Online Stock Investing for Beginner

What makes on-line stock investing so different from the time before we had online stock trading tools? Well, for one it's a double hedged sword. On-line stock investing is now much easier for the man in the street to search the whole stock market to find stocks that meet their criteria. At the click of a mouse one can now have access to as much information as only the professional funds, brokerages had many years ago. This is why so many professionally run hedge funds are now being operated from homes. Believe it or not. And why not?

Online stock investing has leveled the playing field. With an Internet connection and the right tools we can now make professional trading decisions. No more are we relying on the so called "money managers" to play with our money. With the advent of the Internet why doesn't everyone simply invest in the stock market for them-selves?

Some examples of the benefits of online stock investing for the individual trader:

* Access stock filter tables where you can plug in parameters and be presented with your own HOT stocks.

* Access company reports.

* On-line charting services. Many are free.

* Free online stock investing information, articles, forums.

The information now available at a low or even free cost in unbelievable. You just have to know where to look and how to apply the information.

The downside to online stock investing:

* Many free forums are no more than gambling pits. People who pump and dump stocks try to get others to buy the stock they are selling.

* Sadly, there are a lot of scams floating around on the Net.

* Information overload. Too much information in too short a space of time can be difficult to digest.

* On-line stock investing is simply an "aid" a "tool" to help you become a better trader. It still comes down to managing your own stock account in a professional manner.

How To Survive A Bear Market

Most traders I talk to nowadays have lost so much money in the markets during the 2000 NASDAQ Bear Market they are ready to throw the towel in. Having watched their portfolios being decimated by over 70% they simply have not got the money or the mental toughness to come back. What a shame. Profiting in bear market is quite simple... when you know how.

On 18^th March 2000 My NASDAQ indicator turned into negative territory for the first time. Since then up to today 4^th December 2000 it has never gone back into positive numbers. The NASDAQ had now declined 50% from its February high and some of the previous highflying tech stocks have been killed. YAHOO. MSFT, AMZN are all way, way off their peaks. Any fool who had a buy and hold strategy with these stocks has just kissed about 70% of their capital good-bye. Yet not only should you never lose more than 10% of your capital during a bear market you do have alternatives to make a profit.

Option 1 - Safe

When my indicators turned negative way back in March I was already stopped out of many of my high-flying stocks, such as Yahoo, Q-Comm. By strategically trailing my stop behind the price advance I automatically exit when things turn around. But I was still in a couple of long positions when my indicator turned negative. So what did I do? Exit straight away? NO. I simply tightened my stop on these shares. I looked for the slightest excuse to get out. The shares duly obliged for within 1 week of my indicator turning negative I was stopped out. No regrets. I was pleased. Why shouldn’t I be with a 144% gain for the year?

Once I was completely in cash and my indicator on the NASDAQ was negative what should I do? Well let’s ask it another way what could I do?

I was in 100% cash. I had just made a 144% annual gain. The market was turning down. Why not walk away from the markets? Take a break. I don’t have to trade all the time. Simply walk away, check the indicator figure every week and wait for a positive market again before starting all over again. What’s wrong with making 144% during every bull market and sitting out of the market during the bear markets? This is what I would advice every novice trader to do. You must have heard the saying "Any fool can make money in a bull market.." So my answer is "trade only in a bull market" It’s really so simple.

Option 2 - Conservative

Most people are surprised to hear about shares still doing well during bear markets. Yes there are still some great moves. Very few and far between. The moves aren’t as powerful but they are there. Why not cut your position size down in half and go searching for these "exceptional" shares? Use MSTS to ferret out these shares and trade them.

Think about it this way. If you can make 144% during a bull market and 25% during a bear market how rich will you be in 5 years time? You cannot treat every market cycle the same. Sometimes you can’t help but make money. Sometimes you will find it difficult to make money. But as long as you preserve your capital you will always be miles ahead of the average trader.

Option 3 - Aggressive Bear:

If you can make a lot of money on the long side (in the right shares with the right system) during a bull market then why not simply reverse the process? Go short! This is where the easy money is during a bear market.

Which shares should you be looking to go short? Most people like to pick bottoms. These people lose money. Reverse this process. When selling shares most people like to pick tops. Impossible! These people lose money. When trying to sell a share at the top the bullish sentiment causes sharp rallies in the share resulting in stops being hit.

Without a doubt and looking at thousands of shorting candidates I always find the very best time to short a stock is four to six months AFTER it has made a top. Back in September I recommended selling Yahoo at $82. It is now down in the $50’s. Look at AMZN, E-Bay, LU, AOL you’ll see how it is best to short shares AFTER the topping process has taken place.

