Whipsaws And How To Avoid Them

"Whipsaw" is a word that strikes fear into the heart of every trader. The smaller your account the more afraid of being whipsawed you are likely to be. Whipsawing is when the market fills your entry order and your stop loss exit order in the same session, effectively stopping you out for a loss. The summer months are especially bad for whipsaw trades.

Since many of the commodity markets are crop markets they are extremely sensitive to any changes in market or crop conditions, and will react quickly to a change in either. This quick "about face" has the potential to whipsaw you out of a seemingly good trade.

One other reason that whipsaw trades are more likely to occur during the summer months is that many traders are on summer vacation, this is especially true the last few weeks of August as families try to squeeze in a couple of weeks away before the children have to go back to school. The absence of some of these traders leads to a slightly thinner marketplace, which in turn can lead to larger daily ranges and the resulting whipsaw trade.

So what can be done? Is there anything the small trader can do to avoid getting whipsawed? While there is no foolproof way to avoid getting whipsawed there are a couple of things you can do to make it less likely. The most important thing you can do as a small trader is to use only the strongest support and resistance levels to base your trades on. Using the stronger resistance will normally keep you on the right side of the market and "make the market come to you" before entering the trade.

If the risk vs. reward ratio allows it, I normally like to see the market break a secondary support or resistance level before entering the trade. Sometimes this means giving up some potential profit, but in return you will usually get into a trending market instead of one that is just chopping about. The second benefit of waiting for the market to breach a secondary resistance level is that you can use the stronger support or resistance area to cover your trade, which should enable you to keep risk to a reasonably small amount.

It is also important that you continue to try and trade with the trend as much as possible, especially at this time of the year. Do your best to avoid countertrend trades unless you have a very good reason for taking one, and if you do take a countertrend trade keep your exit stop close and use a profit taking target to maximize your potential profit. Bear in mind that because the markets tend to be choppier at this time of the year, you should avoid placing too much emphasis on any single daily range - unless it is a large range of course.

Because of the added choppiness it is more important than ever to be patient with the markets. Be prepared to see the markets look bullish one day and bearish the next. Don't get caught up in trading the daily changes however, keep your eye on the bigger picture. Step back and take an overall view of your charts in order to keep your perspective if you find yourself concentrating too much on the last few bars of the chart. If necessary consult a weekly chart which will normally show the predominant market trend more clearly than the daily.

Lastly realize that whipsaws are a part of trading. Regardless of how well you search out your support and resistance lines and monitor your opening ranges, whipsaws can still occur. Fortunately for us support and resistance technicians, we can usually keep the losses small enough that they do not adversely affect our accounts; although our egos can be a different story.

As unpleasant as whipsaws are, try not to let them affect you too much emotionally. Avoid the desire of trying to "get even" with the market. This rarely works and will usually only make matters worse, likely resulting in yet more whipsaw trades. After all, we are dealing with an uncertain future. Sometimes the market will behave as it is supposed to, and other times it will not. It is important that at those times when the market is not behaving as anticipated, you exit the trade with as little damage to your account as possible.

Take solace in managing your account well, even if it is a losing trade. This is what differentiates traders from fortune tellers. Whipsaw season will pass soon; just make sure you have enough of an account left that you can still trade when it is over. Sometimes the best course of action is just to wait the market out for a few weeks until things begin to look a little more settled. Remember, no one says you "have to" trade at this time of the year.

No Investment Is Safe! The Types Of Investment Risk

If you've been researching the basics of investing, you`ve most likely read a little bit about the varying degrees of risk in different investments. I'd like to look more closely at risk and find out what it means how we can deal with it. Risk is the possibility of loss to your investment. If there is no guarantee that you will receive your maximum possible return, then there is risk of some kind. All investments involve risk.

The most basic kind of risk involves a loss of principal (the original amount of money that you invested). If you buy a stock or mutual fund or invest in real estate, there is no guarantee that you will get all of your principal back. You can greatly reduce or eliminate the risk to your principal by keeping your money in a bank savings account, purchasing a fixed term deposit (agreeing to deposit your money for a specified amount of time), or buying investment grade bonds. But even when you guarantee your principal, there are still other kinds of risk.

Another kind of risk is inflation risk, the risk that your money will hold less value in the future than it does now. Keeping your money in a bank savings account, and to a lesser extent a fixed term deposit, exposes you to inflation risk because your returns will probably be lower than the rate of inflation. This is why banks are terrible places to leave large amounts of money for more than a short time.

Another kind of risk is opportunity risk. This occurs when you lock up your money in an illiquid investment, like a fixed term deposit with very modest returns, and miss an opportunity to invest in something with a chance of much higher returns. When I first began learning to invest, I was in a hurry to get started and put around $5000 into a fixed term deposit. I didn't know much about investing, so I plopped my savings into a guaranteed investment. About 1 day later, there was a drastic drop in the stock markets, which would have been a golden opportunity for me to buy stocks while prices were low. But I couldn't buy stocks, because I had committed that $5000 to a 1 year fixed term deposit with no option of early redemption. I could have made some real gains on the stock market, but I was stuck with a modest 5 percent interest rate. I had avoided risk to my principal, but I was bitten by opportunity risk. You can avoid opportunity risk by keep your money in liquid investments like stocks and mutual funds with no minimum time commitments.

Opportunity risk is similar to marketability risk, which is the chance that there will be no buyer available when you wish to sell your investment. This is important especially with real estate. Selling property can take a long time. You need to hire a realtor, advertise, have open houses, etc. If you need that money immediately, you will likely be out of luck. Your money is tied up for the time being. Real estate is not a good investment to make if you may need to liquidate it anytime soon, or at short notice.

Another kind of risk, and one of the most major, is concentration risk. This occurs when you have too much of your money concentrated in one area, for example all in one particular stock or all in one industry. Have you heard of Enron? Well, anybody who had their investments concentrated in Enron ended up getting the shaft. When the dot com bubble burst several years back, a lot of people who had their money concentrated in new internet businesses lost everything. The lesson to learn here is to diversify your investments. Diversification, as we've mentioned before, means holding a variety of different investments across a variety of sectors so that if one of your investments flops, you are losing only a small portion of your money rather than a large portion of it or, God forbid, all of it. It's of central importance to build a diversified portfolio to reduce your concentration risk.

Another kind of risk is interest rate risk, which is the possibility that the relative value of your investment will decrease due to changes in interest rates. This is mainly relevant for fixed income investments like bonds. If you buy a bond with a fixed 5% interest rate, but then market interest rates increase, you may be stuck with that bond at a 5% interest rate even though bonds with higher interest rates are now being issued. The dollar value of your investment upon maturity doesn`t change, but the relative value has changed, since there are now other people out there earning more interest than you. This will decrease demand for your bond, so if you decide to sell it it will fetch you a lower price than the newer bonds with higher interest rates. Interest rates have a profound effect on various aspects of investment, but this is the most basic kind of interest rate risk to understand for now.

Another kind of risk is currency exchange risk. Currency exchange rates are constantly fluctuating and can change the value of your investments. If the base currency of your investment is different than the currency you are purchasing with, then the value of your investment will fluctuate depending on the currency exchange rates. For example, if you buy a China growth mutual fund whose base currency is the Chinese Yuan, and you buy it in US dollars, then any increase in the Yuan will work in your favor when you sell the investment, and any decrease in the Yuan will work against you when you sell the investment. This risk can not be eliminated and it is best to have a balance of hard currencies. Hard currencies are basically trusted currencies of stable countries with consistent fiscal policies.

Those are some of the major types of risk you need to be aware of. Once you understand these kinds of risks, you can determine your own risk profile and decide how much risk you are prepared to take on.

Learn About Online Trading and Avoid Getting Carried Away

These days, online trading is such a popular activity that anyone can buy and sell stocks and shares online. Traders love having the ability to look at their accounts whenever they want to, and brokers enjoy the ease of taking orders over the Internet, as opposed to simply using the telephone.

Most brokers and brokerage houses are now offering online trading to their clients and one benefit of this trading online is that fees and commissions are often lower. However, while online trading is certainly great, there are some drawbacks, especially if you are inexperienced.

