Tuesday, July 1, 2008

Study of Fundamental Relationships of Equity Funds and Debt Funds

Equity Funds

Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds:

1. Aggressive Growth Funds: In Aggressive Growth Funds, fund manager aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds.
2. Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future.
3. Speciality Funds: Speciality funds have stated criteria for investment and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds. These are following types of speciality funds:

a) Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors.

b) Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.

c) Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.

1. Diversified Equity Funds - Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past.
2. Equity Index Funds - Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky.
3. Value Funds - Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or speciality funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.), which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced.
4. Equity Income and Debt Yield Funds: The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds.

DEBT FUNDS

Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds:

1) Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors, which results in risk reduction.

2) High Yield Debt Funds: As we now understand thatrisk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors.

3) Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible.

4) Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short-term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period.

ANALYSIS OF DEBT AND EQUITY FUND
Debt Funds

- They must be repaid or refinanced.

- Requires regular interest payments. Company must generate cash flow to pay.

- Collateral assets must usually be available.

- Debt providers are conservative. They cannot share any upside or profits. Therefore, they want to eliminate all possible loss or downside risks.

- Interest payments are tax deductible.

- Debt has little or no impact on control of the company.

* Debt allows leverage of company profits.

Equity Funds

- They can usually be kept permanently.

- No payment requirements. May receive dividends, but only out of retained earnings.

- No collateral required.

- Equity providers are aggressive. They can accept downside risks because they fully share the upside as well.

- Dividend payments are not tax deductible.

- Equity requires shared control of the company and may impose restrictions.

* Shareholders share the company profits.

Importance of using Debt Funds:

* Debt is not an ownership interest in the business. Creditors generally do not have voting power.

- The payment of interest on debt is considered a cost of doing business and is fully tax deductible.

Importance of using EquityFunds:

* Unlike obligation of debt, your business will not have any contractual obligation to pay for equity dividend
* Equity financing also allows your business to obtain funds without incurring debt, or without having to repay a specific amount of money at a particular time.

Equity financing also allows your business to obtain funds without incurring debt, or without having to repay a specific amount of money at a particular time. Recent deals by equity funds are much larger than in the past. And debt funds are now doing larger "club" deals. Both types of funds have more money under management than ever before. More cash is chasing deals, causing overlap where both types of funds vie over the same company.

Although these funds do not represent long-term threats to each other, secured lenders must recognize that equity and debt funds have marked different characteristics, goals and behaviors. The most fundamental difference in equity funds seeks to buy all of the equity of companies debt funds are not constrained to controlling equity investments. Highlighted below are other major differences between the both types of funds.

Whether investing in debt or equity, debt funds typically demand a much more rapid exit strategy than equity funds. Debt funds generally seek a quick flip of their investments. However, some debt fund investments are "loan to own" that is, they buy debt at a deep discount with an eye towards converting that debt to equity, then magnetizing that equity (through a recapitalization, refinancing, sale, merger or other disposition) in a short time period. This is a function of, among other things, the liquidity and leverage differences between the two types of funds. The time-hold differences directly affect the exit strategy, risk tolerance and desired rate of return of the two types of funds.

Thus, Investing money for short-term has generally been an issue. As it is the interest rates / returns are quite low. On top of this, there could be taxation issues, which will further reduce the effective returns. Equity funds may not be a prudent option for short-term. Therefore, we need to consider mainly the interest-based investment options. In the equity funds, higher the risk you take, the higher the returns you can get. Since there's a known cash flow associated with debt, the risk is less. But the returns are also less. When compared with equity funds, the risk for the latter may be more. This is because there's a steady cash flow associated with debt funds. In fact, the interest which the debt fund promises to pay (known as 'coupon' in financial parlance) is one of the fundamental attributes of a debt fund.

However, debt fund shares a very fundamental relationship with interest rates. To understand this relationship and how that can be used in present day context to make money, you must understand the basics of debt.

Books:

1. Bhalla V.K. (2006), Financial Management & Policy IIInd Edition, Anmol Publications, New Delhi

2. Prasanna Chandra (1999), Financial Management, Tata McGraw Hill, New Delhi.

3. Rastogi R.P. (2002), Financial Management, Galgotia Publication, New Delhi.

4. Sharma & Gupta (2001), Financial Management, Kalyani Publication, New Delhi.

5. Pandey I.M. (2003), Financial Management, Vikas Publication House, New Delhi.

6. Singh Priti (1998), Investment Management, Himalaya Publishing House, New Delhi.

Article Source: http://EzineArticles.com/?expert=Naila_Iqbal

The Indian Stock Market Scenario

In keeping with global trends and the ever-rising oil prices, the Indian Stock Market is facing a downtrend in both the near-term trend and the long-term horizon. The Market which touched the dizzy heights of 23000 (BSE Sensex) is now trading at around the 14000 levels, a frenzied drop of around 40% approximately. The reasons are as clear as daylight. The Indian Stock Market has been scaling new levels without any real fundamental reasons. Feel-Good-Factors like Low inflation figures, Good industrial production figures and positive economic indicators probably buoyed up the Index. But it was too good to last. The crunch came when the FIIs started offloading their investment and the new IPOs started failing to collect the expected subscriptions. With inflation climbing steadily during the month of May 08, the large investors started selling their holdings and booking profits. This left the Indian Stock Market on the lurch. The stock market pundits say that the Dalal Street has fallen into the bear grip. Stay away from shares, they hasten to advise you.

But really , any investor with average financial intelligence can see that if the investments are made on the basis of strong fundamentals and not on hearsay, then such investment can still bring in profits. This is the time for the long term investor to step in and start investing. Investing in stages is the best strategy. Each dip in the market can be used to buy or invest in really blue chip stocks., companies that perform strongly, consistently and that have fat order books. Such investments will have to be made with a real long investment horizon.

Speculation,short-selling and trying to make that quick buck can really land the unwary investor in to trouble. Leave the day trading to the slick operators on the bourses. Invest in selected stocks and forget.

The markets will come back. The market will definitely find some good news to ride back into glory. The intelligent investor can afford to wait. The investor in a hurry and haste may stand to lose his bet.

The Indian Stock market is choppy but the bull story is not over yet.

PKP Iyer

Article Source: http://EzineArticles.com/?expert=Pkp_Iyer

Pkp Iyer - EzineArticles Expert Author

The Secrets to Be Successful at Short Selling of Stocks

First off, before you learn the secrets to successful short selling of stocks, you must understand that selling short stocks comes with a much greater risk level than regular stock investing. Normally there are very simple precautions that you can take when buying and selling stocks for profit. It is possible for you to literally lose your entire investment in a short period of time when investing for the purposes of short selling stocks. Short selling should only be engaged in by seasoned investors.

So how does short selling work exactly? Well normally you make money on a stock when you purchase the stock at one price and sell the stock at a price higher than what you originally purchased it. The difference in prices is your profit. With short selling it is the opposite. You sell the stock first at one price by borrowing shares to sell from your broker. You then buy the stock at a lower price so you can give the broker back his or her shares. If you buy the stock at a lower price, the difference between the higher price you sold at and the lower price you brought at is your profit.

So how do you successfully short sell stocks? The first thing you want to do is make sure the market is in an overall decline before considering engaging in short selling. In a bull market, 3 out of 4 stocks go up in value. That means you already have a 75% chance of losing money. If the overall market is headed downward, you have a much better shot at making money.

Secondly, look for changes in the company that could trigger a downward trend in the overall price. A lower than expected earnings report can result in downtrend in stock price. In particular slowdowns in financial numbers are huge signs of a potential decrease in price.

Third, there are certain chart patterns that indicate possible sale declines. For instance, if you are familiar with the cup with handle chart pattern, you know that this is a common technical chart signal that indicates a potential rise in stock price. The opposite of this pattern, known as the inverted cup with handle or the head and shoulders pattern is a signal of a potential decrease in stock price. Many of the stocks that have made substantial decrease in prices have shown this pattern. Another chart pattern of a potentially declining stock is when the chart makes a pattern that looks like the letter M. When the price breaks below the previous bottom at the end of the M is the time to short.

