The world of trading and investment can be as frustrating as it can be rewarding! You need to be prepared...
Firstly, decide if you are a trader or an investor.
An investor is someone who enters the stock market inadvertently - usually via their superannuation policies. A trader is someone who makes a decision to buy and sell shares via the stock market. This can be done online or by using the services of a stock broker.
If you decide to become a trader - to win - you must have a survival strategy...
You need to study the market yourself - not just rely on 'reading the news', or listening to others advice and tips.
Take advantage of technology - computers, software, electronic data - all at your finger tips. Seek out charting software and appropriate internet sites - they are plentiful.
Ensure that you 'manage' your money and keep some in reserve.
Have the ability to quickly identify failures as well as successes.
Stock Market trading appeals to those who are a little adventurous - rather than just placing their capital into bricks and mortar.
But - be mindful that portfolio values are less stable than real estate as they are continually moving up and down.
However - investing in the Stock Market means that you are putting your money to work - be aware, and enjoy the gains!
Keep trading and trade wisely and in smart way!
See ya soon!
Friday, September 24, 2010
How To Choose A Stock Market Analyst?
With so many different companies offering such a wide variety of stocks and bonds, it can be difficult to keep track of which ones are good investments and which ones will cause you to lose money. If you aren't sure how to tell the good stocks from those that aren't so great, or simply don't have the time that you'd need to keep track of all of the different stocks so as to know when it's time to buy or sell, you might want to consider hiring a stock market analyst.
A stock market analyst is an individual, sometimes as a part of an investment firm, whose job it is to watch the changes in the market and keep track of which stocks and bonds are performing well and which ones aren't.
If you think that you might be interested in hiring a stock market analyst but aren't sure how you would go about doing so, then the information below should help you begin your search.
Find Local Analysts
The first step in hiring a stock market analyst is finding one to hire. You can often find listings for market analysts or investment services in your local phone directory, and many analysts are likely to advertise in the financial section of local newspapers and other financial publications. You might also try searching the internet for information about financial analysts in your area.
Once you've found the analysts that are closest to your area, it's time to begin investigating the services that they offer and finding the one that's best for your investments.
Compare Prices and Services
Obviously, stock market analysts are going to charge for their services… after all, it's how they make a living. You should take the time to see how much the various analysts in your area charge, and find out exactly what services that price covers. Some market analysts might have several different packages at different prices, offering different services for different amounts so as to cover a variety of different service needs and financial limits.
Take some time to compare the prices that each analyst charges and the packages that they offer, and when you've decided upon the one that offers the most services that you desire for the best price begin checking to see how good they are at their job.
Check References
Taking the time to check references and to see if your potential analyst has any major complaints against them can help you to avoid having to repeat your search in a short period of time. In most cases, you'll find that businesses such as stock market analysts will have customers who are more than willing to allow the analyst to use them as a reference because of good experiences that they've had. If they don't have any references that you can use, take a little time to ask around and see if you can uncover any good or bad experiences that others have had with them in the past.
Though it may seem like a lot of work, you want to make sure that the person that you hire will be able to do the job that you're hiring them for.
Making Your Decision
After you've done some checking around and gone over the information that the analyst has given you again, it's time to make your decision. If it seems as though they'll do a good job in advising you on your stock choices, go ahead and hire them… if not, you should continue your search until you can find the one that will.
Keep trading and trade wisely and in smart way!
See ya soon!
A stock market analyst is an individual, sometimes as a part of an investment firm, whose job it is to watch the changes in the market and keep track of which stocks and bonds are performing well and which ones aren't.
If you think that you might be interested in hiring a stock market analyst but aren't sure how you would go about doing so, then the information below should help you begin your search.
Find Local Analysts
The first step in hiring a stock market analyst is finding one to hire. You can often find listings for market analysts or investment services in your local phone directory, and many analysts are likely to advertise in the financial section of local newspapers and other financial publications. You might also try searching the internet for information about financial analysts in your area.
