STOCKS AND SHARES

How To Lessen Your Trading Risks In Penny Stock Investing

2009-04-20T09:45:00.000-07:00

One of the worst things that can happen in the trading business is to go broke. Of course, anyone would do anything to prevent it from happening. If you run out of your investment funds, the stocks and shares just keep moving on and never stop. Of course you won't be able to operate anymore because you have no money to spare. That couldn't be difficult to understand, right? So that this horrible vision of bankruptcy will not happen, it is important that you set your limitations in penny stock investing.

Nothing can be more obvious than that. No matter how cheap the stocks are, it is important to keep your reservoir full as well. The stock market trend is not predictable. You share can sell high today and you could lose it tomorrow. What if that loss was the last investment money you have? Sad story but this can happen to anyone who is not setting clear goals for themselves. This article talks about some random guidelines on how to keep your savings intact.

- Spend only within your budget. This is common sense. You can't spend any more than what you only have. But what this means exactly is that if you are into penny stock investing, don't pour in all your savings. Set aside a budget for your investment to bank roll. A reasonable margin would be not more than ten percent of your personal funds. Any profit made, you can always add it to your savings. But don't go above the 10% mark unless you can really afford it.

- Know the loops in penny stock investing. In this same way as setting up a business, you have to understand the dynamics and the operations. This will lead you to better understanding of the trade. With it, you can make decisions with better precision, not accurate but better.

- Know the risks you may encounter. Known to everyone in the trade, penny stock trading ranks the highest in risk scale. The stocks lack liquidity. Fraudulent exercises are very possible in this arena. You could lose your money like bubbles bursting in air. But good investors are natural risk takers. They understand it like it's at the back of their hands. With this mindset, you can set your investment funds better.

- Learn when to invest and when to hold back. Don't get carried away if you stock price goes up. It can go down just as fast. So it is important to learn some timing strategies in penny stock investing. This should save you from losing more money and keep your savings steady.

- Do not think of your investment as gambling. If you lose the bet, you can't have it back. So you bet another. Although stock market trading behaves somewhat similar, it's not exactly the same.
Investment aims for profit. When you get your share, you bank roll it for more profit. And you're not the only one benefiting it. Gambling is just for entertainment. Penny stock investing is for serious money makers.

The list can simply go on. But no matter how sensible and persuasive these tips are, it's really up to you. It's your penny stock investing money. You have full authority over it. Small cap trading can make you smile a lot if you stop betting your money and start thinking of it as investment.

Beware of hot penny stock pick scams. Find out more about penny stock investing.

Article Source: http://EzineArticles.com/?expert=Malcolm_Torren

Basics of Stock Market

2009-04-18T09:40:00.000-07:00

Let's face it: We're living in an age where information is anything but in short supply. So when it comes to how to buy stocks, you can get your hands on plenty of investing info. But what about how to sell stock? Selling-it's just as important, but talked about less frequently than how to buy stocks.

You've probably heard one of Wall Street's favorite lines, "Buy low, sell high." Too often, investors get into trouble because they fall in love with their stocks. You see, even the most powerful growth stocks will peak and some point and fall out of favor. When that happens, that intense buying pressure we talked about before eases up and a stock's share price quickly fades.

I don't care how great a stock has been to you-once a stock's price reaches the tip of the iceberg, you have to sell and take your profits. Rule #1: Don't let your emotions gets the better of you when investing. Remember: Buy low, sell high.

So what should you look for when selling a stock? Let me break it down for you:

1. Selling Pressure. Your first clue should be when large corporations begin closing out their positions and selling shares. Instead of buying pressure, a stock faces tremendous selling pressure. In most cases, the pressure is so intense that a stock's price will collapse to new lows very quickly. Try not to get caught up in this momentum. I've seen lots of investors panic in these instances and they wait too long to unload shares. Their profits are completely wiped out! I don't want to see that happen to you. When the selling pressure intensifies, that's the time to sell a stock. Don't hold onto it under the false pretense that it will turn back up. It won't.

2. Deteriorating Fundamentals. When a company is beginning to peak, the first to go is sales growth, followed closely by shrinking earnings. What causes this to happen? Often, when a company is Wall Street's flavor of the week, competitors scramble to meet-and surpass-the expectations that company is held to. So increasing competition causes profit margins to fall and the company begins to report earnings below analysts' expectations. As a result, analysts grow more cynical about the company's future earnings prospects and lower their forecasts. This should indicate to you that it's time to sell.

