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Understanding the stock market starts with understanding stocks. A share represents partial ownership of a company - the smallest share possible. Company’s issues stocks to raise capital and investors who buy stock are actually buying a portion of the company. Ownership, even a small share, gives investors rights to a say in how the company is run and a share in the profits (if any). While stocks give owners certain rights, they do not carry obligation in case the company defaults or faces a lawsuit. In a worst-case scenario the stock will become worthless but that is the limit to the investor’s liability.

Companies issue stocks to raise capital. They may need a cash injection to expand or to acquire new properties. Each stock issue is limited to a certain number of shares, and when they are issued they are given a par value. The market quickly adjusts that par value according the perceived health of the company and its potential for growth.  

Investors usually buy shares because they believe the company will continue to grow and the value of their shares will rise accordingly. Investors who acquire stock in a new company are taking more of a risk than buying shares of well-established companies but the potential gain is much greater. Those who bought Microsoft shares early in the game (and did not sell them) saw an exponential rise in their value.

stock trading is done on stock exchanges like the New York Stock Exchange (NYSE) or NASDAQ (National Association of Securities Dealers Automated Quotation System). This means that only companies listed on a public exchange have shares that can be bought and sold on the open market. Of course, you could also buy partial ownership in a smaller company that is not listed on a stock exchange but that is a very different type of investment than buying stocks.

Because stocks must be bought and sold on a stock exchange, an individual investor needs a broker to make transactions for him. Brokers take orders to buy or sell a certain share. The order may include instructions to trade at a certain price or simply what the market will bear. Once the broker receives the order he attempts to execute it by finding a buyer or seller as the case may be. The buyer or seller is also represented by a broker and each broker receives a commission on the sale.

shares have several advantages over savings investments. Because they represent ownership in a company they give the holder rights to participate in major decisions the company faces. Every share represents one vote and shareholders are regularly asked to vote on important matters. Ownership also allows stockholders to benefit from any profits the company makes. Profits are distributed in the form of dividends, and may be issued once or twice a year at the discretion of the company directors.

If the company prospers the value of the stock will rise and distribution of profits also increases. The downside of this is that if the company does poorly the value of the stocks may fall.  

When compared with savings investments (like bonds or bank certificates of deposit) stocks have the potential to earn more money — but they also carry the risk of loss. Learning about the stock market and the various investment strategies can help to minimize loss, and most investors find they do much better on the stock market than is possible with any kind of savings investment.

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Technorati Tags: shares, stock basics, stock market, stocks

Brough to you by trend trading systems.

The term ’stock Market’ is commonly used to encompass both the physical location for buying and selling stocks as well as the overall activity of the market within a certain country. When we hear an expression such as ‘The stock market was down today’ it refers to the combined activity of many share exchanges i.e. the New York stock Exchange (NYSE), Nasdaq etc. in the United States.

The ’share Exchange’ is the correct term for the physical location for trading stocks. Each country may have many different stock exchanges and usually a particular company’s stocks are traded on only one exchange, although large corporations may be listed in several different locations.

stock exchanges exist throughout the world and it is possible to buy or sell stocks on any of them. The only restriction is the opening hours of each exchange. Both the NYSE and Nasdaq for example operate from 9:30 a.m. to 4:00 p.m. Eastern Time from Monday to Friday. Other exchanges have similar opening hours based on their local time. If you want to trade on the Hong Kong stock Exchange your order will be executed sometime between 9:30 p.m. and 4:00 a.m. New York time.

The major stock exchanges of the world are located in Japan (Tokyo share Exchange), India (Bombay stock Exchange), Europe (London share Exchange, Frankfurt stock Exchange, SWX Swiss Exchange), the People’s Republic of China (Shanghai stock Exchange) and the United States.  The major exchanges in the US are the NYSE, Nasdaq, and Amex.

stock markets closely follow the economic health of a country. When the economy is doing well the market is bullish.  Bull markets occur during times of high economic production, low unemployment and low inflation. Bear markets, on the other hand, follow downtrends in the economy. Inflation and unemployment are rising and stock prices are falling.

Fluctuations in stock prices are also driven by supply and demand, which in turn are determined to a large extent on investor psychology. Seeing a stock rise in price may cause investors to jump on the bandwagon and this rush to buy drives the price even faster. A falling price can have the same effect. These are short term fluctuations. stock prices tend to normalize after such runs.

