Online Trading - Stock and Option » Trading

Trading Stock For Dummies

admin — Mon, 21 Dec 2009 06:14:02 +0000

Over the last year the current bear market that is taking place in stocks has left many stock traders facing relentless selling. For the beginner this experience has been made worse by not having the knowledge as to how the markets work and what they can do to protect themselves during the challenging economic times. While many are discouraged by this, the fact of the matter is that you can be able to protect yourself from the volatile market conditions and at the same time take advantage of the price irregularities that the markets will present the prudent stock trader with during the bear markets. This means using tactics that many beginning traders simply don’t know about or don’t understand such as:

Always use a sell stop: A sell stop is a sell order that is placed in advance, what happens is if the price of the stock hits a particular price which you determine in advance then it becomes a market order and you are out of the stock. The idea is to use this to protect you against buying something at high and then ridding it all the way down to the low. The biggest advantage that this has is you can set the sell stop at a particular point which could be a sign that the stock could be getting ready to go lower such as right below support (which is a major point that the stock stopped dropping previously and then reversed going higher). You can also adjust the sell stop upward to protect your profits and then when the stock does start to top out and go lower the sell stop will sell the stock leaving you in cash while it is going down, something that will help improve trading stock for dummies.

Buy after you see the follow through of a trend: A trend is when you see three consecutive points confirmed. What happens is many investors try to guess when the economy is going to turn around or if a company is going to beat their earnings based on what is happening in one quarter often leading to losses as they were just a little to early to get into the stock. What you want to do is see three consecutive quarters of better than expected numbers from a stock to confirm that they are in an earnings growth trend. When you are looking at any economic numbers you want to see three consecutive numbers in the same direction to confirm that a particular sector of the economy is expanding or contracting.

Clearly trading the markets during these challenging times can be very confusing for the beginning trader. To be able to successfully trade the volatile markets means that you must use tactics that will protect you as well as let you enter the stock at the right time such as: always use a sell stop and buy after you see the follow through of a trend will help you avoid the falling knifes, increasing your overall profits, helping you to be more successful at trading stock for dummies.

Stock Trading: Professional Stock Trader Library (Interactive Cd-roms) 2007

admin — Fri, 18 Dec 2009 14:27:38 +0000

A RECENT CUSTOMER wrote us to say: “I just viewed the entire Professional Trader Library CD collection I received last Friday. I can’t begin to say how educational and inspiring the series has been for me, and what a fine job OTA has done in providing quality education for the self-directed trader. If the CD’s are indicative of the quality of education I can expect from the live training. I’m encouraged I’ll be able to elevate my trading to the next level towards becoming a successful market participant.” James T., New York, NY, June 2003.

This incredible trading library includes all of the following CDs:

“FUNDEMENTALS OF DIRECT ACCESS TRADING”.
“POWER TRADING IN GLOBALISATION 3.0 CD”.
“TECHNICAL ANALYSIS FOR THE PROFESSIONAL TRADER”(Part I, II, III).
“MASTERING NASDAQ TOTAL VIEW” (part I, II).
“FIBONACCI – Use Mathematical Magic for Better Profits from Each Trade”.
“STRESS MANAGEMENT – Defeat the Hidden Killer and Be a Profitable and Healthy Trader”.
“LEARN TO THIN (more…)

How to open a Forex Trading Account

admin — Fri, 18 Dec 2009 18:25:20 +0000

Opening a Forex trading account online can be very demanding. There are a few things you need to know before you decide what kind of online platform will benefit you the most. Keep in mind that Forex trading online is not a joke. As much as there is a lot of successful traders online making a fortune in trading currencies, there is a lot more horror stories of failures and disasters that are not being talked about in the mainstream media. So, if you are serious on becoming a success in forex trading and reach your financial freedom faster than you thought possible, I want you to know these essential facts before jumping into the world of foreign currency trading with all your heart.

