American Stock Exchange Primer - A beginner's guide

Saturday, December 11, 2010 | Labels: | 0 comments |

This is a general article about the NYSE and NASDAQ that should answer several questions about investing in the stock market. What kind of “traps” might come in the way of investors when they begin to trade in the U.S. stock market? Which opportunities should you should seize and which should you ignore?

New York Stock Exchange (NYSE) - the largest stock market in the world. Most companies listed on NYSE belong to the US economy, but companies from other countries are listed here as well. The exchange quotes 3,500 tickers, half of them are most of the time liquid.

NASDAQ (National Association of Securities Dealers Automated Quotation) is an electronic stock exchange. In the very beginning, it was the stock exchange for technology companies stocks only, but now a lot of companies from various sectors are listed on NASDAQ.

On both exchanges ECN (Electronic Communication Network) system plays an important role. This electronic system executes orders automatically. Thanks to ECNs all buy/sell orders are executed according to the FIFO principle (First In, First Out).

The NYSE and NASDAQ maintain programs of funds insurance and control over all traders and financial institutions. SEC (Securities and Exchange Commission) observes every transaction and stops abuses and manipulations immediately.

One of the disadvantages of the NYSE and NASDAQ is the information overflow. There are hundreds of websites providing market analysis, various strategies and blogs, as well as daily reports, free research and surveys from the leading investment companies and analyst firms.

Moments on U.S. stock exchanges that are dangerous for novices: better stay square.

A company’s earnings is a number that comes from the company’s quarterly earnings report. It seems that buying stocks before a company’s forecasted good Earnings and adding to this position after the confirmation of this data is a good idea, but at the same time, you should keep in mind that the most terrible statements of the company may also provoke incredible growth and vice versa.

Upgrades / Downgrades. Forecasts of the biggest investment companies about the particular stocks value in the future. Prices can sometimes gap and reach the amount of several dollars, and dates of these announces are not set clearly. Even if you have a paid subscription to Goldman Sachs advices, positions opened during such an event can bring heavy losses.

Dividends. First, it is not easy to catch the dates when companies pay dividends. Even if you catch the moment, sell a few stocks, and earn on a price down-move (after the dividends are paid, stocks become cheaper for the amount of the sum paid as a dividend), at the end of the month your broker will charge this sum from your account to pay the shareholders their dividends. And nobody can say for sure if the price will continue to move lower. Good dividends might attract the attention of other investors which may lead to a significant stock price growth.

Economic Calendar. Simple logic: lower oil prices will make the stocks of oil companies grow and, and the stocks of airlines fall. But there is no direct correlation between such things as potential earnings and a stock price. Sometimes the market can grow at falling home sales and rising unemployment.

IPO (Initial Public Offering). Initial public offering of securities: offering of the stocks of the company that haven’t been listed on the stock exchange before. First, don’t try to “short” stocks on IPO, stock prices can move up very quickly. You should know the company’s owners personally and have full information about the company’s products and perspectives, otherwise do not try to participate on IPO.

Here are a few common issues that you should know before making your first steps on the stock market.
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Studying Stock Market Trends

Tuesday, November 9, 2010 | Labels: | 0 comments |

Studying the stock market can be very frustrating. There are just so many different factors that can contribute to fluctuations in the market.

There are people that make careers out of predicting where the stock market will be in the next day, month or even year. If you can get good at predicting about where the stock market will go you can make a lot of money by investing in the stock market.

Learning to understand the trends of the stock market takes time and expertise. There are some basic concepts about the stock market that will help you as you try to predict what is happening with the stock market.

Learning to identify and interpret the signs that the stock market gives is crucial. You must pay attention to the stock market and invest time in learning about the stock market.

We will talk about bull markets and bear markets. These are terms that have been coined to describe upward and downward trends in the stock market.

If there is increased investor confidence and increased investing in anticipation of future price increase then you have a bull market. A bullish trend will usually start before the economy begins to show the same upward trend.

