Stock and Options Trading

Guides and Strategies

Introduction to Stock Brokers and Things To Watch For

April 12, 2018 /

For those who would like to invest actively, you will need to deal with stock brokerage firms. A brokerage firm is a group of stock brokers who buy shares for a low price and sell these at a higher price on the stock market. To be able to buy or sell in your name, you need to have the services of a stock broker, a licensed professional from the brokerage firm.

This is not monopoly. There are many stock brokerage firms that will compete for your business and trade orderly among professional brokerage firms as well as online brokerage firms. To hire the services of a brokerage firm is not difficult at all, however, you need to decide the kind of investor that you want to be.

brokerFirst of all, you will need contacts as well as resources to assist you in getting things done. If you like a traditional bank or if you are new with investing, working with a well-known brokerage firm with a reputation and experience may feel reassuring. Examples of such financial establishments include Morgan Stanley, Merrill Lynch, JP Morgan and Smith Barney.

Some mutual fund providers may also act as a broker for you. If the only things you expect from your stock broker is execute the trades and research for you then you can give them a call or you can go to your mutual fund provider’s web site and click on brokerage. Fidelity, Schwab and Vanguard are some of the larger mutual fund companies that also manage stock trading.

Banks such as Citi Bank of America, Wachovia, Washington Mutual and Regions are consumer banks that also offer stock brokerage services. However, before choose any of these make sure that the stock broker you hire is qualified to get the job done.

Online brokerage firms as well as discount brokerage firms can save you some fees and if you want to execute your trades daily and you do not like to pushed by advices that you don’t really need then go for this type of brokerage firm. Here are some good online brokerage firms that you can select from, E-Trade, Scottitrade, Sharebuilder and TD Ameritrade.

Knowing a good deal about the brokerage firm will help you determine which broker to go for. In case, you encounter any websites that offer to stock trade however doesn’t give you a good deal of information on licensing, regulation and who owns the brokerage firm then you should get away from that website as fast as possible. Scams are replete on the Internet.

Cheap does not necessarily mean it’s good so if you need advice, some research or would like to know the fees of a financial advisor, hire a broker anyway all of these expenses can be regained many times over once you start gaining profits.

There is no need to hurry when choosing your brokerage firm because any investment will always take time for you to know and check the background of these brokerage firms and time how you should trade on the stock market.

Stock Index Trading and What It Means

September 25, 2017 /

To understand what stock index trading is, we first have to have a brief understanding of what a stock and a stock index is. A Stock is basically the capital or essentially the basic setup money invested in setting up a business or a company.

A stock index or stock market index is a method by which a particular section of the stock market is measured, as opposed to a price of an asset such as Gold. Trading is basically the transaction of shares from one buyer to another or among multiple buyers in the stock market. In this case it needs to be explained that shares are nothing but the original stock which is divided into manageable chunks of capital.

Stock index trading is basically the trading of shares or stocks of different companies in the stock market. Stock indices are of two major types i.e. international stock market indices like S&P which cater to the stock trading of companies regardless of which nation it is domiciled in.
stock trading strategy

The other type of stock index is the national index which is basically the stock index pertaining to an individual nation. This type of index keeps track of all companies based in that particular nation with respect to stock indices.

Trading in stocks take many forms, the most popular of which is day trading, the other types are automated trading, algorithmic trading, delivery trading etc. Without going into the intricacies of each, we will attempt to glimpse at the basic functioning of the most common type of trading .i.e. day trading.

Day trading is basically trading in stocks and shares during the day time functioning hours of the stock exchange, all trading in this method stops along with the closing time of the respective stock market daily. Usually day trading has remained the forte of financial experts and investment gurus, but of late with the advent of online trading, even users at home are at liberty to indulge in day trading with a reasonable amount of success.

gold

Options Trading For Gold and Currencies

September 18, 2017 /

If you’ve chosen correctly an options trading strategy, it make highly profitable. Currencies and commodities can be assets. This is one way to access options of many different assets. The other way is to spot trade these markets.

Many assets like currencies, and commodities such as gold and copper are closely related. With a sharp instinct, a trader using an options trading strategy can see correlations between these currencies and commodities

Speaking about correlations between currencies and commodities, South Africa is one of example. This country is the world’s largest exporter of gold. In the international market gold prices can be correlated with currency. Like currency Rand with gold prices.

goldSo, when you find the spread between gold prices and RAND to be unusually wide and out of its historical relationship, you can simultaneously trade a gold call and a rand put in case the spread between RAND and gold prices is negative or the other way around.

Maybe you can see similarly , the spread between Australian Dollar and Gold prices widens and becomes out of sync with its historical relationship. This is one of many examples of options trading strategies. When You look carefully, the other options trading are the spread between the Australian Dollar (AUD) and Reuters Commodity Index widens.

Reuters Commodity Index is a useful index that shows general commodity prices. What you are doing is betting on the fact that the spread is wider than the historical levels and is expected to narrow down to the normal.

