Leadership stocks and lagging stocks are two things you can look at when trading the market. These are stocks that are performing above average and below average.
A leadership stock is a stock that has done better then the market average for a set period of time. This period depends on your ... Views: 1016
What drives stock prices? It seems like there is some confusion about this. Some people might be shocked when they see a stock fall on great earnings, or vice versa.
That is because stock prices are not directly linked to the company’s profit. If a company makes a 20% return on their ... Views: 1011
Chart patterns give you buy and sell signals that can make you profits and help you limit your losses in the stock market. But what makes them work so well?
Chart patterns work because of psychology. Take the rectangular patterns, this pattern occurs when a stock is bouncing back and forth ... Views: 1007
Starting to invest when you are really young has many great benefits. In fact it is one of the wisest things you can do from a financial standpoint.
So why is it so important?
1. Time
The younger you start to invest the more time you will have to make money in the stock market. If ... Views: 997
It is no secret that dividend paying stocks are a very popular investment. And there is a good reason for that. There are 3 major benefits that you get any time you are investing in dividend paying stocks.
1. They don’t have to go up
Dividend stocks do not have to go up in order for you ... Views: 991
There are 3 ways that you can make money from a stock that you own, or an investment that you want to get into. Ideally you want to be making money all 3 ways every time you enter an investment.
The 3 ways are:
1. Dividends.
Some stocks offer a dividend, which means they actually pay you ... Views: 990
Keeping your losses small in the stock market lets you keep money in your account when you are wrong. Getting out of bad trades lets you live to fight another day.
So how do you go about cutting your losses? Here are three strategies that are very helpful.
1. Not 100% in one trade
I ... Views: 979
Stock splits occur when the price of the stock lowers and investors get more shares to make up for the lowered price. So do they actually affect how strong a stock will be in the future?
Most investors and traders believe that splits will in fact cause a stock to outperform the rest of the ... Views: 959
Selling a put can be a very effective way to increase your profit in the stock market. It helps to bring some income to the account while at the same time letting you get into longer term positions.
The pros to this strategy are
1. You Get Money Upfront
The best thing about deciding to ... Views: 946
Some people seem to believe that the professional traders got that way by not being wrong. That they can somehow pick a stock that is going to shoot up 200% in the next couple of months. This is what leads a lot of people to just buy and hope for the best.
Well, if everyone just bought and ... Views: 940
Too many people try to jump into an option without having a good understanding of what it actually is. Occasionally there will be times when the stock goes up yet the call option that they bought didn’t go up with it, or even went down.
Why does this happen? Well there are a number of ... Views: 940
There seems to be some confusion whether or not the stock market is actually tradable. Everyone knows about buy and hold, but when they hear the words short term trading it is like taboo.
The short answer is yes, the markets are tradable. It is possible to make a fantastic return from the ... Views: 935
One great strategy is selling covered calls. This strategy is pretty simple, but sometimes the simple strategy is the best.
When you sell a call on a stock that you already own, you are giving someone else the right to buy that stock from you at a given strike price. For this right you are ... Views: 923
Selling covered calls is a very effective strategy in the stock market. It lets you make continuous cash flow from a stock that you already own and can have a huge effect on your annual return. So how do you set up a covered call trade?
There are three steps you have to take.
1. Find A ... Views: 915
One way to increase your returns in the stock market is to sell options n stocks that you already own. This can also give you another way to receive a monthly income from your positions.
When you sell a call you receive money up front. The only downside is that you give someone else the ... Views: 915
I read an article that was saying one of the most important things to know about the stock market is when to go all in. Well I kind of agree, you got to know that there is never a good time to go all in.
If you ever watch the world series of poker you will find that it is a very similar game ... Views: 903
3x ETFs can be a great way to either increase your profits or increase your losses in the stock market. Before you trade them make sure you are prepared.
If you trade them consider the following.