If you would like to get more information about investing in stocks or trying to see which stocks to buy or sell on a daily basis. Visit my site http://www.dailymadmoney.com

Article Source: http://EzineArticles.com/?expert=S_Mcleod

Friday, June 27, 2008

Swing Trading - How to Use Limit Orders to Boost Returns

Buy Limit

A buy limit order is an order to buy a stock at a pre-determined price that is below the market. For example, if a stock is currently trading at $24.00, a buy limit may be entered at $23.00. It will be executed at $23.00 or better (i.e. lower) - if/when the stock trades down to that level.

A typical amateur mistake is to use limit orders where a market one will do. Amateurs use limit orders presumably to get a better price. But since most limits are calculated arbitrarily (just to get an instant "bargain"), the execution price does not matter much in the big scheme of things. It is much more important to buy stocks at the right time - i.e. close to pivots during breakouts. My experience has been that if you buy a stock within 2 days of a breakout and keep it for the duration of advance, your return will be more or less the same over time.

The risk of placing buy limit orders in a fast moving stock is that the stock may run away from you - your order will never get filled, forcing you to buy higher or abandon a profitable trade. The flip side is that the stock trades right through your limit and continues to slide, leaving you with a loss. So if you buy, just buy at the market.

One notable exception is buying thinly traded stocks. If you place a market order for 1,000 shares in a stock quoted at, say, $7.46 that trades less than 100,000 shares a day, chances are you will only get the first 100 shares at that price. The rest may get filled as follows: 100 - at $7.50, 200 - at $7.60, 173 - at $7.75, 400 - at $7.98, 27 - at $7.87. The worst part: once your order is filled, the stock comes right back down to around $7.40 and stays there. In a situation like that it is better to use a buy limit order. But, again, if you place your order below the market, the stock may run away from you or simply never go there. Instead, if it is quoted at $7.46, enter a buy limit for 1,000 shares at $7.46.

The risk here is that you may only get 100 shares at $7.46 and the price will move up, leaving the balance of your order (900 shares) unfilled. If you chase the stock by adjusting your buy limit upward to get the remaining 900 shares, your broker will charge you another commission. Your order may cost you. The best thing is to place a buy limit AON (all or none) order. It will only get executed if the entire amount, 1,000 shares in our example, is available at that price.

Using AON buy limits in thinsters is a good way to gauge share availability. If only 100 shares are quoted at $7.46 but your buy limit for 1,000 shares is filled instantly - chances are there is plenty of stock for sale, the seller just does not want to show his hand. If, on the other hand, your AON buy limit order for 1,000 shares does not get filled and the price moves away from you - the stock is scarce and difficult to buy - you'd better hurry to get it while the price is still low.

There is a simple explanation behind these phenomena: behind each stock there is a specialist or a market maker. They have a much better feel for the stock (and your intentions), and more resources and patience to outsmart you. If they sense you are anxious to buy, they will yank the offer(s) and make you chase the price upwards. They may even sell you shares they don't own by going short and covering later at a lower price (sometimes even buying back from you, if you sell in frustration on a pullback). The bottom line is: don't try to beat these guys at their game, just buy.

Sell Limit

A sell limit order is an order to sell a stock at a predetermined price that is above the market. For example, if a stock is currently trading at $45.00, a sell limit order may be entered at $46.00. It will be executed at $46.00 or better (i.e. higher) if/when the stock trades up to that level. Amateurs use sell limit orders to lock in profits after they buy a stock. Again, most sell limits are calculated arbitrarily: it's either a nice round number or a percentage gain - say 10 or 20% from the buy point.

There are several problems with this approach:

1) Your number one concern after you buy a stock should be protection of principal. Before counting profits you don't yet have, it is more important to place a sell stop order below your purchase price to limit your downside (stop orders are covered in a separate article that follows).

2) The number one complaint about poor returns that I hear from newbies and oldtimers alike is that "I sell my winners too soon but fall in love with my losers." If you never sustain losses, booking 10% or even 5% gains several times a year will amount to respectable gains. The problem is: gains are not possible without losses. If you book your gains too early, the sudden, inevitable, and sometimes unpleasantly large losses may still leave you in the red. Let the stock decide how high it wants to go. It will flash sell signals eventually. But it may be 50% or 100% above your buy point. Why limit yourself to 10% or 20%?

3) The flip side of No. 2): the stock stops a few pennies shy of your sell limit and reverses. Your insistence on getting the last few pennies out of your winner may turn that winner into a loser.

Another thing about limit orders is that, like it or not, we all think and act alike. If you feel $30.00 is a good "logical" place for your limit, chances are thousands of others think the same. This creates a congestion of orders at certain price levels that you don't see but the specialists / market makers do. These guys thrive on volatility; they don't care which way a stock is moving. A bunch of orders hanging above or below the market is money in their pocket - so they will move the stock there just to clear out the orders. Once the mission is accomplished, the stock returns to its natural trading range.

The bottom line: if you want to sell - sell, don't fight for the last penny. To protect your profits, learn how to recognize sell signals and place logical stops.

Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of proprietary trading data that swing traders can put to work right away.
http://www.tradingzoom.com/

Article Source: http://EzineArticles.com/?expert=Slav_Fedorov

Tips to Conquer the Stock Market

As you begin your journey in the rough and tumble of the stock market there are a few lessons and virtues you need to imbibe. These lessons will help a novice get through with confidence and will also help you in the long term to be focused.

If you are a faint at heart and get disheartened then the stock market is not for you. What I mean is that if you lose heart when you are losing money then you should not be in the stock market for money. Your best bet then is to put your money in fixed income instruments which assure you some amount of returns and there is no risk of a loss. That said the fact of the matter is that the money you will make there is nothing given the amount of money the stock market will be able to make for you.

Let me give you an example let us say you invest about $1000 every month in the stock markets and for once assume that the market is falling. You will loose some amount in that falling market but yes in longer term you will gain. You will gain because of the fact that you know the basic principle that if something goes down it has to come up and vice versa. What means to you is that if you are a beginner, never ever try to get into the short term game and always have a long term horizon for making money.

This will entail you doing two things never check your portfolio positions on a daily basis and also once you have decided that you will invest in a portfolio of good stocks then keep on investing in them every month even if they are down as that will average out your holding costs as well as give you hug upside amounts once the stock starts to pick up. There have been various theories for and against but if you look at successful investors almost everyone has made huge amounts of money in the long run and not never in the short term.

If you are serious about stock market do not get discouraged by short term blips in the market. Keep investing and you will make money. That begs another question as to how disciplined are you while investing. This means that if tomorrow you have a priority of buying new pair of sneakers, do not use the money you have set aside for investing. A pair of shoes is definitely important to you but just imagine how many more things you will be able to buy with the money you have invested and it grows let us say three times in the next five years.

The last but not the least important tip is read and read a lot more about stocks and then make an intelligent decision about the stocks. That will mean that you have to make to right stock picks initially to get huge amount of upside in the long run. Pick a wrong stock and you will be doomed.

So go ahead and invest and here is wishing you good times ahead.

The author gives advice on topics like stock market for beginners and has a resource where he has listed guiding principles for stock market beginners.

Article Source: http://EzineArticles.com/?expert=Amit_Kheterpal

Figuring Out Your Trading Strategy

It is very important to be able to figure out your own trading strategy. That is because not everyone trades the same way. There are many different trading strategies out there for many different trading types. Every new trader should try to find a strategy that fits them well and practice it until they get good at it.

But many new traders do not do this. They either try to trade every strategy at once or they do not have a strategy at all. I would say the majority of unsuccessful traders are those who have no consistency in their trading.

These traders will hear a hot tip from a friend about a company that is going to skyrocket and they will buy it. They will also buy big name companies that have crashed because they have to go up; they are after all huge companies. Then they will buy the flavor of the month because it is in the news.

Traders who invest in without a consistent plan are doomed to fail. Even if they find something that works they will not know what it is because they are going to the next new trade that is sure to make them rich. That is what keeps them from ever making any real money in the stock market.

What someone who wants to trade in the stock market should do is find one or two strategies that match them. Maybe they really like the idea of trend trading or option selling. In that case they should develop their own system to make it work and focus on making that work before they move onto the next trading strategy.

They should have specific buy and sell signals that they use every time they place a similar trade. That makes it easier to know if you can make money with that strategy because it is more consistent. After all if you keep doing the same thing then you are bound to come up with the same results.

