Category Archives: Stock Investing Blog

Trade Stock Market Options

When initially entering the investment world, bonds and stocks are often the investments of choice. As an individual gains a better understanding of how stock option trading the market operates, he or she may want to incorporate some additional risk into the portfolio. Some investors seek ways to hold stock but also get increased rates of return, and they find this in options trading. If stock options trading is a term yet unknown, the investor should purchase a stock market guide to learn more about it.

The concept of stock options trading is a bit more abstract than stock market trading because it involves a contract regarding a future stock purchase opportunity at a certain price. If the option is not exercised within a predetermined period, it expires and is unusable. Investors who enjoy speculating or who need to hedge another investment risk often look to stock options trading to do the job.

The stock market may seem like a scary world to people only taking their first steps in it, but there are a variety of securities investors that people have at their disposal. One such security, known as an “option,” opens the door to a world of opportunities for investors. An “option” is a contract that gives a buyer the right-but, not the obligation-to buy or sells an underlying asset at a specific price or before a certain date. This functions as a binding contract with meticulously defined terms and characteristics.

This is just a basic introduction to stock options trading and things already seem to be getting complex. The best way to learn about options trading investments is to review a stock market guide to get an education or brush up on the topic. This guide gives readers an overview of all concepts and option trading strategies considered important to stock options trading. Reading it before making an investment allows an individual to approach the market with confidence.

Options let you choose your own path
Options let you choose your own path

A person should shop around for guides until one is found that includes multiple training modules on increasingly complex topics regarding trading options. The best option trading courses begin with an overview of the fundamentals of stock options trading by providing definitions of basic concepts. These include plenty of graphs to illustrate points, enough realistic examples to allow the reader to understand how the concept relates to the market, and even throw in trading tips. This will build a strong foundation in stock market trading.

As these stock market guides progress into later modules, they cover topics like market timing and chart reading. Timing is crucial to earning a profit, especially with this type of stock options trading investment, so investors will learn about spotting trends and how to understand signals to buy and sell. A basic knowledge of timing indicators and the way they work to provide an individual with a greater chance of investment success.

Information regarding option trading strategies is something no stock market guide should leave out. These strategies include things like earnings strategies, call options, naked calls, and covered calls. Details about where to locate options and the best way to research each one should be a part of the training guide. The best stock market guides provide pointers on how to find free information such as stock and earning announcements. They also include trading tips for each strategy and details about augmenting profits and setting parameters on charts.

A stock market guide clearly explains everything there is to know about options trading. It does so through the definition of concepts and explanation of many option trading strategies, illustrating points with real-world examples whenever possible. The trading tips and advice provided in the stock market guide are icing on the cake and allow investors to embark on an options trading career with confidence.

An amazing feature of stock options is they let you profit in any market. You can profit when costs are going up when costs are going down, and also when they remain stagnant. Even in an uncertain market, options let you ride the up-and-down roller-coaster to your benefit. Options aren’t exactly methods to speculate and make a fast buck. Options are also utilized by pros to hedge risk and augment profits from positions in the major stocks.

Stocks do not need to go up in price for you to make serious coin from options. You can profit just as simply when stock prices fall. In reality significant profits have been made of purchasing put options, which rise in value when stock costs fall, thus giving you a profit.

Bollinger Bands

What are Bollinger Bands?

Bollinger Bands are volatility bands usually plotted two standard deviations above and below a moving average. They were developed by John Bollinger who owns the trademark Bollinger Band®. Simply put, they are used as reliable determinants of the volatility of securities. That is because they have the ability to automatically narrow when volatility decreases and widen when it increases. Their dynamic nature makes them great determinants of the strength of a trend. Furthermore, they are very reliable when it comes to identifying W-Bottoms and M-Tops.

bollinger bands are like traintracks
bollinger bands are like traintracks

How Bollinger Bands Are Calculated

Bollinger Bands are three separate lines. That means to determine them you need to perform three very simple calculations. Each one is summarized below. Please note that you should start by determining the standard deviation because you will need the value.
Middle band (first line): calculate the simple moving average for a 20-period duration (like 20 days). Use closing prices of the security in question.
Upper band (second line): add two standard deviations to the middle band; i.e. middle band + 2 standard deviations.
Lower band (third line): subtract two standard deviations from the middle band; i.e. middle band – 2 standard deviations.