If you can make 144% during a bull market. 100%+ during a bear market how rich will you be?

The next time you get caught in a bear market don’t hold on to your shares HOPING for a rebound. Way up your options 1,2, or 3 and act accordingly. A bear market can be just as pleasant as a bull market

You Can Make Your Fortune In The Stock Market

Sounds too good to be true, doesn't it? It sounds like any other "get rich quick scam."

But you really should be making over 100% per annum in the stock market year in and year out, if you apply some very basic principles. Of course, money managers, stock brokers, financial advisors are going to tell you differently. They are not in the job of looking after your money. there job is to "take your money."

This is how you should be making over 100% per annum in the stock market and the MASSIVE advantage we have over the large institutional funds.

1) Our biggest advantage is our "flexibility". We can flit from trend to trend at a moments notice. The big funds cannot. This point alone should convince you to trade your own money in the stock market. If a stock falls by 10% get out and look elsewhere. Do not waste your time. go looking for the next trend.

2) Trade in lower priced stocks. It's much easier for a $5 stock to gain 300-400% than it is for a $80 to gain 200%. and it will do it in a much faster time frame.

3) Keep to lower cap stocks. These are stocks with much smaller amounts of stock out in the market. Again, these stocks are much easier to shift 300-500% than the larger BLUE CHIP stocks.

4) Do not limit your-self to one industry. If you see as tock you like, buy it. If you are wrong you lose a little. If you are right you make a lot. The big funds limit them-selves to one category, theme, thus tying their hands behind their backs.

5) FOCUS: Notice how the big funds hold 100+ stocks? They may as well simply buy index contracts. You want to narrow your focus down to the top 0.25% of stocks and trade them. Buy big %'s of your portfolio in the VERY best stocks. the ones about to explode right now.

6) Cut your losses early and go looking elsewhere. There are dozens of stocks going on to gain 300-500%+ in less then 6 months. Do not waste your time and money HOPING a losing trade will turn around. Cut your loss and go searching.

7) Play both sides of the market. Most funds are 100% invested during all market cycles. so they do O.K in a bull market only to get slaughtered in a bear market. As a private trader you can be an aggressive bull in a bull market and play it from the short side during those bear markets.

Private traders and small account holders (less than $5 million) have an enormous advantage over the larger funds simply because they can make decisions quickly without affecting the price of a stock. Many of the big funds now have in excess of $500 million (some well into the billions). they are the slow oil tankers of the sea. Taking weeks to get into and out of stock positions. Diversifying into many substandard stocks. They have given up on the idea of making superior returns and gone into the business of managing as much capital as they can. They would rather make 12% on $500 million than 100% on $5 million. Which, from a business stand point actually makes sense. BUT where would you rather have your money invested?

You really can make your fortune in the stock market. It takes time and some effort. But starting at $5,000 and averaging 100% per annum for 10 years (no withdrawals) you will have: $5,120,000. It will take you just under 8 years to make your first million. THEN the power of compounding REALLY kicks in. Unfortunately after $5 million your account size will start to affect your returns. But that's not such a big problem, is it?

I'll see you at the millionaires club meeting one year.

Stock Options - Understanding the Basics

There are two types of options:

A Call Option and a Put Option

The purchase of a call option provides the buyer with the right - but not the obligation- to purchase the underlying item at a specified price, called the strike price or exercise price, at any time up to and including the expiration date.

A put option provides the buyer with the right- but not the obligation- to sell the underlying item at the strike price at any time prior to expiration.

The price of an option is called the premium. As an example of an option, an IBM April 130 call gives the purchaser the right to buy 100 shares of IBM at $130 per share at any time during the life of the option.

The buyer of a call seeks to profit from an anticipated price rise by locking in a specified purchase price. The call buyer’s maximum possible loss will be equal to the dollar amount of the premium paid for the option. This maximum loss would occur on an option held until expiration if the strike price were above the prevailing market price.

For example, if IBM were trading at $125 when the 130 option expired, the option would expire worthless. If at expiration the price of the underlying market was above the strike price, the option would have some value and would hence be exercise. However, if the difference between the market price and the strike price were less than the premium paid for the option, the net result of the trade would still be a loss. In order for a call buyer to realize a net profit, the difference between the market price and the strike price would have to exceed the premium paid when the call was purchased. The higher the market price the market price, the greater the profit.

The buyer of a put seeks to profit from a market decline by locking in a sales price.

The option buyer accepts a large probability of a small loss in the return for a small probability of a large gain.