When you are new to investing, having the ability to speak in person with a broker can be quite advantageous. If you aren’t stock market savvy, online trading may be a dangerous thing for you, as you may easily get carried away. If you are not experienced already, make sure that you learn as much as you can about trading stocks before you start trading online.

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

Starting out, you should select an online brokerage company that has been around for a while. Obviously you won’t find one that has been in business for fifty years, but you can find a company that has been in business for that length of time and now offers online trading.

Again, although online trading is an attractive activity it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure beforehand that you really know what you are doing! You will of course learn as much about the investment as possible, and you would want to see how past investors have done as well. It's common sense!

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

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

Learning about the stock market and investments takes a lot of time, but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic - which is what stock brokers do. With access to the Internet, you can actually play the stock market in theory, without risking any real money to get a feel for how it works.

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

As a potential investor and before you start trading online, you should read anything you can get your hands on about investing, but start with the “How to Begin Investing” books and websites first. Otherwise, you will quickly find that you are lost.

Financial Freedom Retirement Planning - Achieve Your Objectives Starting Today

Financial freedom is very important for retirement planning? Obviously, everybody wants to live the wealthy lifestyle in their later years. Unfortunately, the vast majority of people fail to live the lifestyle they’ve always wanted when they are done with work, due to lack of money.

In many cases, they are forced to continue working well past retirement age just to make ends meet. This regrettable situation could have been easily changed with some simple planning and investing. Here are some tips to help you achieve the financial freedom and lifestyle you’ve always wanted in your golden years.

First of all, keep in mind that the most important part of any retirement planning activity is to know where you want to be at the end. All too many people have no idea of the kind of lifestyle they wish to live when they retire, and yet they attempt to conduct retirement planning without any clear objective in mind.

This is akin to getting in the car and driving without knowing your final destination. Therefore, an important step for you to take before retirement planning is to sit down and write out exactly what you want to accomplish for retirement. Write out the kind of house you want to live in, car you want to drive, lifestyle you want to live, etc. hold nothing back in this process.

Now, put that sheet in a place where you can view it often. This instills in your subconscious mind your retirement planning goals, and you will come up with ideas to help you achieve it, just by merely looking at it and visualizing already having it.

Once you have this financial freedom lifestyle in mind, determine how much money you will need to live the lifestyle, and then find out the investment vehicles that will help you get there. I highly recommend you learn retirement planning investing for yourself, so you can take charge of your financial future.

All too many people entrust their financial freedom retirement planning to a financial services company when they should take control of it themselves. Simply read every book you can find on the topic of investing and making money. Follow these tips, and you will be well on your way to living achieving financial freedom in your golden years.

Investment Stock Market

Online investing tips

The world of online stock investing has proved to be the fortune maker for thousands of people. It is a dynamic market where an intelligent and careful investor can make a lot of money. It has been regarded as the best legal way of making money in the shortest time. In spite of all this, the fact that the stock market can be a risky market and it has made many investors back out. For a new stockbroker it is essential to be well versed with the terms and trends of the stock market if he/she wants to succeed with the least of risks involved. It is futile to make brash theories about the stock trading field on your own hunches. This will lead to the loss of money and you might be forced to withdraw from future efforts in this field. In order to excel in this industry, you have to employ good planning skills with a lot of patience to get the desired results.

One of the best things you can do to raise your income through stock market trading is to study the working methods of the investors who have been above average in this field and follow their example. You must start off by investing in the stock market with relatively safer investments. In the beginning, you must stay clear from stocks that have a history of extreme fluctuations. Another thing to be kept in mind is that you must start the investment process at a young age so that you get the maximum returns on your retirement.

Today you can invest your resources at home. This is a very good thing for you as you can utilize the extra time in educating yourself on the finer points of the market. You must read all the relevant information and learn to ward off useless advices. There are many people who can create a situation of panic around you and this might lead to a situation where you might make the wrong decisions. The determination to stick to a well-planned investment is essential to get the right results. Stock market quotes are a great way in analyzing the market trends. They help in the right assessment of a stock as you can see its performance over a wider period of time.

You should not hesitate to use the services of an established broker if you are new to the market and need some good advice to start off with your fortune making exercise. Patience is also a must-required virtue, which will help you in making the right choices. You must realize that money cannot be made overnight and needs meticulous planning to become a reality. If a stock broker is patient and well educated about his investments, he/she is guaranteed to make the most out from the online stock-trading field. With these points in mind, you can surely benefit a lot in the long run, and carve out a better future for you and your family.

Are There Loans For Investing? Should I Take One?

There are obviously loans for investing in the real estate business because there are mortgage loans, there are loans for starting businesses or for funding running businesses also, but there are other investments that don’t have specific loans to fund them.

Nevertheless, there are generic loan types available that can be used for financing any kind of investment like home equity loans, personal loans, etc. The question that rises is: is it advisable to take a loan and invest the money in something else? What kind of knowledge do you need to do such thing and what kind of precautions should you take to risk the least possible by using the money from a loan for that purpose?

The Concept Of Loans For Investments

Loans for investments are loans provided for acquiring assets of diverse nature that have values that fluctuate more or less significantly with time. What the applicant expects is that the gains obtained with the investment excel the fees, rates and costs that are required for repaying the loan. As explained above there are loans specially tailored for specific assets and other loan types that can be considered non purpose oriented loans that can be used for investment too.

The Risks Of Margin Investing

The problem with the concept of loans for investment is that investing on margin carries several risks that need to be considered. Imagine the following scenario: you take a $100,000 loan with a repayment program of one year and an APR of 20%. This implies that by the end of the repayment program you will have to pay $120,000.

However, let’s say you expect your investment to provide you with 40% gains in one year; if it works, you would have made $20000 without using money of your own. But if the investment takes longer to produce that revenues or the asset even shrinks in price, you may be forced to sell at a lower price and put money of your own to repay the loan. And this is still a good scenario; if you can’t repay the loan the consequences can actually be disastrous.

Being Reasonable

What do we imply by being reasonable? Simple: getting a loan for investing in certain assets like stocks, bonds, etc. is very risky, maybe too much of a risk for someone who is not an expert on markets. However, if you have the means for repaying the loan in the event you lose with your investment it is not such a crazy thing to do. But if you don’t have savings or other assets that you can turn into cash in a short period of time, you may risk ruining your credit or even losing other assets.

Things are different when you plan to start your own business or you want to get into the real estate market. These loans are less expensive in terms of interest rate and can be easily refinanced if something unexpected happens. Therefore, the risks are reduced. Nevertheless, it is wise to take the necessary precautions to be able to repay the loan if such unexpected circumstances take place.

How To Find An Investment Club

For many people, taking the plunge into investing can be a daunting experience. They may have little investment knowledge or limited funds. Joining or starting an investment club is a great way to learn about investing in stock or real estate. Investment clubs enable members to pool their money for joint investment so you don't need to have massive capital to start investing.

Finding an online investment club
There are many online investment clubs available. To start with, choose an investment club that fits your investing style and interests. Do you want to invest in stock or real estate? If you are a male (or female), do you prefer to join an all-men (or all-women) or mixed investment club?

Finding a good fit is important for an online investment club. Keep in mind what your main objective is for joining a club. If you are new to investing and need support and knowledge, be sure to choose a club that offers lots of hand-holding for its members.

Another important feature of an online investment club is the forum or discussion board. It allows members to communicate with each other since they don't meet face to face. They can ask and answer questions. Newbies can learn a lot from others who are more knowledgeable and experienced. People from all over the world can join an online investment club. Distance is not a problem as the internet has made it possible for them to stay connected.

Choose a long established online investment club that is in line with your approach to investing. You should contact the club directly if you have any questions. Enquire about its past and current investment performance.

Finding an offline (or local) investment club
For people who have time to socialize, they may prefer to join a local investment club. These clubs are similar to online clubs except that members meet locally, typically once a month, to discuss and evaluate what stocks to invest.

The meetings incorporate educational talks on various investing subjects. You have the opportunity to hear investment experts speak and share their experience – not from someone with textbook knowledge only.