What Bollinger Bands Indicate

Bollinger Bands form a very powerful trading indicator. As a matter of fact, you can use them solely to develop your trading strategy if other indicators are not clear. That is because they are drawn from the price structure of a security and provide reliable boundaries of lows and highs. The middle band is a powerful trend indicator of the stock because it analyzes the 20-period moving average. On the other hand, the upper and lower bands measure volatility. More often than not, when the bands tighten it always means that volatility is set to increase sharply. In more particular terms, when prices move closer to the upper band it means that the security is being overbought. On the other hand, when prices move closer to the lower band it always means that they are being oversold.

Using Bollinger Bands for Trading

Bollinger Bands can help you achieve consistent trading success when you use them properly and accurately. This section contains tips on how you can use the bands to achieve success, but first, it is important to mention that the price of a stock is relatively high if it is close to the upper band but relatively low if it is close to the lower band.

* Buy and sell signals: when the stock price surpasses the upper band, it generates a buy signal. Contrary to that, when it goes below the lower band then that is a sell signal. Of course, buy and sell signals are important because they ultimately determine whether your security will make a profit or not.

* Volatility measure: when Bollinger Bands narrow (move closer to each other), that is an indication of decreasing volatility. However, when they widen it means that there is an increase in volatility. In case you don’t know yet, high volatility means that the security is very risky.

* Trend-trading: Bollinger Bands are not static indicators and thus change depending on recent price dynamics. That makes them great tools for measuring not only volatility but momentum as well. Usually, when prices stay close to the upper band, it means that the security is recording a strong (consistent) trend. When prices pull away from outer bands then that is an indication that the momentum is fading. Another way of determining fading momentum is using the “three pushes to high” technique. As the name suggests, it develops from three pushes. The first one will record a new high, usually outside the upper band. The second will record a new high and touch the upper band. The final push will record a new high but will remain within the upper band. Such an observation is a reliable indicator of fading momentum.

* Combined with RSI: another way to use Bollinger Bands in trading involves applying them around another indicator – the Relative Strength Index (RSI). In this case, you need to observe for when RSI is tending towards an extreme high or low (usually towards 100 or 0 respectively). If it progresses and eventually touches the upper band but fails to do so on a second try then that is a sell signal. On the same note, if it touches the lower band but fails to touch it again on a second try then you have a buy signal.

Conclusion

What we have here are just a few tips that you can incorporate into your trading strategy. As you continue to use Bollinger Bands, you will realize that they offer much more than we can possibly cover. However, the information you have acquired is sufficient to get you started.

Using Penny Stock Newsletters For Profitable Trading

Newsletters

Many people are interested in investing in the stock market but are always scared about the risks involved. Little or no knowledge about the stock market stops them from taking the decision. If you are one among them, then now is the right time to take the decision and invest in penny stocks and reap the benefits. Penny stocks are stocks with a share value of less than $5. So it is an ideal investment that you can make in the market. These are the shares of small companies or business organizations which do not have more exposure or penetration in the market. The major difference in stocks with more capital and stocks with less capital is the fluctuation in the share value.

Micro-Cap Stocks

So if you have the money to make the investment, micro cap stocks is the right place to start with. Also, in micro cap stocks, it doesn’t take a lot of money to make a investment. You must be wondering where to start and how to go about making this investment in the stock market. To set the dice rolling, I recommend that you first subscribe to a penny stock newsletter and get timely penny stock alerts, and are better aware of how these small companies are performing. Then you must decide the number of shares you wish to purchase to enter the market and to trade. The micro cap newsletter lets you know about the best and the most profit making stocks in the market so that you can make a sound decision. You will get free penny stock alerts on daily basis it might be more helpful than going it alone.

pennies Remember, before investing in penny stocks, or any stocks for that matter, investors are urged to research, research and then research again. Track stocks that you are considering investing in. You can usually trade stocks on your own or open an account with a stock broker. Trading with a broker can be a little bit more costly than say trading with an online account. There are many online trading brokerage accounts available to try. But then you wonder how do I find which stocks to research? Well, there is one way that is helpful and that’s by subscribing to the best penny stock newsletter! It’s easy. They’re online and you get research market analysis so that you can help to minimize your research time.

Penny Stock Advisory Services

You must subscribe to penny stock newsletters and daily updates which are provided free by the online website. These letters and updates are written by people only focused in penny stocks. Sign up for the free newsletter. And don’t forget to always check your email inbox. Keep a watchful eye on your email. So that you are always up to date with their emails and aware of most market updates. This will enable you to help make a better intelligent investment decisions and reap the benefits of trading. And maybe also be a little entertained with their witty humor. Subscribe to the best penny stock newsletter and gain trading strategies to get maximum potential profits.