To see a list of different trading strategies visit http://www.stocks-simplified.com/stock_market_traders.html

To find out more about the stock market visit http://www.stocks-simplified.com

Article Source: http://EzineArticles.com/?expert=Shaun_Rosenberg

Swing Trading - How to Use Stop Orders to Boost Returns

Sell Stop

A sell stop order is an order to sell a stock at a predetermined price that is below the market. For example, if a stock is currently trading at $25.00, a sell stop may be entered at $24.00. Once the stock trades at $24.00, your stop becomes a market order and may be executed at, above, or below $24.00 - depending on market conditions.

The most typical uses of sell stop orders are to protect profits or limit losses. When you first buy a stock, determine how much you are willing to lose on the trade, and enter a sell stop below your purchase price. Depending on your style, it may be 2%, 3%, 5% or 10% below your buy. As your stock advances, protect your profit by moving up the sell stop price.

Since most buy prices are arbitrary (i.e. not based on any scientific formula), so are the stops calculated as a percentage of them. It is much more important to buy right than to have the "right" percentage stop loss.

Another pretty useless feature in my opinion is trailing stops - stops that are adjusted with the market price of the stock. If you place your stop too tightly or incorrectly you are running the risk of being stopped out of a rising stock on a pullback only to watch it climb right back up. It is much more practical to use logical stops, i.e. stops placed right under certain logical levels below which the stock is highly unlikely to go. Percentage wise, logical stops may be larger but you are less likely to get whipsawed. Besides, if a stock violates a logical stop it is likely indicating that something is wrong and the advance may be over.

Buy Stop

A buy stop order is an order to buy a stock at a predetermined price that is above the market. For example, if a stock is currently trading at $44.00, a buy stop may be entered at $45.00. Once the stock trades at $45.00, your stop becomes a market order and may be executed at, above, or below $45.00 - depending on market conditions.

The most typical uses of buy stops are to protect short positions or buy breakouts.

Protecting short positions works in reverse of protecting your buys: you place a buy stop above the market to limit your loss if your short moves against you.

Using buy stops to buy breakouts

It is not advisable to place GTC (good till cancel) buy stop orders when buying breakouts. An after-hours announcement may cause a stock to gap up at the open. If you enter a buy stop at, say, $45.00 and the stock opens at $60.00, your order will be executed at the market. If the gap up is excessive and begins to fade, your purchase may be at the high of day, leaving you with an instant loss.

However, you can use intraday buy stops to buy breakouts. Once you see where a stock opens, there are two key ingredients to watch for: price and volume. If you are satisfied with the volume but cannot watch the price throughout the day, place a buy stop 10 cents above the pivot.

Stop Limit Orders

Your stop order becomes a market order once the stop price is triggered. In a fast moving stock, your buy or sell may be executed significantly above or below the price you entered. To protect yourself, you may use a buy (or sell) stop limit order.

A sell stop limit order has two components: a trigger - a stop price at which your stop becomes a market order and a limit price below which you don't want to go. For example, a sell stop $26.00 limit $25.00 means that if the stock trades down to $26.00 you want to sell but will only do so as long as the price remains at or above $25.00 (selling at $25.00 or better).

A buy stop $46.00 limit $47.00 means that if the stock trades up to $46.00 you want to buy but will only do so as long as the price remains at or below $47.00 (buying at $47.00 or better). Using stop limit orders can protect you against excessive gaps (up or down) but may also leave you behind if the stock trades just a few pennies outside your limit.

Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of proprietary trading data that swing traders can put to work right away. http://www.tradingzoom.com/

Article Source: http://EzineArticles.com/?expert=Slav_Fedorov

Get Started Online Trading

Online stock trading is an exciting way to make money online. You have a lot of control over the whole process and not just because you choose the stocks you invest in. You control how much you invest, how fast, how much risk you take on and many other factors. To get started quickly, consider where you fall on some key variables.

First, what kind of investing do you want to do? If you are just getting started and don't know much about investing, you may want to focus on traditional stock buying and selling. There is a lot of money to be made here in both good and bad markets. Once you have some success and develop some confidence, you can move on to more advanced trading with short selling, options and swing trading.

Second, how much money do you want to invest with? It is always important to protect your principal, no matter how much you invest. But there is a big difference if you are investing $20,000 or $1,000. The larger your principal, the more you should diversify your investments and spread them out among high-risk/high-return stocks and more conservative stocks. If you are investing $1,000, you are putting much less at risk and can focus in on a particular area and try to develop some expertise there.

Third, what are your objectives? If you are wanting to take control of your retirement account, you want to do conservative, long-term investing? If you are wanting to double your money fast, you should focus on stocks that make dramatic price moves. How you answer this question will determine the kinds of stocks you invest in. For a conservative approach, you want to focus on NYSE issues or mutual funds that move slowly and somewhat predictably. For the higher risk, fast gain approach, you could look at penny stocks and other small caps.

Download my free guide, "7 Essential Steps to Online Trading Profits" to learn how to get your online trading going fast and profiting quickly at http://www.PennyStocksRising.com

Daniel B. Johnson is vice-president of a wireless communications company based in Dallas. He maintains a successful online trading career on a part-time basis to earn an additional income stream.

Article Source: http://EzineArticles.com/?expert=Daniel_B._Johnson

Thursday, June 26, 2008

Stock market investing & fundamental indexing

Real Estate vs. Stocks part 1

Alternative Minimum Tax and Incentive Stock Options

Employees often complain that while exercising incentive stock options they have had to pay alternative minimum tax even when the share prices had fallen. Incentive stock options are a type of an equity compensation that offers alternative minimum tax benefit. It has become more popular in recent times to compete with the nonqualified stock options.

There are two disadvantages that nonqualified stock options have when compared to its counterpart incentive stock option. Firstly, one has to declare ones taxable income when one decides to buy stock and secondly such as income is labeled as compensation. This income is taxed with a higher rate when compared to a long-standing capital gain. Whereas in the case of incentive stock option one does not have to declare ones income and incase one decides to hold the stock for a long period of time the gains made from the stock is treated as a long-standing capital gain.

The advantage here is that the taxes are balanced by alternative minimum tax. This complicated evaluation will force one to pay alternative minimum taxes while implementing incentive stock options. However the total alternative minimum taxes that ones pays under the incentive stock option will be less than the ones that a nonqualified option demands- one can recover the entire alternative minimum taxes by declaring the credit on alternative minimum taxes in the near future.

The alternative minimum taxes was passed to prevent the higher income group taxpayers from evading tax as they were capable of taking a variety of deductions on tax. Incentive stock option offers tax benefit to those employees who are willing to risk by holding onto the shares. Sometimes these risks do not benefit the employees. It is a tragedy for those employees who had took the risk without knowing the real consequences.

Very few employees know about alternative minimum tax and are taken aback when they realize that they will have to pay.

Employees who plan to hold on to the incentive stock options must take every precaution to see whether they have entered the alternative minimum taxes territory. One can eliminate the alternative minimum taxes by disqualifying a part of incentive stock options that year. It would be best to exercise incentive stock options earlier during the year as one can plan better if you wish to hold on to the stocks. This will also allow one to contemplate better.

Ian Pennington is an accomplished niche website developer and author. To learn more about stock options, please visit Secrets Of Stock Options for current articles and discussions.

Article Source: http://EzineArticles.com/?expert=Ian_Pennington

Determining the Value of Stocks

As an investor, you have a few options on how you choose stock to invest into. You could go with your gut, a particular favorite of those who have deep pockets and like taking risks. You could go with the information that other investors and forecasters are providing you, after all, they should know what they are talking about. Alternatively, you could do your own homework to be sure that you fully understand what you are putting your money into and what it is likely to bring to you in the long term. This last method may take you a bit more time, but it also makes you an informed investor. And, being informed can lead to further stock returns. The value of stocks is one of the many things every investor should know how to determine.

Stock prices will move up or down based on the company's earnings as well as the forecast for that company which is based on other facts. Stock prices and knowing where they are heading is the one key tools you must have if you want to make money. Stock picks should be made based on the company's earnings as well as their ability either to keep this level or to increase it. What key information do you need to know?

Companies release their earnings quarterly, which generally happens in January, April, July and October. These reports give you an inside view into the company's movements and allow you to see what is likely to happen during the months ahead. Statistics you need to take into consideration include the company's earnings per share as well as the net income reports.

