Posts Tagged ‘Stock trading strategy’

Earn Massive Profit By With Stock Software

Wednesday, March 3rd, 2010

Prior to the economic recession that was felt on a worldwide level, the idea of stock trading was one of the most popular concept for individuals. The classification of Day Traders developed as the Internet allowed for more & more investors to toss aside the once mandatory need for stock brokers and took the concept of trading to a whole new level and into their own hands.

A lot of people began to realize huge errors were being made in the old stock market model where only prosperous persons were allowed to invest in the traditional investing method. But as more and more people began to invest on their own, it regularly meant investing hard earned money blindly while lacking the important research skills which is indeed very much necessary in creating a awesome investment strategy. People were looking for the easy way to make money and and because to this, when market around the world collapsed, numerous people lost all of their savings which was made over a period of time, convincing them to financially start over and re-investigate their future financial goals.

These days, we can get a few of the stock screening software programs which serves people to invest in the appropriate investment plan obtainable in the market which are becoming popular and also help to significantly multiply your chances for achievement. The plain truth is the market is a viable opportunity for people to make large amounts of money quickly But it doesn’t mean that all software products obtainable are adequate capable to produce the achievement which is necessary for the ordinary people. Getting the right software application to scrutinize, analyze and finally obtain your stock picks is crucial in this ever altering fast paced stock market world we live in. It has also come to perk up those people who have not yet decided to use the stock screening software to select their future investments. They are thus negating any possibility to generate large profits and offer the necessary hedge against crumbling markets as opposed to the some people who are using such software products.

The people who select to stay away from using stock trading software and go blindly on their own are still prone to the same losing pitfalls as before. It’s been proven that it is very easy to achieve both short team and long term goals using stock market software. That’s why a lot of elegant investors have come to comprehend blind trading is a huge blooper and tends to keep people trading continuously on the very market bottom. On the other hand, a person who uses trading software successfully has the aptitude to follow several stocks simultaneously plus track industry and sector moves efficiently in the blink of an eye. You have the bigger benefit of following multiple stocks in real time mode, invest with self-assurance and feel the opportunity to create a endless positive cash flow while investing wisely.

Following the fall down of most economies around the globe a glimmer of hope has emerged as markets start to rebound and finances return to normal. If people starts utilizing the advanced stock screening software such as StockVision most of the individual has a chance to capitalize on these growing markets and retrieve the funds which were lost due to the former economic fall.

To discover more about the best stock trading software available in the industry today go to http://www.garsworld.com and open the door to your own profitable investment world. You be worthy of a chance to recover profits lost and build a brighter financial future for tomorrow! StockVision is the answer to that call.

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Double Your Returns Using A Stock Trading Strategy Based On Elliot Wave Analysis

Friday, September 25th, 2009
by James P Kupe

Something all investors should consider before to making an investment decision is this: What is the current trend direction of the market right now? A working knowledge of Elliott Wave analysis can help to answer this question. By understanding the waves, we can often confidently know if the market is most likely to go up, down or sideways.

A good reason to take the time to understand Elliott Wave Theory is that it can help you to identify whether the market is trending, or is it in a reaction to the current trend. Understanding these patterns of market behavour can help you to accurately forecast where the market is likely to go next, and position yourself accordingly.

There are three important elements to Elliott Wave Theory

Pattern - Is the trend of the market up or down? Is it in an impulse move or a corrective move?

Price - When the market has completed an impulse move, how far will it retrace?

Time - How long will the current trend continue?

A bull market or up trend is signaled by a series of higher highs and higher lows, while a bear market or trend has a series lower highs and lower lows. You can see these wave patterns in the market over all time periods - daily, weekly, monthly, and if you are a short term trader, even on intra day charts.

When any market corrects, the major support and resistance ratios are .382, 50% and .618 and 100% of it’s previous ranges. And it’s important to remember that these reactions can be measured in both time and price. So if a bull market were trending strongly, you would expect an average correction to retrace around 50% of the previous leg up in both time and price.

Small retracements mean strong trends, so for example, if a stock rallies $5.00 in 2 months, you would estimate a ‘normal’ correction would be around $2.50 in roughly 30 days. If the market retraced less than 50%, say .382 in price ($1.91) and time (23 days), then gave you a signal that it was preparing to resume it’s rally, it would put that Stock in a very bullish position for a continued move higher.

Understanding the Elliott Wave pattern in the markets you trade can help you to accurately determine the direction of the dominant trend. We always want to trade with the main trend, and if at all possible, try to enter at the end of corrections to that trend so we can maximize our profits. The problem for many traders however is this - how do I know the correction is ending and the major trend is resuming?

