Stock picks and tips

Whether or not to make further investments into an ordinary IRA and tax-advantaged employer plan retirement accounts versus investing in “Roth” tax-advantaged employer plan and IRA personal accounts is sometimes a confusing decision.

The choice on the alternatives happens to be one of the very intricate choices of lifetime personal financial planning. A lot of financial factors can influence whether a regular tax-advantaged employer plan or IRA retirement account contribution versus a “Roth” tax-advantaged employer plan or IRA personal account contribution choice would be best.

In most circumstances making investments into a regular tax-advantaged employer plan or IRA retirement accounts is the better decision, when those contributions would be currently tax deductible.

The trade-offs are complex. Back-of-the-envelope calculations are not able to analyze all the important factors. The choice is not just about tax rate changes. Instead, the decision requires a comprehensive personal finance projection and analysis of an investor’s lifetime expenses, debts, net assets, and taxes.

(Look here for a sophisticated Roth retirement savings calculator that makes automatic this traditional IRA or tax-advantaged employer plan personal account versus contributing to “Roth” IRA or tax-advantaged employer plan retirement account financial projection.)

Whether a person will consume less and save enough to invest efficiently over their lives dominates the Roth retirement account versus the “currently tax deductible” traditional retirement account contribution decision.

When an investor cannot earn a sufficiently high income, does not save aggressively, does not strictly control investment costs, and/or does not accumulate a sufficiently substantial investment asset portfolio, then that person won’t be in high tax brackets when retired — whether or not state and federal tax have changed by retirement. If a family does not have sufficiently large assets and income in old age, then the current tax savings a person can get from picking a traditional retirement account contribution will tend to be more financially favorable over a life cycle.

Note: This discussion ONLY focuses on personal financial circumstances where somebody can choose between a “deductible against current income taxes” ordinary IRA or 401k additional investment versus a currently “not deductible against current income taxes” Roth IRA or 401k contribution. When you can’t take a current tax deduction but can make a Roth deposit, then the Roth contribution is better.

Sophisticated financial planning software with a Roth 401k calculator is vital to establish a thorough long-term money management strategy

In addition, to develop a fully comprehensive plan for your financial freedom demands that you use a high quality financial planning worksheet with a high quality investment software and a high quality home financial software.

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There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.

There’s also a lot of hype about how complicated it is to learn and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.

Lets cover a few of the basics about options and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.

When trading stocks your leverage is 1:1, if you go full out on margin you get get 1:2 leverage, but thats about it. With options it is not quite as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.

So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.

However the downside is that the reverse can happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk management plan is.

What I’ve just described is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much less dependance on getting the stock direction correct, but it still matters.

So should you learn to trade options?, in my opinion you should not do directional option trades until you become an expert stock trader 1st. This is because you must be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.

Whereas if you want to do non-directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.

Learning how to trade options is a very good skill to have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.

About a month ago Money Philosophy thought it would be a good time to get back into the stock market game after having been out of it for a few years. Money Philosophy was drawn to stocks such as GM & C which had taken a huge hit since the markets fell through the floor in September of 2008.

The C and GM picks were extremely successful and that got him into looking for other stocks like them. He came across a couple of penny stocks, LJPC and CTIC, that looked like they may break through with big gains. These stocks were bigger risks but they also appeared to have greater potential for reward.

That turned out to be correct as both CTIC and LJPC ended up being big winners. They were even bigger winners than GM & C.

He decided that he may actually be onto something with the way he was selecting these stocks so he decided to try to build a screener which would find more stock buys like them the moment before they were about to go up.

The reason I’m writing this article today is because his first stock buy with this new screener reached a high 20% above it’s open today and that certainly impressed the heck out of me. Obviously my imagination is off and running with the huge gains I could make by following his stock picks.

Of course I don’t expect every pick he or anyone else makes to have big gains. That’s impossible. It’s also important to remember that a gain isn’t “real” until you sell the stock. Figuring out when to get out is just as important as deciding when to get in. The cool thing is that he also makes a post on his blog (and on Twitter) when he sells his holdings.