One important figure you need to keep in mind is what the earnings per share equal. As a mathematical formula, the earnings per share are equal to the Net income minus the dividends on preferred stock divided by the average outstanding shares. Another formula you should know is the P/E Ratio (Price to Earnings Ratio). This is equal to the current stock price over the annual earnings per share. Yet another formula to use to help you calculate the forecasted earnings of a company is the Forward Price to Earnings Ratio or F P/E ratio. This is the current stock price divided by the forecasted annual earnings per share of your stock picks.

Once you know these details, you can clearly see where stock prices are moving and where your potential profit lies. Do not do all the work yourself, if you do not want to, but have a good idea where the numbers you see are coming from.

Best Growth Stock Market Report provides you with the best stock picks and market advices

Article Source: http://EzineArticles.com/?expert=Omar_L._Caban

Stock Options Screen

All stock investors will agree that the one big problem that comes with science of investing in stocks is there is no universal method for great investments. This is because there are too many choices.

Returns can be gained through value stocks, growth stocks, foreign issues, small caps and dividend payers. Learn the advantages and disadvantages of all these strategies as an intelligent investor and choose the one that fits your time.

Now that you identified where to invest your money in, it is still not that easy make a beginning. One must know where to find stocks for buying.

This is where the stock options screen becomes important. Stock options screen is a database that finds countless stocks and enables you to get the best. The use of this tool helps the investor to follow a criterion that one needs to understand before investing. The screen displays a list of numerous stocks according to the needs and demands made by the investor. The stock options screen replaces numerous worthy days of research with just a few clicks of the mouse. You position the parameter and the screen explains as to which stock is worth buying.

There are several stock options screeners that one can buy. Stock investment pro and Power screeners are the best. All these cost money, so as a beginner it is best to stick to the website or other alternative such as free options provided by MAS money and yahoo finance.

Stock options screen takes you beyond the figures and helps you to understand each business and how your investments will yield money and finance future growth.

There are numerous free stock options screens that are available on various sites. The use of this will helps investors to narrow down investment possibilities for analyzing.

These screeners are unable to select the winning stocks, they can only help to stay focused on your goals and excel as an investor. This is important for companies they get rid of and companies that they select too.

Most of the screens possess similar characteristics. Some of the stock screens are simple to use while other are not. Besides being user friendly these screens must possess a full-bodied database that contains relative and absolute information of each company. It must also give you details about the sales figure.

To conclude, a good stock screener will offer a noteworthy database consisting of presets and flexible parameters.

Ian Pennington is an accomplished niche website developer and author.

To learn more about stock options, please visit Secrets of Stock Options for current articles and discussions.

Article Source: http://EzineArticles.com/?expert=Ian_Pennington

Wednesday, June 25, 2008

Stock Investing Strategy

Stock Investing Profits Introductory Video

The Secret to Picking Winning Stocks

Picking winning stocks is not an easy job. True there are certain investors that tend to make it look easy, the best example being the great Warren Buffet. However all investors (including the professionals) choose bad stocks. The question to be asked is why to the professionals pick far fewer bad stocks than amateurs?

Stock picking strategies can seem like an enigma. What exactly are they? Well to cut a long story short a trading strategy is simply a set or rules that must be followed when executing a trade. A strategy is nothing more complicated that a checklist of criteria that need to be met in order for the trader to invest in a stock, currency or commodity.

Professional traders are much more successful because they have much more detailed strategies than individuals. For example a lone trader might decide to buy a stock after piecing together the following information:

- he has seen a tip to buy the stock in a newspaper

- the company has consistently made profits over the last 4 years

- the stock price has fallen slightly for the last 3 days, making the stock look cheap

The above may seem to indicate the stock is a good investment. However a professional trader would most likely have a much greater number of checks made. Example may include:

- price earnings ration of over 20

- the 1 month moving average price falling below the weekly average

- dividend yield increasing to 7%

- Current Ratio of over 5

In reality a professional trader would have hundreds of indicators or checks that need to be made before deciding whether to invest in a particular position.

The real secret

The way professional traders can process such large volumes of information is by using specially designed software that will be pre-programmed with all the relevant indicators. As a result they can program in thousands of checks to be made that would be impossible to check manually if done by hand.

The output of such computer programs is a short list of stocks with a very good potential to perform well in the future. Only recently has such stock picking software become available to amateur investors.

To learn all you need to know about investor tools please click here

Article Source: http://EzineArticles.com/?expert=James_McKerr

Cheap Online Trading Brokers - Who is the Cheapest?

Before you sign up with an online broker, you need to have a clear understanding of their cost structure. This involves much more than just their commission fees per trade. There are several ways to incur charges with them, so you must look at all of them in order to determine which one is the cheapest.

Here are the factors you should look at to evaluate the cost of an online broker:

Commission Per Trade - This is the most important factor and will likely account for most of the charges against your account. For most brokers, though, there is not a flat rate. It may vary depending on one or more of the following:

- Volume of shares traded - You may have one fee for up to a specified number of trades per month, then a different fee for trades after that. Others have tiered pricing, where the commission rate changes the more trades you make. So if you only trade a few stocks per month, you'll pay more on a per-trade basis.

- Upcharge for certain kinds of stock trades - several brokers have an upcharge, usually for low-cost stocks (below $2.00 per share) or those traded on a certain kind of exchange (pink sheets, for example)

- Number of shares traded - Premium brokers will charge more for a trade of a large number of shares.

- Account Balance - this is like a checking account, where you get charged lower fees if you have a high account balance. Smaller account balances are charged more.

- Phone Trades - Online brokers offer the option to phone in a trade and talk to a live broker, but there is a higher rate for these.

Account Minimums - While this is not an out-of-pocket cost exactly, it is very important for deciding which broker you want to go with. Some brokers have no account minimum, so if you want to deposit only $100, you can do that. Another may have a minimum of $3,000. So you would have to deposit that amount just to open the account. While it is still your money, you may not want to deposit that much to get started.

Maintenance Fees - Some online brokers charge monthly or quarterly maintenance fees. Often, these are waived if you have a high account balance.

Cancellation Fees - Most charge an account cancellation fee. Hopefully, you won't need to use this anytime soon, but it is good to know what it is if you do want to cancel.

Especially for beginning online traders, having cheap online trading is a top priority. In the early stages, you will likely start out by placing smaller trades. So on a percentage basis, the costs can affect your profits quite a bit.

Let me show you how to get your online trading going fast and profiting quickly. Download my free guide, "7 Essential Steps to Online Trading Profits"
Daniel B. Johnson is vice-president of a wireless communications company based in Dallas. He maintains a successful online trading career on a part-time basis to earn an additional income stream.

Article Source: http://EzineArticles.com/?expert=Daniel_B._Johnson

The Ju Jitsu of Trading

The martial art of "jiu jitsu" translates as "the gentle art". As a novice, one of the earliest and most profound lessons I have learned is the skill of relaxing while fighting. It sounds odd doesn't it? Relax in a fight? When every natural tendency, all your emotions and adrenaline conspire to make you hyperactive. And yet success in jiu jitsu increases as you develop the ability to relax your body and mind. Once calm, you learn to feel what your partner is doing and then react quickly with the right move or combination to achieve your objective. You succeed by learning to feel and read your partner.

I woke up one day last year with an "a ha!" and realized what an excellent metaphor this is for trading and investing. How often have we heard that the market is a jungle and trading is a war? Students of Dr Tharp's peak performance course are very aware of the role of emotions and adrenaline on your inner state, and learn skills to achieve exactly the same kind of calm I have been learning to achieve in the dojo. I have been applying this model with success in my trading an investing in the following way.

1. The benefits of physical conditioning for stress management are well known and my martial arts training is certainly improving my fitness.

2. I have confidence in the utility of position sizing to keep me from exploding my trading account, and with that confidence comes understanding and calm.

3. I have learned to incorporate the successful, calm feeling I achieve in the dojo into my inner state when trading

4. In a competition with an opponent, I concentrate on my strong moves. In the same way, I wait to trade only when I have the edge with a positive expectancy system, and I use systems I have tested and rehearsed and prepared for in conditions where they are designed to work to my advantage.

5. I relax and learn to respect and read the market and take what it wants to give me instead of trying to force my will upon it and thus invest my emotions and ego in a struggle to be right.

http://www.tortoisecapital.com

Article Source: http://EzineArticles.com/?expert=Ken_Long

Monday, June 23, 2008

Stock Investing

Beginners Investing: Stocks or Bonds for Best Investment?