The share exchange is only one of many opportunities to invest. Other popular markets include the Foreign Exchange Market (FOREX), the Futures Market, and the Options Market.

The FOREX is the biggest (in terms of value of trades) investment market in the world. FOREX traders buy one currency against another and can profit from small changes in value. Most FOREX trades are entered and exited in one 24 hour span, and traders have to keep a close watch on the market in order to make profitable trades.

The Futures Market is a market of contracts to buy and sell goods at specified prices and times. It exists because buyers and sellers of goods wish to lock in prices for future delivery, but market conditions can make the actual futures contract fluctuate considerably in value. Most investors in the futures market are not interested in the actual goods - only in the profit that can be realized in trading the contracts.

The Options Market is similar to the Futures Market in that an option is a contract that gives you the right (but not the obligation) to trade a stock at a certain price before a specified date. They can be traded on their own or purchased as a form of insurance against price fluctuations within a certain time frame.

All three of these markets are quite risky and require considerable knowledge and experience to prevent substantial losses. They also require close attention to market movements. stocks, on the other hand, are less risky because movements of the market are usually gradual. Although short term investment strategies are possible, most view shares as long term investments.

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Technorati Tags: shares, stock basics, stock market, stocks

Brought to you by make a living trend trading.

Stock indexes are a statistical average of a particular stock exchange or sector. Indexes are composed of stocks which have something in common - they are all part of the same exchange; they are part of the same industry; or they represent companies of a certain size or location.

There are many different stock indexes, the most common in the United States being the Dow Jones Industrial Average, the NYSE Composite index, and the S&P 500 Composite share Price Index. stock indexes give an overall perspective about the economic health of a particular industry or stock exchange.

There are several different ways to calculate indexes. An index based solely on the price of stocks is called a ‘price weighted index’. This type of index does not take into consideration the importance of any particular stock or the size of the company. An index which is ‘market value weighted’, on the other hand, takes into account the size of the companies. That way, price shifts of small companies have less influence than those of larger companies. Another type of index is the ‘market-share weighted’ index.  This type of index is based on the number of shares rather than their total value.

Index Funds

As well as giving an overall grade to a particular economy, indexes can also be an investment instrument. Mutual funds based on indexes are known as ‘passively managed mutual funds’ and have been shown to consistently outperform managed funds. Mutual funds based on an index simply duplicate the holdings where the index is based on. Thus if the Dow Jones rises by 1% the fund based on the Dow Jones also rises by the same amount. This has the advantage of lower costs for research and transactions - savings that can be passed on to the investor who participates in these funds.

The Big Indexes

The Dow Jones Industrial Average is one of the best-known indexes in the United States. It follows the share movements of 30 of the most influential companies in America including General Electric, Coca Cola and General Motors. It is a ‘price-weighted average’ index - thus giving more influence to more expensive stocks. Some analysts feel that the price-weighting does not give an accurate picture of share market movements and that 30 companies are not enough to form an accurate assessment.

The S&P 500 Index is based on 500 United States corporations. These companies are carefully chosen to represent a broad slice of economic activity. It is second in influence after the Dow Jones and is felt to be an accurate predictor of the state of the United States economy.

Outside of the United States the most influential index is the FTSE 100 Index.  This is based on 100 of the largest companies listed on the London stock Exchange. It is an indicator of the British economy and is one of the biggest indexes in Europe. Other important non-US indexes are the CAC 40 from France and the Nikkei 225 from Japan.

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Technorati Tags: stock index, stock indexes, stock market, stocks

If you are interested in buying and selling stocks online or you just want to start it then you better check out share builder.

Many investors are interested to Share Builder since the website offers a different way to buy stocks that is simple and it makes sense.

Compare with a traditional broker, the share builder is easier and much cheaper, and they offer investors a different way than most online stock brokers. It is actually much the same as an online option trading.

Share builder offers stock trade for only $4 for any publicly traded company and for any dollar amount you want to purchase. That means you don’t have a to buy a minimum number of shares at share builder.

Another great thing with this shar builder, you can start off at any level you feel good with as they don’t require you a minimum investment to start.

Many stock brokers sites will require you to invest a minimum amount of money when you establish an account. That means you have to spend more before you put your money into stock, while with share builder, you can start investing right away. That is a good thing if you want to buy stock online with share builder.

No matter how much you purchase, the $4 fee is the same, so that it is worth buying larger amount directly if you can, because the fee will be much lower percentage of the overall cost.