But what if you had a way of trading options where the probability of a large gain was high?

What if you had a system that would make money regardless of which way the stock moves as long as it does in either direction you will make money? Think you could make some serious money?

Stock Market Simulation Game

Do you play games? I do. Stock market games that is.

Here is a stock market game you will love and not only that, it will give you a great insight into the phrases "expectancy", "draw-downs" and "position sizing".

What is the expectancy of your trading system?

Expectancy is how many times you expect your trading method to give you a profit. Once you realize the average parameters of your trading method not only does making money in the stock market become almost "scientific" it will reduce your stress and have you trading in a professional manner.

Here's the game:

Cut out 100 small blocks of white paper. Make them all the same size and just large enough to write two figures on them.

Write on the blocks in this order:

3 = 10W

7 = 5W

40 = 2W

10 = Nil

35 = 2L

4 = 5L

1 = 10L

So what this no represents is you M.S.T.S. in a statistical form.

Fold all the pieces of paper and place into a hat.

Get a piece of paper and write $10,000 on the top of that paper. This is your trading account.

Now write down "each trade is done with $2,500"

Stop loss is a t 8% = $200

Write down "trade 1 =.........." Draw your first random piece of paper from the hat.

Read it. Let's say you had some REALLY bad luck and draw out a 5L paper. This represents a trade where you had to exit at a 5 * stop loss.

Your first trade was a 5L loss = 5 * $200 = $1,000

Your total trading portfolio is now: $9,000

Your position sizing is $2,250

Stop loss = $180

Do it again.

This time you hit a winner. A 2W

This represents a 2 * stop loss gain = 2 * $180 = $360 gain

Portfolio is now: $9,360

Position sizing is: $2,340

Stop loss= 8% of $2,340 = $187

Do it again.

This time you hit a ten bagger. That's a 10* stop loss gain = 10* $187 = $1,870 gain.

Portfolio is not at: $11,230

And so on.... draw out 100 times and note:

1) How much draw down your trading method has.

2) How many losing streaks and winning streaks you had.

3) How did you feel when your system was performing at its worst?

4) How did you feel when your system was performing at its best?

5) Play around with different position sizing rules. go from one extreme to the other and you will be AMAZED at the equity swings your trading account experiences and the total return on your trading account after 100 trades. This should really drum into the importance that position sizing plays in your trading plan.

Once you are comfortable with your trading method and know how it performs trading for money becomes almost a "sure thing". Every system goes through good, bad, so-so times. But as long as you are prepared for this and adopt a professional trading approach with a proper trading plan, there really is nothing to stop you from succeeding in your stock market career.

Get busy and get serious. Start playing the stock market game now.

Stock Trading Basics

When Dealing With Shares Never Forget The Basics!

What really makes a share move up or down? In today's ultra high tech

World we sometimes forget the basics of supply and demand.

VOLUME is a vital and basic element to stock trading decisions.

One axiom of technical analysis suggests that while prices may fall of their
own weight, only volume can drive prices higher over time. The spring
advance of CACI International, an information systems and high technology
"solutions" company out of Virginia, is one of the best examples of this
phenomenon I've seen in this spring rally.


CACI was moving in a tight consolidation from mid-February into late March
when the first significant high volume day occurred on March 27th. The
uptick in on-balance volume (overlaid on the volume chart) supports the
heavy buying, as does the bullish candlestick. Even though CACI continued to
trade in a very tight range for another three weeks, the heavy volume day on
March 27th was a tip-off that buyers were interested in seeing this stock go
up--moreso than sellers were looking to get out of their positions. From the
beginning of the year until the first big up moves in late April, CACI has
advanced from about 22.5 to 28. While this 24% increase is a more than
reasonable return, the rising on-balance volume strongly suggested that
holders of the stock believed there was more to come.


In most cases, given a market with a neutral or mildly bullish bias, the
only thing that would keep a stock like CACI down (outside of a catastrophic
event) would be the determination of holders to sell, which is not reflected
in the rising on-balance volume, nor in the tightness of the
consolidation--particularly between late February and early April.


As good as the returns from CACI were from January to late April, the
advance from late April to late May was nothing short of spectacular, In
about 30 days, CACI climbed over 53%, largely on the backs of heavy buying
on May 9th and 10th, as well as on the 22nd, 23rd, and 24th. Unlike many
high-volume, high percentage moves, CACI's advance had almost no gaps. In
fact, each advance was supported by a significant support area of at least
two weeks. Nearest support currently is at 36.5 as the stock trades in the
low 40s.