Company Profiles - TomTom

TomTom is a relative young company that showed spectacular growth in the previous years in sales of navigation tools. TomTom is market leader in navigation software closely followed by Garmin. In that area however there are continuous changes. One of them is focused in this article; the digital maps which form the basic of the navigation software.

The company recently acquired the second largest digital map provider in the world: Teleatlas. Teleatlas is owner of a large geographical database than it continuously updated and enhanced with "points of interest."

"We believe that the navigation industry is at the dawn of a new era. In the future, we are confident that end user community input and feedback about maps and POIs, including updates and corrections, will prove to be instrumental in maintaining the quality and integrity of the map at the highest level possible." Alain De Taeye, ex CEO and co-founder of Teleatlas, now member of the board of TomTom.

The Combination of a map maker and a software provider offers possibilities. Of one the synergies is the Map-Share ® concept that TomTom has elaborated. TomTom has a large user group - a community to the modern sense - which continuously send updates of locations that are changed or being altered. This is one of the main organizing efforts Teleatlas must make: a continuous update and quality control of their maps.

As maps are their main asset it is also one of the risk areas addressed by Teleatlas. In-accurate data may lead to claims as the number of services for which maps are used increase.
Linked to this risk is the risk of the role of information technology as an important element in the business process (of teleatlas). The database is the center of the operation and makes it both powerful, as vulnerable; "inadequate information may hurt the company's reputation." Now that the company has merged with Tomtom this risk will remain. Yet TomTom has established a vertical integration and may extend its business with this database. Another mentioned (1) risk is intellectual property of the digital maps. "Piracy," is added as a risk factor
Before the takeover, 56% of Teleatlas' revenue comes from only five customers. The combination of TomTom and TeleAtlas must offer new services which is already on the implementation agenda. Demands for location based services (LBS) increase rapidly.

Teleatlas has addressed four main business areas. Portable navigation - for TomTom, navman, garmin, etc. Internet mapping - viamichelin, Google maps (for mobile), Mappy
Wireless and LBS - wayfinder, RIM Automotive navigation - Blaupunkt, VW, BMW, MB Siemens VDO (now continental) and Enterprise & Government - UPS, Fedex Deutsche Post, AT&T, etc.

Nokia was one of the clients, but that must have changed since Nokia took a similar move since TomTom's takeover of Teleatlas.

After the bid issued by TomTom, Nokia decided to buy Teleatlas' main rival and worlds leading map maker Navteq.

For one side this is a new treat to TomTom; Nokia will have much more financial power to invest in new innovations and developments. They also have bought Navteq for 8,1 billion dollars and may face an equal challenge to finance this. On the other hand, it shows that TomTom has done the right thing in acquiring Teleatlas. Management demonstrated to have a vision, where their new rival has merely practiced a "me-too" step. TomTom also has an advantage in the community platform. Communities change to business models of many companies these days.

H.J.B.

(1) - Teleatlas Annual report 2007

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© Hans Bool

Article Source: http://EzineArticles.com/?expert=Hans_Bool

Be Cautious With Earnings

Every now and then a company announces its earnings. During this time there can be many surprises. Earnings may change people's opinion of the stock.

When earning is being announced it is a considered to be a very dangerous time. Because of all the uncertainty you do not know what a given stock will do.

They can cause huge jumps up and down. A stock can be trading at $60 before earnings and $50 after they are announced. Such huge swings can hurt a trader who is long on that position. Every trader needs to have a plan for what they will do during this time.

Some traders will choose to trade the earnings. They will try to predict direction the stock will move. This can be dangerous in a few ways. First of all you do not know exactly what a given stock is going to announce.

Also you do not know how the people will react to what is announced. Stocks can crash to good news or rally to bad news it happens all the time. That is why trading earnings can be much like a gamble.

Other longer term traders may choose just to hold their positions through it. They can justify that by saying that stocks do not always move big during earnings. They can also say that strong stocks have strong earnings. This means that a stock which keeps going up is more likely to get a bust from their earnings announcement then a crash.

Perhaps the safest thing you can choose to do is not to trade a stock that is announcing their earnings. That is not to say that you cannot trade during this time there will always be opportunities in the market. But sticking away from trades that can be so unpredictable can be a positive thing.

For more information on trading during earnings visit http://www.stocks-simplified.com/company_earnings.html

For more information on trading in the stock market visit http://www.stocks-simplified.com

Article Source: http://EzineArticles.com/?expert=Shaun_Rosenberg

How to Use Stock Screeners For Stock Market Success

Stock screeners allow traders to screen the entire market for stocks that conform to certain criteria to meet the needs of the trader. They are indispensable for modern stock traders, and can be either web-based or stand-alone tools. One of the benefits of web-based screeners is that upgrades tend to be automatically available.

If you consider how stock screening was carried out some years ago before the advent of the modern online stock screener, you will begin to understand the benefits that these systems have provided in enabling trading opportunities to be identified in seconds. Think of pouring over the stock exchange sections of newspapers, of trying to make sense of radio, real-time stock quote machines and of charting graphs by hand.

These manual procedures allowed very few stocks to be examined in a given timeframe, and you would be lucky to spot any stock to meet your criteria, let alone compile a useful Watch List. By allowing today's traders to set criteria and automatically screen out all companies that do meet these criteria, today's stock screeners can examine tens of thousands of stocks in a very short time. Results are virtually instant.

The filtering criteria used can detect stocks suitable for growth, for short or long-term earnings, or whose values will increase in a relatively short period of time. Using technical criteria to spot key reversals and breakouts can boost your stock earnings several-fold. If a trader feels a specific criterion to be important, then the stock screener will find a list of stocks that fit, and if several criteria are used in the same search, stocks with very specific properties can be identified.

There are two specific types of screening that can be carried out: by use of either fundamental or of technical criteria, and each can be made available either as end of day or real time intraday screening. Most normal stock screeners utilize fundamental criteria, although elements of technical analysis can also be included to fine tune the screening.

So how should these screeners be used? Let's have a look at the technical criteria that can be used in filtering the stocks that you want on your Watch List. You could start by trying to find trending stocks, or those that will break out above or through resistance levels. The criteria to use in your filtration in order to screen for these could include:

* Stock trending up
* Rising on unusual volume
* Price crossed above resistance line
* Price has touched support line (It is likely to climb again)
* Price has reached new highs

Many of the fundamental screeners can be obtained free although if you want a real-time technical screener then you will likely have to pay a nominal fee. However, although it is normal for stock screeners to be predominantly one or the other, there are screeners available that can be used with both fundamental and technical criteria. This expands the type of screening available to you, and you should never buy a stock unless both the fundamental and technical criteria are both positive for the stock. You will achieve better results if you screen the stocks for both types of criteria, and for that you will need either a combined stock screener, or one of each type.

Stock screeners are essential for screening in today's markets because most professionals actually underperform the market due to human influences. A machine-based model can filter out human weakness, such as believing press forecasts, and produce better results assuming that the criteria, or variables uses, are those that affect the direction of stock prices in the future.

Given that is so, stock screeners are a must for the modern investment professional and novice alike.

Now it is time to try stock screeners in action! Start from http://www.marketinout.com screening service which provides most powerful stock screening tools. No matter if you are novice in stock market or a professional trader the provided stock screeners will be extremely helpful in optimizing your stock trades!

Article Source: http://EzineArticles.com/?expert=Alan_McKnight

Investment Advice - Investing in Old and Live Stocks

All of us are eager to make money through stock market. Some of us have better understanding about this field than the others. Our lack of understanding leads to hesitation to invest in stocks and bonds. This hesitation is also due to the fear of loss. Unfortunately, risk is part and parcel of investment in stocks and bonds. However, with a little caution and good advice from the experts you will be able to safeguard yourself from risk at least to a certain extent.

When you are investing in live shares you must have specific strategy or approach that you would like to use to make money through your stock investment. There are two ways of investing in stocks and bonds one is to invest in old stocks and bonds and another approach is to invest in live shares.

There are a number of people who collect old stocks and bonds not as a matter of investment but as a hobby. This hobby is called Scripophily. The value of the old stocks and bonds is to be found in the form of historical collectible and financial art. If you collect these old documents, make a little research on the value of the old stocks and bonds you possess. If you are lucky some of them may open the doors of fortune to you. Some of the rare certificates with the signature of the company owners such as John D. Rockefeller, Henry Carey, etc, will have great value. So it is always best to research your old stocks for value.