The $4 fee applies to each different stock not to the total purchase. So it makes sense to consolidate your purchases of the same stock together.

It would be much cheaper if you decide to buy $100 worth of a stock each week than purchasing $25 each of 4 different stocks each week for one month.

That way you will only pay $4 in a week fees instead of $16, which means you would’ve spent $48 more money by the end of the month. So, you’re interested in stock market, give share builder a try!

Technorati Tags: day trading, share builder, stock market, stock trades

If you have ever considered online stocks trading, now is a great time to get involved. Stocks are still down across the board but we are getting close to the turning point in this recession where everything will start to go up. Any stock you pick is going to increase in value since the whole market ride a wave to getting better. So this is actually a good news if you’re just starting out the online stocks

There are never any guarantees with the market, a painful lesson a lot of us learned over the past year and a half, but a century of historical data shows that even with its rises and dips, the stock market always rises over the long term.

That expression, “the long term” is the real key to online stocks trading, by the way. If you are patient and willing to hold on to a stock it is likely to make money for you eventually. It is usually the people betting on short term gains that get badly burned in the market.

So if you have started to think seriously about online stocks trading, you need to first make yourself a budget. Simply put, the money you can afford to lose is the money you can afford to invest in the stock market. The money should be in the bank where it safe, if you need to pay some bills the next month.

That way, if you are never forced to pull money out of the market, then you will rarely lose any. Because if a stock goes down, all you have to do is hold on to it and wait. Unless the company has totally imploded, the stock will usually recover in time.

To get started with online stocks trading, you need to create an account with a reputable online broker. Pick one that is well known as they will have the most secure websites. You don’t want to rist yourself with identity theft, so this is very important for you since you will be sharing your personal banking info and credit card to set up an account. The stock market is risky enough!

You can start looking and picking stocks when you have a brokerage website that you like. My advice to those just starting out with online stocks trading is to buy small amounts of inexpensive stocks to start. This will allow you to spread your risk around and if any of your choices turns out to be a mistake it will not wipe out your whole portfolio.

Online stocks trading should fun and by investing small amounts you can get involved with more companies which increases the rate at which you will learn about the market. My advice is buy a few reliable stocks and then take a little more risk with those that are volatile. This gives you a chance of hitting it big while preventing you from losing it all.

Technorati Tags: online stock, online trade, online trading, stock market

Did you know that you can explore historical Stock Market along with Yahoo? It’s true!

If you’re interested in several examples of stocks, it’s somewhat likely that you’ve explored the finance website that is sponsored by Yahoo called “Yahoo! Finance”.

Once it comes to the features on this website, you’re likely to be quite pleased at all that they must offer. There’s even a page which is offered to researching stock prices.

All you have to do, simply go directly to the Yahoo! Finance web site at: http://finance.yahoo.com. There you can get the newest stock prices of any company.

The great thing about this specific web site is that you can search for info connected to latest stocks, as well as stock prices which are considered to be important.

The basic thing that you shall have to do to learn stock prices at Yahoo! Finance is to go to the page above that assists in the process of analyzing various types of stocks. As soon as you get there, you shall need to take a simple “search”. For example, type the company name into the Yahoo! Finance text box - it will then show you a list of all possible company matches!

You will notice that there’s a section that says “Set Date Range”. You need to determine the dates of the historical stock prices that you intend to examine, and then set this info in.

You can then choose to watch the prices for “Daily”, “Weekly”, “Monthly” and even have the choice of “Dividends Only”. It is really easy to look for historical stock prices with Yahoo! Finance! It’s really is the easiest way to obtain stock quotes for anyone, as long as they have internet access!

Technorati Tags: stock market, stock prices, stocks, yahoo finance

If you take a look at the stock market community today, there are literally hundreds of thousands of investors who actively trade in this medium. This wasn’t the scenario merely a decade ago when the stock market was the exclusive realm of bankers and the very rich. With the advent of the Internet, the stock market became more accessible to the general public, and may people who have invested their hard earned money on the stock exchange have found themselves successful.

Of the many tools that investors use this days, stock software helps traders make better trading decisions. In the stock market environment, various stock make sudden up or down movements in a matter of days, sometimes even in hours. With stock trading software at your disposal, you’ll be forewarned of these movements and be better able to protect your portfolio from risks. If you want to be smart about your money it is worth the investment to buy investing programs.