3. Overvaluation. Sometimes, for different reasons, a stock's price is much higher than the actual value of the company. It's like that saying, "You can't have too much of a good thing." Well, in the markets you can. When stocks get too hot, they get pushed way up past their true value-like, say, dot.com stocks-and when that happens, they're often set up for a severe fall-like the dot.com bubble-burst. Your safest bet is to sell stocks when they're overvalued before they collapse and then buy them back after a market correction pulls the price down to real levels. Of course, this strategy requires that you pay close attention to price tops and bottoms. This can be tedious, that's why I recommend sticking to my first two indicators-selling pressure and deteriorating fundamentals-and you'll be in good shape.

The decision to sell a stock isn't easy, by any means. That's why I insist that you take the emotion and indecision out of the process. Now, this doesn't mean you'll always get them right. But if you focus on a few key indicators and let them demonstrate to you that it's time to sell a stock, ultimately, you'll be the richer for it!

Louis Navellier has earned a national reputation as a savvy stock picker and portfolio manager over the past 27 years. He writes four newsletters/trading services for individual investors, Emerging Growth, Blue Chip Growth, Quantum Growth and Global Growth. He informs readers how to invest, and delivers the latest in stock market analysis. Read his article on the eight fundamentals to picking a winning stock.

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Understanding Stocks and Shares - The Stock Market For Beginners

2009-04-17T09:36:00.000-07:00

Understanding stocks and shares is not a difficult job if you don't get too overly technical and just look for the stock market basics. Stocks are nothing more than purchasing a little piece of a business. When owners of a business need to raise money, they have several options. The first is the normal one, borrow money from a lending institution. The second one is to issue bonds. A bond pays a specific interest rate to those that purchase them. There's a date when it comes due and the company pays the loan in full. The third option is to go public with stock.

When a company goes public, it issues stock. The company creates a specific amount of shares, we'll keep it simple and use the number 1,000,000. Everyone that buys a share of stock from the company when they do the initial public offering (IPO) just purchased 1/1,000,000 of the company. Even though it sells many shares, it keeps some stock back for itself. Understanding stocks and shares is a matter of knowing that a single stock is one share of all those that the company issued.

Understanding stocks and shares also involves their purchase and sale. You can buy shares directly through many companies on a systematic basis. This saves brokerage fees. If you sell shares, you also can do that through the company direct. The problem when you do both is that you never know what price you'll get until the close of the stock market since share trading doesn't take place until then when you go direct.

Most people get involved in trading stock as a form of investing and want to make the maximum return on their money. You need a brokerage account to do that. You don't need a broker if you have some understanding of stocks and shares. To provide you with that information, here's a some stock market for beginners basics.

1. Select the stock you want to purchase. After you open a brokerage account, get a basic understanding of the type of stock, and shares you want, be on the look out for three or four companies you know and whose products you really like.

2. Check the background of the companies and their management. Read every article you can.

3. Find the symbol of the companies and track the stock. You'll probably start to see a pattern after a few weeks.

4. Decide the type of investor you want to become. It's not enough to simply have an understanding of stocks and shares, you need to know how you're going to invest. Decide whether you want to buy and hold. This type of investing comes when you believe that over time, the company will grow. You can also buy and trade rapidly. This is day trading and is used to make money on the patterns of price fluctuations.

Understanding stocks and shares is time consuming at first if you jump in with both feet, but once you follow stocks for a few weeks, you'll start to see how simple it really is.

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How To Become a Millionaire Investor

2009-03-04T06:48:00.000-08:00

One of the great myths of investment is that you need an MBA, a Porsche and access to lots of cash before you can take part.

Fortunately nothing can be further from the truth and with the right long-term approach; almost anyone can become a millionaire investor.

Long-term investment strategy

In short, this article will explain a low-risk investment strategy that could allow you to retire younger, travel more, buy expensive cars, pay off your mortgage or simply enjoy a comfortable lifestyle with a greater level of financial security.

Other investment strategies might provide greater returns in the short-term, but will require a significantly higher investment and much more risk.

Understanding the importance of compound returns

When you put money into the bank, you earn interest on your savings. The next month, you will earn interest on that interest as well as the money that you originally put in.

This cycle will continue each month and as long as you do not take any money out of your account, you will be earning increasingly higher amounts of interest, on top of your original contribution.

The same principle applies to investments in shares and investment funds. By re-investing dividends into the purchase of additional shares or funds, you will be able to generate additional earnings, which you can then re-invest again and again.

Turbo boosting your compound returns

You can improve the performance of your compound returns by adding additional contributions to your savings account on a regular basis and by selecting investments that provide higher annual growth rates.

The powerful effects of compound returns are best seen over a long period of time. The table below shows the returns that can be achieved by making monthly contributions of £100 over a period of 40 years.

Note how small differences in the rate of return have a huge impact on the final figure.