Besides being a collectible item or a piece of financial art, the certificates have beauty of their own. They often come as colorful documents. The age of the document, its historical significance, type of company and face value are some of the factors that contribute to the value of old stocks and bonds.

When it comes to live shares, these days you can get the shares with your name printed in them. You can also offer them as gifts to others with their name printed. You will enjoy the full ownership of the share you own. You can have the colorful share certificate can be framed neatly with the material of your choice. This way you would not only have made a good investment but also made an art piece out of it.

You will be able to get the name printed only in select companies those allow it. However many famous companies such as McDonalds, Disney, Coca-Cola, Starbucks, General Motors, Harley Davidson, Tiffany & Co. etc, allow you to have your name printed in their share certificates. These also form a wonderful gift for birthdays and other special days. Would you not love such a gift yourself? Go ahead and have your share purchased from a company of your choice with your name printed in it. When you buy a share do a little research about the company and its history so that you will be able to appreciate more what you own.

Eric Drum is a collector and dealer of old stock certificates. http://www.oldstocks.com is recognized as a leading source of information and collectible certificates. In addition to old stocks, the website sells real live shares with a stock certificate in your name http://www.oldstocks.com/liveshares.htm features live modern stocks that are perfect for framing.

Article Source: http://EzineArticles.com/?expert=Eric_Drum

Scripophily - Finding Money in Old Stocks and Bonds

It is fascinating to note what can interest people and what can become a hobby. One of the interesting and uncommon hobbies is to collect stocks and bonds. Those who collect bonds and stocks as a hobby do not do this as an investment but they find historical value in the documents that they collect. They will not be worried about the profit or loss that normally worries those who invest a lot of money in stocks and bonds.

The person who collects stocks and bonds as a matter of hobby is called scripophile. The hobby of collecting these bonds or stock certificates is called scripophily. These people will be ready to spend a lot of money if they can acquire a stock certificate that has historical value. They will engage in historical research to find about the existence of rare stock certificates and bonds and try to trace them.

Scripophiles find a great value in these stock certificates and invest in them for the sake of the historical importance of a particular bond or stock certificate. They consider it as a financial art. Furthermore, the certificates themselves are beautiful in terms of their colorful appearance. So the factors that decide the value of dead stock certificates include, the date of the stock certificate, face value of the stock, any relevant historical importance, their appearance, name of the company and the nature of the stock. For instance if the stock certificate happens to bear the signature of famous personalities such as Rockefeller then such certificates will be valued highly.

Even if you are not a hobbyist who collects stocks and bonds, do check your parents or grandparents belongings that they have left behind, you might come across your treasure. Not many people are really aware of the value of these old or dead stocks. Many of us are not aware that there are people who collect these certificates and spend a lot of money to acquire them. In case you stumble upon any such documents, make sure that you keep it safely so that you can trade it with someone who is interested for a considerable sum of money.

If this hobby should interest you then before you start collecting your stock and bond certificates, you must learn the terminologies that are used in this field. Reading good reference books on scripophily would help the beginners. You can also find a number of online resources about the stock market and about the history of the stock market, the oldest share certificates, etc. When you do start collecting these certificates, make sure to let your friends know about your new hobby so that they can share with you any valuable stock certificates that they may have. They may also know where you can find such documents.

As a word of caution, when you decide to buy any stock certificates or bonds to add to your collection, ensure that you check for their originality, their historical importance, etc. Do not take peoples word for granted, make sure you cross check the facts yourself. If you have a friend who has experience in this field, do hot hesitate to get help from him or her so that you do not end up spending a great deal of money on a duplicate document. Buy from reputable dealers!

Eric Drum is a collector and dealer of old stock certificates. http://www.oldstocks.com is recognized as a leading source of information and collectible certificates. In addition to old stocks, the website sells real live shares with a stock certificate in your name http://www.oldstocks.com/liveshares.htm features live modern stocks that are perfect for framing.

Article Source: http://EzineArticles.com/?expert=Eric_Drum

Sunday, June 22, 2008

Stock Investment

How to Invest Stock

The Leaps Advantages

Leaps have many advantages over other strategies in the stock market. This is because they give the buyer both high leverage and a long term approach to the market.

Leaps like options give the owner the right to buy a given stock on or before a given date. But unlike options however the date at which it expires is farther out. Instead of an option contract which might give you a couple months before it expires, a leap will give you a year or two before it expires.

This has a few great advantages. First of all the stock does not always do what you want to do right away. That does not necessarily mean that you change your posture on the stock. If you had a leap you could hold onto it longer without having to worry about expiration.

Another reason is that if a stock is strong it may pull back now and then. However, if it is really a great buy it is likely go head up in a longer term time frame.

Of course you do pay more to buy a leap then you would for a call option. But you pay for time. That extra money makes the investment gives you more time than a call would.

They have advantage over stocks as well. That is because they have much greater leverage then a stock does. For instance say you buy a $40 leap for $8 that is two years out. The stock is trading at $35.

After two years that same stock is trading at $60. If you would have bought the stock you would have made 71.42%. But if you would have bought the leap it would be worth at least $20. That would have given you a gain of at least 150%.

There is a big difference between the return the stock could give you and the returns a leap could give you.

To learn more about leaps visit http://www.stocks-simplified.com/leaps.html

To learn more about the stock market visit http://www.stocks-simplified.com

Article Source: http://EzineArticles.com/?expert=Shaun_Rosenberg

Why Penny Stock Investing is a Risk

You hear it quite often: penny stocks are the route to go because you do not have to invest much and that means penny stocks are lower in risk. While they are this inexpensive, they are not, by any means, without risk. As an investor it is up to you to determine how much money you should put into any investment strategy and when it comes to penny stocks, mind those pennies! Understanding the risk behind them helps you see whether these stocks are the route for you to take.

What is a Penny Stock?

There are various definitions and determinations out there in regards to what a penny stock is, but in short, it is any type of stock that is traded at less than a dollar. They come from companies that have a small amount of market capitalization. You may hear them called small cap stocks, micro cap stocks or even nano-cap stocks, too. There is no doubt that you can trade for these stocks with less of an investment, because the stocks are so lowly priced individually.

One of the problems with penny stocks is that you have very little information about the investment you are making. You know very little about the company. Unlike the standard stocks, the penny stock companies do not provide you with SEC reports to do your homework on the company. This does not mean you cannot invest in these stocks, but you will need to do more homework to get to the information you need.

The cost to get into penny stocks is relatively low and if you know the company well enough, you may be able to get in on the ground floor and make a considerable investment in the long term. Yet, the problem with penny stock investing is the increased risk of not knowing who the company is, what their background is, what their past investments have been and therefore you will not know how well the company plays into your investment strategy.

Penny stocks are not an option for smart investors. Growth stocks are a better investment decision you can make. Additionally, be sure that these stocks fit well into your investment strategy. They really must be marked as an unknown unless you have carefully done your homework to exam the risk involved with them. While you can make money on these, it really is not the best route for many people.

Best Growth Stock Market Report provides you with the best stock picks and market advices

Article Source: http://EzineArticles.com/?expert=Omar_L._Caban

Stock Gurus - They Don't Make 'Em Like They Used To!

Stock gurus today are a dime a dozen. It seems like everybody's got some kind of stock trading "system" to make you millions, doesn't it? Now, imagine a guy who lived at the turn of the century, who had no access to today's gee-whiz technological advances, making $3 million in a single day! That individual was 30-year-old Jesse Livermore.

1907 seems so remote to us now in these days of streaming quotes, charting software and computerized trading. Yet that's what makes Jesse Livermore's stock trading successes so awe-inspiring today.

As revolutionary as this early-day stock guru's approach to trading was for his time, in truth, Jesse's stock trading "secrets" just came down to good, sound basics. His success stands as a testament to the fact that the further we wander away from a simple, disciplined approach to trading stocks, the less success we're inclined to have. Just how unconventional was Jesse Livermore? Take a look:

· He believed in trading market leaders, not "weaker sister" stocks.

· A stock hitting new highs was a signal of a stock's strength to Livermore, and meant the stock had broken through its overhead supply of sellers. Today, we call this a "breakout stock."

· He was one of the first stock traders to realize that stocks tend to move in industry groups not in isolation.

