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August 28, 2009
Forex Hedge
What is a forex hedge?
This type of hedge occurs when a currency trader enters into a trade with the goal of protecting an existing or an expected position from a move that is unwanted in the foreign currency exchange rates. How it works is that a forex trader who is short a foreign currency pair, can protect him or herself against upside risk. On the other hand, a trader who is long a foreign currency pair can find protection against down side risk.

There are primarily two ways that you can enter into a forex hedge when investing in the forex markets. You can either use foreign currency options or spot contracts. Foreign currency options one a very popular form of hedging currency because it gives the buyer the right but not the obligation to buy or sell the currency pair at a particular exchange rate at a specified time in the future. You can actually use your basic options strategies, including strangles and straddles, in order to limit losses.

Spot contracts are done by retail forex traders at they are your basic forex trade. They have a very short term delivery date so many don’t prefer to use spot contracts when hedging. In fact, spot contracts are usually the reason that this hedge is needed in the first place.

When putting together your forex hedging strategy there are four main components to consider. These include, analysis of the traders risk exposure, their risk tolerance, and their forex trading strategy. It is important to identify the types of risk taken with each position as well as the implications could be when taking on the risk in order to determine if the risk is too high or if it is low.

Traders also need to determine their own investment risk tolerance so they know how much of a position should be hedged. They need to determine the level of risk that they are comfortable with in order prevent trading anxiety from occurring, which will negatively impact their trading success.

Forex traders who practice forex trading and hedging must also determine what trading strategies they will use. They must determine which strategies are proven to be the most cost effective with the forex hedge.

Part of coming up with your trading strategy includes coming up with your forex trading plan. Be sure that once you develop your trading plan that you follow it! Too often traders spend time developing their trading plan only then failing to actually follow it.

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August 25, 2009
Futures Commodities
Futures Commodities Traits for Success

Futures commodities traders need to learn how to profit in every type of market condition. In today’s article we focus on traits that that will help the commodity trader to be successful in the futures market.

Have the necessary tools – the more equipped you are with the necessary trading tools the better you will perform when trading futures. You must ensure that you can access the market twenty four hours per day, that you have the software necessary to help you analyze the market quickly, and that you have access to real time quotes. These tools will enable you to react quickly to forever changing futures commodity market conditions.

Strong futures analysis – strong futures analysis requires that you to understand technical analysis and fundamental analysis. You should learn both types of analysis and decide which one you will utilize when investing in futures commodities. When using technical analysis you will learn about technical indicators that you can use to conduct your analysis. There are books and online forums as well as seminars that you can attend to learn more about both types of analysis when trading or investing in futures commodities.

Think for yourself – do your own analysis and research and make trading decisions based on your own analysis. Don’t follow the crowd or jump on the bandwagon of so called hot tips. Ensure that you create a trading plan and come up with those trading strategies that you believe in. Be sure that you don’t trade based on greed and fear and pay attention to what is happening in the world and the economy. While you may follow technical analysis you still should pay attention to what is happening around you.

Continued education – never stop learning about futures commodities. Continue to learn about new way of trading futures, and continue to attend seminars or other types of events where you can brush upon your learning. Seminars are great for networking with other investors so that you can compare notes and ideas. You can learn from other trader’s mistakes in order to increase your chances of success.

These are traits of successful futures commodity traders but there are many other traits as well. The basis for all traits is to stay informed. Stay informed about what is occurring in the commodities market, different trading strategies, as well as the different types of analysis. Never stop learning and continue to network with other individual investors in order to become a great trader.

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August 21, 2009
Futures Trade
When placing a futures trade there are many issues that you can run into. Futures traders must understand the common mistakes made as well as what they need to do in the futures market in order to make a profit. In today’s article we discuss some common mistakes made by traders in this market in hopes that it will help some traders to not make the same mistakes.

Protect yourself – many traders in this market fail to protect themselves. There is always investment risk involved when doing any type of trading so you must ensure that you find ways to protect yourself and incorporate it into your futures trading. Many investors will use stop loss orders to do this. Sell and buy stops can limit your losses. Many will also buy puts with attempts to keep your losses to a minimum while maximizing profits.

Follow your trading plan – many investors do not follow their trading plan and some don’t event take the time to develop one. If you do not have a futures trading plan you must stop trading immediately. Trading without a plan is like gambling. It can also lead to emotional investing (see psychology of investing) which inevitably results in profit loss. You learn to analyze the markets when you place a futures trade and you must learn to see signs of trends so that you can adapt to the market. Having a trading plan will provide you with consistency in your trades and profitability.

Never stop learning – the markets are continuously changing and there are always new things to learn. Just like any other industry you must stay on top of changing trends and new ideas. Be open-minded and try new trading strategies that you can implement into your trading plan. Don’t get left behind with old thinking and methodology if there is some new trading strategy out there that you can benefit from. Continued education is the key to successful trading.

Stay focused – when placing a futures trade you must stay focused. There are always going to be potential distractions but you need to have as few as possible as you trade futures or any other type of financial asset. Focus means discipline and both are absolutely necessary to achieving consistent trading success.

There are many more trading techniques and tactics to learn about when trading futures. Continue to learn about the futures market and see if it is a good fit for you.

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August 18, 2009
Future Contracts
Future contracts are contractual agreements to buy or sell particular financial instruments, such as commodities, at a pre-determined price in the future. Two parties agree to a set of terms in order to transact a set of financial instruments for future delivery at a particular price and they agree to the quality and the quantity of the underlying asset. Buyers of future contracts agree to buy an asset that a seller has not yet produced at a set price. Some futures contracts require physical delivery of the asset while others are settled in cash.

The futures market is very liquid, complex and is seen by many as risky. Once it is understood however many are able to make great profits. Most buyers and sellers that participate in this market enter primarily to hedge risk (hedging) or to speculate rather than to actually exchange physical goods.

When opening this type of contract, the futures exchange will give the minimum amount of money that must deposited into your margin account. This deposit is called the initial margin and once the contract is liquidated, you are refunded this initial margin amount plus or minus any gains or losses that occurred over the life of the future contracts. This initial margin amount is typically about 5% or more of the contract but they can change depending on market volatility.

There is also the maintenance margin, which is the lowest amount that an account can reach before more money needs to be added. The amount of money in your margin account fluctuates daily as the market fluctuates, but if your account drops below this maintenance margin amount, then brokers are required to make a margin call. This margin call requires that you deposit more money into your account to bring it back up to the minimum maintenance amount. (See margin buying)

Leverage, as it relates to future contracts is another factor to take into consideration in addition to margin. You can enter into a contract of this nature that is worth a lot more than your initial investment. Leverage refers to having control large cash amount of commodities with a small level of capital. Basically, what this means is that you can enter into a contract that is worth more that you initially have to invest, with a relatively small amount of cash. (See margin trading)

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August 13, 2009
Buy Online Shares
In today’s article we discuss stock market terminology that is helpful to those individuals who would like to buy online shares. See definitions below.

Outstanding shares – also known as “issued” stock outstanding shares are those stocks that are currently held by investors. These shares can be restricted shares that are owned by the company’s insiders and officers in addition to publicly held shares. You can see this information on a company’s balance sheet and it is used in the calculation of many different metrics such as earnings per share and market capitalization. The number of outstanding shares per company fluctuates as the company issues new shares, retires existing shares, as shares are repurchased or when other financial instruments are converted into shares.

Weighted average – when you buy online shares you should learn what the weighted average is. This average takes into account the amount of outstanding shares over a certain reporting period. The weighted average determines the importance of each quantity of the average and it is also used in calculations pertaining to the earnings per share and other financial calculations.

Issued shares – issued share are shares that are authorized and sold to as well as held by shareholders of a company. Just as defined above, they are also known as outstanding shares and can be insiders, the public or institutional investors. Before you buy online shares it is important to understand that a company issues shares in order to generate capital. The stock that is provided to insiders is part of their compensation and the amount of issued shares can be a part of the total amount of authorized shares of a company or it can be all of the authorized shares of a company.

Earning per share – the earning per share is the net income minus dividends on preferred stock divided by the average outstanding shares. The earnings per share indicate a company’s profitability and it is seen as the most important things when determining a share’s price.

Fully paid shares – when discussing stocks and shares, fully paid shares are paid once a company receives the full amount from shareholders. Shareholders are required to pay a certain amount for issued shares when a company issues those shares. They are fully paid when no additional money is required to be paid by the shareholders on the value of those shares. Fully paid shares are different from partially paid shares. Partially paid shares are those shares in which only a portion of the face value must be received by the company. Shareholders are still required to pay the remaining balance due to the company on those shares.

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August 12, 2009
Dividend Yield
When learning about finance it is important to understand terms such as dividend yield, ex-dividend, cum-dividend and more. In today's article we discuss some of the terminology associated with dividends.

Dividend yield – this is a distribution of a piece of a company's earnings. The board of directors decides on this distribution amount and they distribute it to their shareholders. The shareholders receive so many dividends per share and the shares are quoted as a percentage of the current market price. It is calculated by taking the annual dividends per share and dividing it by the price per share. It is the return on investment for a stock with the lack of capital gains.

When learning about stock dividends it is important to the first know the definition of a dividend itself. Dividends exist in the form of stock, property or cash and they are offered mostly by stable and healthy companies. Those companies that offer dividends don't typically have share prices that move up or down in price very much but the dividend makes up for that lack in movement. When looking to invest in dividends it is important to note that many high-growth companies will rarely offer dividends. This is because they reinvest their profits back into the company in order to continue growth. This is referred to as dividend reinvestment and is another term that you should familiarize yourself with in addition to the term dividend yield.

Ex-dividend – a stock is called an ex-dividend is an investor is confirmed by the company to receive the dividend payment. Basically, it is when the dividend belongs to the seller instead of the buyer. When trading shares, you will come across this definition.

Cum dividend – this is what happens when the buyer of a security entitled to a dividend that has already been declared but it has not been paid.

Dividend payout ratio – more mature and healthy companies have a high dividend payout ratio and it is calculated by taking the yearly dividend per share and dividing it by the earnings per share. Another way to calculate it is to take the dividends and divide them by the net income. In other words the dividend payout ratio is the percentage of the earnings that are paid to shareholders. This ratio gives the investor insight into how well the earnings actually support the dividend payments.

The dividend yield is one of many terms that investors will come across as they learn how to find dividend paying stocks. Continue your dividend education and learn about mutual fund investing and stock investing in order to build a diversified portfolio.

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August 7, 2009
Sell Short
In order to learn to sell short you must first understand the basics of trading stock. Some think that short selling is confusing at first, but once they understand it they find it very useful and not as complex as they originally thought. In today's article we discuss some of the risks involved with selling short for those investors looking to participate. Keep in mind however, while there are risks involved, the benefits of selling short make it worth while as long as you know what you are doing and you trade with discipline and focus.

To sell short means to bet against the overall direction of the stock market. Over time stocks typically go up and appreciate in value. If it doesn't do so on its own, the stock price usually raises a small amount due to inflation. When selling short you must be sure that you don't hold positions open for a long period of time. That can be very risky since again you are betting against the overall direction of the market.

There are no limits on how much you can lose when shorting stocks. When buying and selling stock in the traditional sense your upside is limited because your stock cannot go below zero. When shorting stock, in theory the stock price has no limits to how high it can go. It is considered risky because you can actually lose more than your original investment. That is why it is extremely important that you have a clear understanding of what you are doing when short selling stocks.

Margin trading is a part of short selling. You must have a margin account in which you actually borrow money from your broker in order to sell short. This margin account requires that you meet a minimum balance and if your account dips below that amount you will get what is called a "margin call." This margin call requires that you add more money to your account or you can also liquidate. This is considered risky because you are borrowing money and using your investment as collateral.

There is a phenomenon known as a short squeeze that occurs as a result of short selling stocks. This occurs when stocks prices increase and sellers' losses also increase. The sellers then rush to buy the stock so that they can cover their positions. As a result of the now high demand for the stocks, the stock price is driven up even further.

There are risks to short selling just as there are risks to stock trading in the more traditional sense. The important thing is to ensure that you are educated about the stock market and about the strategies that you use to short sell.

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August 4, 2009
Buy and Sell Stocks
How Fundamental Analysts Buy and Sell Stocks

There are certain steps that new investors can take when learning to invest in the stock market. In today's article we discuss those steps that an investor would take if he or she practices fundamental analysis as opposed to technical analysis. Typically fundamental analysis practice long term investing while technical analysts practice short term investing.

The first step investors must take is they must understand how stocks operate. When you buy and sell stocks you are equity investing. You actually own part of the company when you buy shares of stock and as the company does better so does the value of those shares.

The next thing you must do is know the stock exchanges. Stocks are traded on three major exchanges including the New York Stock Exchange, the American Stock Exchange and the NASDAQ. Some of the largest companies in the world are traded on these exchanges.

You should then familiarize yourself with the different types of stocks that you can buy. These include growth stocks, income stocks, value stocks, cyclical stocks, and international stocks. You will also need to look at companies whose products you know and that you are familiar with as you buy and sell stocks.

After deciding which types of stocks you should invest in, you then must clarify you investment goals. Are you beginning to invest for retirement or are you looking to produce income. You will also determine the investment risk and your risk tolerance as you determine investment goals.

As you buy and sell stocks you must determine how these stocks fit in with you entire investment portfolio. Construct asset allocation for your entire portfolio and decide how much should go to stocks. You may need to adjust your stock portfolio as stocks gain and lose value in order to maintain portfolio diversification.

The next step is to understand the fundamentals of those companies whose stock you are buying. This includes information such as the market they are in, their balance sheet, and their competitors. You will also need to look at the company's past and present earnings per share. You should also calculate the company's price to earnings ratio. This ratio divides the price per share of the stock by its earnings per share.

You will also need to find a brokerage firm that you are comfortable with and that you can afford. You will need to determine the type of broker you will use and this will depend upon the level of services that you need.

There is a lot more to buying and selling stocks, but this article should get you headed in the right direction.

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July 31, 2009
Buy Forex
There is a lot of information you need to know before you buy forex. In today’s article we discuss some of this information associated with the forex market.

Choosing a forex broker is a very important decision and one every investor should take seriously. When deciding which broker there are certain things that you should look for. First, you should understand that lower spreads save your money. Forex brokers don’t charge a commission but instead they make money on the spread. The spread is calculated in pips and it is the difference between the price at which a currency can be bought and the price at which it can be sold at any given point in time. When you compare brokers, you will find that the difference in the spreads when forex trading, is as great as the difference in commission when trading stocks.

If you buy forex, you will also need to ensure that your broker is registered with the Future Commission Merchant (FCM) and that the brokerage firm is regulated by the Commodity Future Trading Commission (CFTC). This information should be displayed somewhere on the brokerage firm’s website or the website of the parent company for the firm.

Before you decide on a broker be sure that you request a free trial of their software to test their different forex trading platforms. You will want to ensure that not only do they provide tools such as real-time charts, technical analysis tools, real-time news and data and good customer support, but you want to test each of these to ensure they live up to your expectations. You should also be able to access tools such as economic calendars, research, and fundamental and technical commentaries.