Once you've found the analysts that are closest to your area, it's time to begin investigating the services that they offer and finding the one that's best for your investments.
Compare Prices and Services
Obviously, stock market analysts are going to charge for their services… after all, it's how they make a living. You should take the time to see how much the various analysts in your area charge, and find out exactly what services that price covers. Some market analysts might have several different packages at different prices, offering different services for different amounts so as to cover a variety of different service needs and financial limits.
Take some time to compare the prices that each analyst charges and the packages that they offer, and when you've decided upon the one that offers the most services that you desire for the best price begin checking to see how good they are at their job.
Check References
Taking the time to check references and to see if your potential analyst has any major complaints against them can help you to avoid having to repeat your search in a short period of time. In most cases, you'll find that businesses such as stock market analysts will have customers who are more than willing to allow the analyst to use them as a reference because of good experiences that they've had. If they don't have any references that you can use, take a little time to ask around and see if you can uncover any good or bad experiences that others have had with them in the past.
Though it may seem like a lot of work, you want to make sure that the person that you hire will be able to do the job that you're hiring them for.
Making Your Decision
After you've done some checking around and gone over the information that the analyst has given you again, it's time to make your decision. If it seems as though they'll do a good job in advising you on your stock choices, go ahead and hire them… if not, you should continue your search until you can find the one that will.
Keep trading and trade wisely and in smart way!
See ya soon!
Try To Understanding The Stock Market
Many people look to the stock market to enhance their hard-earned money more and more each year. Some people are not even aware of their investments, because they can come in the form of pensions with their place of employment. The company invests this money in efforts to increase your retirement funds. In order to fully understand what is happening with your money, you should understand how the investments work.
The stock market is an avenue for investors who want to sell or buy stocks, shares or other things like government bonds. Within the United Kingdom, the major stock market in this area is LSE (London Stock Exchange. Every day a list is produced that includes indexes or companies and how they are performing on the market. An index will be compromised of a special list of certain companies, for example, within the UK; the FTSE 100 is the most popular index. The Financial Times Stock Exchange dictates the average overall performance of 100 of the largest companies with in the UK that are listed on the stock market.
A share is a small portion of a PIC (public limited company), owning one of these shares will give you many rights. For example, you will gain a portion of the profits and growth that the company experiences, additionally you will obtain occasional accounts and reports from the chosen company. Another exciting feature of owning a share of a company is the fact that you are given the right to vote in various aspects of what happens with the company.
Once you purchase a share of a company you will receive something called a share certificate, this will be your proof of ownership. This certificate will contain the total value of the share, this will likely not be the price that is listed upon the exchange and is specifically for reasons of a legal matter. This will not affect the current value the share currently holds on the market.
Typically, as a shareholder, you will receive your profit in the form of a dividend; these are paid on a twice per year basis. The way this works is if the company makes a profit, you will as well and on the opposite end of this spectrum if they do not make a profit, neither will you. If a company does extremely well their value increases, which means the value of the share you own will as well. If you should decide to sell your share, you will only benefit from it, if the company has experienced growth.(Courtesy of Jeff Lakie )
Keep trading and trade wisely and in smart way!
See ya soon!
The stock market is an avenue for investors who want to sell or buy stocks, shares or other things like government bonds. Within the United Kingdom, the major stock market in this area is LSE (London Stock Exchange. Every day a list is produced that includes indexes or companies and how they are performing on the market. An index will be compromised of a special list of certain companies, for example, within the UK; the FTSE 100 is the most popular index. The Financial Times Stock Exchange dictates the average overall performance of 100 of the largest companies with in the UK that are listed on the stock market.
A share is a small portion of a PIC (public limited company), owning one of these shares will give you many rights. For example, you will gain a portion of the profits and growth that the company experiences, additionally you will obtain occasional accounts and reports from the chosen company. Another exciting feature of owning a share of a company is the fact that you are given the right to vote in various aspects of what happens with the company.