He doesn’t share the precise way he screens for these stock picks as I guess he’s a little too selfish to share all of his secrets but he definitely shares more about what he’s actually doing on the market than most so called “gurus.”

He’s clear that he is definitely not giving investment advice never giving investment advice. And that’s an important thing to note. You should always do some of your own investigating before trading.

While I understand that it’s tempting buy The Day Trading Robot or The Forex Autopilot System, I honestly think I’ll have better gains just by following what he’s doing. And of course the really awesome thing is that it’s completely free.

Consider this: It’s definitely a good idea to make “fake trades” before you start making trades with real money when starting up a new strategy.

The market moves in steps that are definite, and the steps can be set apart and then studied, one at a time . Also, in a regular sequence these steps follow one another, and you can definite and analyze this sequence , by each piece .

If we understand the “type of trading” that is manifested by the market at a particular moment, we can find techniques and even tools that work the best for the particular activity going on in the market. Also, You’ll also find, if you know the type of previous trading , which is here now , and which is likely to follow , we’ll have an advantage over other traders. We can always choose the best tools , and we will be armed for what is going to occur. When it comes to trading, that is a big part of the battle.

Hard earned experience and a quality stock trading course has shown that our definitions of types of trading must be totally clear , or the analysis done will quickly become without value . We want definitions that can be applied to any market , and to any time-frame . We need definitions that are both simple and robust .

In this stock trading course series we will spend some future articles talking about the types of trading , and we will find that simple definitions combined with careful observations can lead us towards success.

We will start with a simple overview , so as we go on you can see how everything fits together . Then we’ll discuss a market that is showing a trend run. After we make our observation about trends , we will see how the Drummond Geometry tools combined with time period analysis will help us figure out where the trend will come from , and where it will end . We will also see how our monitoring tools , the envelope and the 1-1 zones , fit in with the collection that is growing of observations that are practical and theory. In the end we’ll show you some trading rules that can be helpful as you develop your own trading plan .

So, let’s get started ….

Two major divisions will be used to divide the activity of the market: trending markets and markets in congestion . We further divide congestion into congestion exit, entrance, and action . We’ll also add as the final market condition, trend reversal, giving us fiver different types of trading.

Trend definition is irrevocably attached with the position of the close of the bar also known as the Pldot . No other element is part of the trend definition, though there will be lots to say about the characteristics of various trends . This rule always defines a trend : If on one side of the Pldot there are three closes , it is a trend . This is the three-close rule , and no trends can occur without this rule . This will NOT happen. Next in our series on Stock Trading Course Congestion Entrance will be the topic .

That is the best of two articles looking at foreign exchange vs futures from the point of view of starting a retail stock worker. Forex trading has been having a good deal of excitement recently and even, due to Forex Signals Software like the Forex Profit Launcher and has fascinated several new merchants working from home, including various stock traders looking towards diversify to currency trading. However what specifically is a fx market? How does it work?

International Area

Trades currency is a worldwide affair. You are usually not limited that will dealing in the forex of your special country. Foreign exchange is an over-the-counter market in addition to there is simply no central trade or refreshing house. This gives the foreign exchange industry certain advantages complete the stock area for a retail investor.

Clear Economy

The use of a stock is affected through the performance of a company whose figures can be considered manipulated or known for you to insiders for a number of moment ahead of it is exposed publicly. Foreign currency prices, on the different hand, would be driven simply by the financial performance of an entire nation. This is now pretty much impossible towards manipulate in addition to considerably more transparent. This means that an explorer working from home, is derived the loop of individual financial post, is on a plenty more level playing field in to forex trading industry than in shares.

Liquidity

Daily transactions at the forex alternate market total roughly $4 trillion per day. That is more than the total of all generally the world’s stock deals added collectively. What lies more, there happen to be only a restrained number of potential foreign money pairs compared with in all probability hundreds of thousands of company futures. According to therefore a lot revenue concentrated in such a reduced arena, amount manipulation by means of the greater players is much a lesser amount of of a problem, in case it we know at all.