As a beginner in the stock market, it can be very difficult choosing which stocks are potential profit-makers, and which stocks are not. Many novices are apt to lose money instead of gaining a profit In order to select the best stocks on hand, good stock software is needed to focus on the ones that have the best chances of making a profit. There are many good choices you should look at such as eminiforecaster and tradingsolutions review.

An trader has a wide choice of stock software and trading systems to choose from. To find out which one will work best for you, you will need to test each one. Testing and try-outs are part of trading and investing in the stock market. In order to find good quality software that will work to your advantage, you will have to go through each one.

For a novice just on the verge of making the first few trades, going through endless amounts of data and trying to make a comparative and technical analyses, can slowly drive a person crazy. Not moving fast enough in the stock exchange can be bad news as far as this quickly-shifting environment is concerned. On the other hand, it can also be prove to be a shock for beginners to be inundated with too much information.

A good advice for novices is to get as much information and education that they can about the stock market, and use software that will help them make smarter trading decisions. Utilizing each new assimilated strategy a trade at a time will help them become more focused and improve the way they trade. This way, you won’t become overwhelmed with the deluge of data you get from your stock trading software.

When you have found a stock software package that is easy to use and understand, as well as workable based on your requirements, you’ll be able to assimilate all the stock trading strategies you find useful, and be on your way to making a huge profit on the stock market.

Technorati Tags: eminiforecaster, investing software, stock market, stock market software, stock software, trading software, tradingsolutions

An interesting thing has happened in the last 6-8 weeks.  There are almost no sellers.  Literally.The market has made a massive directional push up and really just holds up and does not correct now.  It seems almost funny how bad it is to try to short for more than maybe 20 minutes at a time.As most traders find out - fighting the market is pointless, all you can do is react to what you are given.  But it sure makes trading hard - the buy and hold guys have it locked down.

One thing I know is that no matter what these guys do that are chasing and then bidding the market so it does not sell - it will sell eventually.  The only way you actualy make money, whether day trading or longer term investing, is to  lock in profits.  Until then its just a fantasy.At some point they will turn the tide from chasing in, to wanting out to lock in profits (or avoid losses).

A key pattern lately has been to break below support and then out of nowhere a massive burst of buying jams the market back to the highs.  It happens so often I now expect it to happen.Most of the time this results in a new low being made, followed shortly by new daily highs as the buyers chase like crazy.

Even when the economy was plowing along at full steam, we would have 10-15% corrections all the time.   And this was when everything was just perfect (or everyone thought so).  So I am not sure what is going on now.  Several theories are in play that I think about:

1. Shorts are completely or mostly out of the market.  The SEC messing with the short rules before caused a panic, and now there are many proposals again in regard to uptick rule and shorting.  Rather than get caught, they are staying away from day trading and longer term positioning.
2. The level of manipulation appears high.  There is a group of large banks or funds that are pushing the market higher at the Fed's and Treasuries request to try to turn the economy out of the recession by making it appear as if the stock market has it figured out.The way the market always rescues itself from the brink of disaster, the ramps into the close every friday, and other odd trading action gives this one some credibility.  Would be easy for the government to just give these guys money to push the market up.
3. Traders are mostly gone, and computer algorithm trading takes over.  This one can happen as well - computers have taken over more of the futures trading which drives the market.Since no one tries to fight this trend, with all of them doing the same thing it just feeds on itself.  This one I like too because the actual variance of price during the rally pushes is actually uncharacteristically low most of the time.  I have seen the dow futures push up 100 pts in 20 minutes with maybe an 8-9 point max retrace the whole time.Of course this type of thing has happened before, but not nearly as often as it does now on a daily basis.

Whether any of these are true, or a combination, I have no idea and we may never.  All I know is the trading action is very odd and I expect at least half if not more of this gain to be gone when this is done.Note that I am not predicting a top in the market, I am simply stating that what goes up almost always goes down - and the down is usually painfull.The market could hit 9.000 or 10,000 etc.I relaly do not see 10,000 as possible right now, because GM, C and a few others are dead - they just don't have the fuel short term.

Maybe everyone just needs to learn to trade again - this is the new market to stay!

Technorati Tags: bot, commodities, day trading, daytrading, fx, information, learn to trade, online trading, stock market, stocks, trading, trading robot

An odd thing happens if you put up a stock price chart and ask a bunch of people what the trend is.Even when it seems completely obvious without question, you still will get many different answers to the same chart which should not happen.This results from people not knowing how to find a trend on a price chart with any speed or accuracy.  It is actually quite simple, and is a key thing to know if you want to learn to trade.