The importance of these small support areas is that the advance is more
likely to be sustainable if there are areas to which CACI can retreat. The
pair of two to three week support areas here can function as places where
selling can occur without overly disrupting any renewed advance. This is in
contrast to what are commonly called "V" advances in which stocks that have
declined rocket upwards without pause, often reaping brief, but fleeting
gains. Advances that come with both heavy volume and short-term support
"platforms" are much more likely to provide reasonable entry points than
those without.

MSTS picked up CACI last week. Already it is showing a nice profit.

Stock Trading Rules

From: Mark Crisp

The Stress Free Momentum Stock Trader

http://www.stressfreetrading.com (c) November 2003

Dear investor

This is a significant step on your road to financial independence. For investing a very small fee, you will receive a set of winning rules that will help you learn how to buy and sell shares, how to invest and how to make money on the stock market. Every investor, whether a novice or very experienced, will be able to win on the stock market with these rules. The aim of my Top 10 Rules is to reduce the risk of losing money and to maximize profits when buying and selling shares.

I am not a stockbroker or an investment advisor or CEO of a big company. I am just a personal investor, who after 20 years of hard work, investing, reading many investment books, trial and error and making a few mistakes, have produced the Top 10 Rules that everyone who wants to make a lot of good, honest money should follow.

I have finally achieved my financial independence and am now enjoying the fruits of my investing. If I had these 10 rules earlier in my life I would have been financially independent many years ago. You can use these rules to make yourself financially secure now !

I started trading stocks back in 1990 on the U.K Stock market. Since then I have also traded shares on the United States Stock market. It is easy to buy and sell shares worldwide now thanks to internet stock broking.

I have done a lot of research by reading investment books, attending investment seminars and subscribing to investment magazines. Over the years I have collected a lot of information and have developed these winning rules that I always refer to before I make any investment in the stock market whether it be in U.S.A.or overseas. By following these Top 10 Rules I have been able to trade in shares successfully..........VERY SUCCESSFULLY !!!

My Top 10 Rules are not a "Get Rich Quick" scheme. They are a set of guiding principles that will help you learn how to save, invest, prosper and to achieve your financial goals. I can not guarantee that they will make you a millionaire overnight but they will certainly help you to get started. Over time you will quickly see the benefits of these rules and your financial prosperity will grow..........SIGNIFICANTLY !!!

Some of these rules are incredibly simple and obvious but until they are spelled out in black and white for you to read, absorb and to follow you probably would never have followed them !!!

The principles used in my Top 10 Rules apply anywhere in the world for anyone that is eager to achieve financial independence and that wants to make good, honest money..........a lot of good, honest money !!!

So if you want to win understand these rules.

1) you cannot predict the future. Stop believing it and stop wasting your time trying to do it. No-one ever has nor ever will be able to "predict" what is going to happen in the future. Runaway markets tend to keep running away. Cheap stocks seem to get much cheaper and expensive stocks more often than not, get much more expensive. do not even bother trying to justify a market simply let it do what it wants to.

2) The big money is made from position sizing. You really must stop chasing a holy Grail and spend time on different position sizing rules. This is the one "secret" that separates a professional from the man in the street.

3) Price is all that matters. Stocks do not follow fundamentals. It's all about "perceptions." Why can two identical stocks have completely different fortunes in the market?

4) Stop thinking like an institution. The big money management funds are not interested in outperforming the stock market. as strange as it seems. They are interested in managing money. So when they tell you to "diversify", only invest in blue Chip stocks with a solid past earnings, great management teams, solid this and that.... treat it for the non-sense it is. Unless you want poor returns.

5) 99% of technical analysis is junk. Whole companies have been set up to feed you B*S in the form of technical analysis. Throw it away and get down to basics.

6) Question everything and everyone. Even me. Never blindly believe anything you read or hear about. Be careful about what you read and even more careful about what you believe in. after all an opinion is only some-ones belief.

7) If you have to ask you shouldn't be in. I can't believe people actually ask other people whether they should hold or sell a stock position they are in. Surely before you enter you have your exits all in place. I'll guarantee if you are asking this question you are not making money.

8) I am in the stock market to make money not to win a puzzle. No-one can beat the market. Make a fortune in a bull market play defensive in a bear market. Returns of 300%+ should be easily attainable in the right conditions but do not give it back when the market conditions change.

9) Some people are just not cut out to trade the stock market. If you attach too much importance to your trading account i.e you are trading "scared money" you will never have the conviction to follow your rules. If you are not having success stop trading. either learn why you are failing or give your money to someone who is.

10) Trading the stock market isn't everything. It's only money. there are much more important things in life and you'd better not forget it.