You can also take options in currency markets and try to profit from a price at a future level. If you notice the dollar has somewhat overshot, maybe due to a data release in the USA, then you could look to use options to trade at lower risk than taking an actual position in the spot market. However as with all investments, due care should be taken when using options. Although the risk can be limited, it is still a way of losing money, as well as making money. Make sure you understand how it all works first.

Getting Started Buying Stocks – The Basic Guidelines

September 13, 2017 /

The stock market is popularly known as a creature in and itself and no one can explain why it acts the way it does. The ride has been thrilling with its fair share of highs and some humbling lows, market keeps teaching new lessons in his own ways. This is why we produced this beginners stock market guide.

For a beginner to know the stock market better should have to learn or study some points like – How the stock market works, how stocks are valued, why the stock market is a good investment in long term, why stock market gets out of whack with reality, recommended ways to invest the stock market etc.

Stock market always been driven by the supply and demand. Investors trade stocks for challenge, retirement, and hobby for a full time job. The supply and demand is involved in the activities of investors.

So what ever may be the reason to take interest in stock market, first check before you invest? So it’s mandatory to know more about the market while investing. Always deal with the market intermediaries registered with Exchanges. Settle down the dues through the normal banking channels with the market intermediaries. Don’t deal based on rumors. Don’t deal with unregistered brokers/ sub-brokers, intermediaries. Don’t fall prey to promises of guaranteed returns.

Getting Started

For the beginners it’s best way to know Trend trading in stock market. Trend trading is one of the most effective and easy to use methods in the market. So beginners always have to look up on the trend after it has started and getting out of trend. So, different tools are there to check out the daily trend or in long term basis for the proper study of the market situation, before investing the funds in the ever unpredictable stock market.

Keep an eye on the market: – you have to keep your eyes open once you start trading. Try to collect information about the companies so that you can work out a plan for future investments. You can watch the news on television, read newspaper register yourself to newsletters of the companies.
chartSome technical analysts decide what to buy and what to sell, the time they decided it’s good to take the consideration part. Stock market guidance using technical analysts suggests markets have memory. They know the past price and current price momentum by experiences. So it’s an advisable part for beginners to listen the words of Technical Analysts and the current trend in stock market before investing doubtfully. There are many ways to get access to the best websites that provide technical analysis for stocks, some are free, some you have to pay for. But in general if they have the ability to use charts, screen the market for various technical set ups and filter down the results (because there are thousands of stocks to choose from) then this is mainly what you are looking for.

At the end of the day use your own judgement. The best analysis of a company is often done by yourself. If you do not understand what it does, and what factors might effect the price, then probably it’s not a worthy investment to get involved in. As a beginner it is best to stick with sectors you understand, maybe technology or banks/finance stocks. This way things will be easier to manage. Good luck!

What Is An Automatic Investing Plan?

August 16, 2017 /

An automatic investment plan (AIP) is a way for investors to buy stocks on a recurring basis with small amounts of money. The funds to pay for these investments are automatically deducted from a checking or savings account of the investor.

There are many different types of automated plans that investors can choose from. For example, many direct stock purchase plans offer automatic investment plans as well as some online discount brokers like ING ShareBuilder. There are also brokers that allow investors to setup these types of recurring investments into mutual funds and other products.
Advantages of Automatic Investment Plans

Buying stock through an automatic investment plan has several advantages, especially for the small investor.

Dollar Cost Averaging – Investing through an AIP will help investors dollar cost average into a stock. This ensures the investor will not overpay to own a stock if they make a onetime purchase. Instead, the investor can spread their investment out over several months or years which ensures they will pay a fair market price.
Small Investments – As a small investor myself, I don’t usually have a couple extra thousand dollars to invest. However, I typically have an extra $50 or $100 around which is perfect for an AIP. Three of my current holdings (CLX, CINF, and LOW) were purchased through an automatic investment plan.
No Commissions – Some automatic investment plans do not charge commissions to invest. For example, I have an AIP through the Clorox direct stock purchase plan and do not pay any commission, which saves me a lot of money. Each month I invest $50 and none of it goes to paying a stock broker.
Hands Off Investing – Setting up an automatic investment plan saves lots of time for the average investor. As long as you have the funds in your checking or savings account, each month you will make an investment without any time spent. Investors should still keep tabs on their holdings, but the automated approach makes investing much easier.

How to Earn Dollars Every Month in Dividend Income

August 16, 2017 /

Are you looking to build a portfolio of dividend stocks but don’t know where to start? I like to set small achievable goals for myself and then expand on them as I begin to reach certain thresholds. My first goal in building my income portfolio was to earn $25 per month in dividend income.

Earning $25 per in dividends may not seem like a lot, but it calculates out to an extra $300 per year in income. The nice thing about that extra $300 in income is that an investor does not have to do any work to earn it (once the stock is purchased). Assuming the investor builds a solid portfolio of dividend paying stocks, the annual income earned from dividends will likely increase over time.

As a small investor just starting out, my plan was to set a manageable goal of averaging $25 per month in dividends. This is a small but necessary step in my long range goal to earn $1,000 in dividends. Here is how I accomplished this first goal –
How I Earn $25 in Dividend Income

Since I have reached the threshold of earning $25 per month in dividends, I thought it would be good to show how I have accomplished this goal. As of my last report, my 3-month rolling average for dividend income was $23.48. I estimate that on my next report, I will be averaging well over $25 in dividend income based on my current holdings.