Read more

Resources

http://www.marketwatch.com/story/10-ways-to-trade-penny-stocks-2012-02-03

http://primarystocktrading.com/

http://www.nasdaq.com/investing/lowdown-on-penny-stocks.stm

Investing in Penny Stocks

Penny stocks are high risk investments, any form of investors both retail and institutional should walk the extra mile to get additional information of companies before putting their money at stake. The prices of penny stocks have been manipulated over the years and even as regulators keep a strong vigil, the prices continue to get manipulated by rumors. There are certain basic principles that must be kept in mind before looking to invest in penny stocks.

It is very essential to clearly demarcate the risks that are associated with a penny stock. Due to lack of information investors should look to seek the one stock that has the lowest risk attached to it keeping other factors constant. It is also very important to price the risk and determine whether the risk taken will be adequately rewarded as the share prices rise. It is not worthy of pursuing a risky venture if the expected returns from such a move is meager.

Once the risks have been identified there are other checks that the investor must put in place. It is quite probable that the current price of the stock is exaggerated and does not depict the true picture. Investors should look out for such signals by performing a technical analysis along with a fundamental analysis. Historical news about the movement of stock prices of the company can be helpful in explaining the current market price of the share.

Once a thorough analysis has been performed, it is essential to understand the purpose of investing in penny stocks. More often than not, the primary reason for putting money in these stocks is high returns. Irrespective of the motive, investors should have a definite strategy in mind while investing in penny stocks. At times things may not work out accordingly to plan but there is no reason to panic if the analysis suggests that the stocks continue to remain a safe bet. Panic selling is a common feature of these stocks as most investors look to book immediate profits but a sound investor will not fall prey to the market outcries.

Investors should also look to invest in penny stocks that have chances of breaking out. Now there are numerous reasons why the price of these stocks may rise suddenly. Beating market expectations, launch of new products and pump and dump strategy are a few reasons that have been responsible for breakouts in the past. Investors should look out for pump and dump strategy as this does not reflect well on the soundness of the company.

A fundamental law of investing in equity markets is that one should not be too biased towards a particular share. As an investor, it is essential to book profits and not cling onto a stock based on one’s intuition. Some people have the knack of holding onto a stock that has already witnessed a considerable rise. This strategy can ruin the effort that was put in before the investment decision was made.

Penny stocks are extremely volatile and extra caution in required along with meticulous planning. Investing in penny stocks definitely requires considerable effort and time. How well people apply the fundamentals of equity investment will be the determining factor in the long run.

How To Choose Good Day Trading Strategies?

The information available on the internet as a beginner in day trading can be very overwhelming and confusing. There is so much contradiction in the day trading strategies that it gets hard to select the ones which are actually good. On the internet and elsewhere, you will find tons of book, seminars, videos, articles, magazines, etc; all telling you to follow different paths for sure success. With the overwhelming amount of strategies for day trading, it is not a surprise that many newbie investors lose money in the initial period and then quit the line. As per a recent statistic, about 97% of the day-trading investors don’t break even in the first year of investment. Now, the question is – how do you choose a really good day trading strategy?

Identify your strategy:

Imagine this scenario- for every trade, there are two different types of opinions in mind of buyer and the seller. If you are purchasing a stock then you are doing this because you see growth in that stock, but wait a minute! You are purchasing the stocks from someone else, and he is selling the stocks, because he thinks otherwise about the potential of the stock. Same is the case when you try selling a stock, as someone else buys the same stock for benefits. There are always two different opinions, and in no situation- both can be true. This is all about day trading strategies, everyone has their own strategy to survive the market and make benefit from the day trading business.

Keep track of your mistakes and good decisions:

Even if you are constantly making wrong decisions with your stock investments, then it tells you that there is a flaw in your day trading strategy. At this time, you need to go back through your investments of the day and evaluate every decision you made. Sooner or later, you will come across the reason why you made a mistake. Yes, the market is very unpredictable and always fluctuates, but even you make bad decisions. The trick for success is to point out these mistakes and note down these for future references. Each one of the day trading strategies has flaws; all you need to do is to identify the ones that cause you loss, and then eliminate them. You can do similar thing about all the right decisions you made, by just keeping it all noted in a diary.

Constantly improve your day trading strategy:

Now the last suggestion is really very crucial for day trading investment. It is possible for the investors to have trouble in breaking even with their investment. By looking at your strategy of day trading, you can actually improve it to become a really great day trading strategy. For example- did you lose money in a stock by keeping it for 10 days, even though its exponential growth ended on day three? If this is the case, maybe you can really use a reminder in your diary not to do this mistake again. If you are planning to go for long investments, try doing this when prices are just over 1% above the average.