Once you purchase a share of a company you will receive something called a share certificate, this will be your proof of ownership. This certificate will contain the total value of the share, this will likely not be the price that is listed upon the exchange and is specifically for reasons of a legal matter. This will not affect the current value the share currently holds on the market.
Typically, as a shareholder, you will receive your profit in the form of a dividend; these are paid on a twice per year basis. The way this works is if the company makes a profit, you will as well and on the opposite end of this spectrum if they do not make a profit, neither will you. If a company does extremely well their value increases, which means the value of the share you own will as well. If you should decide to sell your share, you will only benefit from it, if the company has experienced growth.(Courtesy of Jeff Lakie )
Keep trading and trade wisely and in smart way!
See ya soon!
The Stocks and Futures - What is the Difference?
Are you new to trading? Perhaps you wonder what the difference is between trading Stocks and trading Futures. Often when I meet someone new who inquires as to what I do, I get a response of "that's like trading stocks, isn't it?"
In some ways they are similar, but only minutely so. So let's consider some of the major differences between the two.
Most individuals have likely traded stocks at one time or another. Usually, it is to buy in order to 'own' a percentage of a particular company or to liquidate such partial ownership. They pick up a phone to call a broker or go online to purchase or sell. The order is facilitated through an 'exchange', such as the New York Stock Exchange for example.
Buying and selling Futures is similar in this respect. You can call a broker or go online to buy or sell Futures contracts. The order is then facilitated througha commodity exchange, such as the Chicago Merchatile Exchange for example. Yet while buying a stock gives you part ownership in a company or portfolio of companies (as in a fund), buying a Futures contract does not give you ownership of a commodity or product. Rather, you are simply entering into a contract to purchase the underlying commodity at a certain price at a future time, noted by the contract. For example, buying one May Wheat at 3.00 simply creates a contract between you and the seller (whom you need not know as this is taken care of via the exchange) that come May you will take delivery of 5000 bushels of Wheat at $3 per bushel, regardless of what the price of Wheat at market happens to be come May. As a speculator simply trading to make a profit from trading itself and with no interest in actually taking delivery of product, you will simply sell your contract prior to delivery at the going market price and the difference between your buy price and sell price is either your profit or loss.
When you buy a stock, you are part owner of a company. When you buy a Futures contract, you simply are entering a contract. With stocks, you will pay for the stock at the time of your purchase plus broker commissions. When buying a futures contract, you are simply entering the buy side of a contract and no monies is paid other than commissions to your broker.
Stock exchanges and commodity exchanges are both membership organizations established to act as middlemen between the buys and sells of all types of traders, from business entities to the individual small trader. The stock exchange act to bring capital from investors to the businesses that need that capital. They facilitate the transfer of property rights (ownership in the various companies offering stock).The commodity exchange act to bring people willing to assume risk for the opportunity to make a substantial amount of money for taking such risk. This helps transfer the price risk associated with ownership of various commodities, such as Soybeans, or a service, like interest rates, from producers.
To buy stocks, you only need enough money in your account to purchase the stock outright plus commissions. Once you make the purchase, the money is removed immediately to make the purchase. With trading futures, since you are not actually purchasing anything but simply entering a contract to do so at a later time (which you will exit prior to avoid delivery), the broker will require a certain amount of margin (good faith deposit to cover any possible losses) in what is called a 'margin account'. Each commodity has a different minimum margin requirement depending on several factors. Your broker may use the exchange calculated margin or require a different margin of their own. If the value of the commodity were to decrease and you are on the buy side of the contract, then your contract has lost value and your broker will notify you if your unrealized losses exceeds have gone beyond your minimum margin requirement. This is called a 'margin call'. Naturally you would want to have more capital than simply the margin amount when trading futures to avoid these broker calls. The broker has the right (and likely will) liquidate your position if you are getting too close to not having enough to cover the losses in order to protect themselves.
