The Power Stocks

The different types of stock are what confuse most first time traders. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Common Stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.

Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.

The most upscale type of stock is of course Preferred Stock. Preferred stock isn’t exactly a stock. It is a mix of a stock and a bond. The owner’s of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.

Once you become somewhat familiar with how the forex market works, and you understand to a point what is involved in trading on the Foreign Exchange Market, you would want to start to gauge market trends in order to profit from your business ventures on the open market.
The name of the game is statistics, and the first rule is that you must be aware there is no such thing as a sure thing on the forex market. While you can never be 100% sure at any given time of the next move that will be made on the market as a whole, being able to read statistics and interpret them will place you ahead of the pack in regards to “guessing” what will happen next.
Forex trading is a lot like gambling. If you can keep track of the cards that have already been played, you are more informed, statistically, regarding what is likely to be dealt next, meaning you can place a bet with greater insight than someone who has no clue what has already been played. With the forex market, if you have information as to what has already occurred over the past few days, months, or even years, you are again placed in a better position to more logically conclude what will happen next. You simply learn the pattern and follow it to the end, reaping the financial rewards.
Charts And Chartists
Wait, did you think you were going to have to research and map out the market’s past all by yourself? Of course not! There are people who get paid to do that sort of work. They monitor the market hourly, daily, weekly, monthly, and yearly so that they can provide big-time traders with the same knowledge mentioned before. The more a trading company knows about the market, the more money they can make.
The best part of this is that you have access to the same information as these VIP clients. Chartists, who are essentially market analysts that publish their findings in easy to read charts, produce what is referred to as a candlestick charts. These charts are basically a combination of a line graph and a bar graph that show the trend of various stocks, indexes, or other interests over a specified period of time. Therefore, you can easily determine if the currency is on an uptrend or if it is taking a downturn, when the last major change occurred, and how long it is predicted that the currency pair will continue on the current path.
If your broker does not supply you with these charts, then you should easily be able to draw them yourself with the modern day charting software or trading platform that you get from your broker. These software platforms can draw most charts for you by entering a couple of parameters and viewing the result.
It is recommended however that you learn at least the basics of charting and statistics before you start trading live.

If you are ready to invest money for a future event, such as retirement or your child’s college education, you have several options. You do not have to invest in risky stocks or ventures. You can easily invest your money in ways that are very safe, which will show a decent return over a long period of time.

First consider bonds. There are various types of bonds that you can purchase. Bond’s are similar to Certificates of Deposit. Instead of being issued by banks, however, bonds are issued by the Government. Depending on the type of bonds that you buy, your initial investment may double over a specific period of time.

Mutual funds are also relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. A fund manager typically decides how the money will be invested. All you need to do is find a reputable, qualified broker who handles mutual funds, and he or she will invest your money, along with other client’s money. Mutual funds are a bit riskier than bonds.

Stocks are another vehicle for long term investments. Shares of stocks are essentially shares of ownership in the company you are investing in. When the company does well financially, the value of your stock rises. However, if a company is doing poorly, your stock value drops. Stocks, of course, are even riskier than Mutual funds. Even though there is a greater amount of risk, you can still purchase stock in sound companies, such as G & E Electric, and sleep at night knowing that your money is relatively safe.

The important thing is to do your research before investing your money for long term gain. When purchasing stocks you should choose stocks that are well established. When you look for a mutual fund to invest in, choose a broker that is well established and has a proven track record. If you aren’t quite ready to take the risks involved with mutual funds or stocks, at the very least invest in bonds that are guaranteed by the Government.

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out – especially for beginner investors. The good news is that if you have chosen your stocks carefully, you won’t need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop – and you may even be advised by your broker to do this. But this isn’t necessarily the right course of action.

Stocks go up and down all the time, depending on the economy…and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things – all combined – affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once you’ve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell – especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

Beyond all the ‘hype’ what is it that makes option trading so good?

This is a question that I wish more people would ask, but the thing is not too many people know they even exist!

The main reason that I love option trading is that options provide the opportunity to turn a small or modest amount of money into a large amount of money quickly!