First, know the difference between a desktop versus an online trading platforms. The former is a software you need to download to your computer while the latter is accessible online by logging into the Internet. Depending on what you are looking for and your style of trading, both options have their own preset advantages and disadvantages.

The main advantage of the desktop platform is its stability to execute a trade at a given time while the online platform is directly tied in with the Internet connection at all times. To put it simply, the desktop can be more flexible when it comes to setting up a target entry since it can be executed at a given time. The main disadvantage of a desktop platform is that it is only accessible in one location depending on where the computer is set up.

This is where the online platform comes in to the rescue for those who want to trade anywhere. The online platform works best in freeing you to trade anywhere there is an Internet connection. All you need to have is your account user name and password to execute your trade on the fly anywhere in the world.

How can you have the best of both worlds? Thank goodness there is an answer to that question. The speed of technological inventions of our time have made this all possible. There is a way to combine easily both the stability of the desktop and online platforms in one simple way. You can now have the advantages of both by easily purchasing a good laptop computer. The laptop is light enough to be carried off anywhere you travel that would be almost impossible with a desktop computer. And since all the new models of laptops have a built-in wireless and plugin online connections, you can now have the freedom to sit down inside a cozy coffee shop anywhere in the world that has a good Internet connection for you to trade successfully. Also bear in mind that In most cities in North America almost all the public libraries have a free wireless Internet connection.

Now you know how to trade anytime, anywhere. The next stage is to prepare yourself on developing your trading style. Remember, you need to have the right mind set and proper tools to execute your trades successfully. I wish you all the best to be financially free.

Options Trading 101

admin — Wed, 16 Dec 2009 18:56:51 +0000

The individual investor will typically include some stocks in their investment portfolio. And whether they are a long term trader or in it for much quicker returns, many investors understand and feel somewhat comfortable with the concepts and techniques of trading stocks.
Options tend to be much less understood – and therefore avoided. But Options can form an extremely valuable part of your trading strategy as they can provide tremendous returns!
So here I will try and give you some of the fundamental concepts behind trading options.
Options are a contract conferring the right to buy (a call option) or sell (a put option) some underlying instrument, such as a stock or bond, at a predetermined price (the strike price) on or before a preset date (the expiration date). Options officially expire on the Saturday after the third Friday of the contract’s expiration month but because the markets are typically closed on Saturdays, the Friday is commonly used as the expiration date.
A key concept to grasp is that, when you buy an option, you don’t actually own the underlying security. You simply own the right to buy (or sell) at a specific point in time. But, of course, the price of the underlying instrument and the time remaing before expiration both affect the value of the option itself.
So in trading options you have two main ways to make money on them:
- You can hold to maturity and then exercise the option (with the expectation that the underlying instrument is then worth more than what you are entitled to buy it at – your “strike price”)
- You can sell the option itself prior to expiration (in the expectation that the value of the option itself has risen above what you paid for it)
A great many investors do in fact hold until maturity and then exercise the option to trade the underlying asset. Assume the buyer purchased a call option at $3 on a stock with a strike price of $30. (Typically, options contracts are on 100 share lots.) To purchase the stock the total investment is:
($3 + $30) x 100 = $3300 (Ignoring commissions.)
So if, at expiration, the stock is worth more than $33 you’ve made a profit (You can sell your 100 shares for more than $3300 right away).
Speculating on the actual value of the option itself is the second alternative.
Let’s use the same example above.
You bought your options for $3 with a strike price of $30.
If the price of the underlying stock goes above $33 at any time prior to expiration, then naturally more people will want to try and get a hold of that option you own, because they see a high likelihood of making a profit off the underlying security. With the increased demand for that option, the value of the option itself will likely go up. So you can sell the option to that higher bidder for a profit.
For example, if the price of the underlying stock rose to, say $35 then the option itself may become worth, say $4 on the open market. So you sell your options for $4 and make a nice 33% return. Without ever having owned the underlying stock itself.
Those are the kinds of returns that make options so attractive.
Many brokers offer trading accounts to individual investors that allow options trading and frequently at very competitive commision rates.
It really isn’t very difficult to get started.
Options trading is risky, so manage your risk and your assets wisely and only use a small percentage of your overall portfolio for trading options. But do consider them as an additional component of your investment strategy, as they can yield tremendous returns when traded correctly.

