http://www.exchangematters.com/forexblog Currency Trading & Forex Information Fri, 16 Dec 2011 17:07:43 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 http://www.exchangematters.com/forexblog/228/questions-about-gold-in-the-stock-market/ http://www.exchangematters.com/forexblog/228/questions-about-gold-in-the-stock-market/#comments Fri, 16 Dec 2011 17:07:43 +0000 admin http://www.articlesinsight.com/Art/6616/263/Questions-about-Gold-in-the-Stock-Market.html
So many investors have taken a "beating" in the stock market recently that more are looking seriously at the Gold market For anyone not heavily involved in the stock market, that may be a very good strategy to, not only prevent more loss, but to build their capital with the rising price of Gold Gold is predicted to reach $1,100 an ounce within this year (2009) Other optimistic individuals foresee gold reaching $2,000 an ounce at its peak Liquidating all of one's investments into the purchase of gold is not recommended Neither is putting all of one's capital into any other one vehicle Diversification is advisable Never put all your eggs in one basket, as they say

Many people are actually collecting the gold jewelry that they have lying around, not being worn and taking it to a gold dealer for the cash Maybe once they've done that, they will take the cash they receive and buy gold on the stock market as an investment

Let's look at gold investment potential

For the sake of this discussion, let's imagine you invested 10,000 in the gold market in 2000 By December of this year (2009) you would be looking at a tremendous profit in your investment approximately 238% or nearly $34,000 That same amount invested in stocks in the S&P 500 would be realizing a loss of near 40% in the same period of time There has even been a 198% rise in the investment of those owning rare coins Many strategists foresee gold becoming a real Bull Market, and the wealthy are not losing any time at buying gold for their investment package

Want some reasons to invest in gold?

Check these out The price of gold is determined by inflation, fluctuations in the dollar, and by increases and decreases in the other commodities Gold is produced for its intrinsic value as an accumulation commodity Gold is money

Gold is a hedge against inflation It is a hedge against the falling dollar Gold has been called the crisis commodity and has been shown to outperform other investments when there is world tension When banking crises occur, like now, everyone is looking for a safe haven and therefore, looks to investing in gold Gold will always maintain its value It is recommended as a diversifier for a stock portfolio Its price increases in value in markets that negatively affect stocks and bonds

Read more about the Gold Market on the internet or talk with a financial advisor to find out what the procedure is to convert one or more of your stocks or bonds into gold

What China is doing

China's economy is expected to become the 2nd largest in the world by 2020, next to the United States And now, China is passing legislation go afford their population the ability to buy gold bars from their four commercial banks Gold is in It may be that the time is right for you to get on the bandwagon

Caterina Christakos is a private investor and published author. To get more information about the stock market visit: http://financialinvestmentsdirectory.com]]> http://www.exchangematters.com/forexblog/228/questions-about-gold-in-the-stock-market/feed/ 0 http://www.exchangematters.com/forexblog/320/penny-stock-trading-the-risks/ http://www.exchangematters.com/forexblog/320/penny-stock-trading-the-risks/#comments Fri, 16 Dec 2011 17:07:42 +0000 admin http://www.articlesinsight.com/Art/6253/231/Penny-Stock-Trading-The-Risks.html
Many people chose to buy penny stocks due to the potential profits of picking the right stock and having it pay off big However, knowing the risks of these types of stocks is critical Because if you don't know the risks, chances are you will lose money!

When we talk about penny stocks, it's a good idea to first define what qualifies as a penny stock While most people would probably consider any stock priced under $1 00 to be a penny stock, there are almost as many investors and larger funds that consider any stock priced under $5 00 to be in penny stock territory So for the sake of this discussion, we'll use $5 00 as our cutoff for what we'll refer to as a penny stock With that in mind, here's some factors that can influence (or increase) the risks of penny stocks that you may not find in stocks that trade at higher prices:

1 The stock exchange

Is the stock listed on one of the exchanges? Buying a stock on one of the exchanges is less risky than trading stocks over-the-counter In other words, it's much easier for "sketchy" or questionable companies to get listed through OTC pink sheets than the three major exchanges The NYSE, NASDAQ and AMEX all have tougher requirements in place to get listed, as well as rules for financial reporting and market capitalization, among others Any company that falls out of compliance is booted off the exchange if not brought back into compliance