Local investment clubs are often advertised in the local newspaper classified ads. You may also find them through postings on bulletin boards. Your local bank may also have information about investment clubs. Another good way to find a local investment club is through word of mouth. Ask your co-workers or friends. Chances are they may know someone who is a member of an investment club and can make a recommendation to you.

5 Keys To Stock Option Trading

Stock option trading offers the skilled trader more potential for making a fortune option trading than almost any other form of online trading in today’s market. The degree of controlled risk along with superior leverage allows a knowledgeable option trader the chance to make huge profits but an aspiring option trader must have a solid foundation of education about what makes up a sound option trading method in order to have a long term success at option trading. There are five essential keys that any option trader must understand when developing a winning stock option system.

First, you must understand the degree which time affects the premium of the option you are considering trading. There are two parts you must consider when factoring time into the stock option trading decisions. The first thing that you must take into account is the intrinsic time left on an option. Since options have a limited time period of anywhere from 30 days to several year depending on the particular option that you bought you must be sure that you purchase the correct option containing enough time on it to insure that time decay doesn’t erode your investment away before your position has enough time to be profitable.

The second skill of trading options profitably is factoring time into your trading system in relation to trading a particular stock option and knowing the statistics of your option trading methodology or option trading setup by knowing the average holding period of a trade signal. If your average holding time for an option trade is seven days then you don’t want to buy an option with three months of time premium left on it because you would be paying more for the extra time with the option’s purchase price. Nor would you buy an option with less that 30 days till expiration as time decay would erode the value of option so quickly that even if the option’s underlying stock movement moved favorably to you the time decay would prevent you from realizing a gain in the option itself.

The third thing to profitable stock option trading is understanding the relation of volatility between the market, the underlying stock that underlies the stock option, and the effect is has on the value of the option itself. When the general stock market as an index goes thru periods of volatility or low trading ranges the stocks that make up the market tend to follow overall trend and also begin to experience periods of low overall volatility which in turn can cause derivative like stock options to become cheap or low premiums. But if the market’s volatility rises it is likely that individual stocks will follow the trend causing stock option premiums to increase in value given that the market moves in the trader’s favor. The next key in how to trade stock options successfully is having a stock option trading method that takes these key factors into consideration while giving clear entry signals, clear exit signals, a defined system of trade management, and a profit factor greater than your average loss over a series of trades. Knowing the ins and outs of various trade setups is useless if you don’t have a trading methodology that guides you in every step of the trade process. A solid trading method holds you by the hand and defines each step while leading you to being a consistent winner in the markets and a profitable trader when all is said and done.

Finally, the fifth and final key to successfully trading stock options is yourself, particularly your trading psychology. Human beings and there mental makeup are extremely complex so it is extremely important that stock option traders not only have a sound stock option trading methodology but the discipline to follow their trading methods. You can give two people the same exact winning trading system but it is very common for them to have different results. Invariably, the one that has the ability to remain as detached from his losing trades as well as his winning trades while maintaining the discipline to follow the system’s rules no matter the trading result will emerge the greatest winner in the end.

Using these five keys as a basis to develop your stock option trading methodology can help you avoid the mistakes and pitfalls of many beginning option traders. By understanding time decay, factoring an option’s time into your trading method, how volatility impacts a stock option’s value, what defines a reliable stock option trading methodology, and your own trading psychology you now have a foundation to develop into a winning stock option trader.

Stock Trades

Does investing in stocks eat all our hard-earned money? You definitely need help. No one likes to eat their crows and if you wish to earn something big, stock market is a perfect place to be. Investing in stocks can earn you big bucks and vice versa. However, to avoid a situation to loose your savings it is important to make well informed and calculated investments.

Stocks are volatile and their prices experience a great difference with passing times. Investing in them can make you earn early money as compared to any other assets. However, long-term investments are considered to be better return payer for investing in stocks.

There are many things that have to be taken into account in order to improve your returns. There are special strategies that need to be followed while investing in stocks. When the share prices go up, it reflects strong market condition and appreciation. It is advisable, during that time to sell your shares of a particular company that were brought at lower rates. Moreover, stocks of those companies may be purchased or retained in case of increasing share value of those company stocks. Well, it should be kept in mind that even if the market is on hike, individual companies may experience downfalls. Thus, each company shares are to be handled accordingly.

Despite of downfall in market, some company shares experience a hike but that does not indicate to bulk buying of them as a downfall in the market generally tends to affect individual shares to a great extent. For example, downfall in NASDAQ even affects much other country’s share market and resulted in their low streams. Hence, the shares for those companies, which are expected to recover, soon must be purchased.

Apart from these market moods there are few techniques that may assist you to earn big amounts.

* Set your goals: it is important to create your own financial goals to make a target to be achieved. Creating your feasible standards motivates a person and tends you to be open to new techniques to achieve them.

* Know yourself: know the reason for investment and the motive behind it. Money is a means to an end and not an end itself. Always follow this rule and set your own statistics to trade.

* Anticipate and calculate: stock market is all about anticipating the returns and calculating the risks. It is important for any investor to make an estimate for the returns. However, degree of risks involved is an important stratum that is generally over-viewed by investors. To earn money, it is important to calculate the risks that are to be bared and the results in case of failure.

* Develop your asset strategy: asset allocation must be well distributed and thought of. It is not advisable to invest in only one stock at big amounts. Try and allocate funds to various shares and equity in small amounts. That distributes the amount of risks and avoids huge losses.

* Automated trading: sometimes making the trading automated gives you a break and enable traders to control their emotions. To have better focus on the stocks. Thus, having patience and keep cool tends to increase your rewards and returns.

* Learn, learn and learn: learning is a never-ending process that applies to share investment too. To learn technical and trading techniques provides you an upper hand over other investors. Try to experiment sometimes beside routine strategy. This way keeps a trader motivated and provides him with better probability to earn more.

* Be consistent: consistency and regularity definitely pays. If you want to earn more benefits, be a long-term player in share market, which entails better return prospects.

* Maintain a balanced portfolio: always maintain a portfolio, which has exposure to equity and tends to support purchasing power. Each portfolio must be balanced to have a combination of Largecap and Midcap stocks.

Stock Traders

The conventional perceptions about the stock traders are no longer true in present scenario of online trading. There was a time when stock traders meant people shouting at each other holding pens and paper on the floors of the stock exchanges. Today major portion of the stock market trading is done online. Some of the most Stock markets are nothing but a network of computers where trading is done online. Whether it is a virtual or brick and mortar stock exchange, the online trading stock options have made the stock market more accessible and popular amongst the common man. The myths about stock market trading are gradually dying in mind of the masses and people are investing in the stock market in never before manner.

There are some distinctive advantages that the online stock traders enjoy. The process involves no middle man. All you need to do is open an account with an online broking company and you will have all the online trading stock options open for you. You can do your research and the company you will have your account, which will provide you with extensive help and regular feedbacks on the stock market and stocks of your preference. Then you need to take your own decisions and buy and sell stocks on your own. No clumsy paper works and lengthy waits to receive the share certificates. The trading is done on the real time and you will see the stocks in your account whenever you log in.

Another advantage of the online share transactions is that stock traders can pay less commission compared to traditional stock market trading. With the online share portals you need not pay excess brokerage for certain stocks. You can invest according to your requirement and resources. There is no lower or upper limit and the trading stock options are many like the day trading or limit and long-term investment. In a nutshell you will have complete control over your stock market trading and can effectively plan your investments.

These online brokers offer diverse online trading stock options. They are professional at services and online stock market investment solutions. Their extensive research facilities and regular and detailed guidance to the registered stock traders tends to benefit traders. The cost of trading with online brokerage firms is significantly low. The Automatic Investments price may be as low as $1 per trade and the real time trades may get as low as $1.5 to $3.0. The fractional share buying facility lets you buy portions of an expensive stock. With just a few clicks of the mouse you can open a trading account at these companies. There are different types of accounts for stock traders that are offered including Individual Accounts, Joint Accounts, IRA's (Individual Retirement Accounts), and Education Savings Accounts.

Individual Account – Individual account is the share trading account that is opened by one person. To open an individual account you have to be an US Citizen or Resident Alien, with a valid Social Security Number and must have attained the age of majority in your state.