How is this possible you might ask?

Well before I get into the ‘how’ that let me show you exactly ‘what’ options are.

Options are simply ‘contracts’ that give the buyer the right or choice (but not the obligation) to buy or sell shares in a particular company, at an agreed price, on or before a set date.

Now the thing is, as an option trader I am not interested in buying or selling stocks, I am only interested in buying and selling the options on stocks.

I want to buy an option for one price and then onsell it to someone else for a higher price and make a profit before the option expires.

Now whether or not I am able to do this depends on two main things:

1) Whether the underlying stock (the stock that the option is concerned with) goes UP or DOWN in price.

and

2) The type of option that I have bought.

Now, there are 2 types of options, CALLS and PUTS.

Call options give us the right to BUY shares in the underlying stock.

PUT options give us the right to SELL shares in the underlying stock.

As I said before, we are not interested in buying or selling the underlying stock, only in making a profit by buying the options (on a stock) and then onselling those options to someone else for a profit.

However, the only way we can make a profit is if the option itself increases in value.

So What makes options go up or down in price?

CALL options increase in value when the underlying stock goes UP.

PUT options increase in value when the underlying stock goes DOWN.

This may sound confusing if you are new to option trading, but basically what we want to do is to buy CALL options on a stock when we think it is about to go UP in price or buy PUT options if we think the stock is about to go DOWN in price.

If we are right and the stock moves in our desired direction, UP for CALLS or DOWN for PUTS, we will make money.

The concept is really quite simple once you accept that it is possible to make money whether the underlying stock moves UP or DOWN.

Now here’s the thing that makes option trading so appealing.

Options only cost a fraction of what it would cost to buy the underlying stock itself and a small move in the price of the underlying stock, creates a much larger move in the price of the option by 10 times to sometimes 100 times!

Let me give you an example, let’s say that GE is trading at $31.00 per share. If we wanted to buy 1000 shares in GE today it would cost us $31,000.

However, the option to BUY GE (CALL options) for $30 at any time during the next 60 days is only $2.00 per share. If we bought enough options to give us control over 1000 shares in GE it would only cost us $1,500.

Now let’s say that GE goes up by $1.00 to $32.00 during the next 3 weeks.

If we had bought the shares in GE we would have have made a $1,000 profit (1000 shares x $1.00 per share) or 3%+ return and if we bought the options on GE we still would have only made $1,000 (1000 shares x $1 per share) however as we would have only invested $2,000 into the trade, this would be a return of 50%!

By trading the options instead of the stock it is possible to make far greater returns and at the same time risk only a fraction of the capital.

This is called LEVERAGE and this is the main advantage to option trading over other wealth creation strategies.

However, just as leverage can work for you it can just easily work against you.

This is why you need a solid trading system that stacks the odds of success in your favor on every trade and at the same time reduces your risk.