Forex traders must also be sure that before they buy forex from a broker that the broker offers a wide range of leverage options. Leverage is the amount of money that a broker will lend you for trading. It is necessary when trading forex because the price deviations are fractions of a cent, and this is the source of profit. When trying to find the leverage, you take the ratio between the total capital available to the actual capital. It is also important to note that lower leverage means there a lower risk for a margin call.

There is a lot more to deciding which broker you will use. Just be sure that you ask for references, referrals, and that you test their trading platform before you commit to a firm.

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July 29, 2009
Sell Stock
Deciding when to sell stock means that you must take some factors into consideration. In today's article we discuss some of these factors that stock investors will depend on when they are selling stock for a profit.

If the fundamentals fail meanings the company's sales, cash flow, debt, and other factors, begin to show signs of stress then most likely something has occurred within the company that will negatively affect the stock price. When investing using fundamental analysis you must carefully watch to ensure that you don't wait for the stock market to panic over a decline in revenue or other fundamental factors. You must be prepared to sell stock in order to prevent more of a loss.

Many investors will decide what price the stock can hit before they will sell. So basically, if the stock price falls below a certain level, you must sell. Many investors will use stop loss strategies in order to do this so that they limit their risk.
Investors should also pay attention when companies start to cut or eliminate dividends. If this occurs you should seriously consider selling the stock. Dividends cuts typically mean serious financial difficulties and investors need to pay very close attention in the event they need to sell stock.

Some trading strategies that investors will use for selling stock are explained below.

Don't get too content will specific stocks so much that you stop looking for better opportunities. While you may be making a nice profit, there may be even better stocks out there that you are missing out on. This isn't to say you shouldn't remain invested, but you must actively look for other stocks to invest in.

Don't fall for the hype when investing in stock. If you happen to own a stock that begins to receive a lot of media attention, it may be time to take a profit. Inexperienced investors will often bid up the prices only to see the market collapse when the hype is over. You must be careful that you don't watch the stock prices fall past your profit.

If you want to sell stock successfully you must watch growth. When growth stocks stop growing or the growing begins to slow down, then it is time to sell and move on. The market will not help you if growth stocks fail to maintain their growth.

Some investors will sell part of their stock so that they obtain some profit but let the remaining stock continue to grow. This works if you have a good profit potential in a stock but you must be sure the stock is a good candidate for this investing strategy.

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July 24, 2009
Stock Buying
Stock Buying Tips in a Troubled Economy

With the economy in the condition that it is in, many investors are looking for stock buying tips from wise investors. In today's article we discuss some tips for every day stock investors.

Investors must ensure that they do not overpay for stocks. You must do your homework to ensure that you purchase shares in promising companies that trade below their tangible book values. This ensures that something tangible can protect the downside during a slow in the economy. This is not very easy to do so you must do the research required.

For those companies that have been reporting bad news and its stocks have been declining, it is risky to buy shares in that company. You don't know whether the worst is over and if the stock has bottomed out. Some things that you can look out for to tell if the worst has ended include the following:

First, new research coverage has started. This can indicate that the company expansion and future growth can occur as long as the company can gather up the funds to do this.

Second, press releases or earnings calls indicate that management is optimistic. Just be sure to do your own stock research to ensure it a reality.

Third, the company of the "sell side" starts raising the earnings estimates.

The last hint you can look out for when stock buying is that the company books large one time charges in the fourth quarter. This is done as a means to lumping all of the bad financial news into one time period, to then paint a nicer picture for the new year.

Stock investors must also be sure to diversify their portfolios. Portfolio diversification before a slow in the economy is ideal, however, better late then never. You should diversify by industry and not just by spreading holding across a bunch of stocks. You must be sure to limit exposure to a particular security or group of securities rather than just picking a bottom in a given stock, industry, or market.

Investors should consider mutual funds as well as other types of assets that suit their risk tolerance. Many investors choose to consult with an advisor for long term investing to ensure that their needs and risk tolerance are actually consistent with their investments. Additionally, some investors believe that when stock buying, true diversification can be obtained with about 10 to 20 stock holdings, while others think you should have even more and with a variety of asset types. Again, you should consult with an investment advisor to ensure you are making investment decisions that work for you.

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July 21, 2009
Trading Volume
The trading volume reflects the strength of a stock, commodity, or index and it provides an indication to investors of the quality of a price trend and the liquidity of a security or commodity. Volume itself is the number of shares of stock, options, bonds, or futures contracts that are traded over a specific period of time. Additionally we refer to advancing and declining volume. Advancing volume is the total volume for all stocks that are increasing in price whereas declining volume is the total for all stocks that are decreasing in price.

When analyzing volume and what it means in relation to the market's strength we should note the following:
  • High volume indicates an active market where the spread between the bid and ask prices are typically narrower.
  • More reliance can be placed on the movements in stock price during periods of high volume than during periods of low volume. This is because heavy volume is the virtual consensus of a high number of participants in the stock market.
  • Characteristics of high volume include a breakout in a trading range, indicating the initial stage of a new trend, as well as panic selling.
  • You will also see high trading volume when strong buyer interest exists forming a market top.
  • Investors will experience low volume during unsettling periods in the stock market, such as market bottoms.
  • Low volume reflects a lack of confidence which typically means there is a consolidation period where prices are in a sideways trading range.
  • Volume can tell stock investors how strong changes in expectations really are.
  • A substantial increase in volume can point to a climax or breakout of a move which can be final or temporary.
When analyzing volume changes you are dealing with price trends and patterns. It is considered a good time to buy stock when there price and volume both increase. Investors should also evaluate trading volume as it relates to appraising market strength or weakness. If the volume is decreasing then the current trend will most likely not continue and a reversal may be coming soon. On the other hand, when volume is increasing, it is likely that prices will continue on their current trend. This should happen whether or not prices are going up or down.

Investors should study volume trading as well in order to see how it can be used to analyze the markets. These are areas that every investor should learn about in order to have success trading stocks.

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July 17, 2009
Buying Stocks
For those investors new to buying stocks there are a few things to consider beginning with the type of stock broker that you decide to use. There are different types of stock brokers available depending upon your needs. In today's article we discuss the different types of brokers that you can choose from before you begin to invest in the stock market.

Brokers must be licensed to purchase securities on your behalf. There are full services brokers, money managers, online discount brokers, and discount brokers.  When buying stocks you must research and determine which type of stock broker you will need.

Full- service brokers – full services brokers are the traditional stock brokers who take the time to discuss with you everything from your personality, your investment philosophy and your financial situation. These are the most expensive brokers because they take the time to develop a financial plan that is best suited to accommodate your investment goals, your investment risk tolerance, and your life style. They can also help you with items such as estate planning, your taxes, budgeting and retirement planning. These brokers will not only place stock trades on your behalf but he or she will also provide advice regarding stock investments.

Money Managers
– money mangers act like financial advisors however they also have full discretion over their client's accounts. Money managers are highly educated and skilled and they can handle very large investment portfolios. Of course they come with expensive rates that are based on the assets that are under his or her management and not per transaction. Wealthy stock investors will take advantage of a money manager when buying stocks and other investments.

Online discount brokers
– online discount brokers basically just take your stock orders and they provide the least amount of services available. They provide no financial or stock trading advice and there cost is based on transaction fees or a per share basis. You can open a trading account with this type of broker for a very small fee. You basically receive technical support and other website related links for any additional resources.

Discount brokers – discount brokers are basically the same thing as online brokers, however they make charge a very small fee to pay for a little extra assistance. This assistance is still very minimal but they may offer more in house research and reporting, as well as provide helpful investment newsletters.

Continue to research the different types of brokers before and see which one is right for you.

Online Stock Market Reviews presented live via the internet by Stephen Bigalow
High Profit 

Candlestick Patterns Book
WORDEN Brothers - TeleChart 2007
The Candlestick Forum Option Training
5-Star 

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July 14, 2009
Trade Account
When opening a trade account in order to trade forex, there are many different types of accounts that you can choose from. Forex trading is popular due to the fact that it is the forex market is most liquid and you can trade 24 hours a day. In today's article we discuss the different types of trading accounts that the forex trader can choose from.

There are demo accounts, mini accounts, full accounts, and managed accounts that the typical forex trader will trade from. We discuss each trade account below.

Demo accounts are offered by forex brokers so that potential traders can try out their software first, before committing to an account. Traders can see what the forex trading software has to offer including execution methods as well as other helpful tools. Once the trader has used the demo account, he or she would then set up a funded trading account in order to begin trading.

Mini accounts are very similar to normal trading accounts but the currency is traded in lots of 10,000 rather than 100,000. This allows for lower mandatory initial deposits, hence the term "mini" accounts. It also allows for greater customization of investment risk management. Many beginner traders will open this type of trade account first when they enter the foreign exchange market. Forex investors can take smaller positions with this type of account than if they traded with the standard 100,000 lots.

Managed accounts deal with forex managed trading which involves the use of a money manager to trade a forex account on behalf of an investor for a fee. Managed accounts are just like normal trading accounts that require the use of an investment advisor in order to manage the more traditional investments such as stocks and bonds, and equities. Forex traders must be sure that they take the time to research firms in order to find one that has reasonable fees as well as knowledgeable staff. These types of funds work contrary to mutual funds. Mutual funds are managed by a professional on behalf of many mutual funds holders, whereas managed accounts are more customized to the individual and their investment portfolio.

There is a lot of research to be done when choosing a trade account. Not only do you need to decide which type of account you want to open, but you must also research the different brokerage firms in order to find one that works for you.

Online Stock Market Reviews presented live via the internet by Stephen Bigalow
High Profit 

Candlestick Patterns Book
WORDEN Brothers - TeleChart 2007
The Candlestick Forum Option Training
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July 10, 2009
Trading Course
When looking for a trading course to take to learn about how to trade stocks or other financial securities there are many options to pick from online. Many prefer to attend seminars in person rather than learning about the stock market online, and some may do both. In today's article we discuss the advantages and disadvantages of taking an online course.

Advantages to online courses:

Convenient – taking a stock trading course at home is of course extremely convenient and you can schedule one at almost any time that works for you. You can complete the course at your own pace which is great for students that have a strict or busy schedule.

Flexible – courses for online trading are very flexible in nature because they can go over as much or as little information as you would like. You can often skip around, go back and review those items that may be more difficult for you to understand. There are also different types of courses for all of the different types of markets including options markets, futures markets, as well as different courses for different trading strategies. For example you can learn about day trading, swing trading, scalping, etc.)

Cost – an online course typically costs more than a trading book, but they are a lot less than the cost for attending a stock market seminar.

Interactive – as compared to reading a book about the stock market or stock market trading strategies, online courses are of course more interactive. These online courses are also designed so that they can test the student after wards.

Disadvantages to online courses:


Quality Varies – the quality of these courses can vary greatly. Some may be extremely interactive while others are more or less books displayed online. It is wise to ask fellow investors for suggestions. If you are very new to investing in the stock market and don't know any investors as of yet, you should join an online forum. Other investors are some of the best resources. 

Less interactive – while you can find a pretty interactive online trading course (as explained above) it is not typically as interactive as having a live instructor. At many stock market training seminars you are able to get a little one-one-one time with an instructor and are able to ask questions when you don't understand something or need a little more clarification. Many new stock investors understand this however before they take an online course.

While there are disadvantages to taking a course online, they are still very helpful to the new investor. They also work great as refreshers for those investors who need it.

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July 7, 2009
Forex Technical Analysis
What is forex technical analysis?

There is a large amount of information available on forex technical analysis and there is a very large amount of data that can be used to predict future price activity since the forex market is open for 24 per day. Technical analysis is used in other markets as well such as stocks and commodities and the interpretation is the same across assets. In today's article however, we will focus on why technical analysis is so popular in the forex market.

Trends – the goal of forex traders is to determine whether or not a currency pair will trend in a specific direction, or if it is going to go sideways. Forex technical analysis requires a common method that draws trend lines to connect historical levels that prevented a rate from heading higher or lower. These levels are referred to as support and resistance levels and they are used by many forex traders to determine whether or not a trend will continue.

Rate Consistency – when forex trading rarely are there inconsistencies between the different foreign currency pairs and if there are inconsistencies they typically last only seconds. These currency pairs are monitored by advanced computer systems as well for the larger players that manage hedge funds, and the very large banks that have these programs. Forex technical analysis takes into account all factors that influence these currency rates such as social, psychological, economic, and political factors. These have already been factored into the currency exchange rate and that is why many investors prefer this type of market analysis.

Common Technical Indicators – there are numerous technical indicators used along with support and resistance levels including Fibonacci indicators, candlestick chart formations, the moving average, and stochastics. These indicators assist the trader with predicting the future direction of the exchange rates and there are many more indicators in addition to those listed above. Forex investors must also learn how to read stock charts as well in order to learn how to apply these technical indicators to their trading.

When studying the FX market, there are major currency pairs that show the greatest characteristics of trends. These currency pairs include the EUR/USD (Euro/dollar), the USD/JPY (dollar, Japanese yen), USD/CHF (dollar, Swiss franc), and the GBP/USD (British pound/dollar).

There is a lot more to learn about when studying forex technical analysis. Just ensure that you spend the large amount of time necessary to learn about the forex market, the different types of forex trading strategies as well as the different currency pairs available for trading.

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July 2, 2009
Commodity Trader
The commodity trader understands that commodities are a great way for investors to diversify their portfolio in addition to investing in the more traditional stocks and bonds. More and more people are opting to invest in commodities now that the internet has made is so accessible. Most commodities market participants are institutional or commercial users of the commodities that they trade. They are referred to as speculators and hedgers. Speculators aim to profit from changes in the price of the futures contract while hedgers (hedging) use the commodity markets to reduce the risk of financial loss due to these price changes.

The most popular way that the trader invests in commodities is through futures contracts. A futures contact is an agreement to buy or to sell a commodity in the future at a specific price and also at a specific quantity. There are numerous commodities available including gold, wheat, natural gas, corn, cattle, and many more.

The price of a commodity is determined by the supply and the demand for that particular commodity in the futures market. There are numerous factors to take into consideration that affect the price of commodities. Some of which include war, weather, as well as many economic factors.

Gold investing is one major commodities investment that many opt to participate in. It is popular because it is considered the universal currency and the gold price is directly related to many economic factors. The gold commodity trader knows that fluctuations in gold prices can actually make the markets move. Furthermore, when the economy is forecasted to improve are corporate earnings estimates are on the rise, investors actually tend to turn to equities rather than gold. Additionally, when the economy does not have a favorable forecast and the currency rates decreases, gold investing quickly becomes popular again.

Wheat is another popular commodity and is a major ingredient in many popular cereals and foods. Fluctuating wheat prices can have a major impact on many players including companies and consumers. When commodity investing, food producers are able to pass along some of the costs associated but they have to absorb a lot of the costs as well. This can greatly impact their profit margin.

The commodity trader learns about numerous types of commodities as well as different commodity trading strategies to help them trade. Continue your commodity trading education and see if commodities are for you.

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July 1, 2009
FX Trader
FX Trader Types

When dealing with the forex market, also referred to as the FX market and the foreign exchange market, there are many types of FX traders and market participants. The forex market is the largest and the most liquid of the markets and is available for trading twenty four hours per day. In today's article we discuss the different types of market participants that practice trading in the forex market.