The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed (Wiley Trading) (Hardcover)

admin — Tue, 15 Dec 2009 15:47:35 +0000

A realistic guide to day trading today’s stock market The Truth About Day Trading Stocks is an uncompromisingly realistic look at the challenges involved in becoming a successful day trader. Based on author Josh DiPietro’s ten years of experience as a day trader, this book dissects the psychological and strategic pitfalls that cause most aspiring day traders to fail. Written in an engaging and sometimes humorous tone, The Truth About Day Trading Stocks relates his own experiences, and in so doing, provides the reader with valuable lessons. This book is an antidote to trading industry hype that encourages traders to believe that trading is easily learned and is a fast path to wealth. It explains that the conventional route of attending seminars, buying software, and opening an account with a major brokerage house is a path to failure. Instead, a trader must learn hard lessons of self-discipline, consistency, and staying in the game for the long haul to have a real ch (more…)

Forex Trading – What Are Fibonacci Numbers?

admin — Sun, 13 Dec 2009 18:21:48 +0000

Do you know who Leonardo Fibonacci is? Now, when you think of the name “Leonardo,” perhaps you think of Leonardo da Vinci, but unlike Leonardo da Vinci, Leonardo Fibonacci did not paint the Mona Lisa. No, Leonardo Fibonacci was a mathematician who lived from about 1175 to 1250. He was well known in his day and contributed greatly to the world of mathematics. One of the things he did was that he introduced the decimal system to Europe.
He also studied a sequence of numbers that are known today as the “Fibonacci numbers.” Alternatively, they are known as the “Fibonacci sequence.”
The Fibonacci sequence begins with a zero and one. Each new number is the sum of the two previous numbers; for instance, zero plus one equals two, one plus two equals three, two plus three equals five, and so on.
Therefore, the first numbers in the sequence appear as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ad infinitum.
Fibonacci discovered that this series of numbers and their ratios to each other occurred throughout nature and in fact are incredibly commonplace in the world.
So what does this have to do with forex trading? Well, the ratios that the Fibonacci numbers displayed are also apparent in the price movement of currencies, as well as in stocks and other types of investments.
Although it’s too detailed to go into here, there are three numbers you need to concentrate on from this sequence. They are 0.382, 0.500, and 0.618. There are others as well, but these are the most important.
These numbers help to calculate what are called “retracement levels.” Many traders use retracement levels when they need to figure out where they should place buy and sell orders. It works like this:
Let’s assume that the price of a currency pair, or a company stock, is trending upward. The history says that prices tend to hit a peak and then go into temporary reversal. Then, they continue to trend upward. This is where Fibonacci numbers come into play.
When a currency is trending, the price can be expected to reverse back to one of the Fibonacci numbers. Then, it “bounces” back to its original level or nearly so to continue the trend. Assuming you forecast this right, you can buy just before the upward trend continues and profit handsomely.
Whatever the online trading platform you use, it should give you the means to chart the Fibonacci numbers. To do this, you draw a line from a low point to a high point. Retrace the levels will automatically be mapped on the chart for you.
There are the things to consider besides trading when the price hits a particular Fibonacci number.
For instance, you don’t know at what retracement level the price will stop. If you choose 0.382 and it drops to 0.618, you could lose a great deal. Additionally, if you choose the wrong high or low point, the retracement levels will not reflect what actually happens and will be of no use to you.
Finally, even though Fibonacci numbers are a good tool, sometimes they don’t forecast accurately at all. Again, remember that many variables come into play in the forex market. Therefore, don’t rely just on one method, like Fibonacci numbers, to predict what price movement is going to be.