Robert T.  Kiyosaki says that Option Trading is the investment of the rich.
Indeed, option trading is the most versatile form of investment, today. Its versatility has been the topic of many speakers all over the world. Terms such as “Covered Calls” and “Credit Spreads” have become well known amongst traders new and veteran alike.
Option Trading Explained – Simply put, it is the trading of option contracts on a particular stock.
Options Explained – A contract that allows you to sell or buy a stock at a predetermined price within a set time frame.
There is enough material written explaining the technical make up of an option and I shall not dwell into it further in this writing. The purpose of this writing is to explain to you what the effects of option trading is. … let’s go into Option Trading Explained!
Option Trading Explained – What Can Stock Options Do?
Let us first examine the effects of this thing called stock options. Knowing all the effects of stock options allows us to better understand why it is such a celebrated investment tool and also why so many people go bust doing it. Let’s start from the Positive Effects of stock options.
Stock Options are:
Leverage. It allows you to control more shares (100 shares per option) with the same amount of money thereby exponentially increase your returns per dollar.
Discount. Just as you control more shares with just one option, you will then be able to control the same amount of shares with lesser money than before.
Protection. It allows you to protect the stock you hold by owning the right to sell them at a predetermined price no matter what happens.
Regardless of market direction. It allows you to profit from both upward and/or downward moves in the stock.
Creative. It allows you to put different types of options together to form all sorts of investment positions. It can even make money no matter which way the market goes.
And the Negative Effects are:
No value beyond expiration. You can potentially lose all your money along with the expiration of the option.
Negative Leverage. Just like it can amplify your gains, options will also amplify your loses.
Time Decay Effect. Options reduce in value over time and sometimes can completely obliterate any gains from movement in the underlying stock.
Looking at the above effects, it is clear that Option Trading indeed is an extremely versatile investment tool that allows its investor to profit from any market direction, protect his/her stock positions, reduce capital commitment and lots more, based on the way it is utilized.
Conversely, once such power of leverage is being abused, the investor could then lose everything he/she have put in by expiration or lose more from the same stock move than he/she is comfortable with. Also, by holding on to Options, time decay sometimes can obliterate your profits if the movement in the underlying stock is not big enough.
Therefore, investing in options requires careful planning on the part of the investor. You must know for what effect are you using options for and how much you are putting at risk. In essence, using options for Leverage confers the highest risk and the highest rewards and demands that you use only proven strategies with a proven track record.

The NYSE or New York Stock exchange as it is commonly known as is a facility where stocks and securities are bought and sold. It is the oldest and largest exchange in the U.S and is a major player in the world market as well. It was founded in 1872, and after shifting through different locations, it finally settled on 11 Wall Street in New York. The NYSE is a non profit corporation that is operated by a board of directors and has one thousand, five hundred individuals in its employ.

It lists securities that are offered for sale or trade, oversees stocks and also sets policies within the stocks and securities industry. There are about three thousand companies that are listed on the NYSE. There are certain requirements that a company needs to be listed. The company has to submit annual reports, offer stock for trade, and they must have an income that is above two and a half million before taxes.

Once the stock is listed, then it can be bought or sold either directly from the company representatives that are on the floor or from other traders. Majority of trading in the NYSE is physically carried out on the floor by members who have purchased seats in the stock exchange which permits them to trade directly. This is considered a privilege and the seats fetch very high prices.

The NYSE plays a major role in the economy and financial sector. It provides a secure environment for trade and supports additional regulation of the industry so that investors can continue to do business.

What is FOREX?

FX Trading, also known as Currency Forex Trading is an alternate way you can make money in a trading environment. Everyone has heard of the New York Stock Exchange (NYSE) or the Chicago Mercantile Exchange (CME), each featuring either stock trading or options and futures trading. Forex or FX Trading involves the buying and selling of currencies instead of stocks, bonds, options or futures.

FOREX stands for the FOReign EXchange market, which is the international financial market where currencies are traded. The foreign exchange market began in the 1970s and is now the largest financial market in the world, with an average daily turnover of US $1.9 trillion. That’s 30 times the amount of daily activity on all of the US stock exchanges combined.

FX trading is also very different, in that, there is no physical floor or exchange area like there is in New York or Chicago where the Currency Market is located. The Foreign Exchange Market(Forex) or FX Market can only be accessed by phone or by electronic network.

Forex Market Hours

The advantage of not having a central location, but instead having an electronic network, is that Currency Forex Trading can operate 24 hours a day. In fact, the Currency Exchange is open for trading all day and night during work days, roughly 5 days a week.

Forex Market hours begin at 7:00 pm each Sunday, New York time, currency forex online trading begins as markets open in Tokyo, Japan. Next, Singapore and Hong Kong currency markets open for FX trading at 9:00 pm EST, followed by the European markets in Frankfurt (2:00 am), and then the currency trading begins in London at 3:00 am. By 4:00 am, all European currency forex trading markets are in full swing, and Asia has concluded their currency trading day. Then the U.S. markets open first in New York around 8:00 am Monday, just as Forex market hours in Europe wind down. Australia will take over with the start of their currency trading around 5:00 pm, and by 7:00 pm Tokyo is ready to re-open. All of the Forex market hours above were quoted in Eastern Standard Time (New York). And so you can see that the trade of World Currencies takes place round the clock basically from Sunday evening until late Friday night.

