you can find an identical type of mutual fund so that you can study its performance, it may help give you ideas of how the similar fund will perform. Look for funds that invest in similar assets and perform on the same level. Funds that are this much alike generally perform in much the same way. You can know that if the identical fund you are tracking loses money, the fund you looked at initially will, too.
Most often, funds with higher ratings will outperform all other funds other than those much like themselves. Because two funds are based on the same assets, it stands to reason that they will continue to perform in much the same way.
Check Out Morningstar
Mutual fund rating systems, as mentioned before, are limited to only a few companies, because it's very difficult to develop a reliable criteria on which to rate the funds. It takes a long time to come up with a tool that will give reasonably accurate predictions. Therefore, if you use ratings in your decision-making process, you'll want a company with a long, proven track record.
One company you can rely on for mutual fund ratings is Morningstar. Morningstar uses a simple rating system which consists of recommendations based on the number of stars a mutual fund has been given. A one-star fund will be the poorest performer whereas a five-star fund will be at the top of the performance ladder. It doesn't take much investment expertise to understand a rating system like this one.
Like all rating services, Morningstar can only predict based on past performance. As you know, there's no assurance of future performance in any stock or fund. As long as you only use ratings to help you choose mutual funds which you will study in more detail before deciding to invest, you'll make playing the rating game into a winning proposition.
If you want to become a smarter investor MutualFundPlanning.com for more tips on mutual fund newsletters and fund selection tips and improve your portfolio today.
Spot Forex Trading and Forex Futures Trading
Many people are confused about the differences between spot forex trading and forex futures trading, and while much of this confusion is grounded in reality, the truth is that there are only a few slight differences between the two methods. Both futures and spot essentially give the forex trader the ability to secure a particular position at some future date and time that is established with the writing of a particular contract.
With forex futures the actual exchange of currency doesn't happen until the actual preset date and time that was revealed within the contract, and with spot forex the exchange of currency happens when the contract is established. This is the primary difference between the two methods, and it essentially has some significant consequences in the ways various traders use both futures and spot as part of their overall trading strategy.
Because the contract and the trade of currency happens at pretty much the same time with spot, the actual trading positions that are created are not often held onto longer than about a day. This essentially makes spot a short-term technique that if used wisely can increase your leverage points, but only at the expense of being very active within a particular market. The majority of people that utilize futures will not follow-through with the exchange of currency on the actual date and time that is setup with the initial contract, and the majority of traders who use futures are ultimately speculators who don't ever have any real intention of making any real trades.
Both spot and futures can give a trader an increased amount of leverage if they are implemented correctly, and while many traders like to think that they are using these techniques the right way, many are purely playing games. The best way to learn how to use both spot and futures correctly is to study some real-world examples so that you can see how some of the more skilled traders are actually making money with both methods. Doing this will ensure that you don't waste your time implementing each one of these without an overall strategy, and hopefully you will then begin to make more money.
Claude Ellesemere is an online author who writes about such topics as Forex Futures Trading and Spot Forex Trading.
With forex futures the actual exchange of currency doesn't happen until the actual preset date and time that was revealed within the contract, and with spot forex the exchange of currency happens when the contract is established. This is the primary difference between the two methods, and it essentially has some significant consequences in the ways various traders use both futures and spot as part of their overall trading strategy.
Because the contract and the trade of currency happens at pretty much the same time with spot, the actual trading positions that are created are not often held onto longer than about a day. This essentially makes spot a short-term technique that if used wisely can increase your leverage points, but only at the expense of being very active within a particular market. The majority of people that utilize futures will not follow-through with the exchange of currency on the actual date and time that is setup with the initial contract, and the majority of traders who use futures are ultimately speculators who don't ever have any real intention of making any real trades.
Both spot and futures can give a trader an increased amount of leverage if they are implemented correctly, and while many traders like to think that they are using these techniques the right way, many are purely playing games. The best way to learn how to use both spot and futures correctly is to study some real-world examples so that you can see how some of the more skilled traders are actually making money with both methods. Doing this will ensure that you don't waste your time implementing each one of these without an overall strategy, and hopefully you will then begin to make more money.
Claude Ellesemere is an online author who writes about such topics as Forex Futures Trading and Spot Forex Trading.
What is Futures Trading and How Does it Work?
There are many people who want to know what is futures trading? Futures trading is simply a contract for a predetermined amount of commodities that is established today and delivered tomorrow. This type of transaction helps those that are both buyers and sellers of a specific commodity by allowing to lock in cost and have the commodity sold before it is even harvested.
Futures Trading For Speculators
Now, in order to make market prices liquid the CFTC allowed the speculator to assist in creating tighter price spreads between bid and ask prices. What are bid and ask prices? Glad you asked. Based on the perspective the bid and ask prices means the opposite to the both the buyer and seller.
For the buyer, the bid price means that this is the market price if you are planning to sell short a commodity for the purpose to position yourself for a downward move. For the buyer, the ask price is the price in which you would buy a certain commodity. The opposite would be true for the seller.
The Role Of Futures Trading Exchanges
So the futures trading exchanges are the centralized marketplace where both the buyers and the sellers of a specific commodity is auctioned off. By having a centralized location, it provides one main auction gathering for those that are interested. Prices are based on exchanges. There are some commodities that are traded at multiple exchanges like Wheat.
To determine the price of wheat, you first must look at the exchange to see what the price is at that particular exchange. Although most prices are around the same general area, you want to ensure that if you are trading Chicago Board Of Trade Wheat, you want CBOT wheat prices and not the Minneapolis exchange price.
These exchanges are also important as this is where the prices for electronic futures trading originates. Now, since many traders trade exclusively via electronic trading, real time data can be fed to investors easily since the information is originating from a centralized location.