Joint Account - A Joint Account can be opened for stock trading for two or more people. To open a joint account each of the account holders must have attained the age of majority in their state of residence. The age of majority is when you are entitled to full legal rights as an adult.

Individual Retirement Account - It is a personal retirement savings program that offers tax advantages to share traders. We are offering Traditional IRA, Roth IRA and Rollover IRA options.

Education Saving Account - An Education Savings Account (ESA) is a trust that is set up to pay the educational expenses of the Designated Beneficiary. The beneficiary is the minor for whom the account is being opened. It is essential that the beneficiary is minor that is his or her age is less than 18 years at the time of opening the account.

However, there are many other terms that are provided by many companies and it is left at your choice to get the deal that suits your requirements. So, start investing in the stocks and online brokerage firms are there to extend their guiding hand.

"Stagnant" & "Down" Scenarios

If we apply the covered call strategy to the stagnant stock scenario, we take a negative return scenario and turn it into a positive. Remember, when we sell an option, we receive a premium for doing so.

When the stock does not move during the option's life, the extrinsic value of the option goes to zero. The money paid for the option goes to the seller. We'll take a look at how this sets up.

Let's go back to our previous example with the stock trading at exactly $9.50. We sell the front month, at-the-money call, which would be the 10 strike call. We sell the front month 10 strike calls at $.50. As time goes by, there is less chance for the option to become "in-the-money". As this happens, the extrinsic value lessens and finally, after Friday expiration, the option is worthless.

The stock finishes at $10.00 and you have received no capital appreciation but you have received the full $.50 of extrinsic value from the option sale. If the studies are correct and selling the premium works 80% of the time, then you will collect approximately $4.00 per contract sold over a year.

As the examples demonstrate, writing covered calls against a stagnant stock can provide you with an acceptable return instead of frustration, wasted time and capital.

The "Down" Scenario

In the final scenario, where your stock purchase is headed down into negative territory, the covered call strategy can help minimize your losses. Although picking losers and incurring losses is inescapable, it can be minimized and controlled. Let's take a look at how the buy-write can help us do that.

For example, let's say you bought a stock for $9.50 and at the end of the month the stock had traded down to $8.50, you would have a $1.00 loss on our investment.

However, if you had sold the 10 strike calls for $.50, you would only have a $.50 loss. You would have a $1.00 capital loss in the stock, but a $.50 option gain from selling the option, which would expire worthless.

If you were going to buy the stock anyway and incur a possible loss, it is better to take a $.50 loss than a $1.00 loss. In this down scenario, the option premium received helped to offset the capital loss.

If the stock is down more than the amount you received for selling the call, then the option premium serves as an offset to the loss of the stock.

However, you can still make money in the "down scenario" using the covered strategy if the stock is only down a small amount. There is a scenario in the buy-write strategy where you can profit from owning a stock that is lower than where you bought it.

Going back to the previous example, you bought a stock for $9.50 and you sold the front month 10 strike calls for $.50. At expiration, the stock finishes down $.20 at $9.30 You would have incurred a $.20 loss on your stock.

However, with the stock at $9.30, the 10 strike call that you sold for $.50 is now worthless. So, you have a $.20 loss on the stock and a $.50 gain from the option premium sold. This leaves you with a gain of $.30 on a stock that is down $.20 since the time you purchased it.

To recap: in our third scenario, the "down scenario," your loss will be offset by the option premium you received, hence your loss will not be as severe. You still may incur a loss, but it will be minimized, and minimizing losses is a key to successful investing.

Timing the Exit of a Trade After a Large Move

There are many examples of market blow-offs and subsequent crashes. It is a very difficult balancing act trying to decide whether to get out during the parabolic move, and possibly leaving huge gains on the table, or to hold on with the risk of overstaying the market and giving back much or all of the gains. There is no easy answer. However, many lessons can be learned from observing past large market moves and the inevitable crashes that followed. Gold in 1980 was a good case study, as was the Nasdaq blow-off in 2000. Many individual stocks make great studies as well, including many recently.

Is there a common characteristic that can warn of danger in a timely way? Does a bell ring at the top to suggest we stop acting like pigs and should take our profits? No, there isn't one bell that rings at the top, but there are many little warnings.

Sentiment indicators do try to give a warning when everyone seems to be on the same side of the trade. If almost all traders have the same opinion, and are all positioned on the same side of the market, who is left to buy or sell? This is obvious, but how do we measure it. Traders who agree on the current price, but disagree on value will characterize a healthy market that has room to move. If everyone agrees on both price and value, the market is sure to go the other way.

Most futures markets and stock indexes have many sentiment indicators that give an estimate of bullish or bearish bias. In addition, futures traders have the Commitment of Traders weekly report that separates the large traders, small traders, and commercial interests. The problem with these approaches is they are terrible for making timing decisions. Markets can stay overbought or oversold for months on end. Even extreme readings don't help when the market is in a sustained trend. And, I believe the market character has changed in recent years, and the sentiment indicators are becoming less and less useful. Everybody knows about them. What everybody already knows won't help much.

However, I still find one sentiment indicator that works almost perfectly. When a market has had an extended, directional move and if a market pundit is asked if the trend has possibly been pushed a bit too far, and the answer is "This time it's different," that's a sell signal. It is never different. It always looks different at the top because all the fundamentals that caused the previous price advance are now known, and reported by the media, and already in the price. What had caused prices to advance is now being learned, and now everything looks so bullish that it seems obvious that price has to now go up. But it already has gone up. It's now too late. The bus has not only left the station; it has already arrived at its destination.

I'm a visual person; therefore I view the ups and downs in the market visually, like a vehicle going up or down a hill. Imagine a bus going along a flat road with few passengers. Someone can easily get on the bus at each stop. This goes on for a few miles. The bus starts to climb a gradual hill, while more people get on at each stop. All of a sudden most of the seats are full. The hill the bus is climbing starts to get a bit steeper. It is a hot summer day. More and more passengers get in at each stop. Now it is standing room only, and the bus is climbing a very steep hill. It is struggling, trying to make it up the hill. A little bit of steam starts to come out of the engine compartment, but nobody notices. At each stop people keep climbing aboard. The passengers are oblivious to the straining of the bus. They are talking or reading. They just want to get to their destination. Now the bus is overcrowded and overheating. People are hanging out the windows and holding onto the outside of the bus. It keeps trying to get up the hill, barely moving at this point. One of the passengers asks a neighboring passenger if he thinks the bus will make it, citing an example of a previous bus trip where the bus broke down. The neighboring passenger replies "this time it's different, the bus was fixed since that trip." Right at that moment there is a big clunking sound with steam coming out of the engine. The ride is over. All the passengers get out in the worse possible location. Of course, the next day the bus is fixed and the whole process starts over.

So, back to markets and price charts and away from buses. There are some clues from the price charts, that in my opinion, are more direct and timely than watching sentiment. Divergences between prices making a new high, which are accompanied by lower oscillator readings, are an early warning. The problem is that there can be many divergences in a series before the market finally pays attention and turns around. In my experience, there will be a series of small divergences, and then one last push to a high accompanied by a larger divergence. Also, most likely going out to a larger time frame will show an overbought reading and possibly a divergence in that time frame as well.

Another clue is in the price bars themselves. There will often be a large bar up, or series of bars up, on unusually high volume. Often prices will accelerate into a parabolic curve on the last impulse move up. Other times will be the reverse; a large impulse move, followed by shallower and shallower impulses up. The former is probably a result of short covering, and the latter a result of traders just trying to keep the bull alive, despite declining momentum. Sometimes the conclusion will be left with one bar up there all by itself, with lower bars on each side. This is called an island reversal. This is usually a very timely and reliable signal when it occurs. But it is rare. And beware the retest. When perfect patterns appear, the market will often want to test one more time, just to make sure. Many times there will be upthrusts, or tall spikes, that fail, usually with the bars closing near their lows. The market often needs to retest these upthrust attempts many times, so don't be surprise to see a series of these upthrust bars at major peaks, often accompanied by declining volume, and declining oscillator readings. If prices fail to attract more buying and instead succeed in advertising for sellers, then it is best to leave the party on these failed attempts. It is hard to do because all the commentators and market letter gurus are saying the biggest gains are just ahead.