Rate of return	5%	8%	12%	15%	20%
Age 20	0	0	0	0	0
Age 30	£15,499	£18,128	£22,404	£26,302	£34,431
Age 40	£40,746	£57,266	£91,986	£132,,707	£247,619
Age 50	£81,870	£141,761	£308,097	£563,177	£1,567,625
Age 60	£148,856	£324,180	£979,307	£2,304,667	£9,740,753

Maximising your rate of return

In the above table we can see how a combination of regular contributions and an ability to find investments that provide a high rate of return will literally turbo boost your savings into the millions and it is important to understand how to obtain these results.

Below are four good places to start:

1 - Ditch the bank account

Most of us have a savings account, but often the interest rate on savings is less than 4%. Consider other places to invest your money, where you are more likely to get a better rate of return.

Why not invest your money in stocks and shares, where a rate of return between 8% to 12% is not unreasonable?

2 - Start saving and investing ASAP

The earlier you start, the greater the effect of the compound returns. Many people put of saving when they are younger, because they feel they cannot afford it, but try to understand the power of small amounts.

Small, regular contributions will soon begin to grow into a healthy pot of money. Even if you can only begin by saving £30 a month, this is still better than nothing and as you begin to earn more money, you will be able to increase your contributions.

3 - Buy cheap financial products

Did you realise that charges for financial services can vary enormously among different banks and investment houses, so take care when choosing investment products and make sure you compare prices.

Expensive charges will lower your returns and reduce the compound effect.

4 - Learn about tax efficiency

The banks are not the only ones looking to profit from you. The tax man will also want his cut and this can lead to some serious wealth reduction.

However, there are a number of ways to minimise the affects to tax, such as taking out an ISA (individual savings account), which is a tax free vehicle to keep your savings and investments in.

The importance of clearing debts

We have seen the positive effects that compound returns can have on your savings and investments; however there is also a darker side.

In the same way that banks pay interest on savings, they also charge interest on loans and credit card debts, and with some minor exceptions the interest charged on debts is much higher than that rewarded for savings, so it is the bank who will be benefiting from compound returns at your expense.

One big mistake people often make is to carry credit card debts, whilst keeping money in their savings accounts. This does not make sense because the savings may only be earning 5%, whilst the debts are costing 15%.

It is much better to concentrate on clearing your debts as soon as possible and then harness the power of compound returns in your favour.

Here's to your investment future

Remember it is possible for almost anyone to a develop a substantial investment income, just bear in mind the the positive and negative implications of compound returns, the importance of clearing debts and the benefits of turbo boosting savings and investments.

Investment is a great way to increase your wealth. For more investment advice and information on managing your money, visit http://www.Finance4Beginners.co.uk

Article Source: http://EzineArticles.com/?expert=David_Sharpe

Things You Should Know About Stock Trading

2009-02-03T10:33:00.000-08:00

If you consider the possibility of trading stocks, there are some things you should know from the start. The first thing you should know is what exactly stocks trading mean. Well, first of all, stock shares represent a way companies raise capital for their business. A company issues new stock share, people buy them and the money goes into the company’s bank accounts to be invested in the company’s business. The public has access to these stock shares through a stock broker who is selling and buying them. One thing you should always keep in mind when you start buying shares: their price is constantly changing based on supply and demand balance for those shares. When the supply is high, the price falls; but when the demand is high, the price is going up. This is the golden rule of stocks trading. A raise of price brings money to your pockets.

Stocks trading have changed lately due to technological evolution. Internet has eased the selling and buying process. It is now possible to sell and buy shares instantly. Consequently, the stocks trading process has changed as people chose to sell and buy more often instead of just keeping the shares as they used to do years ago.

Stocks trading are a process that presents both advantages and disadvantages.

First of all, the profit is bigger when you are constantly trading your shares portfolio instead of just keeping the shares for years. There is a huge amount of shares available for buying on the market. But be careful, not all shares have price moving up. You just have to dig up and find those shares whose prices are bringing you profit.

If you don’t know what company’s shares are better to buy, you can always go for popular companies as Microsoft or IBM. They always bring a sure profit.

Leverage is stocks trading biggest disadvantage. This means that if you have a margined account, the maximum leverage you can get is no more than 4:1. Forex trading and even futures trading offer better deals than stocks trading. Another disadvantage is the fact that a trader who is doing more than 4 trades in a 5 days period is required to hold at least $25, 000 in his/her trading account.

The uptick rule represents another disadvantage of the stocks trading process. You are required to wait for the stock price to tick up before you are aloowed to sell it.

Another big disadvantage is the cost of stocks trading. Although the costs for online trading are low, they still count quite a lot at the end of a trading day.

In conclusion, stocks trading are a process which has its upsides and downsides as any other trading method. The best thing for you is to choose the kind of trading you consider is most suitable for you. But keep in mind that all trading processes (no matter if they are forex trading, future trading or stocks trading) have both advantages and disadvantages.