With buying stocks outright, there is no potential for a margin call. You simply own the stock outright. So perhaps you may be wondering why anyone would bother buying futures contracts rather than stocks. The major answer is: LEVERAGE.
Leverage gives the trader the ability to control a large amount of money (or commodity worth a lot of money) with very little money. For example, if Live Cattle futures requires a minimum margin of $800 to trade a single contract, and a single contract represents 40,000 lbs at the current market price of say 75, you would be controlling $30,000 worth for a leverage of over 35:1. This is appealing to many traders and justifies the risk. What is that risk? Just as leverage can work in your favor, it can work against you at the very same ratio. Known as a 'two-edged sword'.
You can increase the leverage of trading stocks if you trade with a margin account. This usually allows you to purchase stocks on margin at the usual rate of 50%. So for every dollar you have you can purchase $2 worth of stock. The leverage is 2:1. How this works is that the broker is actually 'lending' you the other 50%. Of course by purchasing stock with margin you can lose more than you have due to the leverage. And in this case you can end up getting a 'margin call' from your broker if your stock losses too much value. But trading stocks comes no where close to the kind of leverage you get trading Futures.
When you look at these two trading vehicles, the bottom line comes to MARGIN and LEVERAGE.Courtesy of Richard Ratchford)
Keep trading and trade wisely and in smart way!
See ya soon!
In some ways they are similar, but only minutely so. So let's consider some of the major differences between the two.
Most individuals have likely traded stocks at one time or another. Usually, it is to buy in order to 'own' a percentage of a particular company or to liquidate such partial ownership. They pick up a phone to call a broker or go online to purchase or sell. The order is facilitated through an 'exchange', such as the New York Stock Exchange for example.
Buying and selling Futures is similar in this respect. You can call a broker or go online to buy or sell Futures contracts. The order is then facilitated througha commodity exchange, such as the Chicago Merchatile Exchange for example. Yet while buying a stock gives you part ownership in a company or portfolio of companies (as in a fund), buying a Futures contract does not give you ownership of a commodity or product. Rather, you are simply entering into a contract to purchase the underlying commodity at a certain price at a future time, noted by the contract. For example, buying one May Wheat at 3.00 simply creates a contract between you and the seller (whom you need not know as this is taken care of via the exchange) that come May you will take delivery of 5000 bushels of Wheat at $3 per bushel, regardless of what the price of Wheat at market happens to be come May. As a speculator simply trading to make a profit from trading itself and with no interest in actually taking delivery of product, you will simply sell your contract prior to delivery at the going market price and the difference between your buy price and sell price is either your profit or loss.
When you buy a stock, you are part owner of a company. When you buy a Futures contract, you simply are entering a contract. With stocks, you will pay for the stock at the time of your purchase plus broker commissions. When buying a futures contract, you are simply entering the buy side of a contract and no monies is paid other than commissions to your broker.
Stock exchanges and commodity exchanges are both membership organizations established to act as middlemen between the buys and sells of all types of traders, from business entities to the individual small trader. The stock exchange act to bring capital from investors to the businesses that need that capital. They facilitate the transfer of property rights (ownership in the various companies offering stock).The commodity exchange act to bring people willing to assume risk for the opportunity to make a substantial amount of money for taking such risk. This helps transfer the price risk associated with ownership of various commodities, such as Soybeans, or a service, like interest rates, from producers.
To buy stocks, you only need enough money in your account to purchase the stock outright plus commissions. Once you make the purchase, the money is removed immediately to make the purchase. With trading futures, since you are not actually purchasing anything but simply entering a contract to do so at a later time (which you will exit prior to avoid delivery), the broker will require a certain amount of margin (good faith deposit to cover any possible losses) in what is called a 'margin account'. Each commodity has a different minimum margin requirement depending on several factors. Your broker may use the exchange calculated margin or require a different margin of their own. If the value of the commodity were to decrease and you are on the buy side of the contract, then your contract has lost value and your broker will notify you if your unrealized losses exceeds have gone beyond your minimum margin requirement. This is called a 'margin call'. Naturally you would want to have more capital than simply the margin amount when trading futures to avoid these broker calls. The broker has the right (and likely will) liquidate your position if you are getting too close to not having enough to cover the losses in order to protect themselves.