· Unlike today's self-appointed gurus, Jesse Livermore was a humble student of the market, and never considered himself a master.

· Livermore was ever conscious of the part one's psychology played in achieving stock trading success, so he never spoke about what he was doing to anybody, and actually was known to ask people to keep their stock tips to themselves! He was so protective of his trading psychology that he would not even use the words "bullish" or "bearish," thinking they would create an emotional mindset that he wanted to avoid.

· Three of the rules he followed included: 1) Decide the overall direction of the market, making sure of the market's overall trend; 2) Probe the market by trading small portions first, rather than rushing in all at once; and 3) Exercise patience, letting a stock's move play out, while paying attention to all the facts, instead of emotions.

Here are just a few of this legendary stock guru's ideas on trading-in his own words:

· "I absolutely believe that price movement patterns are repeated and appear over and over, with slight variations. That's because humans drive the stocks, and human nature never changes."

· "Keep the number of stocks you own to a controllable number."

· "Take your losses quickly and don't brood about them. Try to learn from them, but mistakes are inevitable as death."

· "Only make a big move, a real big plunge, when the majority of factors are in your favor."

· "Never take a capital loss of more than 10%."

· "Keep the wind out of your face, and when the market hits the doldrums, getting nowhere, moving sideways, then get out, take a break, have some fun, go fishing. Come back into the market when the wind has picked up again, and the sailing is clear and good."

· "Every once in a while you must go into cash, take a break, take a vacation. Don't try to play the market all the time. It's can't be done, too tough on the emotions...there is nothing more important than your emotional balance."

· "Don't take tips of any kind, no matter where they come from."

· "Do not be invested in the market all the time. There are many times when I have been completely in cash, especially when I was unsure of the direction of the market and waiting for a confirmation of the next move...it is the change in the major trend that hurts most speculators. They simply get caught invested in the wrong direction, on the wrong side of the market."

· "The stock market is the greatest, most complex puzzle ever invented-and it pays the biggest jackpot."

For more information go to http://www.StockConfidential.com

Paul Johnson is the publisher of Stock Confidential, a twice weekly stock advice newsletter and has written numerous articles and ebooks on stock picking, internet home business opportunities, and real estate. For more information, please visit: StockConfidential.com

Article Source: http://EzineArticles.com/?expert=N._Paul_Johnson

Legal Thriller Author Explains What Every Investor Should Know About Internet Stock Scams

A century ago P.T. Barnum sagely told us, "A sucker is born every minute." At the time he was, no doubt, correct.

No longer. In today's internet world, that time-span has been cut back to every nana second. Now that spam has been somewhat curtailed, scam artists have moved their operations, largely, to internet bulletin boards and chat rooms. That's all. A change of venue. Like maggots fried in hot grease, they have moved, jumped, spread out, occupied many of these new communications centers.

This up-the-ante, beat-the-street move was made necessary because state law enforcement agencies, the SEC, and the FTC have, in recent years, set up teams to daily police the worldwide web. With spam, being the most obvious and easiest to detect, the scam artists have been forced to a better, alternative outlet for their "avant-garde" visions.

With a chat room, nothing more than pulling all the old con-lines out of mothballs and reusing them is needed. With con-world tactics, they spiel out typical con-like jargon, and reel in the usual high percentage of suckers. Just like the good old days.

With bulletin boards--those Illusory walls seemingly profaned by graffiti--it's a little different. The scam artists are challenged. Tactics and timing take greater emphasis. Try this example on for size:

A clever scam artist left a message on a prominent stock board that a small U.S. hi-tech company was about to be bought up by a European firm for $900.000.000. This was a sum nearly double its market value. The posting had a link to another bulletin board which displayed a press release giving the details. The press release was a phony, placed there by the con man himself. His purpose was 1-track, to temporarily drive up the price of the stock. With the temptations stoked by the bargain-basement price, investors flew to the stock driving its price from $5 to $7.50 in minutes. With the aid of the many day traders on the exchange, who buy quickly on rumor, the scam artist walked off with a fast-buck haul of $520,000. Presto. Nothing more than a classic pump and dump, only taken out of the usual "pump" time frame, speeded up so that the whole thing would come to climax before law enforcement authorizes could even answer their phones to take the inevitable complaints. Real. But, like a classic page from a legal thriller book.

Take a long look sometime. Observe all of the stock boards and news boards hanging in cyberspace. As so many scam artists still dance on the internet in a perpetual spam-fest, this stock "guru" found a better way. Whereas legendary con man, the Music Man's Professor Harold Hill, gave us 76 trombones, he put a little cha-cha-cha into the sax section.

The SEC gets in upwards of 200 complaints a day about illegal activity on the web. Most pf these are stock scams. With fraud made this easy it should come as a heavy-booted reminder that this particular form of Scamology 101 should be featured in Scam School, for the benefit of all concerned watchdogs and law enforcers.
It's textbook.

With his imposing presence, elegant sartorial style, and eloquent use of the language, the con man has evolved. And now, with his range so widely expanded, your life as a potential target has expanded right along with it. Unless you count your age in elephant years, you will most likely find yourself in his cross-hairs at some moment in your life.

Prepare. Learn. Now is the time. Be ready for that cure-all elixir when it comes.

The Con Man's Blog, and first two chapters of Jack Payne's legal thriller book, Six Hours Past Thursday, are now available online. Both readable for free. You are invited. http://www.sixhrs.com

Article Source: http://EzineArticles.com/?expert=Jack_Payne

How to Gain Maximum Profits in the Stock Market

There are several companies' shares available in the market. Many are promising and some others are not that much profitable. How will you choose the best company shares in order to earn maximum profits? Well, it's a million dollar question, but the answer is quite simple. Until and unless you get familiar with the stock market, you cannot find the answer to the million-dollar question. Yes, market knowledge is a must for all who are planning to invest in stocks.

The good news is that Internet based trading is very simple and hassle free. Anyone can invest in stocks at any point of time. There is no lock-in period and constraints unlike other investment options available in the market. However, in this kind of investment, you need to do some groundwork. Initially, if you plan well and gain adequate knowledge about the functioning of the stock market, you can definitely reap the benefits from your investment.

Once you are finished with the initial groundwork, you can find the answer of that million-dollar question. When a company issues public shares in the market - you buy some shares, for example 100 shares at the rate of $10 each. Now, what are the factors that would influence in raising the share price? First of all, it is important to know why a particular company issues public shares - the main aim of issuing shares is to collect funds for the expansion of the company or to pay the debt, if any. And as the company grows, the share prices also go up accordingly.

On the other hand, if you buy a company share and in few days, the share prices go down, it means, the company growth curve is declining. Therefore, expert professionals always suggest investors to keep an eye on major company shares. Even if you don't have any idea about a company - you can access information about a company, its growth curve and the previous market reputation. However, many professionals also suggest buying small-scale company shares for maximum profit. So, whenever, you decide to buy a particular company share - take out all the information about the company profile and other valuable information. After the analysis if you think that a particular company share price would rise, buy those shares.

What are the other factors that influence the trading process? Well, the stock trading company's website, your stockbroker and finally your decision making capability directly influence the whole trading process. So, it is always better to do some rigorous market research on the Internet and then pick the best choice. If your fundamentals are clear, you can definitely gain maximum profits from your investment. So, it is better to do some groundwork and then trade rather than directly jump into the market.

Now, it is evident that professionals who are making profits from the same market have done all the primary work needed before trading So, if you are a new investor and want to earn profits in a short time period - do the primary work first, take advice from financial experts and then start trading online. Save money and build a strong financial backup and support your family in a better and efficient way.

If you are new to Sogotrade: Online stock trading investment

Article Source: http://EzineArticles.com/?expert=Amit_Malhotra

Invest in Stocks and Build Strong Financial Backup

To ensure success in life one needs to do a lot of hard work. Many people however, don't follow this principle and fail to achieve success. But, there is no substitute of hard work and if you want success in life, you will have to follow the basic principle. In the same way if you are investing in the share market, you need to do some groundwork in order to gain substantial profits. First plan in a better way and then invest in the right direction. Moreover, you need to understand the market to avoid subtle risks, if any.

Share market investment today is not only a profitable venture; it offers an easy option to manage funds online and in just few mouse clicks. Yes, the Internet based trading system has changed the whole scenario -- anyone can invest in stocks without any trouble. Forget the traditional trading system where investors would need to meet the stock broker for trading. In today's Internet world, what you actually need is an online account. Open an account on the trading website and start trading right from your home or office.