FX Trading: Buying and Selling Currencies

Since the FX Trading Market is the largest financial market in the world, it is also the most liquid. This means it is easy to get in and out of a position whenever you want. The more liquid a market is, the easier it is to initiate and fulfill a transaction. Of course, the objective when currency trading in any market is to buy low and sell high. With Forex Trading available online, a person buys and sells the currencies of other nations from his or her computer. For instance, if one believes the U.S. Dollar will strengthen against the EURO they can buy Dollars now and sell them later at a profit.

Traders are able to take advantage of intra-day volatility thanks to the low spreads and enter positions for short time periods, such as minutes and hours. Unlike equity trading, where restrictions limit a trader’s ability to profit from a market down turn, there are no such constraints on currency trading. Currency traders can take advantage of both up and down trends thus increasing their profit potential.

FX Trading Market Symbols

The most commonly traded currencies are The US Dollar (USD), the EURO (EUR), the Japanese Yen (JPY), the Pound of Great Britain (GBP), the Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar(AUD).

All currencies are traded in currency pairs and each currency is represented by a 3 letter code. Therefore, a rate, which consists of a pair of currency codes, will end up being a 6 letter code. For instance, USD/GBP is considered a currency pair with each containing three letters for a total of 6 in a rate. The most commonly traded currency pair is EUR/USD.

All Forex trades result in the buying of one currency and the selling of another (currency trading), simultaneously.

Your objective when Trading Currency options is to make sure you can correctly identify the current trend in the currencies you are trading and to make sure you are buying a currency which is appreciating in value and selling a currency which is depreciating.

“Going Long” and “Going Short” in Forex Day Trading

Buying or “going long” the currency pair implies buying the first, base currency and selling an equivalent amount of the second, quote currency (to pay for the base currency). It is not necessary to own the quote currency prior to selling, as it is sold short.

You would buy a currency pair if you believe the base currency will go up relative to the quote currency, or equivalently that the corresponding exchange rate will go up.

Selling or “going short” the currency pair implies selling the first, base currency, and buying the second, quote currency.

You would sell a currency pair if you believe the base currency will go down relative to the quote currency, or equivalently, that the quote currency will go up relative to the base currency.

An open trade or position is one in which you have either bought or sold one currency pair and have not sold or bought back an adequate amount of that currency pair to effectively close the trade.

When you have an open trade or position, you stand to either profit or lose from fluctuations in the price of that currency pair.

Forex Currency Trading Software

Different than stock trading, you will trade using special software programs which allow you to participate in Online Forex Trading. These Forex Trading systems are often referred to as Forex Robots.

Most traders agree that Forex Trading Robots give you an advantage as it removes all “emotion” from the Forex trading platform. The robots rely on proven, tested and quite highly accurate Forex signals to govern their FX trading.

In addition, most of these Forex trading platforms allow you to test your Forex Strategies in a “practice mode” before you actually use your own money.

Currency Forex Online Trading

Forex trading is the backbone of all international capital transactions. Compared to the slim profit margins rendered in other areas of commercial banking, huge profits are generally produced in a matter of minutes from minor currency market movements. Some banks generate as much as 60% of their profits from trading aggressively.

Trading volume has been growing at a rate of 25% per year since the mid-1980s and therefore it makes it true that the currency market is one of the world fastest growing industries.

Technology is having a huge effect on the FX market and millions of Dollars are moved from one currency into another every second of every day by banks and financial institutions through computers and, for the savvy investor, with the touch of a computer key.

Currency Trading can be an exciting alternative to the stock, bond, option or commodities markets. To some, it is a simpler way to trade and profit. To others it is a welcome break from disappointing corporate news that can drive a stock down dramatically within a few short minutes, even in seconds.

Whatever your reason, Forex currency trading may be just the break you need from other investments you are tired of watching do nothing or, worse yet, continue to decline in value. After all, this is money! You like money, don’t you?