Hedgers – this FX trader practices hedging against movements in forex exchange rates or exchanging currency in order to fund international transactions. These are some of the biggest clients of banks and other large institutions (other market participants explained below). Hedgers aim to reduce the uncertainty of the foreign exchange risk through hedging strategies in order to lock in specific exchange rates for the future or to remove risk for the transaction. They are various ways that they do this.

Speculators – this type of FX trader aims to make money by taking advantage of fluctuating exchange rates levels rather than to hedge against movement in exchange rates or exchanging currency like hedgers. In fact, some of the largest speculators that participate in this type of forex trading are hedge funds. These hedge funds are unregulated and are quite controversial. They act similar to mutual funds and allow investors to invest large amounts of money that inevitably affect a country's economy and therefore their currency.

Central Banks and Government – central banks are involved with the manipulation of reserve volumes in order to meet economic goals which ultimately affects foreign currencies and their value. These central banks often (depending upon the country and currency) act in tandem with government in order to balance inflation and keep interest rates low in order to increase economic growth. 

Banks and other types of financial institutions – banks are some of the largest participants involved with forex transactions. In fact, banks act as dealers in that they can buy currency and sell currency at the bid/ask price. They will often exchange currency at a premium to the price that they paid to obtain the currency in order to make money. Banks also have somewhat different exchange rates as well for the same currencies since it is a decentralized market. 

The above information should provide you with basic information regarding the type of FX trader that exists as well as a little information about the forex market in general. Continue your forex trading education and see if this market works for you.

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June 28, 2009
Option Trading
Option trading deals with options contracts that give the buyer the right but not the obligation to buy or sell an underlying asset at a set price on or before a specific date. In today's article we provide a list of facts about trading options as well as the different options strategies available to investors. 

•    Options are derivatives since they derive their value from an underlying asset.
•    Options markets include four different participants. These include buyers of calls, buyers of puts, sellers of calls, and sellers of puts.
•    Calls give the holder the right to buy an asset at a specific price within a specific set amount of time and puts give the holder the right to sell an asset at a set price within a specific period of time.
•    Stock options contracts represent 100 shares of the underlying stock.
•    The total cost of an option is referred to as the premium, which is determined by factors including the strike price, the stock price, and the time that remains until the options contract expires.
•    Buyers are typically referred to as holders and sellers are typically referred to as writers.
•    There are two main classifications of options known as American and European.
•    The strike price is the price at which the underlying stock can be purchased or sold when stock option trading.
•    Investors will use stock options when speculating and hedging.
•    Long-term options are known as LEAPS.

There are several option trading strategies including bullish, neutral and bearish option strategies. We list them below.

Bullish Strategies
•    Buying Calls
•    Selling Calls
•    Bull Call Spread
•    Bull Put Spread

Bearish Strategies
•    Buying Puts
•    Selling Calls
•    Bear Call Spread
•    Bear Put Spread
•    Put Hedge

Neutral Strategies
•    Selling Covered Calls
•    Sell Straddle
•    Sell Strangle
•    Calendar Spread

There is a lot to learn when learning about online options trading. Continue to research and learn more about options, take online courses, attend seminars, and join online forums. It is important to meet others who practice trading options as well. Find out if online options trading is right for you. 


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June 23, 2009
Trading Forex Online
Trading forex online is a great way that many investors make money and there is a lot of information that you should know before you begin to trade forex. Forex, also referred to as FX, is the market in which currencies are traded and it is the most liquid and the largest market in the world. It is estimated that the total average traded value is more than $1.9 trillion per day.

The forex market is open 24 hours per day, five days per week where currencies are traded worldwide. The major financial centers are London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.

There are generally three types of forex traders including short-term traders, medium-term traders, and long-term traders. We describe each type of trader below.

Short-Term Traders – These traders, also known as scalpers or day traders, practice trading forex online by taking advantage of small price movements with a large amount of leverage. These traders will open and close trades within minutes and there is either quick profits or losses when forex trading. This type of FX trading is risky in that it requires large capital due to the amount of leverage required to make a profit from such small price movements. 

Medium-Term Traders – These traders, also known as swing traders, typically hold their positions for one or more days. These traders require lower capital than with day trading because leverage is typically only necessary to increase profits.

Long-Term Traders – These traders hold positions for months and even years and they base their decisions of fundamental analysis. (Short and medium-term traders base their decisions on technical analysis). Long-term traders require large capital in order to cover volatile movements against their open positions.

When learning about trading forex online you must know that currency is traded in pairs. The value of currency is determined by the comparison to another currency. When trading currency, this currency pair tells the trader how much of the quote currency is needed in order to purchase one unit of the base currency. The base currency is the first currency that is quoted in the currency pair when currency trading. It is also the considered the domestic currency that will be used to determine profits and losses. It is for this reason that it is also referred to as the primary currency. For example, if you were looking at the USD/CAD currency pair, the US dollar would be the base currency and the Canadian dollar would be the quote currency.

There is a lot more to learn about when trading forex online. Continue your forex trading education and determine if it is the right market for you.

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June 21, 2009
Margin Buying
Margin Buying Introduction

Margin buying provides a great opportunity for stock investors to make huge profits using less money. It is a very common trading strategy that greatly increases a stock traders buying power but it must be used with great caution and knowledge since it also comes with very high investment risk. A trader's success depends on many factors but these factors are very manageable as long as you take the time to educate yourself and have discipline in your trading.

Margin buying allows the stock trader to spend more money that he or she actually has. The trader must put down a certain amount of money to be used as collateral and then he or she borrows money from their stock broker to make up the difference for the total cost of the stock that is being purchased. Again, margin trading is a great way to make a lot of money off of a pretty small initial capital.

There are some basic terms that investors will come across when learning about buying stocks on margin. These terms are explained below.

Margin Account – this is a type of trading account where stocks can be purchased for a combination of cash and a loan when margin buying. The investor must deposit a minimum balance of about $2,000 to $5,000 into the margin account initially. This is to serve as collateral against what he or she borrows from the broker, and then the owner is asked to either sell a portion of the stock or add more cash if the value of their stock drops sufficiently.

Margin Call – a margin call is a demand for additional funds due to adverse price movement when margin buying. This is what happens when you get a call from your broker to add more funds to your account when the value of the stock decreases sufficiently.

Margin Rates – margin rates are the interest rate charged on a margin account and it varies from one broker to the next. While it is typically tied to the prime interest rate, it usually ranges from 6.5% to about 10%. Of course you can find lower rates if you go with a discount broker as opposed to a full service broker.

There are many advantages to margin buying such as increased buying power with less money, more profit with less invested, and a trader can borrow up to half (50%) of his purchasing price as initial margin. This type of stock trading is more suited more those traders who have a lot of experience and/or trading knowledge. This is due to the risks that are associated with trading on margin such as the fact that you have to payoff interest on margin, you lose big when you lose, trader have much less control with falling stocks prices. Just be sure that you do your homework, have a trading plan, and that you trade with discipline when trading on margin.

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June 16, 2009
Margin Account
A margin account is a brokerage account in which the broker lends the investor the cash to purchase securities. When buying stocks on margin you use leverage in order to increase your gains, however if you are not careful you can increase your losses as well. Trading on margin is a great tool for experienced investors to use but it is very risky.

If you decide you open this type of account instead of a regular trading account, there are some terms that you should know. First, the initial margin is the amount that you may borrow for those securities that may be purchased on margin. This can be up to 50% of the purchase price of these securities however some brokerage firms require more than 50% of the purchase price. This rule is according to Federal Reserve Board.

The minimum margin, according to the Federal Reserve Board, requires that you deposit with your brokerage firm a minimum of $2,000 or 100% of the purchase price, whichever is less. There are those firms however that requires the investor to deposit more than $2,000.

There is also the maintenance margin which is the amount of equity that must be maintained in a margin account. For the New York Stock Exchange and the NASDAQ, after an investor has bought securities on margin, the minimum required level of margin is 24% of the total market value of the securities in the account. This is a minimum however and many brokerage firms have an even higher maintenance requirement ranging from 30 to 40%.

For those investors who are new to margin trading it is important to recognize the risks involved. You have to understand that you can lose more money than you have invested and that you may have to deposit additional cash or securities in your account in order to cover market losses. Additionally, you may be forced to sell some or all of your securities when decreasing stock prices reduce the value of your securities. Your brokerage firm may also decide to sell some or all of your securities without out working with your first to pay off the loan that was made to you.

You must ensure that you know how a margin account works and what happens if the price of the stock that you purchased on margin falls. You should know what you firm charges for the interest on borrowed money and how that will affect your return on investment. You must also know what a margin call is and what that means to you. Before you begin trading on margin ensure that it fits in with your investment goals, your risk tolerance and your financial resources.

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June 14, 2009
Brokerage Account
When setting up a brokerage account there are certain things that you should look into. You obviously need to first decide on the actual brokerage firm that you will use. Selecting an online broker can and should take time and research. Below are those items that you should look into when selecting an online broker.

Differential Pricing and Account Minimums – Many brokers will require that you maintain a minimum trading account balance. Others will also charge a lower price if you maintain a certain account balance or trade above a certain number.

Automatic Investing – Some brokerage firms offer automatic investments. This is only an option that appeals to some investors who are okay with a stock broker or other type of investment manager executing trades on their behalf, according to an automatic schedule.

Assisted Trades – When opening a brokerage account look into the fee for assisted trades if you think you need that service. Some brokerage firms will charge extra for calls made to ask them to place a stock trade. Just be sure to find out if that is an option and if so what the fee would be for that service.

Inactivity Fee – Most trading brokers charge an inactivity fee if you don't trade for a specific period of time. Find out if the firm you choose has this fee and if so what the specific period of time is for your brokerage account so that you avoid the fee.

Customer Service – There are reviews available for different brokerage firms that tell you other investor's opinions and their experiences with the firms. Online stock trading forums also will give you an idea sometimes into how brokers react when you need to rely on them for services.

Dividend ReinvestmentDividend reinvestment allows investors to gain benefits involved with compounding your dividend returns over long periods of time. Some firms will allow you to do this by holding fractional shares in a company.

Promotional Offers – Many firms will offer incentives for you to leave your current broker and to switch to them. Some may give you cash back other rewards for making the switch.

Exchange Traded FundsExchanged traded funds (ETFs) are not available at brokerage firms. When opening a brokerage account ensure that the firm you choose offers ETF trading if you plan to do that. A lot of people assume all brokerage firms offer this service but there are many that do not offer it as one of their investment options.

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June 9, 2009
Currency Trading Online
Currency trading online has become increasingly popular and more and more forex investors are jumping on the band wagon. If you are interested in learning to trade forex online, this article provides a general overview that should be helpful in getting you started.

Before begin to invest in the forex market, you will need to consider taking an online forex trading class. There are many available online as well as many forex trading books that will help you learn the basics of FX as well as the techniques involved with currency trading online. Many of the online forex trading books also include a free trial of their forex software for you try out. In addition to the books, online forex trading programs will also include a 30-day trial or a subscription to their trading software. Most companies will allow investors to try out their software first before committing to anything. These programs will teach you the basics and should have tutorials so that you can practice what you are learning. You should be able to perform test trades as well to get you familiar with the software and with the forex trading strategies that you are learning. You should also ask around to fellow investors of friends who practice currency trading online for references. They can provide you with a place to start.

In addition to trying out the forex trading software, many companies that offer currency trading online also offer simulation trading. This is basically software that allows you to practice trading without risking real money. The program is set up so that you play the market just as you normally would, and you simulate a foreign currency trade using the exact amount of funds you would in real life, using the trading strategies you have developed and using different technical analysis tools. It is a great way for you become familiar and comfortable with FX trading before risking losing real money. You also get to determine if the software is a good fit for you. Perhaps you don't like the software and find that you need to find a new program. The programs are very similar in nature, so you should be able to switch over to another program relatively easy.

Currency trading online provides real time access which is one of the most attractive features of this type of trading. Continue your forex trading education and find software that works for you. Good luck!

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June 5, 2009
Trading Day
Trading Day for a Day Trader

Day trading stocks is the buying and selling of stock within the same trading day and trades are typically closed out by the end of each day. Other financial instruments such as stock options, currencies, commodities and futures contracts are day traded as well.

Some day traders may place several hundred trades each day while some day traders may trade a significantly lower number. It really depends on the trading style. Some traders may focus on short term stock trading in which they trade within seconds and minutes ever day. They buy and sell stock several times throughout the day. These traders receive very deep discounts due to their high volume of stock trading. Some day traders focus their trading day on momentum or trend trading. This type of trading typically results in fewer trades per day as traders patiently wait for the right trade for that day.

As mentioned previously, when day trading, traders will close out of their positions before the close of the stock market. They do this in order to avoid price gaps which are the difference in stock price between the previous close and the next day's open. Some stick to this rule very firmly while others follow it a little more loosely. Some day traders will stay in a position overnight as long as it is still in a winning position and the trend is showing this. They choose to stick with the rule of thumb "let your profits run" that is followed by stock traders. These traders believe that if they close out too early on a trading day then they are going against market wisdom.

Some day traders will borrow money in order to day trade, called margin trading. When buying stocks on margin often times the trading account will be charged interest for holding positions overnight. This discourages day traders who buy stocks on margin, from holding positions overnight. In fact, the margin that is required to hold a position overnight is typically about 50% of the stock's value! Due to this, the day trader must follow their exit strategies and implement stop loss orders in order to ensure that they limit their losses. This is not the place to have false hopes as it can cost you big!

Continue to read about day trading to see if this trading style is a good fit for you. You should also read about swing trading as well as the different stock trading strategies involved with both types of trading.

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June 2, 2009
Sell Shares
How to Sell Shares

When looking to sell shares, common stock shares, you will find that it is not a difficult process but it is still important to understand exactly what to do. Common stock is owned by shareholders and for each share that is bought, the shareholder is entitled to one vote. It is also referred to as voting stock by many stock investors. Common stock is different from preferred stock. Preferred stock does not gives voting rights to shareholders however preferred shareholders receive paid dividends before common shareholders.

The most common type of stocks and shares that are bought and sold each day on the stock market are common stocks. To sell shares of common stock you should either go through a brokerage firm or through a bank. Those investors who may be looking to sell their shares of stock in a company but do not plan on buying or selling stock in the near future, can go to their local bank. All you have to do is take the stock certificate to a bank in which you already have a bank account, ask for the investment officer, and then have the trade placed to sell common stocks at the current stock price on the open market. As soon as the stock clears, and it is delivered (three days later), the money is then available to the investor who sold the stock.

Another way to sell shares of common stock is to go through a brokerage firm. You would have to open a brokerage account in order to do this, so this option is for the investors who I planning on buying and selling shares again in the near future. There are many different brokerage firms available so it will require research on the investor's part to find a firm that works for them. Don't just pick any firm, be sure that you get referrals, check references, and compare and understand commission fees. There are many different options available to investors depending upon their needs.