With buying stocks outright, there is no potential for a margin call. You simply own the stock outright. So perhaps you may be wondering why anyone would bother buying futures contracts rather than stocks. The major answer is: LEVERAGE.
Leverage gives the trader the ability to control a large amount of money (or commodity worth a lot of money) with very little money. For example, if Live Cattle futures requires a minimum margin of $800 to trade a single contract, and a single contract represents 40,000 lbs at the current market price of say 75, you would be controlling $30,000 worth for a leverage of over 35:1. This is appealing to many traders and justifies the risk. What is that risk? Just as leverage can work in your favor, it can work against you at the very same ratio. Known as a 'two-edged sword'.
You can increase the leverage of trading stocks if you trade with a margin account. This usually allows you to purchase stocks on margin at the usual rate of 50%. So for every dollar you have you can purchase $2 worth of stock. The leverage is 2:1. How this works is that the broker is actually 'lending' you the other 50%. Of course by purchasing stock with margin you can lose more than you have due to the leverage. And in this case you can end up getting a 'margin call' from your broker if your stock losses too much value. But trading stocks comes no where close to the kind of leverage you get trading Futures.
When you look at these two trading vehicles, the bottom line comes to MARGIN and LEVERAGE.Courtesy of Richard Ratchford)
Keep trading and trade wisely and in smart way!
See ya soon!
Your Best Stock Market Investment
It has long been said, and not without justification, ,that stock market investment is not for the faint hearted and when you take into account the fact that many investors over the years have lost everything it is not difficult to see why.
With the economy seemingly in a constant volatile state it might seem that investing in the right stocks and shares would be an impossible task to do accurately. However, since the invention of the computer, modern information technology has make stock market investment much easier to access by people from anywhere in the world. It has also facilitated the task of research which is an important part of any stock market investment especially as your money will be riding on all stocks selected for purchase.
Today, more than ever, stock market investments seem to be enjoying an all time high but it is as well to remember that fortunes can be lost easier than won. So, for those who would like to get the very best out of their stock market investments, the following advice may prove to be helpful.
1. Investing in the stock market carries inherent risk
It is generally believed that there is nothing difficult about buying stocks and, of course, this is quite true. But just buying is not dealing and so the next part of the operation is to sell your stock at a profit and this is where the problems actually start. If you wish to make a profit then you have to wait until the value of the stock begins to rise and, once this happens, to then know at which point to sell for a profit. If you sell too soon you will miss some extra profit but if you wait too long then you may lose out completely should a downturn fall to below your purchase price. In the early days and until you have more experience it is best to be restrained with your outlay - better to lose a little rather than a lot. This is good stock market investment strategy.
2. The 'trailing stop strategy'
The most experienced investors incorporate this when getting stocks. This involves 'riding' their stocks high whilst maintaining an exit strategy should things begin to deteriorate. This is where liquidity plays a vital role in their investment as this liquidity can be easily converted to cash should the need arise.
3. Never invest more than you can comfortably afford
This really just boils down to common sense; it is quite easy to get carried away should a stock market investment look like a really good buy. However it is wise to always remember that there is always the risk of losing ones money so enthusiasm should always be tempered with judgment and restraint. In this way your best stock market investment will not turn out to be a catastrophe.
To sum up, the best advice is to always approach each investment with caution, do the groundwork with regard to research and company background and use an amount of purchasing capital that you are comfortable with and which you can afford to lose. If you heed this advice you will avoid falling into the 'gambling' state of mind which can happen all to easily and which has bankrupted many in the past. Read all you can about stocks and shares, take a few instruction courses (which are readily available) and you will find that your best stock market investment can become a reality.(Courtesy of Brian Hunter)
Keep trading and trade wisely and in smart way!