It is extremely difficult to pick a top. Markets can start to exhibit clues to a reversal, and then out of the blue the market takes off to the upside again. For more reliability, it is best to wait for a confirmation that a previous swing point low is taken out to confirm a trend change. However, in a runaway market this swing point is often far away and too much of the profit would be given back waiting for this point to be taken out.

There is no perfect rule for timing these events. Most of the time I get out too early, and if not I usually got out too late. It is easier to get out on strength, when the commentators on CNBC are jumping up and down with joy that the market, or stock, will never stop climbing because "this time it's different." It's far better to get out when everyone wants to buy, than when everyone is looking to sell. It is difficult psychologically to then watch the market climb ever higher without you being on board. It is even more difficult overstaying the trend and giving back much of what you had on paper.

What Are Your Options When the Market Takes A Nosedive?

It is inevitable that in your trading career numerous downturns in the share market will occur from time to time.

Now you have a few choices available to you but this also depends on what sort of trader you are as to the effect it will have on you at this time. "There are basically four types of trader which we will discuss below.

I . If you are a long term trader you won't be too concerned about selling your stocks currently held in your portfolio as you know from past experience that the market will regain its equilibrium and eventually return back to normal.

2. If you are a medium to short term trader then of course you see your immediate profit going down the drain. But if you have learnt from past experiences (hopefully) you would have had a stop loss set in place to lock in those profits or to cover you against substantial losses. So therefore your losses are minimal. You can then buy back those same stocks at bargain basement prices.

3. But if you are like the average trader who did not employ a stop loss and was not prepared for any downturn then you have two choices

A. You will do what the majority do and that is to panic and begin selling your stock at whatever the market price is currently at or B. You can sit back and pray that the market does not go down too far. You then still have the option of selling or waiting till you stock starts to regain in value. Which could take time? In the meantime your cash is tied up and any profit that you could have made elsewhere goes begging.

4. Now if you are a day trader then because you don't carry any open trades overnight the downturn does not affect you in the slightest. In fact you are delighted, you can sit back and watch the chaos and the bloodletting unfold around you. You see it as chance to make some quick profits once the market starts to do a u turn upwards

The thing I like about a market correction is that it also affects the "Blue Chips" as well sometimes in the vicinity of 5 to 10% if not more. This is the time to go bargain hunting. There is an old truism," Buy in gloom and sell in boom." And that still holds today

How Long Should I Backtest An Online Daytrading System?

I am frequently asked how long one should backtest a online daytrading system. Though there's no easy answer, I will provide you with some guidelines. There are a few factors that you need to consider when determining the period for backtesting your online daytrading system:

Trade frequency

How many trades per day does your daytrading system generate? It's not important how long you backtest a daytrading system; it's important that you receive enough trades to make statistically valid assumptions*: If your online daytrading system generates three trades per day, i.e. 600 trades per year, then a year of testing gives you enough data to make reliable assumptions*. But if your trading system generates only three trades per month, i.e. 36 trades per year, then you should backtest a couple of years to receive reliable data.

Underlying contract

You must consider the characteristics of the underlying contract. The chart below shows the average daily volume of the e-mini S&P:

It doesn't make sense to backtest a trading system for the e-mini S&P before 1999, because the contract simply didn't exist! In my opinion it doesn't make sense to backtest an e-mini trading system before 2002 because at that time the market was completely different; less liquidity and different market participants. I believe that a reliable testing period for the e-mini S&P are the years 2002 - 2004.

The problem is that many traders over-use the functions provided by the different backtesting software packages and think more is better. Many so-called system developers try to imply that the longer you backtest the better and more robust your system will be. That's not always true.

Conclusion

When backtesting you need to know these things. It's not enough to just run a system on as much data as possible; it's important to know the underlying market conditions. In non-trending markets like the e-mini S&P you need to use trend-fading systems, and in trending markets like commodities you should use trend-following methods.

Trend Trading or Counter Trend Trading - Which is Best?

When I first starting designing and testing trading systems, back in the early days of personal computers and trading software, I immediately gravitated toward counter trend trading. I would put up a stochastic, before I even knew what it was measuring, and my eye went right to all the divergences. A divergence is a basic counter trend pattern, where the price makes a new high, for example, and the indicator makes a corresponding lower high, thus forming a divergence with the price. The idea is that the new price high was not confirmed by momentum, which in this case was losing strength. When this pattern is seen, it is thought the market might have put in a high for the move, and it might turn around and go in the other direction.

I liked the idea of picking tops and bottoms. I was getting really good at it, at least on paper. I thought I had found the Holy Grail of trading. It all looked so easy. Almost every new high or new low on the chart was accompanied by a very clear divergence pattern. These patterns just jumped off the charts, screaming at me. I thought I had found the key to my trading plan, and it was going to be to be able to pick the point of a trend change. In other words, I was going to become an expert at picking tops and bottoms.

Then I started trying to trade all these easy patterns with real money. For some reason, whenever I would take a trade on one of these patterns the market didn't know it was supposed to reverse. It would just keep going in the direction it had been going. I would get several divergences and the results would be the same. That is, of course, until I got so burned out trying to catch the reversal and I would give up. Then, like magic, the perfect divergence pattern would appear, but I would not be in the trade.

I would caution anyone who thinks that they can pick the spot, with any accuracy, of a top or bottom in the market. I know many gurus and market timers claim to be able to do it. It can be quite gratifying to pick the top of a market, especially when all the media and analyst are on one side of the market, and you go the other direction and win. It gives you a very brief sense of superiority. You could see something that nobody else could, and you made a profit with this knowledge. However, after engaging in this activity for any length of time, one should review the account statements to really see if this has been a profitable way to trade.

It is remarkable how the eye can pick out major highs and lows on a chart, and to see many reasons why the top or bottom was so obvious. Maybe there was a classic three drives to a high pattern, or a head and shoulders pattern, along with diverging momentum or volume. It makes picking tops and bottoms look so easy. But if you analyze the chart more carefully, you’ll probably find two or three times as many set-ups that fail. The mind somehow glosses over the failed set-ups and goes right to the successful patterns.

After many frustrating attempts unsuccessfully using the stochastic indicator, I decided to study with the person who developed the indicator. I flew to Chicago to study with George Lane. Here was the guy who developed the indicator that almost everyone at that time was using to spot divergence patterns, and he talked me out of trading divergences, except in rare case. He only used the stochastic as a confirmation if many other conditions of trend change were present. I still like that indicator, but I use it in an entirely different way now. The time spent studying with him probably saved me years of frustration and a lot of money avoiding losses.

When thinking about trend change there are some things to keep in mind. First, trends tend to persist; often longer than you think is logical. When trends are up they often climb that wall of worry. Worry that the market will collapse without warning and take away your profit. Worry that the fundamentals don't justify the prices being traded. Logic might dictate taking profits, but there is worry of leaving money on the table. Uptrends tend to end more leisurely, at least in the stock market. For the public, it is easier to decide to enter a market or take profits in the calm of rising prices, where only greed is the factor. In down markets, traders often panic, and margin calls with fears of losing your home are often a motivator that results in more urgency. Therefore, bottoms can form quickly and sharply. Futures markets seem to be a bit more even regarding uptrends and downtrends, due to the nature of the mix of traders involved. A sideways trending market, or a market with a perceived lack of trend, will often lull traders into complacency, and with attention elsewhere, breakouts into a trend can be missed.

To summarize, I find the best strategy is to find the main, confirmed trend, whatever indicator or method used to determine that trend. Then trade only in the direction of that confirmed trend. Trading pullbacks, such as flag patterns, will usually offer the safest entry points. Trends have smaller cycles within the larger cycle. There are usually pullbacks within the longer term trend. One can still trade turning points of these smaller cycles, as long as they are in the direction of the longer-term trend. I will accept kicking myself for the few times I see major tops or bottoms that I will most certainly miss. This is a small price to pay for missing many losing trades resulting from trying to buck the trend. There are always trends somewhere, and in some timeframe. Going against the trend is like jumping into a river flowing rapidly in one direction, and trying to swim in the opposite direction. It is difficult and exhausting to do. It's much easier to float down the river in the direction that the current wants to go. The ego is more gratified in going the opposite way. The ego is also one of the most difficult aspects of trading to overcome.