The opposite is true of a bear market. When there is widespread investor fear or pessimism and the market shows a general decline over a period of time we would classify it as a bear market.

When the investors transition from having an attitude of optimism to pessimism we are usually going to be faced with a bear market. Later when we use these terms you will understand what we are saying.

The majority of stocks move with the trends of the markets. When we are in a bull market or when we are in a bear market we will see that most trends will follow the upward or downward trend.

This proves the point that it is important for us to always know what trends are currently affecting our stock market and what trends will be happening.

Price and volume are the two key points to look at when you are trying to determine where the market is headed. When you put these two key pieces of information together you will get a picture that tells you whether there are more sellers in the market or more buyers in the market.

The volume will tell you whether there is movement in the market and the price will tell you what direction. If you find a trend, you will need to capitalize on the trend.

The three big indicators for this formula are the Dow, the S&P 500 and the Nasdaq. These markets will be your source for price.

They will help you decide whether the market is going to continue its current trend or it if is trying to reverse course. We chose these markets because they are the leading markets in our economy.

The indicator for the volume comes from the daily sales volume. IF the market has a high-volume day and prices are up, you will be looking at mutual funds and institutional investors buying , which is a sign of an up market trend.

But if you see that one day there is a high-volume with lower prices that could mean that there is a downward trend. Usually big players will be backing out of the market at this point.

Remember to use your common sense as you are watching the trends in the market. If you have three or four days of high volume rising prices, it is not unusual to hit a high-volume day where the prices fall off.

If you begin to see the up days too much in a market that has been moving down, you may be noticing a sign that the market is about to reverse course or stall. The same is true of noticing down days in an up market.

A market that is showing sharp price movements in either direction without corresponding volume increases is sending false messages that should be watched carefully. You need to be wary of these changes.

Understanding that you should not try to swim upstream is crucial. The obvious forces of supply and demand will drive the market.

When there are more buyers than there are sellers the market will go up. When there are more sellers than there are buyers the market will go down.

It is when you find a prevailing trend of a different price and volume than the rest of the market that you may know to expect change.
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Forex Trading from Home - Some Tips

Sunday, October 31, 2010 | Labels: | 1 comments |

Forex trading from home, offers one of the few ways where traders can start with small amounts of money and build wealth quickly. While many traders aspire to this, very few succeed and it's not because they can't learn to do it - anyone has the potential to make big gains but most fail due to getting the wrong education. Below you will find some simple tips which will give you, a roadmap to Forex trading success so follow them and currency trading success can be yours.

The first point should be obvious which is you need to do your homework and learn your art but most traders fail to do this and lose. They buy cheap Forex software and think these automated systems will give them an income each month with no effort, all for the cost of a good meal out for two! Of course they lose and you have to accept that if you want to win at FX trading, you are going to have to learn the basics but for the amount of work you have to do, huge gains can be yours.

When trading Forex you need to keep things simple and not complicate your trading so forget about trying to follow news, judge economic numbers and guess where prices may go and use Forex charts.

The advantage of using charts is - you don't need to guess or predict anything, you just follow the price action and trade the reality of the price change. The reasons behind the moves on the charts are unimportant to you because you just want to make money by locking into and following price trends.

Learning to spot chart formations that offer trading opportunities is a learned skill and the even better news is - the best systems in financial trading are simple! Forget about all the gurus and geeks, who tell you complex systems are better there not, simple systems are more profitable because they are more robust and have fewer parameters to break.

You can learn a simple chart based system in a few weeks and then you need to get the right mindset to win. The problem for most traders is their emotions prevent them from winning. They hate to lose so run losses and when they get profits they take them early. To win you need to keep losses small and take them. If you fail to do this, you will never win at currency trading. If you have an ego and want to be right all the time don't trade currencies.

Some of the best traders in the world, are people with no formal education and use simple systems but they still make big gains. If you have understood this article so far, you will understand why they win and also see, that if you have the motivation to succeed and a desire to learn Forex the right way, you can make big profits in Forex trading too.
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