Investors will also need to decide if they want to go with a full-service broker or a discount broker. This will depend on the investor's needs as well. Online discount brokers are available for those looking to sell stock online with little to no guidance from a live broker. Full-service brokers are available and can offer more one-on-one attention however that comes with a heftier price for commissions.

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May 29, 2009
Trading After Hours
Trading after hours became popular along with the rise of online investing in the late 1990's. The majority of stock trading takes place during the day from 9:30 a.m. to 4:00 p.m. on the major stock exchanges. Trading before and after market hours became available to those high-net worth investors, and it also became available to major institutional players. Initially, stock investors were only able to buy and sell stocks during the regular business hours of major stock exchanges.

Trading after hours became easier and more accessible with the advent of electronic trading and electronic communications networks, also known as ECNs. Basically, any investors who can make the necessary arrangements to trade via an ECN have the ability to trade stock after hours. There are of course some requirements to practice electronic trading. For example, you must be a customer of a brokerage firm that has access to an ECN or that has one of its own. Keep in mind that some electronic communications networks are unregulated, some are regulated and some are sidelines of broker-dealers. Make sure you know this before you sign up with a brokerage firm.

There are of course risks associated with trading after hours just as there are risks associated with trading stock during regular hours. For starters, there is less liquidity. There are fewer investors participating and there are fewer investors available to react to news and other sources of information regarding public companies. Other risks include those associated with limit orders and the execution of stock orders. Those investors who are unfamiliar with limit orders find it difficult in the ECN market and sometimes the market centers that your orders interact with may not include all of the possible execution venues. This means that your order may not be executed at the most favorable stock price available across all possible venues, therefore limiting those prices available among all possible market participants. There also is a possibility that your order may not be executed at all. Due to this, it is highly recommended that only seasoned investors participate in after hours stock trading.

The costs associated with trading after hours include more than just the regular commissions. The lack of liquidity mentioned previously, can make it more difficult for you to get the price that you want when online trading after hours. There are also severe price swings that take place when after hours trading and there is limited information regarding price quotes.

Trading stock after hours is still a great way to make money investing in stock. Continue to learn more about it and find out if it is an option for you.

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May 26, 2009
Brokerage Firms
Brokerage firms are many and there is a lot of information that you should be aware of before choosing a firm. Before you can begin investing or trading stock, you have to have a brokerage account. This is one of the most important decisions that you will make before you begin to invest your hard earned money. In today's article we discuss some information that should help you decide the type of stock broker you should use.

First you must understand that there are two main types of brokers to choose from. You can go with the more traditional type of broker, also known as the full service broker, or you can go with an online broker such as a discount broker.  Full service brokers are more expensive than discount brokers and they offer more services. They will give you investment advice, prepare reports about your stock portfolio, and will update your on the status of your investments. Of course, those brokerage firms offering the services of a more traditional broker have higher commission fees due to their higher level of service.

Discount brokers are more for the independent investor who does most of the work themselves and who can devote the time necessary to do this. They are often online discount brokers and they do not offer investment ideas or investment advice. They simply execute orders for you on your behalf and you don't necessarily have a dedicated broker that you are guaranteed to work with. Most of your trades are done online so if an investor does call in, he or she will most likely get the first broker available. This is an option that works great when short term stock trading since you need access to online trading quickly and repeatedly throughout the day. There are many brokerage firms out there that offer this service. Since the discount broker offers fewer services than the full service broker, their fees are less. Both types of brokers charge per transaction however the fee for discount brokers per transactions is significantly lower.

In addition to selecting the type of trading broker you will use, you also need to understand that there is a minimum balance required to open a trading account as well as maintenance fees. The minimum balance required to open an account varies from around $500 to around $1,000 or $2,000 depending on the type of account. You must be sure that part of your investment knowledge is not just how to trade stocks, but also researching the fees associated with brokerage firms. Read the fine print and have a complete understanding of all the fees required so that you are prepared and there are no surprises.

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May 22, 2009
Buy Stock Online
There is lot of information that you should know before you buy stock online. In today's article we list some stock trading tips to help you on your way.
  1. Before you buy stock you must have a trading system in place. With this system you should also have a trading plan that includes your trading rules for buying and selling stocks. This should include your entry and exit points as well as any stop loss orders to limit your losses.
  2. Before you begin to invest real money you should practice paper trading to test your trading strategies and trading plan. As you paper trade you can adjust your plan accordingly and not run the risk of losing real money. Once you make money consistently with paper trading, then you are ready to begin investing real money. Many people like to practice online paper trading.
  3. Before your buy stock online you must sign up with an online broker. You must have a broker in order to execute trades on your behalf. Many investors that practice short term trading, opt to utilize the services of an online discount broker. They are cheaper than full service brokers because they do not offer any financial advice and they only place your trades for you. You will have to decide which one works for you.
  4. Select a brokerage firm after doing a lot of research. Not only should you do your own research, but you should also ask around for referrals from fellow stock investors. Find out who other investors use through joining online investing forums. You should also research and compare pricing. Have a complete understanding of all of the associated fees so that there are no surprises.
  5. Once you have selected the type of stock broker and the actual brokerage firm that you will use, you then need to make an initial deposit into your trading account. Firms will require a minimum deposit anywhere from about $500 to $2,000 depending of course upon the type of trading account that you open. Margin accounts will require more of course, for those who will practice margin trading. Some website may not require a deposit at all, but you should be sure to research those website thoroughly.
  6. Remember that your broker must report your stock trades to the IRS. You will have to fill out all of the required forms before you buy stock online. Be sure that you also understand all of the tax implications for how you choose to trade. This will affect your actual return on investment in the long-run.

There is a lot more to trading stock online, but this article should get you headed in the right direction. Continue to research and expand your knowledge and don't buy stock until you are sure that you know what you are doing.


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May 20, 2009
Stock Markets
There are many different stock markets that investors can choose from all over the globe. In today's article we discuss the major United States markets as well as other markets around the world. The stock market is a place where buyers and sellers meet to exchange shares of a company. They are physical and virtual market places that offer procedures for stock trading that benefit both the buyers and the sellers. The size of the world stock exchange is estimated to be about 36.6 trillion U.S. dollars.

United States Major Stock Markets

New York Stock Exchange (NYSE) – this stock exchange is located on Wall Street and it is largest stock exchange in the world. It trades about 1.46 billion shares each day including stock for about 2,800 companies. Stocks traded on the exchange range from blue chip stocks to new high growth companies. There are very strict requirements for those companies that wish to be traded on this exchange.

NASDAQ – this stock exchange is the largest equity securities trading market in the U.S. It has more trading volume than any other stock exchange in the world and it was the world's first electronic stock market. NASDAQ stands for National Association of Securities Dealers Automated Quotations. It was the successor to the over the counter stocks systems of trading.

American Stock Exchange (AMEX) – this stock exchange is the third largest stock exchange in the U.S. and it manages 10% of all American trades. This is one of the U.S. stock markets known for trading small cap stocks, trading options, and exchange traded funds. It lists companies from a variety of industries from companies of various sizes.

There are other markets in the United States including the Boston Stock Exchange, the Cincinnati Stock Exchange, the Chicago Stock Exchange and the Philadelphia Stock Exchange.

Other popular stock exchanges in the world include the London Stock Exchange, the Euronext and the Hong Kong Stock Exchange. The London Stock Exchange is one of the largest exchanges in the world and it provides equity markets, trading service, derivatives and market data information. It is one of the top locations for finance in the world listing over 3,000 companies. The Euronext is based in Paris and is a European stock exchange. It also provides derivatives and equities markets and it is ranked the number fifth largest exchange in the world.

There are other stock markets that stock investors can learn to trade from however this article discusses the major exchanges. Continue your stock market investing education to learn more about these stock exchanges and others.

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May 15, 2009
Charting Stock
Charting Stock – The Basics

When learning how to read stock charts there is basic information that you should know. Stock charting is based on the principles of technical analysis as opposed to principles of fundamental analysis. Technical analysis is the method of predicting future price movements, whereas fundamental analysis is based on a stock's intrinsic value. While technical analysis is not fool proof and is open for interpretation, it is a very highly valuable tool for finding profitable trading opportunities. In today's article we will discuss charting stock basics.

Time Frame short term stock trading involves the use of intraday time frames that deals with short term movements. The intraday data is used to build daily price data. Day traders will use a different trading time frame than swing traders. The time frame that you choose to trade in will depend on your trading style and your personality. Be sure to research the different trading times frames, the combination of data as well as the different types of stock charts.

Price – this refers to the type of stock chart that you will use to trade stock. The main three types go stocks charts include bar charts, line charts, and candlestick charts. Candlestick charts are considered among traders to be the most visually appealing, the easiest to read, and they provide the most valuable information when charting stock.

The line chart is the most basic form of price display showing the closing price only for the stock per time period. The bar stockchart displays price using a single bar for each time period and it displays the open, high, and the low. There is also a small horizontal bar that shows the open and close for that trading period. The slender shapes of the bars do allow stock traders to see more information in a time frame.

The candlestick chart is based on the use of Japanese Candlesticks to trade stocks. These charts were originally used in Japan centuries ago in order to forecast the prices of rice! These charts are now the most popular style of price display. Once single candlestick consists of an open, high, low and a close and the body of the candle either black (red) or white (green).

There are advantages and disadvantages to using each of these three charts however, most traders opt to read candlestick charts when charting stock. Once you have decided which stock chart you will use then move on to study technical indicators. Technical indicators include stock chart patterns, moving averages, and most traders use two or three indicators in conjunction with each other for accuracy.

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May 13, 2009
Stock Share
Stock Share Types

Just as there are different types of stocks there are also different types of shares. In today's article we provide a list of the different types of shares as well as a definition for each. It is important to have this basic knowledge before investing in the stock market.

Authorized Shares – These shares represent the total number of shares of stock that were authorized when the company was created. The only way the number of authorized shares can increase is if the shareholders vote for the increase. Not all of the authorized shares have to be issued to the public; in fact, many companies retain some shares for later use. These shares are referred to as unissued shares. These companies may later use these shares and often retain a very large percentage of authorized shares in order to ensure that no other companies can seize control of them. They also like to have stock share available for future issue instead of using debt for major expenditures or to buy another company

Unissued Shares – As mentioned above these are those stocks and shares retained by the company in its treasury and they are not issued to the public or to employees.

Restricted Shares – This type of stock share refers to company stock that is used for employee incentives and compensation plans. It is important to note that when a company first goes public there is a waiting period where insiders restricted stock is frozen. Permission of the Securities and Exchange Commission is required by stock holders in order to sell these restricted stock shares. In order to do this, insiders must file a form with the SEC to declare their intention.

Float Shares – These shares are those that are available for trade on the open market. Anyone can participate in buying stocks and shares that are considered to be float shares. If the float of a company is small and the stock attracts attention of investors it can become volatile due to supply and demand imbalances. More buyers drive the stocks up but you must be careful that the stock is no over priced in comparison to its earnings or other fundamentals.

Outstanding Shares – Outstanding shares includes all shares that are issued by a company. This includes float shares as well as restricted shares.

The above provides a quick snapshot of the different stock share types. Continue your stock market education and learn more about trading shares.

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May 9, 2009
Investing 101
Thinking about investing money, but are unsure of where to begin? You are not alone, especially in today's market. In today's article Investing 101 we discuss steps each new investor can take to begin investing for your future.

One of the first steps you will learn in investing 101 and that that new investors take is to open a brokerage account. Brokerage accounts will allow the investor to purchase stocks and bonds, mutual funds, and other types of investments. There are fees associated with these accounts that determine not only on the brokerage firm, but the type of account, what you want to do specifically with that account, and the type of broker that you decide to use. There are full service brokers that will provide an array of services, and are more expensive. There are also discount brokers that are cheaper but they don't provide the level of service that full-services brokers provide. Basically, investing 101 tells us that newer investors may want to start of with a full-service broker, where more experienced stock traders that are more self-directed may opt to utilize the services of an online discount broker.

When opening an account, be aware of the different fees as well as the commission fees, and the minimum investment required to open the account. This again will depend on the type of account you are opening and the fee usually ranges from $500 to $1,000. The process of applying for an account whether you will be investing in stocks, investing in bonds, or investing in mutual funds, is relatively simply and you can typically get them off of the brokerage firm's site online.  Investing 101 will also teach you that you must not only research the brokerage firm's fees but you must also research the firm's customer service ease of use, website, etc. Call into their customer support and see how long it takes them to answer the phone. Once they answer the phone, ensure that they are courteous, knowledgeable and are able to answer your questions. This will give you a good idea of how your experience will be with them should you encounter any issues.

Once you open your account you are then free and clear to begin investing your money. All firms will give you the option of paying automatically each month, in which your fee will deposit directly into the brokerage account from your checking or savings account, depending on how you set it up. This helps to invest money to start building up your equity.

Continue to research other investing tips and investing basics before you take any action and good luck!


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May 5, 2009
Investing Tips
There is a lot to know about investing whether you are looking towards long term investing or short term trading.  The bottom line is that education is the key to success whether you are looking to invest in the stock market, in mutual funds, or other types of investment options. In today's article we discuss some investing tips helpful to all new investors.
  1. There is no right or wrong way to invest only better or worse investment options. There is not one investing strategy that works for every beginner investor nor is there a set of rules that works for every investor. Risk tolerance, financial resources, and your interests will all play a factor in how you to choose to invest. You must find investments that work for you.
  2. Before you act you must develop a plan as well as procedures. For example, if you are going to trade stock for a living, then you must develop a trading plan that documents a set of trading rules that you will follow. Never invest without a complete understanding of what you are doing and a plan of action.
  3. There are broader investing tips that every investors should follow as it relates to education. For example, you should understand some basic investing concepts such as earnings per share, net worth, and stock analysis.
  4. Investors who are interested in investing in the stock market must be sure to learn about and understand the differences between fundamental analysis and technical analysis. Understanding these two important concepts will enable you to discover your trading philosophy which will ultimately determine how you will invest in stocks.
  5. Perhaps one of the most important investing tips is to achieve portfolio diversification. Diversify your investment portfolio through investing in stocks, bonds, mutual funds, and other types of investments. You should have some higher risk investments along with other lower risk investments that are more dependable. You can never do too much research when looking to build a strong portfolio.
There are so numerous stock market tips as well as tips with mutual fund investing as well as tips for the newer exchange traded funds. The most important thing that you can take away from this article is that knowledge is power, when beginning to invest, and you can never have enough of both. Do your research, take your time to understand your own strengths and weaknesses as an investor, and build a strong portfolio that will make you money, but won't keep you up at night. Happy investing and good luck!

 


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May 1, 2009
Investing for Beginners
In today's article we take a look at the different types of financial instruments that can be traded in today's markets as well as brief explanation of each.

Stocks – Many people opt to invest in stock as part of building their investment portfolio. Portfolio diversification is the key to success and investing in stocks is great way to make money. It can be said however that investing in stock is actually different from trading stock. When someone invests in stock they will hold onto that stock for longer period of time, such as months to years. These investors become shareholders and believe that their stock will increase in value over time. When investing for beginners it is important to understand that those who practice stock trading buy and sell stock over a period of days, minutes and even seconds!