Trading For Dummies (Kindle Edition)

admin — Sat, 12 Dec 2009 14:12:53 +0000

When people think of stock trading, they often think of the glory days of the Internet, when stocks just kept going up and everyone seemed to be making a fortune. Since the bubble burst, many people are scared of investing in the stock market. Sure, stocks are risky-just like any other investment-but with the right knowledge and tactics, there-s still money to be made. Trading For Dummies isn-t about high-risk, fast-paced day trading. It-s a simple, straightforward guide to the ins and outs of stock investing that offers a measured, level-headed approach to trading. You-ll learn the basics of portfolio management, measuring stock value, market analysis, and much more-all with a focus on risk reduction and steady profits. Inside you-ll learn how to: Understand market cycles Choose a great broker Master technical analysis Manage your risk exposure Build a balanced portfolioThis friendly guide presents the kind of honest advice you won-t find in the typical get-rich-quick (more…)

Benefits of Forex Trading

admin — Fri, 11 Dec 2009 18:25:00 +0000

There are many benefits and advantages to trading Forex. Here are just a few
reasons why so many people are choosing this market as a business
opportunity:

1. LEVERAGE: In Forex trading, a small margin deposit can control a much
larger total contract value. Leverage gives the trader the ability to make
extraordinary profits and at the same time keep risk capital to a minimum. Some
Forex firms offer 200 to 1 leverage, which means that a $50 dollar margin
deposit would enable a trader to buy or sell $10,000 worth of currencies.
Similarly, with $500 dollars, one could trade with $100,000 dollars and so on.

2. LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid.
This means that with a click of a mouse you can instantaneously buy and sell at
will. You are never ’stuck’ in a trade. You can even set the online trading
platform to automatically close your position at your desired profit level (limit
order), and/or close a trade if a trade is going against you (stop order).

3. PROFIT IN BOTH ‘RISING’ AND ‘FALLING’ MARKETS: On the stock
markets, you can only make money if shares are rising, but in economic
recession and falling ‘bear’ markets, there is little chance of making big money.
Forex is different. One of the most exciting advantages of FX trading is the ability
to generate profits whether a currency pair is ‘up’ or ‘down’. A trader can profit
by taking a ‘long’ position, (buying the currency pair at one price and selling it
later at a higher price), or a ’short’ position, (selling the currency pair and buying
it back at a lower price). For example, if you think the US dollar will increase in
value vs. the Japanese Yen then you will buy Dollars and sell Yen (go long). If
you think the Yen will increase in value against the Dollar then you will sell
Dollars and buy yen (go short). As long as the trader picks the right direction, a
potential for profit always exists.

4. 24 HRS: From Sunday evening to Friday Afternoon EST the Forex market
never sleeps. This is very desirable for those who want to trade on a part-time
basis, because you can choose when you want to trade–morning, noon or night.

5. FREE ‘DEMO’ ACCOUNTS, NEWS, CHARTS AND ANALYSIS: Most Online
Forex firms offer free ‘Demo’ accounts to practice trading, along with breaking
Forex news and charting services. These are very valuable resources for traders
who would like to hone their trading skills with ‘virtual’ money before opening a
live trading account.

6. ‘MINI’ TRADING: One might think that getting started as a currency trader
would cost a lot of money. The fact is, it doesn’t. Online Forex Firms now offer
‘mini’ trading accounts with a minimum account deposit of only $200-$500 with
no commission trading. This makes Forex much more accessible to the average
individual, without large, start-up capital.