Trading companies on the other hand are also promoting this Internet based trading culture and are offering impeccable services to consumers. With so much competition in the stock market, stock companies are offering several services at competitive rates. Therefore, it sometimes becomes difficult to choose the best company. So, if you want to pick the best company - browse several major companies' websites and check out the services they are offering. In addition, you also need to check previous record of the company, how much commission they charge, etc.

Once your online account gets activated, you can start trading from any corner of the world. This is the most exciting feature of online trading. However, many new investors who do not have knowledge of computer and the Internet feel reluctant in investing in this kind of trading system. They should not worry at all, as traders need not to know much about computer and the Internet. The stock trading websites are so intuitively designed that anyone can understand the features and tools that are available on the website. Almost all company websites offer video tutorials and help consumers in understanding the features.

Trading is an intelligent process and therefore, you need to be more focused. You also need to apply your presence of mind, decision-making capability and above all your knowledge about the market. Many a times, you come across a situation where you need to take a quick decision. For example, if a particular company share prices go up - would you wait for further rise or would rather prefer to sell shares immediately? You can't make a right decision unless you have a complete market data. According to experts, if you are going to buy and sell stocks, you first need to do market analysis. There are several advanced analysis tools available on the website - you can do the analysis easily and efficiently. In addition, you can also consult with people who are experienced in trading or consult with online financial experts for the same.

Future financial security is a must for everyone. However, there are many people who plan but never execute them and face financial burden. So, if you don't want to face such a situation, then be realistic. Start investing in stocks and enjoy your life, always. However, it is also important to first gain knowledge about the market and then trade online. There are various open resources available on the Internet - you can access articles, newsletters, reviews, etc and expand your knowledge and experience for better and intelligent trading.

Open an account with Sogotrade

Article Source: http://EzineArticles.com/?expert=Amit_Malhotra

For companies looking for value in a Plasma cutter, the 1000 Series is the perfect solution.

Why do you invest in stocks - if anyone asks this question, your immediate answer would be to earn profits in a short time period. Yes, profit is the main key for such trading system. But do you think you know the key to successful trading - ask a professional trader and find the correct answer. According to experts, stock market is an unpredictable entity and therefore, the whole success factors depend upon the market knowledge, experience, your decision-making capability and finally your positive attitude.

All the above factors influence trading process. However, there are many investors who do not follow these things and often lose money in the market. And if you ask these people about what they think of stock trading, you cannot expect the overwhelming answer from their side. But the truth is different. Many professionals are continuously gaining profits from the same market. What is the secret of their success - well, the secret lies in their knowledge and the strategy they follow during the whole trading process.

What kind of market knowledge you need to know? If you search online trading on the Internet search engine, you will find several content on the same topic. You cannot read all the content and all open resources are not valuable as well. Therefore, the basic strategy is to get familiar with the terms that are being used in the trading process. You might have heard of day trading - try to learn the basic philosophy behind the concept. In the same way, learn the meaning of stocks, how to buy and sell stocks, the role of stockbrokers, etc. In addition, you should know how to read stock charts and stock quotes.

All trading terminologies are very important and you can find the meaning of these concepts on the Internet. Once you get familiar with these terms, you can plan your investment. If you know someone who has some knowledge about the market - you can take advice from him or her. However, you can contact online financial experts and discuss the issues and they will help you find the best solution for the problems you have in planning or any other stock related problems. Once your planning is done - you can open an online account on the stock company's website. And after online account activation - you can start trading online.

In the present trading system, the stock trading companies play a very crucial role in trading. The company where you have an online account is directly attached with you. First of all you need to browse the company website to login. All your account information is also uploaded on the website account. With advanced security tools, the company website keeps your account information secured. In addition, you can access a wealth of information from the company's website such as market analysis tools, charts, educational content, articles, newsletters, reviews, etc. Therefore, you need not to go anywhere for stock news, and to access other related information. The company charges a very minimal commission rate for every transaction you make during the trading process.

Professionals from all across the globe are making profits from stock trading. And, you can also be one of successful traders if you do the job intelligently and effectively. In addition, you should know which company share you have to buy and which one to avoid. And for that you need to keep you updated with latest market news. Try to learn the changing market moods and trade accordingly. Invest now and enjoy your life always.

Open an account with Sogotrade

Article Source: http://EzineArticles.com/?expert=Amit_Malhotra

Thursday, June 19, 2008

Stocks

Exit Strategies That Lock in Profits And-Or Minimize Losses

There are three things that we must consider when developing an exit strategy.

1. How long are we planning on being in this trade? 2. How much risk are we willing to take? 3. At what price point do we want to exit?"

How long are we planning on being in this trade? The answer to this question depends on what type of trader you are. If you are in it for a longer term (for more than six months), then you should focus on the following:

A) Set profit targets to be hit in several months, which will lessen the amount of trades you make.

B) Develop trailing stop-loss points that allow for profits to be locked in every so often in order to limit the downside potential. Remember, the primary goal of any trade should be to preserve capital.

C) Take profits in increments over a period of time to reduce volatility while liquidating.

D) Allow for volatility so that you keep your trades to a minimum.

E) Create exit strategies based on fundamental factors geared towards the longer term. For example, let's say you love the business model of ISRG and you believe the company's growth potential to be enormous. In this case, you may want to hold the stock long term and create a price target based of future earnings growth. However, if you are in a trade for the short-term, you should not concern yourself with these things because they really do not matter on a short term basis. Too many short term traders try to trade on fundamentals and it just does not make sense to do that. Fundamentals only work in the event you want to invest in a company rather than just trade their stock.

F) Set near-term profit targets that execute at opportune times to maximize profits. Here are some common execution points:

- Pivot Points (A technical indicator derived by calculating the numerical average of a particular stocks high, low and closing prices. - Fibonacci/Gann levels - Trend line breaks.

The key is to learn a system that works for you and one that develops solid stop-loss points that immediately get rid of stocks that do not perform in the desired manner.

How much risk are we willing to take? Risk is an important factor when trading. When determining our risk level, we are determining how much we can afford to lose. This will determine the length of our trade and the type of stop-loss we should use. Those who want less risk tend to set tighter stops and those who assume more risk give the position more room to maneuver or work as they say.

It is also important to set your stop-loss points so that they are kept from being set off by normal market volatility. This can be done several ways. The beta indicator can give you a good idea of how volatile the stock is relative to the market in general, but these are good for longer term traders who can tolerate 10% losses. Short term traders cannot take such a loss so using the beta as a guide is rendered worthless. Example would be if the beta is within 0 and 2, then you will be safe with a stop-loss point at around 10-20% lower than where you bought the stock. However, if the stock has a beta upwards of 3, you might want to consider setting an even lower stop-loss, or finding an important level to rely on (such as a long term trend line or moving average). Again, all this depends on the type of trader you are and how much risk you are willing to impose.

Where do we want to get out? You may ask, why would we want to set a take-profit point or limit order where we sell when our stock is performing well? The answer is, ideally, we don't want to do something like this but there are times when it is in your best interest. Many people become irrationally attached to their positions and hold the stocks when the underlying fundamentals or technicals of the trade have changed. The only thing good about a limit sell order is the fact that it takes the emotion out of the trade. It either hits your sell limit order or it hits your stop loss point and you can go about your business after you enter your orders and not have to worry about how your position is performing while you are away. If you are going to trade in this manner, your exit point should be set at a critical price level such as price resistance, trend line resistance or other technical points on the chart such as certain Fibonacci levels.

Conclusion Exit strategies and other money management techniques can greatly enhance your trading by eliminating emotion and reducing risk. Before you enter a trade, consider the three questions listed above and set a point at which you will sell for a loss, and a possible (but not written in stone) point at which you will sell for a gain.

David Colletti Founder StockTradersHQ.com The Headquarters for serious traders.

Copyright © 2008 StockTradersHQ.com

This article is courtesy of David Colletti, a ten year veteran stock trader and founder of StockTradershq.com. Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock recommendations nightly with the greatest potential for explosive gains. These stock picks are traded with our real-time portfolio. Email alerts are sent to members for every entry and exit. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses. StockTradersHQ.com offers a 21 day free trial with full member access.

http://www.stocktradershq.com/

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