Good Stock Investments - How To Spot The Best Stocks For Your Portfolio

So what are some good stock investments for your portfolio? Just about everybody wants to know this. The truth is, the answer all depends on what type of investor you are.

There are really two types of investment strategies you can follow-short or long term. Therefore, the stock you decide on largely depends on your overall strategy for making money with the stock market.

For instance, if you have a long term outlook, good stock investments would be larger companies such as Disney, Microsoft, etc. While these companies many not offer the biggest opportunities for short term growth, they are very stable companies that you can be sure will turn a profit for a long time.

However, if you are short term investor, good stock investments will likely be smaller, more risk companies that have big growth potential. Keep in mind, you never want to invest in the companies long term, as that will likely be financial suicide; however, if you know how to determine trends, short term you can make a killing of these types of companies.

If you are short term oriented investor, you likely will not be very concerned with a companies overall health; instead, you will look at it’s stock price trends, the overall market trends, and try to decipher what you think the stock will do compared to the market. This is huge difference from a long term outlook, because short term investors don’t take into account a companies’ overall financial health, because there is no need to.

Short term, the market mis-values companies based on investing trends. For instance, once people start investing in one company, its’ stock price will start rising. Many people often jump aboard.

This will cause the stock to rise significantly above what the company is really worth. In the other scenario, when many are selling it in masses, the stock price will fall substantially below the fair market value of the company.

The bottom line is, you need to determine which strategy you feel most comfortable and confident with. Good stock investments will be different depending on which strategy you choose to adopt. No matter which way you choose, the important thing is to make a decision, and commit to following it no matter what.

Picking An Internet Stock Broker

Believe it or not, a very important step in increasing your financial success is by choosing an appropriate internet stock broker.

You may be asking yourself, "What makes an internet stock broker appropriate?" Three things: cost to trade, in depth analysis of your portfolio, and in depth analysis of the stock market in general. Allow me to hit on each one of these individually now.

The first, the cost to trade a stock. I'm sure most of you have been searching the web and have come across ads where the brokerage company states, "Only $4 a trade!". I'm sorry, but, unfortunately this is not as straight up as it originally appears. Sure, you can pay only $4 a trade, but, you can only trade for $4 if you commit to a trading schedule. What does that mean? For instance, allow me to use the stock brokerage company I used to trade through: Sharebuilders.

Now, don't get me wrong, Sharebuilders is not a bad internet stock brokerage company. The company is great for beginner's because it has a glossary of terms and a few e-documents that explain things like options and puts. They also appeal to beginners because of their advertisement which states you can trade for only $4. You can trade for only $4, but, you have to commit to a trading schedule. Also, you only can get that deal if you commit to buying X dollars of such and such a stock every single week of the month. Basically, you will be paying $16 a month, instead of the $15.95 that it usually cost to trade on sharebuilders.

So, my first advertise is, shop around, call the 800 number, and ask what it really cost to place a live trade. I would much rather save my money for a month, and buy all the stocks at one time with an additional fee of $15.95, then have a computer buy it for me automatically every single week for $4.

Second, in depth analysis of your portfolio. What exactly does this mean? Well, your portfolio is the name we give to every single stock, mutual fund, ETF, money market fund, bond fund, bond, etc. that you own. Depending on each investor's own goals they should invest accordingly. For instance, say I have $25,000 that I'm investing for my child for when he goes to college. I don't need to touch this money for about 18 years and I also want to increase this money greatly because the cost of attending a university for four years by then will be close to $300,000. Therefore, I would invest my money in large company's hoping for long term, aggressive growth. On the other hand, if I needed the money in a a year or two, it would be much wiser just to open a CD account and also put money in a general money market fund. Believe it or not, there are internet brokerage accounts that will analyze your portfolio according to your goals and how long until you need your money.

Third, in depth analysis of the market. Now, they may or may not give you individual analysis of stocks, but, you don't need that. That's what I'm for! But, some company's make you pay for in depth reports in sectors. these reports range from $10.00-$400.00! Make sure to look for a company that does give out these reports for FREE!

Trading Stock Options

If you've been trading stocks for some time and have never tried options, then you may want to give them a go. Stock options are more speculative but offer flexibility, diversification and control to protect your stock portfolio or create more investment income. So, here are some things you should know about options.

An option is a derivative, meaning its price is based on an underlying asset. These underlying assets can either be stocks, Indexes or ETFs. An options trade involves giving someone the “right to buy or sell” a certain stock at a certain price by a specific time. Options help the investor to purchase stock at a lower price and to gain from a stock price’s rise or fall. If you buy an option to purchase securities, then it's called a “call” option. If the option you buy is to sell securities, then it's a “put” option. There is also a put and call option, whereby traders purchase both calls and puts on the same stock, with agreed prices and by an agreed date. Buying an option gives you the right, but not the obligation to purchase the asset at a specific price (called the strike price).

The hardest part of options trading is understanding all the jargon. But once you understand all the technical names, you'll soon find out that basically what you really need to know is which way you think the stock price is going to go in the near future. Once you have an idea what's going to happen, then all you need to do is use the right option trade to profit. For instance, if you expect a stock's price is going to increase, then you would purchase a call option on that stock.

Options are not issued by companies like stocks are. All options that exist are "written" or sold by another trader somewhere. Therefore, you are directly betting against that person if you buy an option.

For Call options, if the price of the underlying asset is below the strike price of the option then it is "out of the money," when the price of the asset crosses above the strike price it is called, "in the money." This too works the opposite way for Put options. The price of the option has the greatest percentage moves when it crosses from out of the money to in the money but out of the money options also have the most risk.

So if you don't want to risk large amounts of capital, but still want to use a smaller amount of money to gain from price variations, options trading can be the answer. There are very few risks and an option buyer cannot lose more than the price of the option, the premium.

There is much more involved with trading options, but these are just some of the most basic concepts to help you get started. The bottom line, is that options trading is something that you should only try once you've spent some time learning about the stock market, and if you can make decisions calmly when the pressure is on. A lot of information must be learnt before an educated trading decision can be arrived at.

High Risk, Moderate Risk and Low Risk Investments

For those looking to invest, you should know that many investments can be categorized as being high risk, moderate risk and low risk. Investing is not difficult, but you should always put lots of thought and planning into it. It is also extremely important to educate yourself about the many different investments available to you so you can find those that fit best with your specific situation and lifestyle. Here are some tips regarding the three categories of investing.

Low Risk Investments
While low risk investments are usually very low key and rarely are extremely glitzy or publicized, they do offer conservative investors a way to save money for the short or long term without the risk involved that you find in other forms of investing. Low risk investments usually pay the lowest yields, but are far less volatile than many other types of investments. Low risk investments include money market funds, certificate of deposits and some types of bonds. Low risk investments are perfect for those that want to make sure there money remains safe and secure. While low risk investments don’t offer high returns, they do offer stability and security for those that can’t afford to lose money or would just like to avoid as much risk as possible. Expect low risk investments to pay out yields of 1% to 5% annually.

Moderate Risk Investments
Moderate risk investments are perfect for those that are interested in investing for the long term and would like to earn moderate yields. Moderate risk investments are usually certain kinds of stocks, bonds and mutual funds that pay handsomely over the long term. While generally riskier than saving money in a bank, for those that are looking to invest for the long term, historically speaking you will grow your money quite nicely. Moderate risk investments usually use the power of compound interest and time to create a nest egg from 10 to 40 years with regular savings. For instance, saving 1K per year at an interest rate of 10% for 30 years can return close to 200K. Moderate risk investments usually return yields of 5% to 12%.

High Risk Investments
High risk investments are those investments that if you are lucky can return huge yields, however the downturn is that they can be extremely volatile and in many cases instead of getting rich off your investment, you find yourself losing some or all of it. High risk investments include penny stocks, international stocks, some types of Forex trades, etc. The sky is the limit for returns, but many high risk investments- if considered a winner should return yields that range from 10% to 30%++.