CurrenciesCurrencies trading is also referred to as forex trading, FX trading, forex currency trading and more. The forex market is the most liquid market in the world and it involves the trading of one country's currency for another though a currency exchange rate system. Currencies are always bought and sold in pairs and this market is one of the fastest growing divisions in the online trading community. When learning about currencies and investing for beginners it is important to know the main currency pairs that are the most widely traded on the currency exchange.

Stock OptionsStock options trading is different from regular stock trading and there area lot of different stock market terminology associated with options when compared to stocks. When you buy stock options, you are not buying ownership in the company but instead you are buying the right to buy stock at any time in that company up until the expiration date of the options contract. Stock options require less capital and they allow for higher leverage, which is why some traders opt to trade stock options instead of plain vanilla stocks.

CommoditiesCommodities can include items such as soybeans, rice, sugar, gold, ethanol, pork bellies, currencies, and much more. Investing for beginners tells us that commodities are any product that trades on an exchange. Commodities trading is the buying and selling or commodities through what are known as futures contracts and the prices are subject to supply and demand. Similar to stock options, futures contracts also give you're the right but not the obligation to buy a certain commodity, or other asset, during a particular time period.

There are many additional types of investing for beginners so continue to research and find out what you would like to invest in. Your options are endless!

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April 28, 2009
Stock Market for Beginners
This article discusses items that investors should know who are new to the stock market. This "Stock Market for Beginners" article will review various items such as the different forms of stock analysis as well as some steps to take if you are interested in investing in stock.

The most important thing that new investors to the stock market should do is take the time to receive a thorough education in the stock market for beginners. Knowledge is power when trading stocks, and it is absolutely necessary for success. Not only do you need to understand how the stock market works, but you also need to have a general understanding of all off the different types of trading styles and trading strategies available to investors. That way you can find one that suits you and your personality.

This stock market for beginners article will also tell you that you once you determine what trading strategy works for you, you must learn as much as you can about it. Not only must you have a complete understanding of the strategy you choose but you must also practice first before trading with real money. Are you going to day trade, swing trade, buy and hold, or scalp? Many investors also opt to practice online paper trading. It is a great way for new investors to practice on paper without risking any real money, and it also serves well for investors who are looking to implement new methods to see if they work.

As you are learning about the stock market and the different types of trading strategies available you will learn about fundamental and technical analysis. Fundamental analysis is the analysis of economic factors such as supply and demand in order to determine stock's intrinsic value. Investors will look at things such as the company's quarterly earnings and annual growth rate before investing in a particular stock. It is very time consuming and is the type of analysis that long-term investors prefer. Stock market for beginners will also tell you about technical analysis. Technical analysis is used by short term traders such as day traders and swing traders, and it involves the study of past price movements. Technical analysts use stock charts in order to track these price movements and they attempt to make money based on predicting future price movements of stock.

Continue to learn how the stock market works as well as the different types of trading practiced by investors. There is a lot more information available and new investors should really take the time to study the stock market, and to find a trading strategy that is right for them. There are many tutorial and courses for the stock market for beginners that investors can find online. This can take time, but it is absolutely necessary to achieving success when trading in the stock market.

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April 25, 2009
Stock Advice
In today's article we discuss basic stock advice that you will come across as a beginner investor. Information such as why you should invest in stocks, the disadvantages of stocks, as well as the different stock market trading strategies practiced by investors will be discussed.

Trading and investing in stock is a great way to make money whether you are doing it full-time or as a means for extra income. There are many reasons why many people choose to invest in stocks. We will discuss three important reasons. First of all, the returns overtime outperform other asset classes such as bonds or real estate. Stocks can generally produce a return of about 10% per year whereas other types of investment will give a lower return of about 5%. Another benefit of investing in stocks is the taxes. This really applies more to long term investing for those that hold stock for more than one year. The long-term capital gains rate is 15% compared to the standard tax rate. Investors will also receive stock advice telling them to be sure they diversify their investment portfolio. Stocks can provide portfolio diversification because if you invest across a wide variety of stocks, if one bottom's out, it is not a major issue.

Of course investors must be aware of the risks associated with stock investing because the stocks market can vary widely. Again, however if you are properly diversified you shouldn't lose out big if one of your stocks plummets. Of course, with higher potential for gains there is always higher investment risk.

There are also a variety of different investment strategies when dealing with stocks. You will receive an abundance of stock advice no matter which investing strategy you decide to practice. Many investors opt to practice value investing. These investors look for those stocks that are currently undervalued by the market. They then look for those undervalued stocks that they believe will earn more than experts predict. Another type of trading is growth investing. Investors look for stocks they think have a high potential for growth but are not necessarily undervalued. These growth stocks are believed to grow faster than the market expects.

The last stock investing strategy we will discuss is perhaps the most exciting. Short term trading also known as day trading, is based on technical analysis which uses stock charts and other technical indicators to predict a stocks movement based on price change. Japanese Candlesticks stock charts are considered to be the best type of stock chart to use and many are successful using candlestick analysis. Continue to learn about Japanese Candlesticks to see how you can make a profit in the stock market.

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April 21, 2009
Trading Broker
Trading Broker Tips – How to Select a Broker

One of the most important decisions you will make when you begin to trade stocks, or other securities, is selecting a brokerage firm that satisfies your needs. There are different terms and conditions that apply depending on the type of account that you choose to open. Minimum deposits can range anywhere from $500 to $2,500 so be sure that you have enough money to actually open a stock trading account before you begin filling out applications.

There are four main types of accounts that you can open after you have selected a trading broker. These include cash accounts, IRA accounts, margin accounts, and options accounts. The cash account is very basic and is simply an account in which you deposit cash to buy stock, bonds, mutual funds, and the like. IRA accounts are simply individual retirement accounts and margin accounts allow investors to borrow money from your online broker against the cash and securities that reside in your account. (Margin trading is very risky and should only be practiced by seasoned traders). The last type of account is the options account. Only seasoned investors should open this type of account as well due to the high risk involved when trading options.

When selecting a trading broker investors must pay careful attention to the commission and fees associated with a particular brokerage firm. The price is indicative of the service, so beware of extremely cheap brokers. You don't necessarily need to pay for the full service broker either who is the most expensive. It really depends on your needs and the amount of experience you have as a stock trader. Many online traders opt to utilize the services of discount brokers when trading in the stock market.

It is also important to keep an eye out for hidden fees. Every trading broker will have hidden fees buried under layers of stock trading terminology and most of the fees are standard across the board, but you still need to be sure that you are aware of them. Some hidden fees to look out for include inactivity fees, account maintenance fees, interest on margin loans, fees for not maintaining a minimum balance, sales charges on certain securities, and fees for transferring assets into and out of your account(s). Again, while it is important to shop around, these fees are pretty standard in the internet stock trading world.

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April 19, 2009
Bonds and Stocks
When building your investment portfolio you want to ensure that you have the proper bonds and stocks ratio. Portfolio diversification is the key and in today's article we discuss stocks and bonds as they relate to diversification.

Some way to determine the appropriate stocks to bonds ratio can be complicated but most analyst agree that you should have a range of 70/30 to 60/40 in regards to pre-retirement investing. Of course this ratio will depend on the investment risk per investor and how conservative or aggressive the individual investor is. For instance, the retired investor may want to have a higher ratio of bonds with the goal of preserving capital. This investor must be sure however that he or she has enough invested in stocks in order to counteract inflation.

Once the investor has determined the ratio of bonds and stocks, he or she will need to work on structuring the bonds portion of the portfolio in particular. The investor must be sure that the bonds invested in provide stability. Many investors ensure stability by bond investing in U.S. Treasuries that provide low-yield products. In fact, about 20 – 35% should consist of treasuries along with other higher yielding products.

When investing in bonds you can also invest in municipal bonds, also known as munis, corporate bonds, as well as other bond funds. When investing in municipal bonds, mutual funds are good but you must make sure the quality that the fund buys is good. Also you have to pay very close attention to the fees associated with munis in general. Munis however are very attractive bonds and they offer a tax-free return. Municipal bonds are however difficult for individuals to purchase since they come in large denominations.

When dealing with bonds and stocks, corporate bonds produce very attractive yields, but they are difficult to find. They are highly rated, but investing in mutual funds may still be a better option if corporate bonds are not. For an investor looking to buy bonds, they an also invest in bonds funds that have all of the advantage of mutual funds. These benefits include a low minimum investment, professional management, and liquidity. They also do not have a fixed maturity date.

Bonds are a great investment and offer great portfolio diversification. You must be sure that you determine your stocks to bonds ratio first. Stock investing is another education altogether, but investing in stocks is a great way to make money. Continue to study the stock market as well as the different types of stock investing and find something that works for you.

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April 14, 2009
Stock Market Index
Also know as market indices, a stock market index tracks the performance of a specific group of stocks. This group of stocks represents a specific market sector of the United States stock market or the economy. There are indices for almost every single sector of the economy and the stock market and many investors are familiar with these indices through index funds and exchange traded funds. The purpose of these funds is to track a particular index's performance. Rather than try to determine the health of the market from the performance of a single stock, stock indexes allow investors to track a group of stocks. In today's article we discuss four popular market indices.

Dow Jones Industrial Average (DJIA)
– This marked the introduction of the stock market index by Charles H. Dow in May of 1986. The goal of this index was to take the average of twelve specific stocks in order to gauge the market's health. Of course now the calculation is a bit more complex, however it satisfies the same goal. This index is currently comprised on 30 blue chip stocks and the average share price of these stocks is divided by a number that is meant to reduce any distortions from non-essential factors. Unlike many other market indexes the DJIA is not a "weighted" index which means that it does not take into account market capitalization.

Standard & Poor's 500 Index (S&P 500) – The S&P 500 is made up of 500 companies that reflect the largest corporations in America. These stocks are chosen for their market size (large cap stocks), their liquidity, and their industry. This market index was one of the first computerized indexes and each company is weighted according to the company's market value. The S&P 500 is a more accurate representation of actual market performance.

Nasdaq-100 Index – The Nasdaq – 100 index is a modified capitalization weighted index that is used to track the performance of a market consisting of the 100 largest and most actively non-financial domestic and international securities listed on the Nasdaq stock market. In order to be included on this index, a stock must have a minimum average daily trading volume of 100,000 shares and have generally been listed on another major stock exchange for at least two years.

Russell 2000 Index – This stock market index is a capitalization weighted index that is used to measure the performance of a market consisting of 2,000 of the smallest publicly traded companies in the United States. These 2,000 companies are determined by means of their market capitalization.

These are other indexes in addition to those listed above. Continue to research these as well as other indexes when analyzing stock market indexes so that you have an overall knowledge of the markets.

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April 7, 2009
Stock Information

There is an abundance of stock information available on the internet. Your education of the stock market should never end however you must have an understanding of the stock investing basics before you begin to invest your hard earned money. In today’s article we discuss shares and the difference between authorized shares and issued shares. We will also discuss what capitalization means.

When buying stocks and shares you must understand the difference between authorized shares and issued shares. Authorized shares are the total number shares of stock that the board of directors are authorized to sell or “issue” to shareholders. The shareholders determine the number of authorized shares rather than the board of directors, and the directors are not allowed to issue shares without authorization from its shareholders. The board is allowed to issue all of the shares at the same time, or they can issue some now and issue some later. This is why the total number of authorized shares is equal to the total number of shares.

When looking at the stock information for a corporation you must also understand what issued shares are. Issued shares are the maximum number of shares that the board of directors are allowed to give or “issue” to the shareholders and they are the only shares that are counted for ownership purposes. In other words, when buying shares, shares that are “un-issued” still belong to the corporation and they are not taken into consideration when analyzing stock ownership percentages. These stock shares are still considered to be authorized shares and only when they are sold to shareholders are they considered issued shares. In fact, the shareholders are actually responsible for telling the board of directors the number of authorized shares they will allow.

Additional stock information that is important to know about is the term capitalization. Capitalization refers to the amount of money or assets that a company has when operations for that company begin. When investing in stock in a company you should know that there are some states that have a minimum capitalization requirement as a way to pay any potential lawsuits that may arise. They require the corporations to have a minimum number of assets before they begin operating in order to make it a little more difficult to create or begin a corporation.

There is a lot of information regarding stocks and the stock market that every investor must understand before he or she begins investing money. Continue to expand your investment knowledge to avoid making any investing errors that could cost you greatly.


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April 3, 2009
Stocks and Shares
The Difference between Stocks and Shares

There is a difference between shares and stocks however these days both terms seem to be used interchangeably when referring to investing in the stock market.  They both refer to the paper that represents ownership in a company, called the stock certificate but the difference between these two stock market terms in determined by the context in which they are used.

When buying stocks and shares you learn that shareholders own shares of stock in a particular company. When an investor says they own stock, the question would then be "what company or companies do you own stock in, and how many shares do you own?"  When a stock investor says they own or bought shares, the question would be, "what company do you own shares of stock in?" Again, the difference resides in the context in which this stock market terminology is used however they really are basically the same things.

As stated above, when you own shares of stock in a particular company, you become part owner of that company. If the company performs well, then the value of your stock should rise over time. If the company performs poorly, then unfortunately the value of your stock investment will fall. Companies issue basically two types of stock to their shareholders, both of which are explained below.

Common Stock is the type of stock that most investors own. When investing in stocks and shares, common stock in the basic form of ownership in a company. Those that hold common stocks have a claim on the assets of a firm after those of preferred stock holders and bond holders. Preferred stock is the other form of stocks that is issued to stock holders and it also signified ownership in a company. The safety of preferred stock in greater than the safety of that of common stock because the assets and earnings of preferred stock holders are paid first then the common stocks holders are paid.

Why does a company issue stock?
Companies will issue stock in order to raise money. Companies can also use other methods to raise money such as issuing bonds, or getting a loan but raising money through issuing stock does not create debt. It also does not create a legal obligation by the company to repay those funds. 

The difference between stocks and shares really is quite simple but it is important to know how and why both terms are used interchangeably. Hopefully you now have a clear picture if you didn't before.

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March 31, 2009
Investing Stock
When investing stock there are five types of assets that you may own. In today's article we will discuss five assets that provide great investment opportunities.

Common StocksCommon stocks see the biggest ups and downs in the stock market and they are the typically investment asset for ownership in a company. With this type of stock, stock holders don't have voting privileges or dividend rights, but they have a large profit potential.

Preferred StocksPreferred stocks offer limited benefits to shareholders and they tend to be slow, stable investments that don't bring huge sums of money but are steady performers for an investment portfolio. When investing stock, these stock holders, will typically receive dividends that are pretty high yet again they have a limited upside.

BondsBonds can include municipal bonds, savings bonds, U.S. government treasuries, corporate bonds, and more. Bonds are a debt security where the issuer loans money to the borrower and the lender decides how much will be lent as well as what the agreed upon interest rate and the term of the loan will be. The return on investment for the issuer is the interest accrued throughout the term of the loan.

Money Markets – These funds are highly liquid and are designed to protect your purchasing power. Money markets are similar to mutual funds and these fund managers will take your cash, invest it in conservative short term commercial paper and they pay you your portion of the interest earned on these investments. See also money market mutual funds.