Please visit the author’s other trading sites to learn more about forex trading:

http://www.daytrade-forex.com
http://www.daytradeforex.com
http://www.daytradeforex.com/products.htm
http://www.professionalforextrading.info
http://www.professionalforextradingonline.info
http://www.successtrading2000.com
http://www.successtrading2000.com/forex
http://www.tradecurrency.ca/education.htm
http://www.shortterminvestingsite.com

A Beginner’s Guide to Day Trading Online (2nd edition) (Paperback)

admin — Wed, 09 Dec 2009 19:15:41 +0000

Day trading is highly profitable–and highly tumultuous. Moreover, the financial markets have changed considerably in recent years. Expert author Toni Turner gives you the latest information on mastering the markets, including: Decimalization of stock prices New trading products such as E-minis and Exchange Traded Funds (ETFs) Precision entries and exits The new breed of trader Written in an accessible, step-by-step manner, A Beginner’s Guide to Day Trading Online, 2nd Edition shows how to day trade stocks in today’s market.

About the Author

Toni Turner is the bestselling author of A Beginner’s Guide to Day Trading Online, 1st Edition, A Beginner’s Guide to Short-Term Trading and Short-Term Trading in the New Stock Market An investor/trader with fourteen years’ experience, she is a popular educator and speaker at financial conferences and trading forums across the country. Toni has appeared on NBC, MSNBC, CNN, CNNfn, and CNBC’s Power Lunch, with (more…)

Options Trading Strategies, Basic Concepts

admin — Wed, 09 Dec 2009 06:30:37 +0000

When venturing into the options market, the best way to get the lay of the land is to be acquainted with at least some of the more elementary concepts. These will aid the new investor in successfully executing basic trading strategies.
Two basic terms, the call and the put, are the epicenter of the trading strategies. To buy a call confers the right, not the obligation, to buy at a price that is pre set. Conversely, puts give the buyer the right to sell at a pre set price. Options are both sold and bought, meaning that the seller grants the buyer the right and takes on an obligation to fulfill the other side of the trade.
The variations to this maneuver include:
Long Calls
The long call is the easiest to understand and is the most basic concept. MSFT (Microsoft) traded at $28 with June 31 options that were to expire on the third Friday of June. The strike price was $31, meaning that it was pre set so if exercised it had to be bought at that price.
Short (Naked) Calls
When the writer, the person selling the option, does not own the underlying stock and the option is exercised, then he or she is obligated to sell. Under those circumstances, that action is considered a naked call. Because the person is on the selling side of the contract, his position is considered to be short.
The short call status incurs the most profit by the amount of the premium if the market price of the underlying asset decreases. When the price exceeds the strike price by more than the premium, then the short position takes a loss.
Long Put
When a trader anticipates that the future market price of an asset, such as a stock, will fall before the expiration date is able to sell the stock at a fixed price. The buyer, put buyer, is not obligated to sell the stock, but he or she does have the right.
If the market price does drop below the strike price before the option expires and the decrease is more than the premium paid, then the seller profits. If the price increases or fails to drop enough to cover the premium then the trader will allow the contract to expire worthless.
Short Put
When a trader speculates that the future market price will rise, they can sell the right to sell an asset at the predetermined price.
If the asset’s market price increases, the short put position incurs a profit that is equal to the amount of the premium. This amount excludes any transaction costs and commissions. However, if the price drops below the strike price by more than the premium amount then the writer loses the money.
There are several trading strategies that are basic to the market. These strategies employ the characteristics of four basic trading positions. These strategies have one of several outcomes: pure profit plays, speculating on gaining a profit or creating a combination of speculation and hedging.
When positions move in opposite directions, it is called hedging. Hedging bears a profit less that sheer speculation, but they do compensate by offloading a certain degree of the risk.
Bull spreads and bear spreads are common strategies that can help the trader manipulate the market, depending on the market emotion. Bull spreads utilize a long call with a low strike price and combine it with a short call at a higher strike price and a short put with a higher strike price. On the other hand, bear spreads use a short call with a low strike price and a long call with a high strike price. Alternatively, the short put can be used with a low strike price and a long put can be used with a higher strike price.
There is a great deal of software on the market that can aid in these types of trades. Options trading software can offer users concrete demonstrations of the how these strategies work. They show how they behave under different assumptions regarding future prices, volume and other factors, combined with various expiration dates and strike prices to show how these different scenarios can result in a profit or a loss.