See ya soon!
With the economy seemingly in a constant volatile state it might seem that investing in the right stocks and shares would be an impossible task to do accurately. However, since the invention of the computer, modern information technology has make stock market investment much easier to access by people from anywhere in the world. It has also facilitated the task of research which is an important part of any stock market investment especially as your money will be riding on all stocks selected for purchase.
Today, more than ever, stock market investments seem to be enjoying an all time high but it is as well to remember that fortunes can be lost easier than won. So, for those who would like to get the very best out of their stock market investments, the following advice may prove to be helpful.
1. Investing in the stock market carries inherent risk
It is generally believed that there is nothing difficult about buying stocks and, of course, this is quite true. But just buying is not dealing and so the next part of the operation is to sell your stock at a profit and this is where the problems actually start. If you wish to make a profit then you have to wait until the value of the stock begins to rise and, once this happens, to then know at which point to sell for a profit. If you sell too soon you will miss some extra profit but if you wait too long then you may lose out completely should a downturn fall to below your purchase price. In the early days and until you have more experience it is best to be restrained with your outlay - better to lose a little rather than a lot. This is good stock market investment strategy.
2. The 'trailing stop strategy'
The most experienced investors incorporate this when getting stocks. This involves 'riding' their stocks high whilst maintaining an exit strategy should things begin to deteriorate. This is where liquidity plays a vital role in their investment as this liquidity can be easily converted to cash should the need arise.
3. Never invest more than you can comfortably afford
This really just boils down to common sense; it is quite easy to get carried away should a stock market investment look like a really good buy. However it is wise to always remember that there is always the risk of losing ones money so enthusiasm should always be tempered with judgment and restraint. In this way your best stock market investment will not turn out to be a catastrophe.
To sum up, the best advice is to always approach each investment with caution, do the groundwork with regard to research and company background and use an amount of purchasing capital that you are comfortable with and which you can afford to lose. If you heed this advice you will avoid falling into the 'gambling' state of mind which can happen all to easily and which has bankrupted many in the past. Read all you can about stocks and shares, take a few instruction courses (which are readily available) and you will find that your best stock market investment can become a reality.(Courtesy of Brian Hunter)
Keep trading and trade wisely and in smart way!
See ya soon!
What is Fundamental Analysis ?
Fundamentals are associated with the economic health of a company, measured in terms of revenues, earnings, assets, liabilities, Return on Equity (ROE), Return on Assets (ROA), Return on Investments (ROI), growth prospects and cash flows, etc. The fundamentals tell you about a company. You can say a company is having robust fundamentals if it is growing at a nice pace, generating a profit, has limited debts and abundant cash.
The analysis of a company's fundamentals involves getting deep into its financials, rather than day-to-day movement in its share price. Equity researchers normally do fundamental analysis in order to calculate the intrinsic value of a company's stock. If a company's stock is trading above the intrinsic value or fair value, then the stock is overvalued. If a company's stock is trading below the intrinsic value, then the stock is undervalued. However, if you watch the stock markets very closely, the share price of most companies never matches the fair value. Often, day traders and investors who would prefer short term investment options invest in those stocks, regardless of the companies' long term growth prospects. However, long term investors generally prefer to invest in companies with robust fundamentals and ignore near-term share price movements.
The following are various components that constitute a company's fundamentals:
Revenues: Revenues (sales) are the total amount of money received by a company through the sales of its goods and services during a specific period of time. Revenues are one of the most important barometers of the growth of a company as it indicates whether there is demand for their products and services.
Cash flows: Cash flows are calculated by deducting a company's cash payments from cash receipts over a particular period of time. Cash flows indicate the liquidity position of a company. However, one must pay particular attention to the operating cash flows, since the health of the business can be most clearly seen there.