There are any number of ‘entry triggers’ people use to enter trends - Moving Average crossovers, trend line breaks, higher highs and lows on our Swing Charts, etc. Your main goal as a trader is to find an entry trigger you are comfortable with, something that has a proven history of reliably identifying the beginning of fast moving trends, and then take every signal that system gives you. Once you are in a position, implement a trailing stop loss system that takes you out of your trades when each trend comes to an end.

When you have a proven system for identifying, entering and exiting trades, you’ll find your trading much less stressful and your account balance will start to grow consistently.

About the Author:
For a Free stock trading strategy Video that reveals a trade entry signal that’s right up to 77.4% of the time, and will sa simple way you a simple way to position yourself breakouts in the the Stocks you trade days before they actually occur, visit http://www.stocktradingexperts.com

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ETF Basics

Friday, May 29th, 2009
by Jordan J. Weir

While many investors have an overall outlook, and may be able to accurately predict what will be the next big thing, it is often harder to nail which company will be able to best take advantage of the coming conditions. After all, while it may be easy to figure out, retail stocks are going to be hammered by this recession, that doesn’t help you decide which retail company is best to short. And while it may be easy to figure out, reduced demand from the developed world is going to hurt Chinese companies, its much harder ” especially for those non-mandarin speaking people such as myself ” to figure out exactly which Chinese companies might escape this fate. So how can we take advantage of these outlooks without having to pick specific companies?

The answer lies in a little tool known as the ETF. ETF stands for Exchange Traded fund. Think of it as a mutual fund that isn’t actively managed, focuses on a certain area, and can be traded like a stock without incurring extra penalties. Each ETF holds a number of companies, similar to a mutual fund, and its listed price is simply the overall value of the companies it holds.

Each ETF is designed to mimic an investment in a certain industry, region, or type of stock. Some examples of ETFs are the XLI, XLU, and EWC. These ETFs grant an investor exposure to the industrial sector of the S&P 500, the utilities sector of the S&P 500, and the entire Canadian stock market, respectively. Similarly, one who simply wanted to match the S&P 500 indexs returns could just invest in the SPY.

Yet if ETFs are so similar to mutual funds, why not just use a mutual fund. There really are a couple reasons to do so. First off, mutual funds have a history of underperforming the stock market as a whole after fees are included. This makes simple index investing, through an ETF representing a large basket of stocks, such as the SPY, an extremely effective way of matching the markets returns with nearly no cost. There are also slight tax advantages with ETFs compared to mutual funds. Mutual funds have to pay capital gains tax whenever they sell one of their holdings, and whenever they have a large wave of redemptions, they have to sell their positions to come up with the money. This leads to excess fees, some of which get passed on to the remaining investors.

Of course, the vast convenience ETFs have over mutual funds shouldn’t be underestimated. ETFs can be traded just like a stock, giving active traders the ability to buy and sell intraday. The ability to short was impossible with a mutual fund, but now it can be done. During any bear market, the ability to benefit from the fall of sectors as well as their rise is a valuable one to have.

A great boon to ETF investors, never before experienced by mutual fund holders, is the ability to use stock options to control risk. Stock options can be used to reduce the risk by using covered calls, or buying protective puts. Alternatively, call options can be used to control maximum loss, and potentially increase profits.

One thing to note is that not all ETFs are created equal. While some simply hold a basket of stocks and use those to keep the ETFs value near the benchmark, many use other, more exotic strategies, with various degrees of success. QLD for instance, aims to gain roughly twice the daily returns of the Nasdaq composite index, and is usually fairly consistent when doing this. Another similar instrument is the ETN, which is actually a debt based instrument. While ETNs also aims to gain returns based on a given benchmark, there price is also sensitive to changes in the debt rating of the issuer, and this should be considered when investing in them.

The only reason not to use ETFs is a lack of understanding, for they really are one of the most revolutionary investment tools of the 21st century. Their ability to reduce risk through diversification across an asset class, while still effectively giving an investor exposure to an entire sector, should be taken advantage of by everybody, for both long and short plays. ETFs are an invaluable asset for everyone invested in any stock market, and their advantages should be used to the fullest.

About the Author:
The first step to making fortunes in the markets is learning them, so visit my website and become a master of the markets! Learn about “insider secrets” such as ETF Investing, Stock trading strategies, stock options, and more!

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Option Trading Strategy: The Vertical Leap

Monday, May 18th, 2009
by Jordan Weir

Many investors view options as only a short term trading strategy. The idea of a highly leveraged tool with the potential to make big bucks quickly appeals to the risk taker inside all of us. Just like a card counting black-jack player, options strategies can be used to make consistent short term profits, provided the player is careful, and knows what they’re doing. But while stock options are usually employed solely by that clique of high-octane traders, they actually have enormous benefits that tend to go unnoticed by many a long term investor.