As you can still consider, such great liquidity also means that this can be very improbable that a control in a few in the major currency frames would own difficulty receiving matched, still in harmful situations. This is exactly a large profit, chiefly if you are usually investing large positions.

Refinement

So while forex trading system has many benefits, the reason why is it that is’nt been popular right up until recently? The answer is that the market itself merely began for genuine by the 1970s if exchange rates stopped being permanently pegged through the ‘gold standard’ in addition to were allowed toward fluctuate.

Possibly then, it absolutely was just the banks, hedge funds etc who were involved in trading on the currency industry at very first. There is never history of personal buyers having on the phone to a merchant to trade in currency as it has in carries several. It is dangerous because it was not until eventually the advancement of the web that the forex market opened up and forex vs stocks became a true options for retail traders.

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Question is can you turn $200 into $1 Million. The answer is yes, it is very much possible to turn $200 into $1 Million by investing in scientifically selected stocks.

Here’s how an ordinary investor can cash on huge profits! You must be thinking how do you find such stocks that can make you rich. You can do this by following a 4 step investing system. Get these three FREE stock investing reports and discover a stock trading course that can make you rich in 2010. Turn $200 into $100K in just five months with this penny stock trading system. Discover a forex robot that doubled money every single month and made 2.270.30% ROI in 2009 starting from 30th March 2009!

First, you need to know the internal strength of the stock market. What I mean by the internal strength of the stock market is by the fact that many stock exchanges have a stock index associated with it. These stock indexes are used to measure the market sentiment. But the actual truth is the fact these stock indexes are mostly value weighted or price weighted and based on some few hundred stocks. Out of these few hundred stocks, only a few dozen dominate these stock indexes.

Let’s make it clear with an example, Dow Jone Industrial Average (DJIA) is a price weighted stock index based on only 30 stocks. It only shows the performance of these 30 stocks not the New York Stock Exchange, but you will still hear frequently on CNBC and other financial news channels, analyst talking about DJIA going up or down.

S&P 500 Stock Index is considered to be a barometer of the US Economy. It is value weighted and based on 500 stocks listed on NYSE, NASDAQ, AMEX and other US Stock Exchanges. You must be thinking that S&P 500 is a good measure of the US market sentiment. To tell you the truth it’s not either. It is heavily influenced by the 50 stocks in it and half of it’s movement is just based on these 50 stocks.

So what to do then! What you need is how to measure the actual strength or weaknesess of the stock market. Then drill it down to weak or strong industry sectors. After that you further need to drill it down to the individual stocks that have the highest potential of giving you maximum returns.

Once, you have identified the super stocks, you can build your portfolio in such a manner that your risk is hedged and your profits are maximized. So if you have a system that can give you the best stocks and you know how to build your portfolio with those stocks, you can get incredibly rich without ever doing anything. This is the essence of investing! Follow this system and you can turn $200 into $1 Million over and over again!

It must be pointed out that as more people are involved in the market when they try charting out predicatively all the actions, the accumulative effect of those similar actions self-creates price fluctuations which might destroy much of the validity of all chart techniques .

If you are involved in charting, you’re not alone. There are many others that are charting all the same things you chart . So, when there’s the signal of a major move , you are liable to have a lot of the same orders as yours hitting the trading pits . In particular , having many chartists place their stop loss orders at points that are identical , can create false formations to occur. Charting is inevitably to some extent an inexact science , even for people who have a stock technical analysis course to fall back on .

It is a matter of choice about the scale your chart is on and whether the mid-price or closing price is used . When plotting movement of prices , there can be a distortion to either. The latter is the most often used , but as it comes at the end of the day profit taking is often associated with it and more. Furthermore , events that are dynamic or unforeseeable can cause mayhem with the charts .

