Investing Basics for Beginners
Deciding how you want to invest for your future in the long-term is one of the most important things you will do. While you can also practice short term stock trading for a living, todays article focuses on those long-term investing strategies as well as some short term investing basics that are available and that are the most common.
Investing basics for the new beginner includes the following:
Savings Accounts This form of beginner investing can also be considered more short-term because these accounts only earn a small amount of interest and are mostly for back-up funds and when you are trying to save for something in particular that is not too far off in the future.
Money Market Accounts These accounts are a step up from savings accounts because they pay better interest rates and they invest in very short-term bonds. (These are different from money market mutual funds)
CD (Certificate of Deposit) This type of fund earns more than a money market account and equals that of a short to intermediate term bond. Investing basics tells us that it is a specialized deposit made at a bank and interest is paid at regular internals until the CD matures. Once the CD matures you get the money you originally deposited plus any accumulated interest. Many investors include CDs in their investment portfolio.
Bonds Bonds are fixed income securities and are similar to CDs. Investing basics tells us that the main difference is that the government or corporations issue bonds instead of banks. The amount of income produced by a bond is generated each year and is a fixed amount when the bond is sold.
Stocks Stocks are very common these days and they represent ownership in a company. Shareholders will buy shares which represent portions of ownership in a company and as the value of the company changes, the value of the shares change as well. Investing basics tells us that the goal is to invest in stocks for those companies whose shares you predict will rise.
Mutual Funds Mutual funds are managed by professionals and not by individual investors. These funds represent pooled money used to buy stocks and bonds, or any other types of financial instruments the fund manager deems worthy.
There is a lot more to the investing basics in regards to stocks, bonds, mutual funds, and the like. There are also exchange traded funds, and many other investment options that you can research as well. Just be sure to do your homework and only invest in what you feel comfortable with.
Market Direction: The market has been very clear in telling us which direction it wants to be moving. Since early March, there has been a very strong uptrend. The past few weeks were giving indications of another Dumpling Top formation. The huge advantage of candlestick analysis is the incorporation of investor sentiment to form a candlestick signal or pattern. The advantage comes from knowing what is going on in investor minds as a trend is progressing. A Dumpling Top, just like a Fry Pan Bottom pattern, have investor aspects that can easily be identified. They create price patterns with results that can be highly predictable. A breach of a pattern creates the same benefits as an analytical tool.
Recently, the Dumpling Top pattern in the Dow revealed the bullish strength slowly diminishing. However, the past few trading days showed a breach of the rounding top trajectory. This makes trend analysis much easier to evaluate. If the Dumpling Top formation is providing information about investor sentiment, then a breach of that pattern reveals a whole new set of analysis tools. The Bulls continued to maintain control of the trend. This is an identifiable change of investor sentiment. A new price pattern is now developing. Knowing what each price pattern illustrates or represents allows an investor to maximize profits. There are many high-powered price patterns developing in this market. The Fry Pan Bottom pattern and the Jayhook pattern have created huge profits over the past few weeks. As long as it can be analyzed that the market in general is maintaining a bullish trend, the more opportunities for producing profits will be available because of pattern breakouts.
What creates price movement? Investor psychology. The further the uptrend continues, the more confident investors become. This was first mentioned 6 to 8 weeks ago as the market was bottoming out. Currently, the market indexes continue to show strength. The longer the strength persists, especially with a large percentage of the so-called experts not committing to this market, the longer and stronger the trend will be. Each day, the talking heads on the financial news stations keep professing that this is just a bounce in a downtrend. It has to make you wonder if they are sitting on the sidelines when the market has produced huge gains, what type of overall returns can you expect from them. They are waiting for the pullback. During that time, they have foregone profits of 20%, 40%, 80%, and greater.
Candlestick signals show you what investor sentiment is doing now. Not one person's opinion, not a companies opinion, but the accumulative knowledge of everybody that is buying or selling in the markets. There is an old adage that says when the public is buying, it is time to sell. Today, one of the talking heads on CNBC said that they would not be buying until the S&P 500 moved up over 1000. That would be proof that this was not just a bounce in a down trending market. That should make you wonder who started the old adage that when the public started buying, it was time to sell. If you have found that your money managers in the past have given you mediocre returns at best, it has to be assumed that they do not have any insights into the movements of the markets. Take advantage of what the candlestick signals reveal and you dramatically improve the returns you can produce in the investment markets.
If you want to learn how to trade options, you must know how to identify the direction and magnitude of price movements. If you are serious about option trading, please learn the 12 major candlestick signals and patterns. Learning how to use options without knowing what to apply that knowledge to will be like kissing your sister. If you have not ordered the 12 major signals training CD package and the high profits candlestick patterns training CDs, please do so immediately. This information is going to be extremely valuable for the oncoming Candlestick Forum option trading program.
Having the knowledge behind candlestick signals produced a relatively good profit this past year as the market moved lower. The signals and patterns clearly demonstrated that the portfolio should be directed toward the short side. Candlestick signals showed when the reversal occurred in early March. Since that time, the reversal signals have created huge profits. This is a function of the signals and patterns showing which sectors and stocks were receiving the strongest buying indications. You do not have to be a stockpicking guru to make money in the markets. Let the candlestick signals show you what everybody else is starting to buy. This puts you in control of your own investment destiny. If you are not utilizing candlestick signals, you are not taking advantage of one of the best trading methods ever developed.
Chat session tonight 8 PM ET - members only tonight. Candlestick patterns provide very strong option trading strategies. What does everybody want to do when trading options? Hit the homerun! Candlestick signals and patterns provide a much higher probability of hitting option trades that will produce very very strong profits.
The Candlestick Forum Team
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