At the time of this writing, I own 12 dividend stocks in my portfolio with an average yield on cost of 4.4%. I have approximately $9,000 invested in these stocks which should translate into $33 per month in dividends. My 3-month rolling average is a lagging calculation which is the reason for the difference between the two monthly income numbers (i.e. $23.48 & $33).

My longer range goal for this current year is to earn $500 in dividends (not $300), which will average out to $41.67. Now that I have reached an average of $25 per month in dividend income, I want to keep the momentum rolling. I want to duplicate my results so that I can earn $50 per month in dividend income. Then I will start pushing for $100, then $200, and on.

As you can probably tell by now, earning dividend income will play a large role in my family’s financial future.
How You Can Earn $25 per Month in Dividend Income

Earning $25 per month in dividend income is not all the difficult to achieve. You can start with an initial investment amount of $8,500 and quickly reach this goal. At an average dividend yield of 3.5%, an $8,500 investment would generate approximately $297.50 in dividends annually.

Initial Investment Amount – $8,500
Average Dividend Yield – 3.50%

If properly managed, a portfolio like this could double the amount of income earned annually in 10 years’ time with no additional investment. Assuming an average 8% dividend growth rate each year, this same portfolio would return $600 after 10 years. There are few other investments that can accomplish these same results.

Even a small goal to earn $25 in dividends is an important step in building a solid portfolio of income stocks.

Why You Should Look At Copper ETFs

August 16, 2017 /

If you have been looking for a new way to make some money on the stock market, it may be time to explore some options in exchange traded funds. Better known as ETFs, these investments represent tangible items, such as energy or precious metals. One such option is a copper ETF. Copper has become a valuable resource for things such as electrical wires and is very popular for making money. Even though the value of it is low compared to previous years, it’s still may be a good investment and financial plan to look into copper ETFs because as the economy grows and gains more strength, so will the value. That makes now the right time even more so.

As the economy gains strength once again, more structures will be built and that will stimulate the value of everything involved in these projects. Wires are needed to run electricity throughout, and that requires a good deal of copper. If you have invested in a copper ETF, you will make money when this sort of growth occurs. For instance, many of the world’s nations depend on the health of China’s economy. China has been able to preserve their economy more so than others and they are predicted to begin growing and expanding first. Thus, the copper value around the world will see the effects of this growth.

One of the best things about investing in a copper ETF is that the value doesn’t fluctuate as much as other metals, such as gold. Gold values depend on politics so much that it can be a roller coaster ride. Another aspect of copper is that it can be used in the liquid form, and that makes it even more attractive to invest in. ETFs are also tax efficient, and it’s easy to make money without having to pay out a chunk of taxes at the end of the year.

What Is The QQQ Etf?

August 15, 2017 /

The QQQ ETF tracks 100 of the largest domestic and non financial international companies. Ranking is based on market capitalization in the Nasdaq stock market. By definition it is a broad index fund that excludes financial based companies.

While the QQQ is heavily weighted in technology stocks, it is not considered to be a tech fund. It has always been associated with technology stocks and the technology sector. Many technology companies will list their stocks on the Nasdaq market, particularly the largest more successful companies in the world. Since QQQ is focused on the Nasdaq, it is not surprising that it is overweight to some degree in technology related equities.

Diversity has always been important to many investors. While QQQ avoids financials, it has diversified into Biotechs and some consumer stocks such as Starbucks Corp. (SBUX). With a good mix of consumer, biotech and technology investments, QQQ may be destined to outperform over the long term. This investment strategy has served it well since 2013. QQQ has outperformed the Dow Jones Industrial average over the past three years.

The future appears to be bright for QQQ. The world is increasingly dependent on technology and this trend appears to be accelerating. Biotech is also expected to do well as aging baby boomer appetites for life extending and quality of life demands increase. Drug makers and biotechs are well positioned to meet these demands. Technology companies are also developing solutions to meet the needs of aging baby boomers in addition to the worlds increased demand for technology solutions.

About ETFs

August 13, 2017 / / 0 Comments

An ETF (Exchange-Traded Fund) is a type of mutual fund which is traded as a regular stock on the stock exchange.

Index tracking exchange traded funds (commonly called stocks ETFs) are one of the most popular and most traded exchange traded funds. Among them you may find QQQQ (Qubes), SPY (Spider), DIA (Diamonds), XLF, IWM and others.

Index ETFs gives investors an opportunity to invest into a basket of stocks with a purchase of a single ETF. In this way it cost effective type of investment into indexes and market sectors.

There are three main points why exchange traded funds attract so many investors:

Convenience: Investing in ETFs are as easy as investing in stocks. You just need to buy one as you would buy any regular stock.
Low fees. Like index fund, ETFs have low fees.
Tax efficient. There are no unexpected capital gains/losses when you purchase an ETF. Sell when tax-wise it makes the most sense to you.

© 2024 Stock and Options Trading

Theme by Anders Noren — Up ↑