Net income: Net income, which is also called the 'bottom line', is calculated by subtracting from revenue, all of the company's costs, such as operating costs, interest expenses, depreciation, taxes and other expenses associated with running the business.
Balance Sheet: Balance sheet is the company's financial statement, which reflects its assets and liabilities. A company's fundamentals are said to be robust if its assets are significantly higher than the liabilities. However, one must carefully analyze companies who are reporting large intangible assets as they may have questionable liquidation value to offset any real liabilities.
Return on Assets (ROA): ROA is an Indicator of a company's profitability, which is calculated by dividing the net income for the past 12 months by total average assets of the company. This is one of the important indicators, which long-term investors consider before investing into a particular stock.
Although long-term investors and institutional investors consider a company's fundamentals before investing, the share price of a company often does not correspond to the fundamentals - which can present enormous investment opportunities. A company's long-term growth is driven primarily by fundamentals, while a company's share price can be driven by short-term news and investor sentiment, which can be extremely volatile. Every investor must consider a company's fundamentals before investing into its stock if you want to gain stable returns over the long term. (Courtesy of Joel Arberman)
Keep trading and trade wisely and in smart way!
See ya soon!
The analysis of a company's fundamentals involves getting deep into its financials, rather than day-to-day movement in its share price. Equity researchers normally do fundamental analysis in order to calculate the intrinsic value of a company's stock. If a company's stock is trading above the intrinsic value or fair value, then the stock is overvalued. If a company's stock is trading below the intrinsic value, then the stock is undervalued. However, if you watch the stock markets very closely, the share price of most companies never matches the fair value. Often, day traders and investors who would prefer short term investment options invest in those stocks, regardless of the companies' long term growth prospects. However, long term investors generally prefer to invest in companies with robust fundamentals and ignore near-term share price movements.
The following are various components that constitute a company's fundamentals:
Revenues: Revenues (sales) are the total amount of money received by a company through the sales of its goods and services during a specific period of time. Revenues are one of the most important barometers of the growth of a company as it indicates whether there is demand for their products and services.
Cash flows: Cash flows are calculated by deducting a company's cash payments from cash receipts over a particular period of time. Cash flows indicate the liquidity position of a company. However, one must pay particular attention to the operating cash flows, since the health of the business can be most clearly seen there.
Net income: Net income, which is also called the 'bottom line', is calculated by subtracting from revenue, all of the company's costs, such as operating costs, interest expenses, depreciation, taxes and other expenses associated with running the business.
Balance Sheet: Balance sheet is the company's financial statement, which reflects its assets and liabilities. A company's fundamentals are said to be robust if its assets are significantly higher than the liabilities. However, one must carefully analyze companies who are reporting large intangible assets as they may have questionable liquidation value to offset any real liabilities.
Return on Assets (ROA): ROA is an Indicator of a company's profitability, which is calculated by dividing the net income for the past 12 months by total average assets of the company. This is one of the important indicators, which long-term investors consider before investing into a particular stock.
Although long-term investors and institutional investors consider a company's fundamentals before investing, the share price of a company often does not correspond to the fundamentals - which can present enormous investment opportunities. A company's long-term growth is driven primarily by fundamentals, while a company's share price can be driven by short-term news and investor sentiment, which can be extremely volatile. Every investor must consider a company's fundamentals before investing into its stock if you want to gain stable returns over the long term. (Courtesy of Joel Arberman)
Keep trading and trade wisely and in smart way!
See ya soon!
Stock Trading Psychology
Many of today's highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.
Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true. A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.
Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.
You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.
Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art. The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.
Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:
* Price Based * Time Based * Indicator Based
Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesis's about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.
Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.
The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows. Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.(Courtesyof Tim Renolds).
Keep trading and trade wisely and in smart way!
See ya soon!
Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true. A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.
Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.
You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.
Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art. The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.
Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:
* Price Based * Time Based * Indicator Based
Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesis's about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.
Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.
The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows. Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.(Courtesyof Tim Renolds).
Keep trading and trade wisely and in smart way!
See ya soon!
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