2 Trading volume

How much trading volume is there each day? If not many shares are traded in the particular stock, this can make buying and selling the stock at a market price very difficult and can increase the risk of losses For example, if you want to sell 100,000 shares of a stock with a last trade of 10 cents but the closest best bid with that many shares is all the way down to 06 cents, you may end up losing 40% if you need to sell the stock right then This is sometimes called "liquidity risk" and although it can be a risk of higher priced stocks as well, it is not as pronounced as in penny stocks

3 Stock price

Why is the stock a penny stock in the first place? The price of the stock itself is important, because many times the reason a stock is trading for such a low price is the company itself may be having financial problems or other issues The company may even be on the verge of bankruptcy Can you be sure the company isn't going to fold the day after you buy the stock? It's a good idea to check recent news and press releases for the company to make sure there's no suprises you aren't aware of

4 Volatility

Is there much historical volatility? And what I mean by this, is if you look at a 1 year chart for the stock does it make big price moves often, either up or down? While volatility can be your friend, it can also be your worst enemy Imagine buying a stock for $1 00 a share, and having it fall to 30 cents in just a few days That's a big loss, especially if you've put a lot of money in one stock

5 News, information and research

Since the bulk of penny stocks tend to be smaller, lesser known companies, it's sometimes hard to find any information about them The company may rarely (if ever) release news about company developments, it's products or general business conditions This makes it very diffuclt to do research or decide if it's a company worth buying stock in And this increases risk

6 Location of the company

Given all these other factors, one additional thing to consider is where is the company located? Since the US, Canada and the UK tend to have more securities laws and regulation in place to discourage fraud, corruption and other unethical business practices, other countries may not, or if they do they may be loosely enforced Buying stock in a small, unknown company in the US may be risky enough, but buying stock in a small, unknown company in Russia or some other country that may not be subject to the business or securities laws of your country can increase the risks exponentially And just to be clear here I am not picking on Russia, I love Russia and I love Russians, they are some of the smartest business people out there - I only use this as an example to make a point

What do I think?

Overall I think penny stocks carry higher than average risk, so I would not invest a lot of money in these types of stocks However, if you are a person who is interested in penny stocks and think the risk is worth the potential big gains, just be sure you fully understand the risks and take steps to mitigate them as much as possible Good luck!

John Merritt is an active investor and founder of invest.us, which offers resources for investing in America. Visit us for more investing basics, or link to this article on penny stock trading.]]> http://www.exchangematters.com/forexblog/320/penny-stock-trading-the-risks/feed/ 0 http://www.exchangematters.com/forexblog/319/stock-market-corrections-are-beautiful-and-necessary/ http://www.exchangematters.com/forexblog/319/stock-market-corrections-are-beautiful-and-necessary/#comments Fri, 16 Dec 2011 17:07:41 +0000 admin http://www.articlesinsight.com/Art/6725/231/Stock-Market-Corrections-Are-Beautiful-And-Necessary.html
Every correction is the same, a normal downturn in one or more of the markets where we invest There has never been a correction that has not proven to be an investment opportunity You can be confident that governments around the world are not going to allow another Great Depression "on their watch"

Every correction is different, the result of various economic and/or political circumstances that create the need for adjustments in the financial markets
While everything is down in price, as it is now, there is actually less to worry about When the going gets tough, the tough go shopping

In this case, an overheated real estate market, an overdose of financial bad judgment, and a damn the torpedoes stock market, propelled by demand for speculative derivative securities and Hedge Funds, finally came unglued

But it is the reality of corrections that is one of the few certainties of the financial world, one that separates the men from the boys, if you will If you fixate on your portfolio market value during a correction, you will just give yourself a headache, or worse

Few of the fundamental qualities that made your IGVSI securities sound investments just two years ago have permanently disappeared We'll be using credit cards, driving cars and motorcycles, drinking beer, and buying clothes twenty years from now Very few interest payments have been missed and surprisingly few dividends eliminated

Only the prices have changed, to preserve the long-term reality of things---and in both of our markets

Corrections are beautiful things, but having two of them going on at the same time is like a trip to Fantasy Land Theoretically, even technically I'm told, corrections adjust prices to their actual value or "support levels" In reality, it's much easier than that Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, and investor profit taking

The two "becauses" are more potent than ever because there is more self-directed money than ever And therein lies the core of correctional beauty Mutual Fund unit holders rarely take profits but rush to take losses Additionally, the new breed of unregulated index-fund speculations is capable of producing a constant diet of volatility overload New investment opportunities are everywhere

Here's a list of ten things to think about or to do during corrections:

1 Don't beat yourself up by looking at your market value You don't live in a vacuum and you should expect lower valuations That is why you should only buy the highest quality securities in the first place and stick with a well-defined asset allocation plan Look for ways to add to your portfolios

2 Take a look at the past There has never been a correction that has not proven to be a buying opportunity, in spite of the media hype that this one is somehow special When they are broad, long, and deep, the rally that follows is normally broad, long, and steep Get ready to party

3 The "Smart Cash" produced by interest and dividends should be placed in new stocks for rapid profitable turnover--- don't be shy when you're looking at 50% discounts from recent highs Buying too soon, in the right portfolio percentage, is nearly as important to long-term investment success as selling too soon is during rallies

4 Take a look at the future Nope, you can't tell when the rally will come or how long it will last If you are buying quality securities now, as you certainly should be, you will be able to love the rally even more than you did the last time--- as you take yet another round of profits

5 Buy more quickly in a prolonged correction, but establish new positions incompletely so that you can add to them safely later There's more to "Shop at the Gap" than meets the eye, and you should remain confidently fully-invested at least until the media starts whispering: "rally"

6 Cash flow is king Take smaller profits sooner than usual as long as there are abundant buying opportunities Today, nearly sixty percent of all Investment Grade Value Stocks are down more than 25% from their 52-week highs As long your cash flow continues unabated, change in market value is just a perceptual issue

7 Note that your Working Capital is growing, in spite of fallen market prices, and examine your holdings for opportunities to average down and increase your yield on fixed income securities Examine both fundamentals and price, lean hard on your experience, and don't force the issue

8 Identify new buying opportunities using a consistent set of rules, be it rally or correction That way you will always know which of the two you are dealing with in spite of the Wall Street propaganda Focus on Investment Grade Value Stocks; it's easier, less risky, and better for your peace of mind

9 Examine your portfolio's performance in terms of market, interest rate, and economic cycles as opposed to calendar time intervals Apply your asset allocation to your analysis for meaningful-to-you results

10 So long as everything is down, there is little to worry about long term Downgraded, or simply lazy, portfolio holdings should not be discarded during general or group specific weakness--- unless you don't have the courage to get rid of them during rallies

Corrections of all types will vary in depth and duration, and both characteristics are clearly visible only in institutional-grade rear view mirrors The short and deep ones are most lovable; the long and slow ones are more difficult to deal with

Most corrections are relatively short and difficult to take advantage of with mutual funds So if you over-think the environment or over-cook the research, you'll miss the after-party Unlike many things in life, Stock Market realities need to be dealt with quickly, decisively, and with zero hindsight

Amid all of the uncertainty, there is one indisputable fact that reads equally well in either market direction: there has never been a correction-rally that has not succumbed to the next rally-correction

Steve Selengut Sanco Services Kiawah Golf Investment Seminars Author: 'The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read' and 'A Millionaire's Secret Investment Strategy'.]]> http://www.exchangematters.com/forexblog/319/stock-market-corrections-are-beautiful-and-necessary/feed/ 0 http://www.exchangematters.com/forexblog/298/reducing-risk-with-options-trading/ http://www.exchangematters.com/forexblog/298/reducing-risk-with-options-trading/#comments Mon, 31 Oct 2011 01:38:05 +0000 admin http://www.articlesinsight.com/Art/6885/231/Reducing-Risk-with-Options-Trading.html
Options trading has been around since 1973 but really didn't take off until the last 10 years or so During that period the number of options contracts traded on U S exchanges increased by more than 600% What accounts for this increase in the popularity of options trading?

One major factor is that options are now understood better than they previously were Because options have many variations it is quite easy to misunderstand how they work, and as a result many investors - or their brokers - had bad experiences when they first tried them

The influence of the internet has also been a significant factor Not only has the internet provided the means for low cost options trading, but it has been a tremendous source of valuable information

This has served to demystify the options trading process to a great degree Prospective options traders can draw on the experience and advice of countless numbers of people who have successfully engaged in trading, learned its ins and outs, and developed a sophisticated understanding of the activity

One commonly held view about options trading is that it is risky - mostly because it is relatively difficult to understand and the new investor will usually be uncertain about the best strategy to employ

One of the simplest strategies to understand, and one that can actually be used to reduce risk is the use of a put option as a hedge against dramatic declines in a stock's market value

The traditional way stock traders protect themselves against such losses is to place a "stop-loss order" on a particular stock they hold When it trades at or below the limit specified in the stop-loss order, the stop-loss order automatically becomes a market order to sell

