Candlestick Trading Blog
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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 10:43 AM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 11:49 AM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 5:35 PM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 1:31 PM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 2:35 PM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 1:10 PM
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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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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posted by Stephen W. Bigalow at 10:52 AM
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