Real Estate Investment TrustsReal Estate Investment Trusts, also known as REITs, are real estate companies that offer common shares to the public and it is similar to investing stock in that REIT stocks are similar to any other stock that represents ownership in a business. There are three different forms that REITs can take including mortgage, equity, or a hybrid of both.

Mutual FundsMutual fund investing provides the ability for investors to purchase stocks and bonds with much lower trading costs that if they tried to go it alone. Mutual funds are companies that pool their money from many investors and invest the money in stocks, bonds, short term money market instruments and into other assets or securities. They can include exchange traded funds, index funds, and actively managed funds. When you invest in mutual funds you are actually buying shares in a company and you become a shareholder.

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March 27, 2009
Price Stock
How to Price Stock
 
When trying to determine a stock's value before you invest, it is important to understand that a stock's value is ultimately determined by what investors are willing to pay for it. Of course there are other factors as well that determine stock prices that investors must understand before investing in stocks. We will discuss these factors in today's article.  

The main factors that affect the price of stock in the stock market include the following:
  1. The industry in which the company operates
  2. The quality of products or services that it offers
  3. The way the company is managed
  4. The condition of the economy and the financial markets
  5. The company's earnings growth
  6. The company's sales or revenue growth
Of course supply and demand plays a major role when investing in the stock market. When you price stock you must look at supply and demand knowing that prices will fluctuation continuously. When investing money in stock it is important to know that if there are only a fixed number of shares available for a particular stock, then the price of that stock will rise. The stock is more valuable because the demand is higher and the supply is limited. On the other hand, if a stock a certain stock fails to live up to its expectations then the demand for that stock will drop and the price of that stock will drop as well. This drop in price causes shareholders to sell their shares, which increases the supply and again drives the price back down.

Another important factor to take into consideration when you price stock is market capitalization. Market capitalization is calculated by taking the current price per share and multiplying it by the number of shares a company has outstanding on the stock market. The market cap also refers to the size of the company. There are three categories when looking at market capitalization. These include large caps, mid caps, and small caps. Company's that are large caps are very big companies with a market cap of over 10.9 billion dollars. They are most likely to pay out dividends and they typically have more financial assets to help them in the event of down turn in the market place. Small caps companies have a market cap of less than 2.3 billion dollars and they carry a higher investment risk than mid and large cap companies. Their shares tend to increase rapidly in price however they have fewer financial resources in the event of a down turn in the market. Mid cap companies may or may not pay dividends and they are medium sized companies with a market cap between 2.3 billion dollars and 10.9 billion dollars.

There are many factors to take into consideration when you price stock for a particular company. Even if you are looking to practice technical analysis and aren't particularly concerned wit the fundamentals of a company's stock, it is still important to have knowledge of the stock market basics

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March 24, 2009
Market Timing
Market timing means to predict the future direction of the market and technical indicators are typically used to do this. A technical indicator is a series of data points that result from applying a formula to the price data of a security. This data includes the open, high, low or close of a security such as stocks or commodities, over a specific period of time. While some market timing indicators only use closing prices, others look at an incorporate volume and open interest into their formulas. The data point is produced by entering the price data into a formula. Technical indicators are used in technical analysis as opposed to fundamental analysis. Technical analysis is the study and prediction of price movements.

There are many different types of technical indicators available to investors who practice market timing when investing. In today's article we will discuss two. First we will take a look at Candlestick patterns. There are 12 major candlestick patterns that must be memorized by the investors however there are about 40 candlestick signals that consist of continuation and reversal patterns. The major signals occur in price movements often enough that that they warrant actually placing trades. The other signals while they rarely occur are still effective in producing profit when trading stock.

The moving average (MA) is another technical indicator that shows the average value of a security's price over a specific period of time. There are different types of moving averages such as the simple moving average (SMA), the exponential moving average (EMA), and the weighted moving average (WMA). The purpose of using the moving average is to track the trends of a security by smoothing out the stock price fluctuations of daily price data, also known as market noise. Market timing uses moving averages by plotting data onto a stock chart that stock traders can then use to identify trends.

On another note, there is also mutual fund timing that is the switching of mutual fund asset classes in attempts to profit from the changes in their market outlook. This is different from market timing and it is frowned upon my long term investors because it has a negative effect on a fund's long term investors because they are subject to higher fees due to the transaction costs of the short term trading. Due to this, most mutual funds impose a short term trading penalty for traders who do this.

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March 20, 2009
Stock Trend
Stock trend lines may show an uptrend or a downtrend, but are basically lines that connect a series of highs or lows. These lines confirm a trend and when they are drawn they are drawn along at least two relative highs or lows. These trend lines can either be slanted or horizontal as they rise. The study of these trend lines is known as trend analysis and trend analysis is an important technical analysis tool used by many stock traders.

As trend lines first begin to form, they sometimes require redrawing in order to ensure that that important lows and highs are connected. Trend lines that are mature rarely need to be adjusted or redrawn and the steeper the line's angle, the less reliable the stock trend is. Trend lines, used in stock technical analysis, are typically good places to initiate trading positions with low-risk entry when stock trading. This is due to the fact that when the trend line is breached it results in a break in the trend and therefore an exit signal is provided.

When trend stock trading, there are two types of trend lines used. The first that we will discuss include the uptrend lines. Uptrend lines are seen when a stock makes repeated higher highs and repeated higher lows. This results in a price advance which trends higher and this trend ends when a series of higher highs and higher lows ends. This uptrend formation ends with the formation of a lower high or a lower low. When analyzing the repeated higher highs and higher lows as you trade stock, traders must be sure that each relative high is above the former high, and conversely that each low is higher than the former low. When identifying the stock trend, the uptrend gains more validity each time the price touches but does not breach the uptrend line.

The other type of trend line used when trading stock online is the downtrend line. Downtrend lines are seen when a stock makes repeated lower lows and lower highs. This results in a price decline and the trend ends when a series of lower lows and lower highs ends. This downtrend formation ends with the formation of a higher low or higher high. When analyzing the repeated lower lows and lower highs, traders must be sure that each relative low is below the former low, and that each relative high is below the former high. When identifying the stock trend, the downtrend gains more validity each time the stock price touches but does not breach the trend line.

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March 17, 2009
Spread Trading
Spread trading is the sale of one or more futures contracts and the purchase of one or more offsetting futures contracts. When doing this type of trading you are tracking the difference between the simultaneous values of these futures contracts, or in other words, the spread. The assumed risk is the difference between these contracts rather than the price fluctuations.

Two types of spreads are possible if both futures are traded on the same exchange but spreads can also be constructed with futures traded on different exchanges. Spread trading is the trading of futures spreads and for speculators it provides reduced risk when compared to simply trading futures. Futures spreads also typically have less strict margin requirements because the long and short futures that make up the spread are usually correlated and tend to hedge one another.

The calendar spread, also known as the intra-commodity spread is long one future and short another. Both have the same underlier but they have different maturities.  The inter-commodity spread on the other hand, is a long-short position in futures on different underliers and both typically have the same maturity.

Spread traders positions themselves between the speculator and the hedger and assume risks other than excessive price fluctuations. The spread trader assumes the risk of the difference between two related futures contracts in different markets, or between two different trading months of the same futures, or between equity and an index, or between two equities.

There are many advantages according to investors who practice spread trading. Some of which include the following: First, spreads are considered less risky when compared with straight futures trading because every spread is a hedge. Additionally, spreads on futures typically require lower margin than other forms of trading. This results in greater efficiency in the use of capital when compared to buying stocks on margin and margin requirements are even lower than with options trading. Many feel as well that spreads create a more level playing field because there are no stops possible. Another advantage to this type of futures trading is that spread trades are less volatile than other types of trading. This volatility is the reason that margins for spreads are so low and this type of trading is less volatile than trading options, regular futures trading and share trading. The last advantage of spread trading that we will discuss in this article is that spreads avoid problems that are associated with a lack of liquidity. There are more trading opportunities due to this and you can trade is less liquid markets.

There are more advantages to spread trading however investors must make sure they are aware of drawbacks and disadvantages as well. Continue to research this type of trading so that you can determine if it is the right trading strategy for you.

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March 13, 2009
Volume Trading
Volume trading is a form of technical analysis and used together they can indicate bias in the stock market. More specifically volume analysis is used in conjunction with technical analysis and they can both be very helpful when investing in stock. Stock volume is the daily number of shares of a security that is exchanged between investors. In today's article we will go over various terminology used in volume analysis as it relates to trading and investing

Buying Volume – Any volume that is generated as the index moves higher. This is different from a VMA surge because it is not a distinct surge however volume is still generated.

Selling Volume
– Any volume that is generated as the index moves lower however not a distinct surge.

VMA - Volume Moving Averages – Just like to moving average technical indicator used for security prices, the volume moving average (VMA) is the same thing except it plots the volume instead of the price. The duration ranges from a few minutes to many months.

Volume Moving Averages Surges (VMA Surges) – When volume trading, the VMA surges are a sign of sudden bursts of significant buying or selling activity. The surges are large peaks visually seen by the stock trader and they are either bearish or bullish VMA surges.

Bearish Volume Surge – This surge indicates that the index is moving down. This means that a large number of low-priced shares are currently being distributed to another group of market investors. After this bearish surge, the number of sellers who are trading shares decreases as sellers are no longer willing to dump their shares at the bid. The market is vulnerable to a trend reversal and has reached a very critical point.

Bullish Volume Surge – This surge indicates that the index is moving higher. This means that a large number of high-priced shares are currently being distributed to another group of market investors. After this bullish surge, the number of buyers decreases as stock prices become inflated. Again, the market is vulnerable to a trend reversal and has reached a very critical point.

Bearish Volume Accumulation – When volume trading volume is accrued during the price moving down. This accumulation shows the number of shares that were sold during this down-trend on the stock market, and the larger the accumulation of the bullish volume the stronger the index or stock is oversold.

Bullish Volume Accumulation – Volume is accrued as the price moves up when trading stocks. It displays the number of shares that were bought in the up-trend. The larger the accumulation of the bullish volume the stronger the index or stock is overbought.

There is a lot more to volume trading that investors should research and when used with other technical indicators, these volume analysis indicators can confirm trends in the market.

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March 11, 2009
Daytrading
This type of trading is the buying and selling of securities within one single trading day. Day traders use short term trading strategies to capitalize on small stock price movements in highly liquid markets and they use high amounts of leverage. This type of trading also provides much of the market's liquidity. In today's article we will discuss what day traders require as well as the characteristics of a day trader.

Daytrading requires many things but we will focus on three in this article. First day traders need analytical software. This software typically has many features and traders rely on technical indicators instead of fundamentals. This software can be pretty expensive to day traders must be sure to do thorough research before choosing one. Next, the day trader must have access to multiple news sources. The news provides opportunities to day traders and typical trading rooms contain multiple monitors displaying different news sources as well as additional analytical software. Lastly, these traders must have access to a trading desk. This should perhaps be first on the list, but is only necessary for those traders who work for larger institutions. Obviously when day trading stocks from home it is not a requirement.

Day traders also possess certain characteristics that make them good at trading stock. For starters they must obviously have sufficient knowledge of the marketplace as well as experience trading. This is true for all types of investing, however, more so with daytrading.Those that attempt day trading without the proper knowledge and training risk losing large amounts of money very quickly. Additionally, day trader must have sufficient capital to invest into the stock market. These traders only trade with money that they can afford to lose and large amounts of capital is necessary to make money on intra-day price movements. Perhaps on the most important traits necessary for a successful day trader is that he or she must be disciplined in their approach. They must develop a trading plan, and follow their set-ups. They cannot let emotion control their trading and they must act fast. Another important characteristic of day traders is that they must have a trading strategy. Again, they must develop a strategy that works, implement this strategy as part of their trading plan, and follow it strictly. There are many strategies available to day traders so they must do their homework and find proven strategies that work for them.

Daytrading is a great way to make money in the stock market as well as trading currencies, commodities, and other securities. Investors who are considering day trading must be sure that they have a complete understanding of the markets, that they receive training, and that they are disciplined in their approach. Read more about day trading stock online as well as the different technical analysis tools used by day traders. This should help you to expand your knowledge of day trading and of the different approaches used by many top traders.

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March 6, 2009
Short Selling
Short selling stocks is done for a couple of reasons. For starters investors aim to profit from a stock's decline in value and secondly investors are able to increase the value of their portfolios during a bear market. Typically investors will buy stock believing that the price will rise in the future, or in other word, go-long. Conversely, when an investor goes short, that means that he or she anticipates that the value of a stock or share is going to decrease. When selling short the trader actually sells a stock that he or she doesn't even own! Rather than buying the stock, the investor instead promises to deliver the security.

There are two main reasons that stock traders look to begin selling short. The first reason is to hedge. In fact, the majority of short sellers use shorts to hedge. Basically they use short sales to protect other long positions. This is an investing strategy that is very sophisticated and it takes real dedication and focus to pull it off, however it can be done. The second reason that traders practice short selling is to speculate. Traders will speculate in attempts to profit from an overpriced stock or an overpriced market.

There are many additional reasons that sophisticated traders choose to sell short. For instance, it can provide you with an investment portfolio that is low in volatility since it includes both long and short positions that tend to move together. Also, a lot of institutions won't participate in shorting stocks which leaves opportunities for others to benefit from. There are also investors who are better at identifying companies that are bad and overpriced instead of companies that are good and undervalued. Additionally, keep in mind that good news is more available to investors than bad news. This means that the bad news may not yet be completely factored into the price current stock price. This provides a great opportunity to those investors that understand the entire basis of short selling. Investors however must keep in mind that if a stock is overpriced, it has the potential to become more overpriced! This means that you at some point would have to buy it to cover your position. Also, when you are selling short, you are not just making an educated guess on what the stock is worth, you are also making an educated guess as to what the stock market will be willing to pay for the stock in the future.

Keep in mind that there are some restrictions involved with short selling. Investors cannot short sell penny stocks for starters and most short sales have to be done in round lots. Investors must be sure to follow the rules and regulations set by the "Regulation SHO." If you are unsure of what these rules are and you wish to begin shorting stocks, be sure to continue to do your research.

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March 3, 2009
Trading Currencies
When trading currencies, there are many factors that every investor should consider. The forex market is a great place to make money and in today's article we discuss some important tips that will help investors to invest money wisely in currencies.

The most obvious helpful tip is that before you invest in a market, you need to understand it. The currency market is driven by many factors such as a country's economy, politics, interest rates, equity markets and more. It is important to understand all factors that could potentially affect the currency of a country and what that impact means for the investor.

When trading currencies or any asset such as stocks and bonds, every investor must understand their risk tolerance. You must know how must you are prepared to lose on any one trade and you should never go above this limit. Additionally, currency trading requires that investors incorporate strategies into their trading such as stop loss orders and/or limit orders. Investors must learn to manage risk as they trade currency.

Decide on a trading strategy that works for you. There are so many strategies available that it is important to find one that you understand, that you have studied, and one that has proven potential to bring you success. Develop a trading plan for success and follow it. One of the key's to successful trading is having set strategies and a trading plan that you follow every day no matter what.