This procedure has some serious shortcomings When a stock starts fluctuating in price a stop-loss order virtually guarantees that it will be sold for a loss because it will be sold as soon as it dips to or below the stop order price

More importantly when a stock worth, say, $50 at closing opens in the morning at $30 it will automatically be sold at that price This serves to lock in some pretty significant losses

Purchasing a put option, on the other hand, lets you purchase the right to sell a specific stock at a predetermined price (the "strike price") for a specified period of time So if you suspect a certain stock is going to decline in value you can purchase a put option for a quantity of that stock If its market price goes below the predetermined strike price you have the option of selling it at the strike price

For example, let's say XYZ stock is trading at $50 today, but you suspect it might go down quite a bit in value over the next two or three months You might purchase a put option for 200 shares of XYZ stock at a strike price of $42 for a period of three months

What this means is that you can sell 200 shares of XYZ at $42 per share any time within that time period - even if the market price of the stock should go to $30 In other words you are paying a price to lock in a guaranteed value for a limited period of time

This contract would cost you a "premium" - say it is $3 per share If the stock price does not go down during the period of your contract you can simply let the option expire and forfeit your premium Of if it does go down you can sell your stock if you actually own some and take less of a loss than you otherwise would have

Or even better, if you don't actually own any of the stock you could buy some at the current price and sell it at the strike price predetermined in your option contract

The bottom line is that options trading can be fairly simple like this example and can be used to reduce risk rather than increase it On the other hand, some strategies used by options traders are very complicated and carry considerable risk

Anyone considering getting involved in options trading should take it one step at a time Find a good online trading site that specializes in options trading and has low fees Then learn as much as you possibly can about options trading strategies before you try anything too adventurous

Join more than 130,000 other satisfied traders by opening an account with TradeKing.com, where options trading online is our specialty.]]> http://www.exchangematters.com/forexblog/298/reducing-risk-with-options-trading/feed/ 0 http://www.exchangematters.com/forexblog/297/the-ways-of-internet-stock-trading/ http://www.exchangematters.com/forexblog/297/the-ways-of-internet-stock-trading/#comments Mon, 31 Oct 2011 01:38:04 +0000 admin http://www.articlesinsight.com/Art/6953/231/The-Ways-Of-Internet-Stock-Trading.html
Now that the world is faced in a big problem regarding the economic status of most countries, may people are in desperate need of some soul uplifting, the current problems may be taking it toll but then a simple and convenient way to solve that, like internet stock trading can be done to ease up the burden

There is no denying that people now are frantic about the situation of the economy There are just a lot to think about and consider Despite the efforts of many to stay calm in this situation, there is still a lot of pressure that pushes people into the edge of their patience Some sad to say, could not bear the problems but then the innovative ones and the ones who are feisty and always eager to fight can find their way through no matter what

It is not true that there are no ways that these problems could not be solved; of course there are countless ways by which you can do that It is not yet the end of the world and so long as you are eager and determined, you can always find your way out of the burning tower

There are many media that are available, many avenues by which you can find hope, a waning light against the dark alleys you are in right now, and the economic problem is not one thing that you should be on your knees about Well, why not use the internet?

With training, you can work wonders There are training courses available that will make you a stock market wizard in hours and with internet stock trading, everything is possible Now who says the only way out is by jumping out of the burning tower? The internet is readily available and with the sufficient knowledge that you can get through trainings and courses you can save your self

There are numerous ways by which the internet can save you This way you can just forget about your woes By buying and selling stocks you can earn money Now you need not be an economist to understand that the stock market is a place where most transactions such as buying a folio of stocks happen When you have stocks, you have a claim to a certain company and you can earn money by keeping, buying or selling those stocks that you have And with the internet as a medium what else can go wrong?

After going through the processes of acquiring such folio of stocks and submitting your self to the necessary processes, the way to earning is just easy The internet as a medium of this exchange is very convenient With millions of people all over the world using the internet and the availability and accessibility of the internet, there certainly is nothing else to hinder you

Investing is always a risk; you should remember that this is not a one time big time kind of thing Despite the future promised by internet stock trading you should still be very careful There is no way you would want to lose whatever things you have gained The only thing you have to remember is that you need to keep a good strategy and everything else will follow

Matthew Stanton writes an article about Internet Stock Trading and how this type of investment can help you amidst the economic crisis we have these days. Simply visit this site for information at http://www.tradestocksamerica.com/stock-trading-course.php]]> http://www.exchangematters.com/forexblog/297/the-ways-of-internet-stock-trading/feed/ 0