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Article Source: http://EzineArticles.com/?expert=Ispas_Marin

Focus On Momentum Stocks For Greater Profit Levels

2009-01-29T10:29:00.000-08:00

Recently, the stock market has been performing, but not at very high levels. There has been a simultaneous increase in the focus on momentum stocks. This focus on momentum stocks is easy to understand when you consider their history: in the past, they have proven that they are a reliable system for generating income in the stock market.

A key investment move in the stock market is to trade big. By using the trading system you can use it to your advantage. Many different strategies exist to turn a profit, and one of those is to focus on momentum stocks.

The concept behind the stock market is to purchase shares of a company that is doing well or just starting off new. When you purchase them at a certain price you hope that the market will go up around that company's shares. At that time you are able to sell the stocks at a higher market price and make a profit on that sale.

Using the momentum stock strategies we can further define the stocks and types of companies which we may consider purchasing and selling. First, a high performing market and a stock is identified and then a stock with greater momentum than the others in the group is selected from that market.

By doing this you are enabling yourself to place in your hands the best stocks that have the greatest momentum within its respective area. This ensures that you are setting the odds in your favor. By having a stock with momentum your market is encouraging your shares to continue to ride that momentum into higher levels of gain.

The momentum strategy in stock investment is one that frees you from the need to constantly buy and sell many shares and spread your investment funds among as many diverse stocks as possible. Instead, you ride the momentum of the market when it urges your company's stocks higher, and this is likely to be sustained when the momentum stock strategy is used.

For smart investors, the trend is to focus on momentum stocks. They have been proven to be useful in generating income in the stock market. This strategy requires that you fully define both stocks and company types that you are willing to consider trading on. By having a stock with momentum your market is encouraging your shares to continue to ride that momentum into higher levels of gain. The key to the stock market is to trade big. Purchase shares of a company that is doing well or just starting, new. Using this trading system to your advantage is the key to any strategy in the stock market.

Article Source: http://EzineArticles.com/?expert=Mark_Crisp

Stock Market Secrets Revealed - Get Showers of Money

2009-01-26T10:27:00.000-08:00

If you are looking for a handsome income then there is no better option than nvesting in the stock market. There is rising inflation in many parts of the world. 100% safe investment in fixed deposits and similar financial instruments are no longer adequate. The good news is that investing in stocks and shares can not only help you overcome the problems of inflation but also make you very rich. Online buying and selling of stocks and shares is quite easy way. There are online stock websites which can help you to choose companies that are good for investment. They help you to evaluate which stocks and shares to watch, which are paying good dividends, which stocks are good for long term and short term investment.

The decision regarding which shares to buy depends upon your investment goals. You may try and pick stocks from some emerging sectors which have good growth potential. Keep your eyes and ears open for stock market advice from authentic sources but at the same time aware of stock market scams.

When you invest in stocks each cent of your investment should yield profit for you. This can be possible most likely when you invest in stocks on long term basis, pay minimum commission and the most important factor is that the companies whose stocks you buy should have a history of good performance year after year. You should either buy stocks with a lump sum payment or by using the dollar cost averaging method. Here I recommend the cost averaging method as it takes into account the ups and downs of the stock market so that on an average you get a higher yield for your invested money.

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Stock Market Strategies For Wealth

2009-01-26T10:23:00.000-08:00

Renting Stocks & Shares Most people think that all you can do with stocks & shares, is buy them, hold them for a period of time, and hopefully wait until they go up in value, and sell them for a profit. This in fact is the most popular way stocks & shares are traded on the stock market.

Did you know that you can actually rent out your shares on a monthly basis and earn a consistent monthly rental income from them? The strategy I am referring to here is called either, Renting Stocks Strategy or Renting Shares Strategy (depending on what country your are from) This strategy is quite a low risk, and can provide a consistent monthly income.

What we do in this strategy is:

Buy our stocks or shares

Rent out our shares

Receive our rental premium immediately

Insure our stocks or shares against market falls

This strategy is particularly good in this time of volatility as with each trade we insure the value of our shares at around 80% of their value. So even if the market crashes and our stock or share price falls to zero, we can always sell our stocks or shares for around 80% of the value that we purchased them at.

Here are the results from using the Renting Australian Shares Strategy for the month of November 2008:

Account Size Used= $70,000
Number of Trades = 6
Average Capital Insurance Level = 80%
Income = $9,030
Return on Investment = 12.9%
12.9% ($9,030) in One Month

That is 12.9% Return On Investment in a month when the stock market index went down 11.4%

Written By Scotty Smith

To find out how you can become involved in this strategy and take advantage of some very consistent income, take a look here...

http://www.squidoo.com/Stock-Market-Strategy

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