Teach Your Kids to Invest

You might not realize it, but one of the most important lessons you can teach your kids is how to invest properly. One of the major pitfalls that many adults fall into is money problems. Teaching your children early on the benefits of investing, how to invest and the importance of personal finance can have a huge impact on their lives and careers. Here are some tips on some of the lessons you should teach your child.

The Earlier the Better
Even when your child is 8 or 9 years old, teach him or her how to save. Giving your children an allowance is a great way for them to understand the importance of money and savings. One technique to use is to reward them when they successfully save money. When children are in their teens, you should encourage them to open a savings account and deposit money into it each week or month. Teaching your children how banks work and the ease in which they can save money can help them in later years.

Teach Children the Importance of Building Credit
Children grow up very quickly and it won’t be long till they apply for a credit card. Talking to your children about the ups and downs of credit is extremely important. Don’t wait till they are packing for their first semester at college to teach kids the basics of credit cards, it is important to start much earlier. When shopping with your kids show them by example how to use credit cards effectively, talk to them about how interest works and how credit cards on the whole work. Encourage kids not to buy things impulsively, instead to plan out their purchases for maximum satisfaction. These are all lessons that can help children avoid the pitfalls of credit cards.

Investing for the Future
As a parent, your goal is for your children to be extremely successful and never have money problems. One of the ways to help your children on the right path is to discuss with them investing for the future. For many kids, retirement is not a concept that they can relate to, but buying a house or nice car might be. Teach your children the ways in which they can invest, what tools they need to invest properly and how to use the power of compounding interest.

Online Trading

Investing in stock market is no more a tedious process! Now anyone can invest with the online stock trading option available today. Now everyone starting from guys to girls, children to oldies can be a part of this online trading from anywhere by just the help of computer. So no more hanging around the brokerage houses!

Online trading is definitely a striking mode of mechanizing the trading process and that also without any intrusion of a third person! But it should be remembered that online stock option trading is a form of business. Capital is required in the initial stage from the person who is commanding the business. Along with capital, a business also requires a well-formulated plan with an appetite and determination to digest heavy financial losses that might incur in the initial stage.

But, a complete dedication to the work helps the business to prosper very rapidly. Businessman should be acquired with proper academic qualification having a complete idea of the field in which he is investing. The urge to enhance their academic knowledge allow traders to have comprehensive research on the trading of stocks involved in their company.

There are factors that can allow the online stock option trading to have an upside. Traders can control the risks involved in stock trading. They can do that by having a command over a stock-block. Traders should have the thought process and the fore vision to make the best possible decision on their options and stock. Dealing in stocks should be done at adequate time where they can grab maximum gains from the market and simultaneously prevent any kind of loss that the stock might incur in the future. Options carry an expiry date and it should be dealt prior to the expiry date.

Option trading and online stock trading option are similar in nature when we consider the rules followed by both of them. Traders, when they are “in the money”, are with an option to either redeem at stated value or purchase the stock if it expire. However, if the traders are “out of money” with the stock at the expiry of the options, then they loose their investments. Online stock trading option is a platform where there is either a straight-out profit or a loss.

Traders benefiting from online stock option trading might have educational guesses as their weapon. Knowing the basics of “Puts and Call” option allow these traders to be prepared for a “High Stakes” contest. Experienced online stock traders opt for trading use straddles and strike prices as their major weapons. They vary their strategy according to the situation of the stock and the overall financial market. Normal stock traders follow the market according to its rise and fall.

However, option traders need more specific research related to the particular movement, whether rise or fall. A prime benefit of an online stock option trading is that traders to minimize risks or losses can use it. Stock options are not related to the rise and fall of market. If properly planned, stock options are always a winner. Online stock option trading is a platform where option and stock trading is combined with a strategy of having maximum profits or protections from the fluctuation in the market. With the advent of Internet facilities, online stock option trading has been very popular. It gives privacy in the making decision on investments. However, risk factor is always there with online stock option trading. The decision to select an online stock option company should be preceded by a thorough research to have the maximum from the market.

Stock Market Investing

It’s certainly tough to answers questions about stock market than the usual Hollywood, Bollywood stuff. Stock market carries all gestures- happy, sad, creepy, tensed and what not? To cut short it is a risk cell, where thousands of people invests to fetch better returns but some succeed and some console themselves to try again.

Going in literal terms, a stock market is a place for the trading of derivatives and company stocks, listed on stock exchange. The stock comprises of shares, commodities and so. As earlier said, ‘a risk cell’, this market is full of uncertainties and risks. Risks, to loose the hard earned money. Every investor invests in stock market with a perspective and motive to earn positive better results. The bulls and bears are the situations with which you may make some or loose some. The uprising in stocks is termed as bulls’ situation and vice versa.

As such, stock market investing is not a child’s play. The investing in stocks may be carried as a sideline business by an investor but the amount of knowledge needed to invest cannot be side lined. It demands a fearless, fiery and extensive knowledge to understand moods of the stocks. An intuitive person may succeed once but that does work for all time. All counts is the experience in this field along with the almighty luck. Yes, luck is also an important factor that moves on with an investor.

The stock market always has shocks and news in stock. No one can be sure about what’s next? The pressure of bulls and bears along with the fear of loosing money and the predications and tips by the companies always adds spice to the happening world of stock market. One has to be familiar with the dictionary of stock’s world. What I mean is- the stock market has its own words to represent the situations and products. Bulls and bears being the example, one has to work upon the dictionary used in this market. Intraday, future and options (f and o’s) are mere examples of these.

Being aware of the fact that it is a risky affair to invest, thousands of people invest daily in the stock market. To provide assistance there are brokers available who try to get the best possible deal. Brokers are the people who work on percentage basis to fetch the best deal. Very often, the commission is calculated on the money invested. This commission, in turn, is known as brokerage. This amount has to be paid by each investor who does not posses his own pass to trade directly in stock exchange.

Well, only one thing is certain and that is change. Changes are always certain, so does the experienced stock world.. It has moved on to cyber space from the clattered, clumsy stock markets, which looks nonetheless fish markets. The evolution of Internet is the reason for the revolution in stock markets as well as other trading. It got the easy access feature along with the comfort of operating stocks from one’s office or home. The speedy technology acted as a catalyst to break the norms of stock market. It is no more an alien world for people. Rather, it got unearthed and the mysteriousness of this trading place just vanished. Now, people are comfortable trading online and the investors and their investments have increased three-fold. The bulls and bears are no more only confined to the creams rather it has skimmed to the commons.

Moreover, the technological support not only acted as middlemen rather it worked as a magnet which brought thousand of new faces to the stock market. The advances of online brokerages, online trading and online investing further jacked the boom in the stock market investment.

Successful Stock Market Investing

Before entering into the markets at any level it is crucial to have a working knowledge of the dynamics of the stock markets and the main influencing factors.

These will be briefly touched upon. The main influencing factors are likely to be economic, such as inflation, interest rates and GDP. A variety of other factors are likely to have an effect, relating to possible geo-political factors (i.e., wars, civil unrest), also political uncertainty generally has a profound effect on the markets.

From this we can see that there are a wide variety of variables that are going to affect the markets as a whole which will ultimately determine the supply and demand of direct equities.

There are a general set of principles that you should adhere too constantly in order to reap the rewards that the stock markets have to offer, below I will outline some of these universally accepted principles for experienced private as well as institutional investors.

•Set a concrete nominal value you can realistically afford to invest. For example if you go out to the bookies to bet on the horses you would generally have a set amount to spend and once you reach that level cut your losses or cash in. What I am trying to convey is discipline and routine which is essential for consistent returns.

•Do not treat the stock market like the lottery. It is a skill that needs to be mastered and perfected to “trade effectively”. Be in it for the long term and like anything in life essentially the more skills you build the more effective you will be.

•Eliminate as much risk as possible by doing your homework on a stock you are going to invest in. Information is freely available more so than ever especially on the internet. You will be able to locate company accounts and assess the general health of a company through a variety of sources.