Don’t get caught following some guru’s strategy get some facts from a trusted source.

Advantages of Using Stock Trading Software

Stock trading is one of the most practiced investment option for the private investors. People always take good amount of risk to develop their income in popular stock trading such as NYSE or NASDAQ. The trading systems are generally used by the public as a way of building income based on the savings. The best investment option for any individual is generally the companies he is most familiar with. Making benefits in the stock trading requires great amount of experience and knowledge of the factors affecting the pricing of stocks. To make this whole task a lot easier, there are plenty of software tools available for stock trading. This stock trading software uses a pre-determined strategy to invest the money in desired stocks. Among the advantages of these software tools, some are listed below:

  • Save Time: In the initial times of day trading, it was easy to spot people looking for services of someone expert in financial businesses for advice about investment. The only option available for the investors was to invest in a mutual fund where the fund owners will keep a share of benefit for sure but in case of a loss, they take no responsibility. The other possible work around was to understand the working of stock investment and take risks on your knowledge. This is much more risky unless you are an expert and it requires great deal of your time. The stock trading software tool give you full freedom with your investment efforts as the tool takes care of all the tasks in a pre-determined manner.

 

  • Save Money: Another benefit of using the software tool can be found in the saving of money. Yes, most of the top-notch effective software tools cost you a little bit of money, but at the same time, these software tools sets you free of any kind of stock broker commission. Other than that, the stock trading software provides you the ability to invest money intelligently. This gives you a lot of money saving facility by avoiding wrong investments where you may lose money. The well thought investment decisions taken by the software are more reliable and trustworthy.

 

  • Access advantages: To use the time saving and money saving features involved with any trading software, you need to fully adapt to its all access tools. There are many hidden tools and assistance that a software tool provides you and it is worth trying to get the full advantage of the tool. The added benefits of the tool include features like a standard guideline for better investment, a virtual assistance on the analysis of market stocks, tracking of various stocks, among many other desired features which will give you a peace of mind and better results with your investment.

These software tools are available to everyone and give you an investment option beyond your level of familiarity with the investment trends. Just purchase the software tool and prepare for a long-term success. In any trade, it is important to have your tools with you, and in the trading of stocks, trading software is the lifesaver.

 

Penny Stock Trading Strategies and Tips

Keeping a technical analysis of the investment in stock trading is a great tool that enables the investor to keep track of the financial activities as well as the performance of his investments. This kind of evaluation almost always results in good predictions and benefits. However, in case of a penny stock strategy, this technique gets a little difficult to use as the accuracy of data is never very reliable in the penny stock trading. Hence to win the benefits from your investment, you need to focus on specific penny stock trading strategies. Learning these strategies can really help you with your investment, along with the task of maximizing your benefits.

Learn the truth about penny stocks http://www.sec.gov/answers/penny.htm

One of the most faced challenges in the penny stock trading is the hype of the price for stocks. It is common in the penny stock trading that pricing of a stock goes virally up just based on the promotion of it through various mediums. The newsletters, e-mails, and discussion of people in the chat rooms can actually affect the pricing of a penny stock. It is very important for an investor to stay away from this kind of false advertisements, and following good penny stock trading strategies can really help you in avoiding such type of false claims. There are various market tricks you can use to make a proper strategy to gain maximum benefit.

Trading Online
Trading Online

Tips for Penny Stock Trading:

  • Concentrate on individual stocks: In the penny stock trading, you can actually win great returns with small amount of investment. This characteristic of the trading may appeal to you to invest in more than one stock at the same time. This is a little discouraged technique as you need to focus on your investment. Handling two different stocks can be a lot of task, and you may need to make separate penny stock trading strategies for each stock. Try avoiding a situation like this by keeping your concentration entirely on just one stock.

 

  • Invest small capital money: If you are having small amount of capital to invest, you can easily select the penny stock trading as you way into the trading industry. You can start with the small investment, and earn big returns with it if you follow an effective strategy.

 

  • Take cautions about the pink sheet stocks: The pink stocks are highly risk involving as there are no casual formalities attached with such as providing financial statements in a regular manner. These stocks don’t have enough essential requirements of getting listed in the official United States stock exchange. These are not very reliable and many not stay for long time. Unless you are completely sure about a pink sheet stock, the recommendation is to stick with the listed stocks only. It is one of the most important tips for the penny stock trading and for reliable success, you need to follow this.

 

  • Opt out of market order: in case of your penny stock trading, don’t select a market order. The stocks are very much fluctuating, and the reliability of these companies is not very high. It is recommended not to purchase the stocks out of stock exchange hours.

 

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