Candlestick Trading Blog: July 2009

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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	Website Specials

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	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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. Online Stock Market Reviews presented live via the internet by Stephen Bigalow	Website Specials

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