Category Archives: Stock Market Tips

The most useful metrics for investors

The most common and the simplest metric, which can be used by investors in order to choose the company for investing in, is the revenue, gained by the last one. The attention must be paid to the statistics for 3-5 last years of the company’s action at the market. However, sometimes such a straight-forwarded approach can be a misleading one. The revenue cannot show all the perspective of the company and its real position in the field. We’d like to offer some more interesting metrics (criterias) for you, which could be used for any particular company analysis.

  1. Operating margin can show you the real situation in the company with its operational profits and losses. This can show us, how successful its managers are and how they deal with their current, ongoing tasks. Consequently, it will bring you the vision of this business ‘from the inside’.

The second benefit of operating margin value is that it can be compared to the same characteristic of the closest competitors for this company. As the result, we’ll get the real market picture for a business and its position on the market.

  1. Earnings per share is one more favorite value for the investors. It allows us comparing the price of each share and the earnings, brought by the company. If this value increases by 10-20%, the investment into this business must be fruitful.
  2. Return on assets/equity is one more criteria for defining, whether a company uses its investments into assets (or money, brought by investors) effectively, or not.
  3. Company’s economic moat can show the benefits, which this business has got in comparison with other companies on the stage. It shows such advantages, as some technology solutions, tools, patents and so on, which are used by the company.

The ABC of Insider Trading

Anyone who has ventured into the world of stock market investing will have, at some point encountered the term ‘’insider trading.’’ This term alone is enough to make most market players cringe in fear, conjuring images of billion – dollar pyramid schemes and betrayed hardworking investors. It is however interesting to note that despite the infamy that this practice has gained over the years, not many people have a firm grasp on what insider trading really is. The first thing to know is that there are two main forms of insider trading.

Firstly, insider trading can be of a legal nature. In this case, people who hold strategic offices in corporations follow the set out guidelines when buying and selling stock in their firms. This practice is very common, given that employees of companies that are publicly traded, albeit in executive positions, usually own shares or stock in their own firms.

The practice is often considered a form of ‘’insider trading’’ given the fact that the company’s employees possibly have information to their disposal, that is not readily accessible to the general public. The information can take the form of a new product offering, a planned merger or takeover, an upcoming appointment or a great performance report. All these can be factors that impact the company’s share price.  A major feature in this type of trading is that the players have to consistently report their activities to the relevant securities and exchange authority after a sale or purchase of stock.

On the other hand, insider trading becomes illegal when the people on the inside carry on share trade based on information that the general public doesn’t have. When a trader has information about a company and acts on it before the public are aware of it, is regarded as a fraudulent activity. By so doing the general public is considered short changed as the investment playing field is not level or equal.

The penalties of insider trading can be dire. A person can look at up to 20 years imprisonment if successfully convicted of securities fraud. Usually an accompanying charge of mail and wire fraud can be added to the indictment which itself holds a maximum of 20 years in jail as well.

What Is A Stock Market Crash?

A stock market is defined as a loose network of economic transactions (not a physical facility or discrete entity), as well as the aggregation of buyers and sellers of stocks, which may include securities listed on a stock exchange as well as those only traded privately.

Naturally, every stock market is bound to have ups and downs, and these are caused by many obvious, less obvious and occasionally even underlying factors. However, there is a difference between ups and downs of a stock market and the situation in which a stock market crashes.

A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. These crashes are mostly driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.

Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines. Bear markets are periods of declining stock market prices that are measured in months or years. While crashes are often associated with bear markets, they do not necessarily go hand in hand. The crash of 1987, for example, did not lead to a bear market. Likewise, the Japanese bear market of the 1990s occurred over several years without any notable crashes.

Top 3 Online Stock Trading Platforms

Finding a great online stock trading platform can be mission impossible if you don’t know what (and where) you’re looking for. Various sites offer a chance to earn “lots of money without any costs”, but here you won’t get any of that. Here you’ll have a chance to see which sites are considered to be the best ones in this niche, and you’ll also see their pros and cons. The final decision is up to you.

Trade King (tradeking.com)

Trade King offers a wide variety of trading options to help build your portfolio. It offers a great selection of investment tools, charts, graphs and calculators to help you manage your account. The best thing about Trade King is the fact that it offers a low, flat-rate trade fee. You can even connect with other traders to exchange ideas and get advice for online stock trading. On the other hand, some people don’t like it because this online platform is not customizable.

Options House (optionshouse.com)

The Options House online platform was launched in 2006 by its parent company PEAK6 Investments. It offers trades with the lowest fees in the industry. This platform suits those who don’t have much experience in this niche (non-professional investors). Option House has a customizable platform and it allows you to focus on aspects you find to be the most important. The only thing this platform is missing is access to international stock trades.

Options Xpress (optionsxpress.com)

Options Xpress is labeled as one of the best online brokers. It offers a variety of investment options – including other investment vehicles that many other services do not offer – and an intuitive platform with a solid lineup of tools and features. A variety of fees is also present – some of them are higher than usual, while others are significantly lower. But, the quality of the platform and company is worth the extra cost for many investors, especially those looking for riskier ventures with high pay-off potential.

Getting Successful In Stock Market

Let’s just leave out the part that tells. Investing in stock is a risky endeavor everyone’s aware of that. The question how steer yourself away from such paths that can devastate any investor. Remember this it takes years of hard work, dedication, persistence and a never ending willingness to learn.  The first thing obviously to be kept in mind should be awareness about market trends. For that you need an extensive analysis of the area you are interested to invest. Once you get an idea of area of interest, you must decide about a few more key points.

Ask yourself if you want to invest for a short term venture or a long term. Regarding short term one thing must be crystal clear. Short term market fluctuates in a random manner, that said the answer is simple you can’t play it safe in short term. One essential point should be, if you can’t afford the luxury of losing money given your expenses & needs don’t invest. Be pragmatic.

Choosing the right mentor is of key significance. There are two paths simply put. The hard way, most people investing in stocks learn after losing too much. So it’s better to get some tips from someone with a sound knowledge of investing in stocks him knowing your strength and weakness. Check if your trading style is in accordance with yourself lifestyle. Simple the time you can invest in stocks is the second most precious after your money.

Before investing, carefully devise out your strategy. There is no hard and fast rule to it. It’s important to have in mind that a strategy can fail also. You develop a style with passing years, once it works stick with it. Commencing a partnership or going solo. These two choices must be evaluated with detailed reasoning. Better way is to find a eccentric trustworthy partner. Seek the long term profitable investments. Often the young inexperienced runners chase short term investments thinking of just making quick money. Remember short term investments require much more attention.

Bear in mind to avoid lame stock market myths. Few of them are listed below.

Investing is just like gambling. This phrase is wrong the duos are entirely two diverse things. Stock market is just for rich people & Stock-Brokers, with advent of internet information regarding stock market. Are easily accessible to general public falling stocks will go up eventually? This isn’t a wise move. Most of the investors make this fatal mistake. This doesn’t get them anywhere.

Stocks that go up must come down. The value of a stock rises due to progress of the company. So hoping for such a miracle won’t help. Also keep in mind when to sell stocks when to buy them & associating with the right successful people is vital for survival in stock market.