The stock option strategy I’m about to reveal isnt often used. Amazingly, I’ve only briefly heard mention of them on little known websites, and even then, not in enough detail to give an example. So here it is, what I believe may be the best kept secret from long term investors on wall street. The stock option strategy for the long term investor.

Its the vertical option spread, using leap options. How this technique works is you buy one option, while simultaneously selling another option for the same month, but at a different strike price. While XYZ is usually my standard ticker, I will use a real stock in this case. Keep in mind, this is NOT a recommendation. In fact, it would probably be a bad idea to invest in the example I’m about to give. Its just an example. Yet to get realistic prices for this strategy, it may be helpful to use a legitimate stock.

note:I wrote this part of the article about a short time ago, prices may not be 100% current. So GE is currently trading at 10.41 per share. In this example, let us talk the January 2011 options, giving GE plenty of time to go the way we believe it will. So if you thought GE was a good long term buy, it would be reasonable to think it is going to at least $20 per share by that point. By January 2011, many experts believe the recession to be over, and that single development alone should lead to a substantially higher stock price.

To do a vertical spread, you have to buy one option, and sell another one. Giving our price target of at least $20, and given the current price, 10.41, I would buy the 12.50 strike call option, and sell the 17.50 strike call option. The 12.50 option can be bought for 2.71 at the moment, while the 17.50 can be sold for 1.40, giving us an total cost basis of 1.31 per share for the vertical spread.

Now lets examine this trade for a second. If General Electric is trading below 12.50 on the January 2011 expiration, both options expire worthless, and the 1.31 per option spread invested is gone. On the other hand, if General Electric is trading above 17.50, then the 12.50 option will be worth exactly $5.00 more then the 17.50 option, and so the position is worth $5.00 per share. If its between 12.50 and 17.50, the call we sold expires worthless, while the call we bought will have value equal to the difference between the stock price and the strike price; 12.50 in this case. How do you calculate the break even? Well we paid 1.31 for the vertical spread, so if its exactly 1.31 higher then 12.50 (13.81), then well be at break even if the stock is at that point.

That gives us an amazing return of 281% if GE is above 17.50, for an annualized return of 107% (holding period is 22 months). Because of the high potential for risk - a complete loss of investment if GE is below 12.50 in Jan 2011, you shouldn’t put more then you’re willing to risk in the trade. Definitely a speculative play. Yet with how much time there is, it is a much safer bet then short term options, and much more profitable then just buying the shares.

So now that the basic idea is covered, what are some examples of vertical spreads I would consider? I’m a big believer in investing in emerging markets, so I am long term bullish on EEM (IShares MSCI Emerging Markets Investment Index). The January 2011 25-30 vertical on EEM is only going for about $1.88 at the moment, with EEM trading at 25.30 so I think that would be a wise investment. Above 30 it would be worth $5 at expiration, while below 25 it would be worthless. Unless the economy further deteriorates, I cannot imagine that occurring.

Along the same lines, I expect FXI (iShares FTSE/Xinhua China 25 Index) to go up. The “China miracle” isn’t over, merely in a subdued state due to temporarily reduced demand. The 30-35 vertical Jan 11 vertical would be worth $5 at expiration if FXI is above 35, which from its current price of 28.51, is not much of a stretch. That vertical spread currently has a $2 price, so that would be an even 150% return from now until January 2011.

A significantly more controversial play would be Bank of America. While the trader in me screams to short the stock, I foresee it being far more valuable then it currently is a couple years down the road. The simple reason is that yes; financials have been hammered by the current collapse. Yes, some banking companies have gone bankrupt, or have been on the verge of bankruptcy. Is the financial system going to completely collapse? No. Are rampant bank runs going to drive them out of business? No. Are people going to want to borrow money again after this recession ends? YES! Is pent up demand in housing going to cause a rush to buy houses at prices not seen in a decade? YES! Are banks going to profit from this? Most DEFINITELY. If BAC is above 10 at the January 2011 expiration, the 7.50-10 vertical for Jan 2011 would be worth 2.50, while only costing about $0.65. That would give a 286% return, or 108% annualized. The risk of course, is that BAC goes bankrupt, or BAC stays under the $7.50 per share mark past January 2011. In either case, you would lose your investment. Yet with prices as low as they are now, there isn’t a high chance of that scenario unfolding.

For most people, the financial markets are not the place to get rich quick. While some short term traders will have great success with these option strategies, long term investors can use these same strategies while remaining focused on the longer term, to achieve gains vastly exceeding those of the regular stock market, while limiting risk.

About the Author:
Wanna hear more about this amazing Stock Trading Strategy? Visit my website and learn all you need to know to become a stock market master. Know what industries to invest in and when, and learn the Stock options strategys the big players use to make money in the markets.

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