1. Not for long term
Tipple leveraged ETFs are not for long term investing no matter which way ... Views: 901
Covered Calls can be a great way to collect premium from the stock market month after month. So how do you go about entering one? You have to follow these steps.
1. Find A Stock
Of course the first thing you want to do is to find a stock, you can’t enter a trade without it. The stock that ... Views: 873
Whenever you enter the stock market it is a good idea to have two targets. Each one of these is critical to being successful in a given trade.
The first target someone should have is where you believe the stock will go. You do not want to just blindly buy a stock and hope that it works out ... Views: 872
Most people when they sell bear call spreads intend to hold onto them until they expire. If they do and they profit you can realize your maximum gain. You also do not have to pay commissions for exiting your spread if they just expire.
But in certain conditions it is a good idea to exit a ... Views: 871
I don’t know what all the fuss is about penny stocks. They take your money go to zero and everyone seems to think that is a great deal. Not me, there are 3 reasons why I will never trade penny stocks.
1. They are Penny Stocks For A Reason
A company doesn’t go from $10 to $.10 unless ... Views: 869
Options can be a powerful wealth building tool if used properly. But one big mistake you can make when trading stock options is buying the wrong strike price. This can work against you in so many ways. So let’s examine some strike prices and how they can help you.
1. In the Money
An in the ... Views: 869
Gold is considered to be a great place to put your money in order to guard against inflation. It is a shiny metal that is deemed valuable, but why does it work to help your money keeps its buying power, even when inflation hits?
Well gold is a good hedge because
1. It is Valuable
Gold is a ... Views: 862
Stop limit orders can be very powerful if you use them correctly. However there are certain times when you should just not use stop limit orders.
Before we go into when you should not place stop limit orders lets go into what they are first. When you set a stop limit order you are attempting ... Views: 860
Should everyone learn stock trading? It can be very profitable, but that doesn’t mean that everyone should take part. Some people will probably be better off as far away from the stock market as possible. There are three traits that you must have if you want to succeed as a stock ... Views: 858
When you hear the words stock options you probably think something like risky or huge losses. But if done correctly trading options can be profitable and help you to experience limited losses.
Most people who trade options will probably end up going bankrupt, and why is that? It is because ... Views: 857
Selling covered calls is a great way to make money in the stock market. But as an exit strategy it has it’s ups and downs.
First let’s look at the benefits of selling covered calls as an exit strategy.
1. It allows you to make consistent cash flow
If you are constantly selling covered calls ... Views: 856
Buying a down trending stock to sell covered calls on can turn into a very bad idea very fast. Here are 3 reasons why selling covered calls on a downward moving stock can become a black hole in your account.
1. The Premium does not Make up for The Loss
The part that everyone loves about ... Views: 854
Selling puts can be a wonderful strategy at times. And it definitely can build up after you have been doing it for a long while.
Most new traders want to make the big returns. They want to buy that option that is going to shoot up 300% in 2 days. While that can happen every once and a ... Views: 850
Stock market crashes aren’t always bad. In fact sometimes they can be unbelievable profitable. During a big crash there is the opportunity to make a large amount of money in a short period of time, if you play it right.
So what do you need to do to play a market crash successfully? Well ... Views: 849
When trading in the stock market one of the most important things that you can have is patients. You want to be able to wait until the time is just right before you get in.
Anyone can create their own trading rules but actually following those rules is what sets apart the people who are ... Views: 849
Absolutely not, in fact there are times when holding cash is probably the smartest thing you can do. I know no one likes to hear it, but sometimes you have to stay out of the market at least for a little while.
Here are a few reasons why it is important to hold cash when times are ... Views: 848
Trend trading can be an extremely powerful way of making money in the stock market. It has simple bases behind it too, catch a stock that is trending up and ride it until it starts to go down. What can be a simpler trading approach?
Trend trading is probably the best approach for trading in ... Views: 842
The stock market has been around for centuries, but why? Why does it help the economy? Does it help in any way? The answer is yes.