•Diversity is truly the key in the markets. All the big guys know this in the markets usually “hedging” their large position’s with an inverse position or more stable position. Do not put all of your egg’s in one basket as they say equally spread capital over a number of positions.

•If you loose money on one position it’s not the end of the world all of the massive guy’s the Karl Icon’s and Warren Buffet’s would have if not still loose money in the markets. Try and look at every event as a learning experience on which to add to your arsenal of skills.

Internet Stock Trading

Stock Trading is the leading and most prevalent mode of making easy money. All over the world, people are fascinated by stock trading system. Everybody is interested in making income through purchasing and selling stock. However, it is always very dicey and und unsafe mode of investment, it is still very attractive and appealing. You can by no means be tired of anything. Stock trading is itself an addiction and you can only be successful if you have the fervor for the same.

Advancement in Stock trading
With the advancement in technology and increase in the interest of number of people in Stock trading, internet stock trading has fabricated a sturdy podium in the market. Internet stock trading is a very remarkable and swift ways to trade stocks. It is so fast and effective that any transaction does not take more than few minutes and the effective is so instantaneous.

Online stock trading has gained so much popularity that even professional online brokers and dedicated online investment websites are easily available rendering best of their services keeping updated through fast trading market news.

Before investing, any amount in online stock market-trading people must be cautious and pay their attention to everything. Foremost things you have to learn and know that market changes with a single click, so be always prepared to face the consequences. Then you have to spend a better part of your day in making research and being specific with the information about your future investments and online trading. However many online stock investing website have incorporated many tools to assist and aid the customers with it.

Can you do it? Obviously, anybody with zeal towards stock trades or stock investment can do it. There is no specific educational qualification necessary as its eligibility. Just all you need to do is gather maximum information possible about online stock trading.

Things you must do You must always plan your finance and strategies before investing in the market that require high-quality information regarding market trends. There are many small and big firms acting as enormous advisors to their client on daily online stock trading. Frequently these companies are great help to you as they try to ascertain contented investment as per your requirement. Then to conclude, all orders and any cancellations in the order should be well communicated and always preferably kept in written form.

Although at times you may face problem in issue of transaction due to server problem but still the risk involved and all the action keeps up the adrenal flow and always keeps the investor on it toes. The profits made are at time outstanding and acts as lure to customer. However, risk always involves in graving fatalities as well. In the end, everything depends on the investor and the final call is from him. It is an expert’s advice that one must never use his retirement or savings money in online stock trading.

Stock Investment

Stock investment: want to make some quick money?

Stock investment is the quickest way to make money! This is the general notion of everyone. Have you ever wondered on what strategy the stock market works? Well, if you are a beginner, then this is question you will ask your financial advisors. In order to get the answer to the question, knowing what stock market is, is important. Then you need to how to make some quick money from stock market investing.

Well, making some quick money from stock market investments is not an apt option for someone wants to invest on a short term basis. But it is definitely one of the best options if someone is planning for a long term investments in stock trading. But please keep it mind, risk is not averted in any of the investments: Either short term or long term as nothing is guaranteed in stock trading system. The market may on its peak one moment and the very next may be crashing down! In long term investments, there are less chances of huge loss. Because loss incurred one moment, it can be recovered after the market has again started gaining pace.

However, this is not the case with short-term investments. The market moves up and down like waves of a sea and hence chances of loss are much more. And with the advent of internet technology, investment in stock trading has become much easier. Internet stock trading has gained a new dimension in stock market investing.

People can now be a part of this huge market right from their home or office or even while they are on tour. All they need is just the internet connection! Before the advent of internet, the traditional way of stock trading was time taking, involved more risk and was even burden some. But online stock trading system lets you buy and sell stocks instantaneously.

Although, online day trading has popularized with the time but it doesn’t detach the risk factor involved. This risk factor can be minimized to a certain extent while selecting an online stock company. Online stock trading company is one of the easiest and the best way to help you start buying and selling or in better words trading in the stock market. Internet is an ocean of information available world wide, where you can find anything and everything. Hence, a thorough research needs to be preceded before the selection of an online stock trading company.

While dealing with an online stock trading company, an important role is played by the online stock brokers in the people’s life who wants to invest in stock trading and do not have large capital or do not know where to start from. They are very different from the usual brokers in the markets as they help you with investments only.

Hence, investing in stock trade is definitely a good option to make some money but proper care should be taken as there is a large amount of risk also involved. This can be minimized with the help of proper guidance from your financial guide, the online stock trading company you opt for and along with your stock investment plans.

An Introduction To Forex Money Management

Forex trading money management is one of the most imperative things you must learn before you really start up with live trades. The Forex money management principles discussed here would further teach you how to keep yourself away from the expensive mistakes many fresh forex traders make, frequently to the degree that they lose their full investment on the first few trades. Psychology is actually the most key factor to money management when it comes to forex trading. You have to be clever to separate yourself from any touching affection you might have got to your money. This is not extremely simple to do, but it works and it could be really done.

First and foremost, you have to mull over leverage and risk. It is sensible that you by no means risk more than two percent of your account stability on any forex trade. However, some go beyond and permit for as much as ten percent, but in no way more than that. This gives you the capability to endure market fluctuations in forex, and if the trade goes poor, you yet have money to try again. You must never function under the hypothesis, which you would profit from each trade. You must as well plan for losses. Therefore, most forex traders would tell you that the most excellent thing to do is to keep your gains big and your losses less. Develop your forex trading strategy around this idea.

Keep a proper track of your gains and losses. Keeping correct and detailed records of your forex account commotion would permit you to see whether or not the forex trading strategy is working, or if it requires being rebuilt. Never go blindly into trading without a means to keep follow of results. You would surely lose all of your money and never know why it happened.

Finally, it is extremely advisable that you first carry out a strategy on a forex demo account. Nearly all forex brokers provide a virtual demo account upon which you make trades in real-time, but with fantasy money, so nothing is risked. This is the most excellent way to test a strategy before you put your real money on the line.

The Big Business Of Forex Online Trading

The daily transactions on the Forex, or foreign exchange markets, are so vast that they dwarf the total amount of money invested in stock markets across the globe. With over two trillion dollars in daily volume, the Forex is the most significant of the global monetary marketplaces

Since the introduction of the Euro to the world currency mix, the Forex has seen exponential growth. Add the rise of the Internet, and what had been the exclusive domain of the world’s great banks, financial institutions and super wealthy with at least a million dollars to invest became available to small investors who had PCs, Internet connections, and a few thousands of dollars in risk capital.

There is a very wide mix of entities, from individual brokers to corporations to governments, engaged in currency dealing through Forex online trading. And the currency market, because it does not operate form a single physical exchange like the NYSE, is ideal for Forex online trading. There are, of course, cites around the globe with large numbers of Forex brokers, and the advent of Forex online trading has connected all of them electronically. Forex online trading is now conducted around the clock every day of the year.

Forex Pre-Internet
In pre-Internet days, Forex business was conducted over the telephone and the only way in which individual investors could participate was to go to their bank and have a banker place their currency trade, or phone the bank to request that it be placed. For most of its history, the currency market saw very little individual involvement.

But Forex online trading has changed all that. Hundreds of thousands, if not millions, of individual investors have taken advantage of their around-the-clock online access and, just like larger institutions, are now engaging in Forex online trading twenty-four hours a day. Geography no longer matters, because business hours are always ongoing somewhere in the world.

Forex Trading Today
Forex traders can now have a hands-on role in their investments by continually observing market trends so that they can close their Forex online trading positions when the market turns against them. Forex online trading has also benefited from improvements in encryption technology, making investors feel more secure about having money online.

Forex online trading, in short, has become big business. And every big business will eventually spawn cottage business; Forex online trading is not different. There are now hundreds of websites offering advice and software designed to improve an investor’s chance of success in the Forex online trading game.

But you should make sure, before you decide to give your money to any Forex online trading site, that its software is compatible with your PC’s operating system. And take the time to comparison shop for commission fees. You’d be surprised to know how widely they can vary among brokers. And above all else, find out how the broker intends to let withdraw your Forex online trading earnings.