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The Basics Of Stocks

Almost all financial advisors will tell you that you can never start too early when it comes to saving and investing. As it becomes easier and more accessible, investing in the stock market is now an option that everyone can take part of. Like all investments, it is important that you do your homework first and understand the risks and advantages that come with the stock market. Although it may seem easy enough, making sure you at least know the basics can help you prevent a monetary loss that you cannot afford. Here are some basic tips to make sure you are on the right track.

Financial Metrics

It’s important that you understand the definitions of the different metrics, such as ROE (return on equity), CAGR (compound annual growth rate), and EPS (earnings per share). They are calculated differently and the differences between them can be critical.

The Right Stock at the Right Time

It is very important that you know how “technical” and “fundamental” analysis are performed and how it plays into your stock market strategy.

Different Order Types

You should know the difference between the different types of market orders that are commonly used by investors, such as limit orders, stop limit orders and stop market orders.

Different Investment Accounts

Although cash accounts are the most commonly used, regulations require margin accounts for specific types of trades. You should know how it is calculated and the maintenance margin required.

7 Penny stock trading tips (Part 2)

We continue listing our tips on how to trade with penny stocks. And the tip #4 is keeping a journal.

A trading journal is a great tool for writing down all the moves that were done by you. The results of the operations should be fixed there as well. This will be a sort of diary that teaches you how to trade with profits and which strategies to implement for the future.

Such a journal will provide you with consistent profitability. It’s the most precious skill for any stock trader. In the future, you’ll get an opportunity to analyse your past experience and to improve your trading.

5.Take care of yourself

Improving the trading skills is a number one goal for any trader. But your body and your health are no less important, than your profits! That’s why you should not skip healthy eating, exercising and enjoying the life with your beloved ones.

Schedule your daily routine in a way that it could help you remain fit and healthy, not just staying focused on trading.

6.Spend time with your family

You should always remember that trading is just your job, not a part of your life. People around you, your family and close friends – they should be thanked for everything they’ve done for you. So, when you think of the way you are going to spend your free time, don’t forget about them.

7.Invest in education

Remember, education is still the only way to increase your earnings and enter the next level. So, never stop investing in your education. This will be the really profitable investments of yours!

7 Penny stock trading tips (Part 1)

A lot of people get interested in penny stock trading. They believe in the promises of the penny stock trading brokers, telling unbelievable success stories.

In this article, some real tips will be given. They will help you avoid spending both your time and money on making the wrong decisions while trading.

1.Don’t believe to everyone

Each of the companies that provide their services for traders may tell you some great stories about their amazing success. But think logically: if they were really so cool, they wouldn’t have been the penny stock trading companies. These guys would probably enter some large stocks. So, if they aren’t still there – everything is not so easy for them.

2.Your profits are limited

There are famous success stories, which relate to penny stock trading. According to them, you can turn each $1 into $10 with simply one share.

In theory, it is possible, but the reality is much harder. Even the professional traders expect to get $0.4-0.8 of profit per share. It’s an amazing result and it’s quite real. When you know which numbers you should expect, you can trade safely.

3.Diversify

Playing with penny stocks may be a risky game, though it goes about the low-cost shares. The situation at the market may be changed immediately so that your main task is to diversify your portfolio as much as possible. A perfect diversification means that you buy a few hundred thousands of shares and make enough profits, selling them on a daily basis. As you can imagine, these operations require a lot of control from your side.

 

What is day trading strategies?

Day trading is one of the approaches to trading that concerns buying and selling stocks within one day. Obviously, the aim of day traders is getting tiny profits on spinning the large amounts of shares (and capital). This strategy may be applied to the highly liquid indexes and stocks. In the majority of cases, the beginner traders fail to deal with day trading successfully. The main reason for this is a lack of the strategy, tested in practice.

Usually, the day traders look for a couple of metrics: volatility and liquidity. The first one measures the range in which a trader can operate. The last one allows buying and selling the stock for a good price, getting profits.

There are several common strategies, used by day traders. Here are the short explanations for some of them.

Scalping

The most popular strategy, which is simple enough to be used by anyone. It involves selling the stocks just after they become profitable.

Fading

A much more rewarding strategy that involves shorting stocks right after they moved upward rapidly. The strategy is more complicated than the previously described one.

Daily pivots

According to this strategy, a trader buys stocks when they have the lowest price and sells when the price is the highest.

Momentum

Day traders, who follow this strategy, monitor news and events, occurring during a day. They ‘catch a moment’ when trends affect the stock price and sell it or buy when it’s needed. Momentum traders risk a lot, defining the trends of the day; but they can also benefit a lot from some of their successful predictions.

What is active trading?

The term ‘active trading’ is used to define a strategy of trading stocks in short terms. In other words, active traders think of the share cost movements not in perspective, but in the next minutes and hours. Obviously, active traders make profits in short terms.

The strategy of active trading may be split into 4 most popular strategies.

Day trading

This active trading style is probably one of the most famous. It’s a method of buying and selling stock within one day, making profits ‘on fly’. The main principle of day traders is ‘no leaving opened positions overnight’. As a rule, day traders are professionals, who have enough experience to switch their strategies fast enough for getting profits.

Position trading

This type of trading may require both short-term strategies and the long-term ones. The main principle of this strategy is catching the trend and benefiting from the wave that is caused by it. The main task of each trader is exiting the trend when its influence lowers down.

Swing trading

When the trend ends, the price volatility appears, because the new trend is trying to be established. The swing traders buy or sell stocks during this price volatility. As a rule, they create a bunch of rules, using analytical tools. The main requirement for the swing traders is to predict the right direction of the stock price movement.

Scalping

Being the quickest strategy of active trading, scalping is also one of the simplest. The main task of a trader, using this strategy, is buying the stock at the bid price and selling at the asking price, getting the difference between these two points.