The first thing to do is to size the chart properly.  There is no point of putting up 5 years of data if you are looking for a daytrade to hold for 5 minutes - that is completely pointless.  So here is a guide for what you need as far as time loaded on a chart:

Daytrade:

1. 1 min chart:  Have at least 2 hours of data (120 bars) on the screen but no more than 6 hours (1 full day).
2. 2-5 min chart: Have at least 3 hours of data, but no more than 2 days up.
3. 10-15 min chart:  Have at least 3 days of data up, but no more than 1 week.

Swing Trades (longer term hold) you will want a 10 to 30 minute chart up and you will want at least 10 days of data up on the screen.

You will want to make sure you are using a "bar chart" style of chart, and not "candlestick" or other types.  This is easier to see the trend.Start by looking for every V bottom area.  Anytime there is a low with a V bounce, make note of it.Additionally, look for / top areas where the price spikes up and then sells off sharply.  Concentrate on the major ones (meaning it makes a significant move away from that area in a short time).  Next, get your drawing tool and connect the V to each other V.  Connect the / to each other /.Connect the low areas on the V, and then the highs of the /.  Again, this is a key to learn how to trade.

Lines that slope from the lower left up to the right means the stock is in an uptrend.  Lines that slope from the upper left down to the right means the stock is in a downtrend.  Another easy way:  Find the first bar on the chart to the left and the last price on the right.  Draw a line between the two.  If the line is sloping up - its an uptrend.  If the line is sloping down, its a downtrend.  The other key thing to look at is the oscillations around this trendline.Does it go up and down 2pts, up and down 1pt, up and down .50 etc - remember, all that is needed is a rough average, not an exact number.  This gives you a general sense of the strength of the trend.  The lower the oscillation, the stronger the trend.  The theory here is the buyers (in an uptrend) or the sellers (in a downtrend) are so strong that it hardly budges against the buying or selling.

Another thing to keep in mind the more you practice, the faster it gets - the lines are no longer necessary.  I can look at any chart and in a matter of seconds know the trend and the strength.Additionally, you really need to know the trend direction and strength on the next higher timeframe than you are trading on.  For example, on a 5 minute chart the trend might be up, but on a 15 minute chart it is still down.  This needs to be paid attention to, because the longer term trend can push the shorter term trend back into a downtrend.  In general, you want a higher term chart to be a multiple of 3 vs the chart you are trading.  So if you are on a 1 min chart, you watch the 3 min chart also, if on a 5 min chart, you watch the 15 min chart.  Once you can easily tell the trend of any chart, other aspects of learning to trade become much easier.

Technorati Tags: bot, commodities, day trading, daytrading, fx, information, learn to trade, online trading, stock market, stocks, trading, trading robot

Once you have learned the basics of trading, it comes down to how many quality ideas you can find during a trading day.  Some people subscribe to chat rooms with other traders, some people like to watch real time news, and others like to program computers to scan the market or use a day trading robot to help them find ideas in real time to make money.

One of the key reasons to use a day trading robot is that it applies a set of formulas in exactly the same way every time and is unbiased by outside factors.  The real key is finding a day trading robot that is reliable in its stock picks and is easy to use.  Of course, this is no easy task as there are a lot of imposters out there or more likely, stuff that used to work but no longer does because of changing market conditions that the day trading robot cannot adapt to.

One key component of any day trading robot that should be essential is the ability to find stuff in real time, but give you enough time to actually act on the information it provides.It is of no help to use a day trading robot that scalps stuff so fast that you cannot even get an order in if you wanted to follow it.You can always choose to let a day trading robot have control of your account, but a lot of traders are uncomfortable with this type of situation and like to keep control.In addition, there are always things that happen each trading day that cannot be accounted for in a computer program.

Overall, anyone looking to use a day trading robot to help find ideas should realize the limitations and the fact that it should only be used as a tool to enhance a traders own judgement and trading prowess.It is fantasy land to expect a trading robot to be right 90-95% of the time, or for it to make 40% every month in your account.Anyone who has created such a tool would never in a million years license it or sell it because of the amount of money it would generate.  This does not mean day trading robots are not useful, you just need to have realistic expectations to get the maximum usefullness out of them.

Technorati Tags: day trading, day trading robot, daytrading, investing, learn to trade, stock market, stock trading, stocks, trading, trading help, trading rules