The Finance Factor

Computer stock picking is one of the easiest and cheapest ways to increase the success of your stock picks.

One of the big problems faced by all investors is the vast amounts of information to process and analyze. Sometimes it can be baffling and tricky to know where to start looking for the next stock to invest in. It can be easy to get the feeling that professional traders or fund managers must have some secret tool at their disposal. To some extent this is true.
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Diversification is a growth strategy that takes advantage of market opportunities aiming to reduce the portfolio risk by allocating investment interest over different classes of assets. Through the acquisition and efficient management of two or more different assets, diversification leverages investment risk by offsetting losses from one asset with the gains of another asset in the same portfolio. As a result, as the number of the multiple assets in the portfolio increases, the total portfolio risk decreases.

Diversification is essential for all investors. Constructing a diversified portfolio is important to the growth of the investment. Savvy investors have different investment classes in their portfolio such as stocks, mutual funds, bonds, cash, or commodities and they protect their portfolio from losing value if one asset category declines sharply. However, although asset allocation may seem a straightforward form of diversification, still it requires a good knowledge of investment fundamentals.

The first rule of diversification is to know the basics of each investment class.

Stocks are financial assets of equity investing that offer ownership or a share of the company to the investor. When a firm is viable and profitable, its market capitalization increases and so does the value of its stocks. Stocks are generally considered as riskier than all other financial assets because they are susceptible to more frequent and sharper fluctuations and market volatility. Yet, as investors have different investment profiles that differ in the level of risk that are willing to undertake, the investment goals are directly proportional to the fluctuations of the stocks. Risk-takers investors invest in aggressive stocks, which generate instant income. Risk-averse investors prefer stocks that generate average returns on a long-term horizon.

Continue reading ‘Financial planning: The significance of diversification’ »

Were you ever taught the basics of investing money? No, nor was I. It seems that no one in my school or family considered it perhaps because working class people where I came from considered it a subject only for the rich. I mean you earn your weekly wage and pay your bills with it. That’s it.

Well here’s a short 101 on investing… actually most of us even on modest incomes can find things available these days to invest in.

The first thing is to manage your risk. There’s kind of a payoff here in that long term investments are safer but you’re in them for the long haul and need to be patient while you wait for them to mature or simply forget you even have them (probably the best). Continue reading ‘The Basics of Investing Money’ »

These Fundamentals Aren’t Technical

I believe in order to lay a solid foundation for successful trading, there are three basic fundamentals you must adhere to. The first is knowledge. There are only three things really that separate us from an expert. Training and experience comes after knowledge. Knowledge comes first, and expertise is accomplished through experience and constant training. So, how knowledgeable are you? Let us assume that you have some knowledge or you wouldn’t be researching the market. Do you know the difference between day trading and swing trading? To me there is a major difference. Many so-called experts lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last. Knowing these subtle nuances will determine what kind of software you need.

Training encompasses a lot of different meanings. For our purposes I want to address technical analysis. I strongly feel any trader not taking advantage of the immense knowledge gained from technical charts is wasting time and money. Of course the fundamentals are important. They are much more important to the investor than the trader, however. A company’s financials don’t matter a great deal if you are planning on dumping the asset in a few minutes, a day, or a week. If there was any news about the company’s financials, believe me you would see it reflected on the technical charts.

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Now based upon the idea that my assumptions are accurate, and you are still with me, as far as software platforms, the following suggestions I strongly feel are necessary for any software to be useful.

1. It must be able to offer live streaming technical data. (Otherwise the program is merely educational)
2. The platform should defiantly include candlestick charting.
3. Visually it has to be large enough for all the data to be seen easily. (Many of the online brokerage’s technical data is to small to be useful)
4. It must be cost effective. (Most good systems can be purchased for between one to two hundred dollars)

Continue reading ‘Stock Market Trading Software…Up Or Down You Make Money’ »

Is it Day Trading Or Something Else?

There is this misconception about day trading that need to be cleared up. I ‘ve always thought of day trading as trades opened and closed in the same day. This may seem very obvious to most of us, however, there are so-called experts who lump all online traders into the bag of day trading. For the sophisticated observer it is plain to see the obvious differences. A day trader rides the rush of the asset, while a swing trader diagnosis the trends and holds onto it as long as the momentum last. So where does that leave you? I don’t know if the term “day trading” ever existed before we had access to the internet. My definition is that of a person who might be trading at the speed of light. You might laugh, but this is the life of a day trader. They do not care about fundamentals or even for that matter what the company does. They are riding the trend, up or down it doesn’t matter, as long as the asset is behaving the way they have projected it would. Day traders don’t care what markets they are in, be it stocks, options, currencies, or futures, they get in and out with a fast profit. A transaction may last a few minutes, an hour or so, but never more than that day. They also must adhere to a set of strict rules and regulations, including maintaining an account that doesn’t fall less than twenty-five thousand. For complete details on all the rules, please refer to the SEC web site.

So now you can determine what type of a trader you are thinking of pursuing. Are you a real day trader, or perhaps, swing trading is more what you were intending to research? Swing traders can do a limited amount of intra day trades without incurring any penalties. A great way to determine which strategy is best suited to your needs, is to first decide if your plan is to pursue this on a full time basis. You cannot be a day trader part time. With the proper software you can swing trade while keeping your job or enjoying your retirement. Swing trading is traditionally considered a low risk venture, especially for those who trade the large cap stocks. But is there really such a thing as low risk in these volatile times? Some experts will tell you that swing trading only works in a stable market, where the prices don’t fluctuate, but I feel that if you are properly trained you can make money no matter what the market is doing.

Continue reading ‘What To Know About Day Trading…Strategies That Ensure Profits’ »

Investing in stock is a wise yet risky venture. But what in life isn’t risky? This is one investment option that is unpredictable unlike real estate where you may not see your returns immediately but you have some assurance. The mistake many people make is that they want to buy stock for the short term and not the long term. In addition many people do not fully understand how the process works and how to “time” when to buy and sell. Once you master the art of knowing when to buy or sell you can make money.

It is important to do some research before you decide to invest in the stock exchange. If possible also make it your business to learn how to analyze stocks and the companies yourself. This will help you separate the stock that seem to be making money and those that actually are. When you are ready to invest, it is important to look for money that you can afford to have tied up in this venture. Continue reading ‘Finance Stock’ »