When trading currencies or any other asset, you must keep your emotions in check. While you will experience emotion, you must learn to control it so that it does control your trading decisions. Greed and fear are very common emotions felt by traders and can cause investors to lose a lot of money due to poor decision making. Follow your trading plan, set your stop loss orders, and follow your entry and exit strategies. Don not let your emotions control your investment decisions.

The last tip in this article is that investors should not expect to win every trade when they trade currency. That is an impossible task, even for the most successful of traders so please do not put unrealistic expectations on yourself. Learn from your mistakes and move on. The idea is to be ahead overall and not to win every trade. If you are however losing your money overall then you most likely need to rethink your trading plan and your stop loss strategies and techniques.

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February 27, 2009
Forex Account
When opening a forex trading account, there are a few different types of accounts that you should know about and consider. First of all, forex trading is the buying and selling of world currencies on the forex exchange. Before investors begin to trade forex they must set up a trading account. In today's article we discuss the three different types of trading accounts that investors can set up to perform forex trading

The first forex account we will discuss is the standard trading account. This is the most common account among the experienced and well-funded investors. With this account forex investors have access to standard 'lots' of currency with each lot worth $100,000. This doesn't mean you have to put down $100,000 to open the account but instead only need $1,000 to be in the margin account for one standard lot to be traded. Many like this type of account due to more services and perks for the investor. Also, it has a higher type of gain when dealing with pips when one standard 'lot' is traded. Forex brokers however require a higher starting minimum balance of anywhere from $2,000, $5,000 to $10,000. Also, just as there is potential for higher gain there is also potential for greater loss with this type of trading account, which is why it is recommended for well-funded and experienced investors.

Another type of forex account is the mini-trading account. This is basically just a trading account that allows forex traders to make transactions using mini-lots. The idea behind this type of account is so that brokers can offer a way for new and perhaps hesitant investors to enter the forex markets. They offer a mini lot that is equal to $10,000 instead of the standard lot that is equal to $100,000. This is great way for inexperienced traders to familiarize themselves with the markets without risking too much money. Also, new traders can use this account to test new forex trading strategies. These accounts can be opened with anywhere from $250 to $500 and risk management is considered. Of course with smaller risk comes smaller reward so once forex traders are comfortable they really should move to the standard account to make more money.

The last type of forex account we will discuss is the managed trading account. This account is different than the standard and mini accounts because the capital is still yours however the trading decisions are made by someone else. An account manager will handle the decisions made with this account just as a stock broker would handle a managed stock account. There are different types of managed accounts including a pooled fund and individual accounts. Pooled funds are shared with other investors while an individual managed account is just that. Many like having a professional handling their trading decisions and it helps with portfolio diversification. Most managed accounts however require a minimum of $2,000 for pooled accounts and a minimum of $10,000 for individual accounts. Additionally, account managers will of course charge a commission for their services.

Continue to learn about the different types of forex accounts and figure out which one is the best option for you. Good luck!

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February 25, 2009
Forex Analysis
There are two types of forex analysis that investors can use when investing in the forex markets. These include forex technical analysis and forex fundamental analysis. The term forex, also known as FX, deals with the international exchange where currencies are bought and sold. This exchange is referred to as the foreign exchange and foreign currency market.

Forex analysis when dealing with technical analysis deals with the study of price and volume movements. Forex charts are the primary tools used to track the data representing these price and volume movements. FX technical analysts are not interested in the fundamentals of a particular stock. They instead believe that a stock's fundamentals are already represented in the price movements. Factors such as market sentiment, supply and demand, and political and economic factors do not concern those who trade forex using technical analysis. They are only interested in the price movements and not the reasons for these movements.

Forex technical analysts also believe that prices move in trends (trend analysis) and therefore can be predicted through identifying patterns. While these patterns are not 100% reliable, they do provide a high probability that they will produce the expected results. Forex analysis using technical analysis also relies on the assumption that history repeats itself. These analysts rely on identified chart patterns that have been in use and categorized for over 100 years because they have repeatedly led to the same conclusions. Due to this we can assume that human psychology changes very little over time. The psychology of investing as it relates to trading forex is another concept that technical analysts study as well.

Types of technical analysis tools used in forex analysis in addition to charts and trends include technical indicators, the Elliott Wave Theory, Fibonacci indictors, and gaps.

The other type of analysis is forex fundamental analysis. Fundamental analysts study and research the intrinsic value of financial instruments. They base their investment decisions on economic and political information and supply and demand. Many investors however do not trade forex using fundamental analysis because the markets often take time to recognize that exchange rate our out of line with value and the forex market tends to anticipate events and then discount them in the currency value in advance.

Hopefully this provides a good description of the two types of forex analysis at a very high level. Continue to research the foreign currency market and decide which method of analysis is the best option for you.

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February 24, 2009
Buying Shares
There are a couple of important steps that every investor must take when buying shares. The stock market is a great place to make money however investors must be aware of the risks and have the knowledge to trade wisely. In today's article we explore two steps that every investor must take before investing in the stock market

The first step every investor must do is to select and sign up with an online broker. There are so many to choose from that it can be overwhelming but you must take the time to research. You can opt to go with a full-service broker, but most online stock traders opt to utilize the services of online broker or online discount broker. Online brokers and discount brokers simply execute your trades while full-service brokers provide trading advice in addition to executing trades for you. The idea when buying shares and when looking for an online broker, is to find one with cheaper rates including transactions fees and maintenance fees. You also must look for one that does not charge any account keeping fees and does not charge any inactivity fees if you don't trade frequently. In addition to researching brokerage firm fees, investors must also take advantage of free demos to get a feel for the user interface of the online brokerage site. Ensure that the look and feel complement your trading style.

Once you have chosen an online broker now you must learn how to execute your trades! When placing trades you will be asked specific information each time. You will be asked of course for the stock symbol and the quantity of the number of shares that you want to buy. You will also be asked for the order type which is either a 'market order' or an 'at limit order'. When trading shares, a 'market order' means that you are buying shares at the current market price. An 'at limit order' means that you set a limit for the price at which you will buy the share. This is used in order to reduce exposure to large swings in the stock market. The last piece of information you should be asked for is the expiration. The expiration is the date that you want the trade to expire. Make sure that you don't leave the expiration for too long because you may forget about the trade and accidentally buy the shares!

There is so much more that is important to learn about when buying stocks and shares. Continue to learn how the stock market works and don't start trading until you are ready. Practice online paper trading as well so that you have an understanding of what you are doing before you begin to trade with real money.

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February 17, 2009
Stock Option Trading
For those investors interested in getting into stock option trading, there is a lot to learn however the options market is popular because you can make money trading options no matter the market conditions. When the market is down you can make money, when it is up you can make money, and even when the market is sideways you can make money.

When a company grants stock options to its employees it provides three important pieces of information. First it provides the number of shares, then the grant price, and then the vesting date. The number of shares is important because this tells the employees how many shares of the company's stock they will be entitled to purchase under the options grant. The grant price is the price at which the employees are able to purchase the stock. Options are typically given the price that is quoted in the stock market on the day they are granted to employees. The last piece of information that is provided is the vesting date and this is the first date that the options may be exercised. When stock option trading, it is important to know that options must be exercised before their expiration date.

Stock option trading means that investors can do three possible things. They can either exercise the option and buy or sell the underlying security. Investors can choose to trade options, or investors can opt to use options as a hedge against a loss (hedging). If the investor chooses to exercise the option that means that they can take possession of or sell the stock at a fixed price regardless of the current market price of the stock. You must exercise the option on or before the expiration date however when stock option trading. An options trader can also simply trade options with no intent of ever taking possession of the underlying security, or the investor can use options as insurance against losses. This is hedging and hedging allows you to buy a put option at or just below the market price if you felt a stock might drop and you didn't want to sell.

Stock option trading is a great way to make money if you know what you are doing. Investors should however proceed with caution if they are just beginning as stock options are extremely complex and you can lose your money very quickly. Continue your stock options education to find out if stock options trading is right for you.

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February 13, 2009
Stock Market Prices
Factors Affecting Stock Market Prices

There are many factors to that affect stock prices. In today's article we discuss only a handful of these factors as there are so many to take into consideration.

News – The news is one major factor when it comes to prices on the stock market. When there is good news about a company, this obviously positively affects its stock price. Conversely, when the news is bad it can ruin the value of stock very quickly. Obviously the overall performance of a company is more important than daily news, or wall street news, however it is important to note that news does affect what happens to stock market prices for a particular company.

Earnings Per Share – Quarterly reports are published by public companies and the information in these reports includes the company's earnings per share, among other information. The earnings per share is one of the most important stock price factors since it directly influences the buying tendency of the market. These reports are mandatory and every investor should make it a habit to read these reports if looking to practice long term investing

Price to Earnings Ratio (P/E ratio) – The price to earnings ratio provides an idea of how each company's share price compares it is earnings. Basically, if the price of the share is a lot higher than the actual earnings of a company, then the stock is considered to be overvalued and the price can fall at any time. Conversely, if the price of the share is a lot lower than the actual earnings of a company, then the stock is considered to be undervalued which means that it has great potential to rise in the very near future.

Supply and Demand – This is a more obvious factor affecting stock market prices and it is a very important factor. The price of stock is directly affected by trends in the stock market meaning that when more people buy stock, the price of that particular stock increases. Conversely, when more people sell stock, then the price of that stock will fall. The idea when stock trading is to be able to predict the trends. There are many trading strategies available to investors who are interested. The trick is finding one that works for you.

Market Capitalization – Investors must multiply the stock price with the total number of outstanding stocks in the market to determine the market cap of a particular company. Market cap tells investors the worth of a particular company rather than the price of its stock.

There are many more factors affecting stock market prices. Short term traders versus long term traders all use this information however it is applied a bit differently depending on the investing strategy used. Continue to research other factors affecting stock prices as well so that you have an overall education in the stock market.

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February 10, 2009
Options Strategies
While there are many options strategies available to traders in today's article we discuss five. Please read the options trading strategies listed below.

Covered Calls
Covered calls mean the writer of the of the call takes on the obligation to potentially provide a futures contract at a specific price. The writer then tries to mitigate their risk by buying futures. Basically a covered call is a call sold against a long futures position. In order to succeed the futures bought must be generally stable in order to retain the options premium. The passage of time along with lower volatility make it unlikely that the options contract with be exercised. Losses using this strategy can be unlimited and as prices decline, the premium received from the sale of the call acts as a partial hedge against the futures position.

Long Strangle
This is one of many options strategies requiring larger price moves to be profitable. It is costly to execute because the options are out of money and losses are limited to the total premium paid. It has lower execution costs and as a result is used during very volatile price movements when trading options. In theory profits using this strategy are unlimited.

Short Strangle
This position profits in stable markets and is less costly to execute. It is also less risky because the strike prices are out-of-the-money. The short strangle takes advantage of premium income and they must be monitored very closely due to high potential for market movement in highly volatile markets. Profits using this trading strategy are limited to the premium received and the risks are unlimited.

Short Covered Put
This is a put option that is sold against a short futures position. This position is bearish (vs. bullish) and premium income can be earned if futures prices are stable to lower. If the options contract is exercised, it will be offset by the short futures position. The premium of the put increases income for hedgers and it simultaneously offsets the price level of the physical product. Losses are unlimited as the prices rally using this position, and the profits are limited on the downside.

Fence
This is one of many options strategies where the upside profit potential is limited but the net cost is low. This position requires the buying of a futures contract and hedging it with the purchase of an out-of-money put and the sale of an out-of-money call. Then the premium that is received for the call sale is used to subsidize the purchase of the put. A fence offers hedgers unlimited downside protection. The profit to loss profile is the same as the bull call spread strategy.

There are many more strategies available to investors who perform options trading. Continue to research different strategies to determine which trading strategies work best for you.

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February 8, 2009
Practice Trading
Those investors new to trading should practice paper trading. Paper trading means that you don't actually trade using real money, but instead you trade on paper. It is one of many great stock market trading tools and no capital is invested. This allows you to make mistakes and learn from them as if you are really trading, but without losing any money on those mistakes. You are actually able to practice trading as if you are really doing it.

Investors have so much to gain especially when online paper trading. They are able to develop a trading plan and a discipline, they can test their trading strategies, and they can build confidence. They can decide if they want to test out new markets in order to make important trading career decisions. This is especially important for those new investors looking to find their trading niche. It is very important to practice first and then apply those skills later once you are ready.

In addition to online paper trading, a new investor can also conduct self-guided paper trading. This is old-fashioned paper trading where you do everything by hand.  There is also broker assisted paper trading that is basically just what it sounds like. You can enlist the help of a broker to assist you with fictitious trades while you are practice trading. Online paper trading, however, seems to be the most popular method for investors who want to practice stock trading, without risking actual money.

While paper trading, traders only really have concept that they cannot be fully prepared for. This is a concept that all traders will eventually come across if they don't immediately. Greed and Fear. Greed and fear can negatively affect a trader's performance and must be addressed with every stock trader. Unfortunately when paper trading, anxiety and emotions that come with the idea of losing money, are absent. ou don't have the fear of losing money because you aren't actually at risk yet. These feelings can greatly alter your trading when you actually trade using real money. Due to this, traders must follow the trading plan they implemented and trust themselves. This is vital to successful stock trading.

While it is important to keep the concepts of fear and greed in the stock market in mind, it is still very important that traders practice trading through paper trading. The benefits outweigh the risks and now that you are aware of the concepts associated with trading emotions and anxiety, you can address them as you trade using real money.

Learn more about Eliminating Emotions; The most profitable skill that can't be taught!

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February 3, 2009
Day Trade
Those investors who plan to begin to day trade have a lot of research to do in order to get going. Stock exchanges are now run by computers, and are accessible via the internet making day trading very popular. Day traders can trade from almost anywhere around the world as long as they have an internet connection and a computer. In today's article we will discuss some items that traders should look into before they begin to trade.

Services
Fast and reliable internet access is crucial when trading online. In addition to having a fast and reliable internet, many investors opt to also have a back-up internet in the event their primary access is disturbed. Investors will use either a dial-up but most prefer to use a mobile phone that provides internet access.

Brokerage
When deciding on a brokerage firm, traders must look at the commissions and fees in relation to their experience level and the type of market they choose to trade. There are so many firms to choose from that it can be overwhelming and each one offers something different from the next. Just be sure that whichever firm you choose to day trade with, fits your trading style, is good for the market you choose to trade, and has good customer service.

Computer
Basically the more powerful your computer is the more stock charts and markets it will be able to display and handle. Look at things such as the memory, the CPU speed, the screen resolution, and the screen size. Get the best to have the best trading experience!

Trading Software
|Most brokerage firms offer their own trading software, but traders can typically use any trading software that is compatible. It is important to choose a firm that offers trading software that you can demo first. Demonstration software is typically offered so that traders can become familiar with the software and determine if it is the trading software that they would like to use when they day trade. Be sure that the brokerage firm that you choose has demonstration software before you commit to anything.

Charting Software
Like trading software, investors can also demo charting software before committing to software. Some features of charting software include ease of use, flexibility, basic charts and a few technical indicators, but traders should also find out if the software offers the basic charting features or if there are additional features included. Additional features could be custom indicators and replaying charts.