The stock market was created to help 2 people.
1. Business owners
Say you open up a new shop that cost you $1,000,000 after a couple years your business grows ... Views: 837
Selling naked puts is a way for you to get a steady stream of cash flow in the stock market. But how good of a strategy is it exactly?
When you sell a naked put what you are doing is selling someone else the right to sell a stock to you at a set price in the future. So if you sell a $50 put ... Views: 834
Protective puts and stop orders both allow you to limit your loss in the stock market. Each has its own advantages and disadvantages.
So say we bought the stock at $54 and want to limit our losses to $4. We could do this by buying the $50 put for $8. Now if the stock goes down the most we ... Views: 824
Letting your winners ride is a stock market strategy that we can all learn from. This simple way of thinking has proven its effectiveness time and time again in the stock market.
Many trading strategies out there call for you setting a profit target to meet. Once it meets that target then ... Views: 823
It is common to want to pick the bottom of a stock in order to get in before a trend starts. But that does not make it the most profitable route to go. It is a far better strategy to stick with the trend of a stock until it ends for the following reasons.
1. High probability
If a stock ... Views: 821
In a situation like we have now in the market there are many stocks that are way undervalued. You may be looking into buying some of these undervalued stocks and waiting for the market to recover. If so selling out of the money covered calls on those stocks is an excellent way to generate ... Views: 813
Unsystematic risk is the risk you take on when investing in a stock. Basically it is the risk of some new announcements, or earnings reports coming out that could affect the price of the stock.
So if you buy a stock thinking it was a good buy and all of a sudden the company comes out with ... Views: 812
One very effective strategy of getting into a strong stock is to not just go right out and buy the stock, but to sell a put on the stock instead. This does give you some advantages that you would not have had you simply entered the stock.
The advantages are.
1. Money Up Front
One of the ... Views: 809
If I only had a small amount of money, say $2,000 to invest in the stock market what strategy would I use to make a good return while at the same time limiting risk? The answer seems pretty simple when I think about it. I would still be trend trading because it offers you such a great ... Views: 799
Buying options can be a very profitable strategy, but it can also be a very risky strategy. Trade it correctly and you can make unbelievable gains. Trade it incorrectly and it can take your account to $0 faster than you would have even imagined possible.
I like to trade options every now ... Views: 799
Put options are a great way to make money as the stock market goes down. There are a number of benefits to trading them, and when the markets are falling there is no faster way to profit.
Here are some reasons that Put options can be fun to trade as stocks fall.
1. It allows you to have some ... Views: 799
Stock options hold many advantages over just holding a stock. This ranges from higher leverage to managing risk. Below are all the ways options can be a better way to go.
1. Higher Return
Options offer a higher return then holding the stock. Even a small move in the stock can give you a huge ... Views: 797
It is probably one of the best times to invest for the long term. Almost every stock is undervalued and has seemed to have stopped going up. So a buy and hold strategy might not be that bad of an idea.
The reasons buying and holding could have the potential to be very profitable ... Views: 796
Covered calls can be a very profitable strategy. That has made it one of the most used strategies in the stock market for both traders and investors. But what does it offer that makes it such a workable approach?
1. Money Now
You make money the second you enter a covered calls trade. It ... Views: 788
Sideways markets are always harder to trade then trending markets. Trying to hit every swing can be difficult for a trader. Instead of trying to predict the movements you can make money in a sideways market by using a strategy called an iron condor.
This is how it works. Say a stock is ... Views: 785
The Markets have been falling fast lately and most people either believe it is the end of the world or the markets are at a bottom. Both conclusions are probably wrong.
First of all it is not the end of the world. Stocks go up and down that’s what they do. That said, even though the markets ... Views: 778
Most people decide that the stock market is just too risky for them to put their hard earned money into. I know many savers out there who would rather put their money into a savings account then into the markets.
This way they can go for the sure thing, the government insured return, but what ... Views: 778