Standardized Futures Contracts
As mentioned in the beginning paragraph, futures trading uses standardized contracts for commodities that trade. This makes things easier when calculating what your potential profits and losses when analyzing what contract you want to invest in. For instance, keeping with our wheat example, wheat is traded in a standard size of 5,000 bushels of wheat.
Each 1 cent move is $50 dollar move. The minimum move for wheat is 1/4 of a cent or $12.50 per 5,000 bushels. As you can see, unlike stocks this makes things easier to figure out. Stocks are based on how many shares multiplied by the current stock prices so that sum is varied.
Better Leverage In Futures Trading
Leverage is a double edged sword and should be respected as such. Many "get rich" programs focus on how the large leverage can make you a large chunk of cash in a very short period of time. While this is true, leverage can also work against you. If you are on the losing end, you can lose a lot of money quickly.
What do I mean by leverage? Well, in comparison to stocks, you can buy one contract of wheat for about $700-1200 dollars. That number can change based on volatility,you'll need to ensure what your margin is from your futures broker. Let assume though that the margin to place in order to secure a contract of wheat is $700 dollars and you are buying that contract at a price of 3.10.
If that price moved from 3.10 to 3.30 you would have made .20 cents or .20 x $50 dollars which equals $1,000 dollars per contract. This can happen rather quickly depending on many different factors like supply and demand or the weather. If you exit this trade you receive your margin money of $700 dollars plus the profits of $1,000 dollars. In retrospect if you bought the minimum amount of shares to trade which is 100 shares of a $20 dollar stock, you would pay $2000 dollars to establish your position. If the stock moved from $20 dollars to $25 dollars you profit would be $5 dollars multiplied by 100 or 500 dollars.
Seems somewhat close to our futures trade right? The answer is no. In futures, you risked only $700 dollars to make $1000 dollars while in stocks you risked $2000 dollars to make $500 dollars. See the power of leverage!
So now that you that you understand what is futures trading, you can make your decision whether it is more advantageous for you to invest in futures or stocks.
Beau Penaranda is an expert in trading futures and has been trading futures for close to 20 years. He helps people understand what is futures trading and how it can benefit them if traded correctly. Visit his site at http://www.futurestradingsetups.com
Futures Trading For Speculators
Now, in order to make market prices liquid the CFTC allowed the speculator to assist in creating tighter price spreads between bid and ask prices. What are bid and ask prices? Glad you asked. Based on the perspective the bid and ask prices means the opposite to the both the buyer and seller.
For the buyer, the bid price means that this is the market price if you are planning to sell short a commodity for the purpose to position yourself for a downward move. For the buyer, the ask price is the price in which you would buy a certain commodity. The opposite would be true for the seller.
The Role Of Futures Trading Exchanges
So the futures trading exchanges are the centralized marketplace where both the buyers and the sellers of a specific commodity is auctioned off. By having a centralized location, it provides one main auction gathering for those that are interested. Prices are based on exchanges. There are some commodities that are traded at multiple exchanges like Wheat.
To determine the price of wheat, you first must look at the exchange to see what the price is at that particular exchange. Although most prices are around the same general area, you want to ensure that if you are trading Chicago Board Of Trade Wheat, you want CBOT wheat prices and not the Minneapolis exchange price.
These exchanges are also important as this is where the prices for electronic futures trading originates. Now, since many traders trade exclusively via electronic trading, real time data can be fed to investors easily since the information is originating from a centralized location.
Standardized Futures Contracts
As mentioned in the beginning paragraph, futures trading uses standardized contracts for commodities that trade. This makes things easier when calculating what your potential profits and losses when analyzing what contract you want to invest in. For instance, keeping with our wheat example, wheat is traded in a standard size of 5,000 bushels of wheat.
Each 1 cent move is $50 dollar move. The minimum move for wheat is 1/4 of a cent or $12.50 per 5,000 bushels. As you can see, unlike stocks this makes things easier to figure out. Stocks are based on how many shares multiplied by the current stock prices so that sum is varied.
Better Leverage In Futures Trading
Leverage is a double edged sword and should be respected as such. Many "get rich" programs focus on how the large leverage can make you a large chunk of cash in a very short period of time. While this is true, leverage can also work against you. If you are on the losing end, you can lose a lot of money quickly.
What do I mean by leverage? Well, in comparison to stocks, you can buy one contract of wheat for about $700-1200 dollars. That number can change based on volatility,you'll need to ensure what your margin is from your futures broker. Let assume though that the margin to place in order to secure a contract of wheat is $700 dollars and you are buying that contract at a price of 3.10.
If that price moved from 3.10 to 3.30 you would have made .20 cents or .20 x $50 dollars which equals $1,000 dollars per contract. This can happen rather quickly depending on many different factors like supply and demand or the weather. If you exit this trade you receive your margin money of $700 dollars plus the profits of $1,000 dollars. In retrospect if you bought the minimum amount of shares to trade which is 100 shares of a $20 dollar stock, you would pay $2000 dollars to establish your position. If the stock moved from $20 dollars to $25 dollars you profit would be $5 dollars multiplied by 100 or 500 dollars.
Seems somewhat close to our futures trade right? The answer is no. In futures, you risked only $700 dollars to make $1000 dollars while in stocks you risked $2000 dollars to make $500 dollars. See the power of leverage!
So now that you that you understand what is futures trading, you can make your decision whether it is more advantageous for you to invest in futures or stocks.
Beau Penaranda is an expert in trading futures and has been trading futures for close to 20 years. He helps people understand what is futures trading and how it can benefit them if traded correctly. Visit his site at http://www.futurestradingsetups.com
Subscribe to:
Comments (Atom)
Finance and investment. Blogger Template created by Deluxe Templates
CSS Template by Breezy / Support by Dante Araujo