There are other factors to take into consideration when trading but hopefully this article gets you headed in the right direction. Good luck!

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January 30, 2009
Online Forex Currency Trading
When conducting online forex currency trading there is a lot of information that investors must know. One of the most important pieces of information for new forex investor is to research and to decide on a forex broker. In today's article we will discuss various characteristics and things that every investor must find out about a brokerage firm before selecting one.

Trading Platform
Forex brokers offer many different types of forex trading platforms to investors that have great tools and resources. Before you commit to broker, you should request a free trial first to ensure their platform is what you are looking for. You should also check out specific features such as the technical analysis tools offered, the news and the data, the charts, and of course their level of support for their trading system.

Spread
When online forex currency trading it is important that every investor finds out how to calculate the spread. The spread is the difference between the price a currency can be purchased at, and the price that is can be sold. The spread is calculated in pips, and the reason it is important is because forex brokers make their money on the spread, instead of on commissions, like stock brokers. You should be looking for a broker that has a low spread.

Qualifications
Ensure that your broker, or the firms of interest, are registered with the Futures Commission Merchant (FCM) and that they are regulated by the Commodity Futures Trading Commission (CFTC). This is of course for your protection so that you know you are dealing with a reliable and qualified firm. The majority of forex brokers are attached to lending institutions or large banks due to the large amounts of leverage that they need to provide to their clients. The brokerage firm's qualifications should be listed on its website.

Lots of Leverage
Leverage is the ratio between total capital available to the investor and the actual capital. This leverage is the amount of money your broker will lend to you when you trade forex. When online forex currency trading, leverage is important because the source of profit are fractions of a cent. Please note that the lower the leverage, the lower the profit, but the margin call risk is also lower. Conversely, the higher the leverage, the higher the profit, but the margin call risk is higher.

The last important thing to consider when choosing a forex broker is the type of account that you choose to set up. There are mini accounts with a lower minimum trading amount, and there are standard accounts that have a higher minimum amount. The amount of leverage you receive, when forex trading with your account, will change depending on the type of account that you choose to set up, so be sure to research that piece at as well.

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January 27, 2009
Futures Market
The futures market consists of hedgers and speculators and they both practice different methods for trading futures. Hedgers aim to increase the value of their assets while limiting any potential loss in value. They use the commodities markets to take a position in order to reduce the risk of loss in their assets due to changes in price. Hedging involves securing a price now to protect against a future declining price, also known as shorting. Conversely, they also aim to secure a price now to protect against future rising prices, also known as going long. In summary, hedgers can be farmers, importers and exporters, as well as manufacturers, and they buy or sell in the futures market in order to secure a future price of a commodity that is intended to be sold at a later date in the cash market.

Speculators, on the other hand, aim to profit from changes in the price of the futures or options contract. They aim to secure a price now in anticipation of declining prices, also known as shorting. Conversely, they also aim to secure a price now in anticipation of rising prices, also known as going long. Instead of aiming to minimize risk, like hedgers, they aim to benefit from the risky nature of this type of market. Speculators, actually increase their risk in order to maximize their return on investment. To summarize, a speculator who buys a contract low so that he or she call sell it high in the future most likely buys that contract from a hedger who is selling a contract low anticipating that the prices will decline in the future. May the best man win!

What is a Futures Contact?
Futures contracts are agreements made between investors to buy or sell a specific quantity of a commodity in the future at a specific price. In the futures market, however there is rarely actual delivery of the commodity in order to fill the contract and most contracts are liquidated before the delivery date. An option on a commodity futures contract gives the buyer of the option the right to convert the option into a futures contract.

In the past 20 years, futures trading has expanded quickly from agricultural commodities to energy commodities, as well as to financial instruments. The CFTC reviews the terms and conditions of proposed futures and option contracts and conducts daily market surveillance. It can take action if there are any issues in any contracts that are being traded.

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January 19, 2009
SSF
SSF – Single Stock Future
 
Single stock futures began trading in November of 2002 and are a fairly new investment concept. A single stock future is a futures contract with the underlying asset of one particular stock, typically in groups of 100. When it is purchased by the investor, no transmission of share rights or dividends occurs. They behave exactly like futures contracts and they can be traded on margin. They give investors the ability to leverage themselves within the market and they are not subject to the short selling limitations that stocks are subject to (see short selling stocks).  

A single stock future is traded in many different financial markets in different parts of the world. It can be traded on the United States markets, Spain's markets, India's markets, the United Kingdom's markets, South Africa's markets and more. In fact, South Africa currently traded an average of 700,000 contracts daily making it the largest single stock futures market in the world.
 
There are advantages to single stock futures as well that we discuss below.
  1. There is a range of trading strategies that are used with single stock futures. They can be applied to a variety of portfolio management needs and are in fact transferable from the stock market.
  2. There is improved financing of equity positions by participating at competitive benchmark rates.
  3. Electronic trading is available and if fully automated on the OneChicago single stock futures exchange.
  4. SSF acts as a synthetic stock lending vehicle therefore replacing the process of locating stock when selling short.
  5. Many investors are able to trade OneChicago products on their computers through their existing securities or futures brokerage accounts. This is because they can be traded in either securities accounts or futures accounts due to their narrow based indexes. 
  6. All trade are cleared through the OCC which is a triple A rated credit facility or CME clearing house division.
Single stock futures have not yet gained popularity in the United States compared with other countries. In fact the total contract volume previously averaged about 26,000 contracts per day in December 2005. Investors anticipate that this type of trading may increase in the future. Investors should research futures trading more before jumping into single stock futures. At least a basic futures education and stock market education are necessary to investing in single stock futures. 

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January 18, 2009
Online Forex
Online Forex Market
 
The forex market, also known as FX, or the foreign exchange market is the largest trading market in the world. The amount traded daily on the forex exchange is above two trillion dollars! Forex trading is also known as currency trading and is just that. It is the buying of one currency and the selling of another currency. The goal of the investor is to predict which currencies will rise, and which will drop. When the investor predicts this correctly, he or she will benefit from the investment.
 
Investors can use two types of analysis to predict which foreign currencies will drop and rise when trading online forex. They can either use fundamental analysis or they can utilize technical analysis. Technical analysts use stock charts and other technical indicators to asses and predict price patterns that reoccur over time. Fundamental analysts base their assumptions on economic factors that influence the price of currencies. Either method can be used, but each investor must determine which one works best for them.
 
When trading forex there are many advantages. We discuss them below.
  1. There are investors taking a percentage of the investment or the profit. Each investor deals directly with the pricing market agent when trading online forex.
  2. There are no commissions! The forex market is the only trading market where there are no brokerage commission fees, exchange fees, government fess and other miscellaneous fees. Additionally, there are low transaction costs between the bid and the ask price.
  3. There is high liquidity in the forex market as well. Investors can buy and sell their currency at any time no matter the position of the currency. The trade is also done almost immediately.
  4. Forex trading is also very dynamic. You can have mini lots worth dollars to huge lots worth thousands. It is up to you.
  5. Online forex trading also allows you trade 24 hours a day. Due to many times zones and the fact that it is worldwide means that you can trade anytime 24 hours a day.
  6. The last advantage discussed is the fact that there are margin investments that increase the investor's chance for higher profits. Margin trading can potentially increase your money's worth.
Continue to learn about the foreign currency exchange to see if online forex trading sounds right for you. Once you study more about the specifics on forex trading and the different methods available to assist you, you may decide this is the market for you!

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January 13, 2009
Trading Psychology
Trading psychology is a concept that is now more common among stock traders and investors. In fact, truly great investors have a complete understanding of the psychology of investing and they appreciate how it greatly affects ones success in the markets. In today's article we discuss three concepts associated with trading psychology and how to incorporate these concepts into your every day online investing.

Enjoy Trading First
You must enjoy what you are doing in order to be truly successful at it. If you dread trading stocks everyday, and you know what you are doing, then trading stocks probably isn't for you. That doesn't mean you can't invest however it just means that maybe you need to look for other ways of investing money that are more in synch with your personality. You can explore foreign currencies, commodities, or even exchange traded funds. Don't give up until you have explored all of your investment options and you find something that you truly enjoy.

Have Confidence in Yourself
Another very important part of understanding trading psychology is to understand that you must have confidence in yourself. Of course you need not only confidence, but once you have found a method of investing that you enjoy, you have done your homework, and you have a proven method of investing, have confidence in yourself. If you are finding it hard to launch, you should practice paper trading first so that you can see your results on paper before trading with real money. In fact most investors new to trading should practice online paper trading until they have proven methods and success. Lacking confidence can prevent your from entering trades and can make you pull out of trades too quickly so that you lose out of bigger profits. Enjoy yourself, have confidence in yourself, and understand that you will most certainly not win every trade and you will lose from time to time. As long as you are winning overall, then you are in great shape.

Have a Trading Plan
The most important part of understanding trading psychology is not only to have a trading plan but to follow that trading plan. If you don't have a trading plan outlined that you have implemented into your daily routine then stop trading now! You must develop a trading plan that includes your set-ups, your exit strategies, stop-loss strategies, etc. Without a stock trading plan you have no business trading! Stop, create a plan, and more importantly, stick to that plan. If you need to make adjustments that is fine too, just as long as they are absolutely necessary and infrequent. This cannot be stressed enough.

There is so much more to learn about trading psychology that every investor must apply to their investment strategies. This article only begins to touch on how much our minds can influence our trading without our even knowing it.

Please learn more about Eliminating Emotions; The most profitable skill that can't be taught!

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January 9, 2009
Stockmarket
Basics of the Stockmarket

In today's article we discuss three important parts of the stock market. This will help those new to investing in stocks to understand the basic functions that stock exchanges provide to investors and corporations.

Stock Exchange
Stocks are publicly traded on stock exchanges throughout the world. The main stock exchanges in the United States include the NASDAQ, the NYSE, and the American Stock Exchange. All buying and selling is done in one place which allows the price of stock to be public knowledge at a moment's notice. As a result, investors are able to watch how a stock price is affected as a result of news, the economy, and other factors. They can then buy stock or sell stock based on these fluctuations.

Corporations
A corporation is a company that goes public and can then sell shares of stock in the company to investors. This is actually called incorporating and it serves many purposes for the newly incorporated company. For instance, the corporation is then able to raise money through the selling of its shares so it can invest back into the company. This money that is raised this way is known as investment capital. Additionally, the company can buy property and it can sue people. This is especially important because corporations help to limit the liability of the owners so there is less of a personal investment risk. If a corporation is sued, it can go out of business, but if a person who owns a company that is not incorporated is sued, then that person can potentially be personally liable and lose everything they have. In order to be traded on a major stock exchange the corporation must register with the government and it must be issued a federal tax ID number. The owners of the corporation also hold shares of stock in the corporation to represent their ownership. 

Shareholders
Shareholders are a group of owners in a corporation. Anyone can hold stock in a publicly traded company as long as they are able to buy it. Thousands of shareholders trade their shares on a public stock exchange everyday for one corporation. Additionally, there is a board of directors that is elected by the owners of the corporation. The board of directors make the major decisions and they decide how many total shares there will be. The hope of shareholders is that the money the corporation makes from selling its stock will be wisely invested back in to the corporation. As a result, the corporation then makes more profit and increases the value of the stock on the stockmarket. The investment opportunities are mutually beneficial between the corporation and the shareholders. Shareholders must be sure that they do sufficient research on the companies they are investing in. For short term traders, the key is to find a successful method for evaluating and predicting the short term price movements of stock, and then creating a successful trading plan that allows you to make a return on investment

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January 6, 2009
Shares
They are often referred to as stock of a corporation but they can also represent ownership of other financial asset classes such as mutual funds. They represent ownership bought in units and shareholders are entitled to an equal distribution of profits. The profits are paid out in the form of dividends.

Common Shares / Stocks
When you buy common stock in a company you become part owner of the company and will see the value of your investments rise as long as the business performs well and makes a profit. As a shareholder you have a right to the company's profits and the more money the company has left over after it has paid all of its debts, the more your share of the company is worth. Investing in stock is generally risky because if the company that you invest in fails, then you could potentially lose all of your investment. Look for bigger companies that have a proven track record and are more established to reduce your risk. You can also look into technical analysis as a method of analyzing and tracking stock price movements. The benefit of investing in the stocks is that overall stocks give investors the highest returns than most other types of investments.

Preferred Shares / Stocks
Preferred stock is a type of stock that regularly pays out a set amount of money out of the company's profits in the form of dividends. They are called "preferred" because you get preferential claim to the profits ahead of the common shareholders. They come with many features that are similar to bonds. There are convertible preferreds and retractable preferreds. Convertible preferreds let the investor exchange their preferreds for the company's common stock. Retractable preferreds allow the investor to turn in the stock to the company at a specific price during specified times. These are risky because they react to changes in the interest rate. If the interest rates rise you have to sell and could get less than what you paid for in order to sell competitively. However, you are in line before shareholders to collect profits if the company performs poorly. Additionally, the yields are higher than those of other fixed income investments like bonds.

Continue to research investment fundamentals to find methods of analysis that work for you. Some investors opt to practice fundamental analysis while more active traders utilize methods taken from technical analysis. Research both and determine what methods are inline with your risk tolerance and investment philosophy.

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January 2, 2009
Dividends
These are payments that are made by a corporation to it shareholders and typically include a portion of the companies earnings. Companies can either reinvest their profit or surplus back into the company or pay it to the shareholders. They typically retain a portion of their earnings and then pay the remainder to their shareholders on a cash basis. Investors must research the companies that they are interested in investing in to find out their earnings estimates as well as additional information about the companies to see if they are a good investment.

There are different forms of payment in addition to cash such as stock, property, other financial assets, and more. We will discuss each of these forms of payments and investment options below.

Cash – Cash dividends are the most common form of payment and are paid in the form of a check. It is considered investment income and is taxable to the recipient the year they are paid. This is the most common method of sharing corporate profits with the shareholders of a company when investing money.

Stock or scrip dividends – These are paid out in the form of additional stock shares of the issuing corporation. Sometimes the subsidiary corporation pays it out. They are issued in proportion to the shares owned and if the payment involves the issue of new shares, it is similar to a stock split. This means that the total number of shares increases while the price of each share is lowered. The total value of the shares held does not change and the market capitalization stays the same as well.

Property – These are paid out in the form of assets from the issuing corporation. (Read about asset protection and asset allocation). These can also be paid out by the subsidiary corporation as well. This form of payment is pretty rare and tends to be securities of other companies owned by the issuer. They can take other forms also such as services or products.

Financial assets – financial assets with a known market value can also be distributed to shareholders. They are used in structured finance and warrants are sometimes distributed this way.

As mentioned above sometimes subsidiaries of companies will make the payments to shareholders. This is known as "spinning off" and it occurs when the parent company distributes shares in the new company to the old company's shareholders. The shares are then typically traded independently.

Continue to learn how to invest and explore different investment options to see what works for you. Explore technical analysis and day trading, or perhaps commodities or foreign currencies to see what fits your personality. Investment knowledge is the key to success so be sure to do your homework and find an investment option that suits you.

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