Charting is to some extent a lazy approach . The sheet of paper with a neat looks appeals to many who are weaker. Those who don’t have time or liking to go further . Many like to believe that it’s a better idea to look at all the variations. As technical analysis spreads and many begin taking a stock technical analysis course, it will commence to defeat its own purpose , especially in a market that is “thin” .

It’s imperative to understand that if enough traders are using the usual chart interpretations to trade a given commodity , it can sway the commodity’s price in the track the prices are expected to move by chartists . Chart followers can prove their own theories right . Pure chartists never want to know all about the fundamentals, a trader that is wise will try to use both strategies for futures trading . No chart formation is completely reliable . One must seek confirmation from other indicators , such as production changes each year, business cycle variation, and changes in quantifiable sums like commodity prices , reduce to one figure in summary to register all the diverse activities .

There are many times a commodity ends up going contrary to considerations that are fundamental due to technical and other factors . To become successful chartists must be ready to do a lot of work and study and develop experience . This is an art form because of its skill and the finesse and experience of the technician . These are no doubt the essentials needed to trade profitably. Checking and re-checking must be done by the technician.

Another problem from charting stems from the belief that although a commodity situation and its facts are know to a speculator these facts are also known by large trading houses and other professionals .

In reality, however, certain events can occur unexpectedly and affect all traders . Prices may not have completely discounted these occurrences , which can catch chartists off guard and little can be done to protect a position in such a situation except being alert to catch these trend changes quickly and to act fast. ( Think about a hurricane that takes all the oranges out to sea).

Technicians are well know for one week making huge profits and enormous losses the next . The facts are that prices aren’t dictated by past performance when fluctuating, although you do get some idea on a day to day basis with P&L charting .

Most systems are indictable when it comes to advisability because a track record is lacking. Each approach has to be looked at as unsuccessful until it has proved otherwise . To be perfectly candid , there is very little objective explicit evidence available to support chart analysis and it’s common rules . Trends are anticipated by various chartists . This is a falsehood . You can’t recognize or even assume a non-existent trend . In attempting to utilize a trend following method , you have to wait until the demonstration of the trend has occurred. Even then, the motto a chartist needs to have is that a trend continues until it stops . Again , he tries to figure out the trend reversal direction as it happens . It doesn’t work . You can only realize an evolving trend as it happens. Trend reversals or trends can’t even be anticipated by most technical systems either .

When a move occurs that wasn’t expected, starting all over is what happens to mot technicians. After dealing with losses again and again, many traders have abandoned their technical studies because they never work . Since it occurs fairly often , it offers more proof that short cuts don’t exist to trading success and nothing substitutes for hard work, knowledge, and good experience .

All that is known is that there will be fluctuation of prices, but we don’t know how much they’ll fluctuate .

You’re only protected in congestion areas because the congestion area defines you’re projection of losses . In congestions, prices fluctuate . Any technical approach that attempts to analyze congestion areas , and when a trading method evolves , will provide the broker and trader huge profits , since commodity prices happen to be in congestion , one form or another 85 % of the time .

The main problem that novices and professionals both deal with is when they should get out of and get into the market . Because of this , a stock technical analysis course will help you learn that technical analysis has to a large degree encompass the short term price fluctuations ( Once again pointing to P&L charting).

Unfortunately, some people don’t begin planning their retirements soon enough, nor do they fully grasp the principles of growing retirement income. This is due in part to the fact that most people don’t have access to reputable financial goals counseling. There’s actually plenty of good free investment advice available, but you usually have to pay if you want the information customized to your needs. As a result, some people try to fend for themselves, only to discover too late that they won’t have what they need to retire. That’s why it’s a good idea to use a financial professional to help you plan your retirement. And because it’s your money, you owe it to yourself to do your homework first so you can ask intelligent questions questions of the financial advisor and understand the answers. Learning the financial ropes a bit in advance can also lower the financial consultant’s bill.

Here are some of the subjects you should investigate before you pay someone for financial advice:

How life insurance impacts your financial bottom line
Not everyone needs information on term life ins. and other forms of insurance protection because they don’t have anyone depending on them and causing them to need life insurance. But those who do should make sure they understand what they’re buying. Knowing the difference between universal life, term life and variable universal life (VUL) will allow you to pick the option best for you. And I’ll clue you into one fact right from the start: cash value policies, such as whole life and universal life usually provide the worst return on investment and will often leave your loved ones with inadequate coverage. So you should bear that in mind when you talk to a financial consultant.

The difference between load and no-load mutual funds
Some financial consultants get commissions on sales instead of an hourly rate, so they only make money if they steer you toward “loaded” funds (those that have service fees). This is why it’s sometimes better to pay by the hour for financial consulting, so you can get objective advice. Once you understand the financial difference between no-load and loaded funds, you’ll see why.

Have an idea when you will retire and how much you’ll need to save
It’s a good idea to know about when you’ll retire and how much money it will take to maintain your lifestyle before you meet with a financial planner. That will help him or her to work with you to create a plan to get you where you need to go.

Once you’ve done the homework above, there’s just one more thing to do: ask the people you know if they can recommend someone before you pick a financial consultant to work with. Once you have that information, see how well that person has done with his own finances. If they haven’t been able to do it for themselves, there’s no way they’ll be able to do it for you!

One of the most popular technical analysis indicators is the simple moving average also known as SMA, if you learn how to use these correctly they can be a very useful tool to help you to make good trading decisions.

The 50 simple moving average, or 50 SMA, is simply the sum of the last 50 values for each period, divided by 50, this is a moving window, as time moves on so does the average. Notice that I used the word period because this indicator works on any time period in exactly the same way.

It can be used on monthly, weekly, daily, hourly, 30 minutes, 10 minute and on whatever time period you want to monitor and trade. Although the SMA is the most commonly used there is also the exponential moving average or EMA. This is a weighted version of the formula using the mathematical exponent function to give more weight to the more recent values, this has the effect of making it a much faster average that many traders like.

The truth is that it probably does not matter if you used the SMA or the EMA, what does matter however is that you use one or the other and then be very consistent with it. Do not switch between them, it is more important that you trust your chosen indicator then a slight difference in its value.

The simple moving average is primarily used to determine what the current trend of the stock is, depending on the value used it could be a short term, medium term or long term trend. An important point to note is that moving averages are most useful when the stock is trending, if the moving average is flat, i.e. horizontal on your chart it can become very choppy, this is a good time to not trade.

The general rule is that if the chart price is above the SMA the trend is up, if below the trend is down. This is very important to know because it forms the basics of trend trading and trading with the trend.

For the short term trend many traders like using a 5-8 SMA or EMA, here is a trading secret, never trade again the direction of the short term tend, actually this is really just common sense when you think about it.

Moving averages often act as support or resistance, many traders use the 15, 21 or 30 SMA for this purpose.

There are a number of other very important moving averages that you need to know about, these are the 50, 100 and 200 SMA, and this mainly applies to the daily and weekly charts. A lot of big players in the markets, like the the mutual funds, investment banks etc use the 50 and 200 SMA as support and resistance, if they decide to buy or sell based on these you need to follow suite, the 100 to a lesser extent. These are very useful averages to watch if you trade EFT’s like an Oil ETF.

A useful tip is that when a stock breaks through one moving average it will often move all the way to the next, for example, if a stock breaks the 30 it may move to the 50 before finding some support or resistance.

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Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These indexes generally only contain major blue chip  stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to quickly buy and sell at the price you want without having a delay. You will also get a lower spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered highly liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to aviod stocks that are bellow as this usually means the company is in trouble, although with the bear market of 2008/9 there have been a lot of good stocks at bargin prices between and . Avoid buying a stock that is below at anytime.

Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock.

Be very cautious about buying a stock just before it’s earnings release, stocks often drop significantly if you come out with a poor report. Earnings releases are 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

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