Typically, if something wrong or good is happening to a corporation, that will be reflected in the price of its stock (ex. the boom in Apple’s stock because of all its sales). Therefore, if the price is falling, probably you will see that the profits of the stock are shrinking. Moreover, it is very hard for someone that is not an expert to adopt the fundamentalist methodology: it is difficult to apprehend the real value of a corporation, in order to be able to divide that value by the number of shares and see if the value is higher than the price of the share.

The technical analyst just looks to the past moves of the stock in order to guess future moves. For that end, he uses trends lines, support and resistance lines, median lines, some technical indicators (ex. RSI, stochastic, etc.) and some chart patterns. He traces lines of support between the lower prices (using charts software, like Metastock), in order to find a value where in the past the price of the stock stopped falling and started going up. If a stock just fell to a price that is on a support line, that can be a good moment to buy the stock. On the other hand, if the price has been going up and hits a value that matches a resistance line (price at which, in the past, the selling pressure made the price go down), it will be time to sell. Accordingly, the first technical rule is: buy stocks on its support lines and sell them when they hit a resistance line.

If the stock is in a bullish trend, you probably will see it hit the resistance line, go down a little, go up again against the resistance line and, after some hesitation, to break it. On that moment, the past resistance line is converted on a support line. Even if the stock, after going up, starts coming down, it probably will not go under the value of the former resistance line, present support line. If that happens, we are in front of a false break-up of the resistance line. Usually, you have to wait at least 48 hours to be sure that the resistance line was broken. The fact that the movement up was based on a very high volume of shares bought/sold is a good signal. Another rule is to pick the bullish stocks, the ones that are breaking resistance lines, and avoid the ones (bearish stocks) that are breaking support lines. Do not think that these are cheap stocks, good to buy.

In the stock market, a stock is always cheap when its price is going up and expensive when it is going down. In the first case, you will make a profit (so it was cheap); in the second, you will loose money, therefore, the stock was expensive. Similar rules apply to chart patterns (ex. heads and shoulders; double bottom; flags and pennants; triangles, etc.). You have to identify the pattern (search for them and never buy a stock before studying the basic ones) and respect its rules.

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Everyone would agree that investing in the stock market is not child’s play. For a person to make a consistent as well as a sizable profit in the market would requires a person to have years of stock picking experience to be able to feel right about their stock selections.

The reasons why some people are making bad choices of choosing a stock, is because of bad timing and of-course bad luck. But, it would take them some consistently messed up thinking an an approach that would lead into picking a stock broker who recommends stocks which end up suffering bankruptcy. The reason for these stock brokers in losing their money is mostly because of the lack of stock research when they are investing in a company’s stock. Another reason for this is that their investing is based on a totally baseless speculation.

Even after the years of worldwide economics research as well as thousands of books that are being written as to how to they could identify the best stocks for them to invest in, we are none the wiser and there appears to be few people who have the perfect formula to be able to select the best stocks for a person to invest in.

The reason for this is that to perform a good job in stock picking, you need to be willing to think outside of the box.  You need to be able to determine those stocks which have opportunities to rise in value before anyone else does.  This means doing some homework and being willing to take some risks.  The risks are not unfounded gambling but are based on true research into what makes a winning stock and then finding it.

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Do you know what investment is? What makes an investment good? First, you have to clearly define investment. It means different things for different people. Investing is when you use a resource in the attempt to get a return over time. You use your time or money right now in order to get more later, is the basic story. In order to tell the difference, research as much as you can into the art of investing. Keep your emotions under control, because logic will help you make money whereas using fear and panic will not.

Do not simply follow the actions of other investors, because oftentimes by the time you hear of a good investment or a hot tip, the good deal is already gone. Once everyone starts to make money doing something, it no longer becomes useful. Like leading the lambs to the slaughter, your money will simply disappear if you follow like a sheep to other’s investment advice. Only you can tell the market trends and find out for yourself what you need to find.

Some examples of questions to ask yourself are “How much experience do the runners of the company have? How long has the company been in business? Can their product provide a service to people? What is the company’s mission plan? Does the company care more about their shareholders or about pleasing the customers?” These are only a few examples but the more you can find out about a company, the more likely it is to stand the test of time. If the company focuses only on money or is run by incompetant and inexperienced people, don’t invest in the company. It will be a dud. It may be worth lots of money now but the prices will fall very shortly once the company catches up. If you focus too hard on the dollars, you may not be able to see what your brain and logic is telling you. Don’t be a gambler, be an intelligence investor. Increase your financial intelligence, learn to invest, and it will pay off for you in spades.

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Growth Investing Defined

When we talk about growth, we are not just talking about any positive % return.  The reason why 2-3% return doesn’t work, even though it is a positive number and technically your money is growing, is because of inflation.  If there is 2-3% inflation every year, than you aren’t making much money.  So even for nominal growth in your investment portfolio, you need more than a 4% growth to make it ‘grow’.

Growth is often paired agains value investing on the other side.  This investing style looks for fundamentally good companies with good business models and financials.  It looks for growth, but in solid companies that are undervalued by the market.

Small Cap Stocks

One of the best ways to get good growth is investing in small cap stocks.  Small caps have room to grow unlike large cap companies like GE or Wal-mart.  Think of small caps as getting in on the ground floor of an investment opportunity.

Small cap stocks are companies that have a market cap of between $300 million and $2 billion.  The market cap is calculated by taking the number of outstanding shares and the share price and multiplying them together.

Small Cap Funds

If you don’t want to go out and look for these individual stocks, you can invest in small cap funds that use this strategy.  If you go the ETF route like investing in the iShares Russell 2000 index fund ETF, it will be relatively cheap compared to a mutual fund and you won’t have to do the stock picking yourself.

If you want to go even further, there are mutual funds and ETFs that have an explicitly aggressive growth investment strategy.  These funds will be very volatile so you need to be willing to stay for the long haul to smooth out it’s dips.

Emerging Markets

If you want to go even further than that, you can invest in small caps in the emerging markets.  This sector of the global economy is growing at a faster rate than the developing world’s economies.  That makes it a tide that is raising all ships.  Likewise, small caps will have more potential for faster and more growth than large cap stocks in this sector.

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Most businesses, small and large, have a 401k plan. If you are self employed, you can set up an individual 401k fund so that you too can save for retirement. It is a simple process to begin. You fill out a form and choose which funds to use for your investing. There are bookshelves devoted to helping you decide how to invest your money but what it all comes down to is time and risk. How much time you have left in your working life and how much risk you are willing to tolerate. The way the stock market works is that you invest in funds and over time, those funds grow. The funds grow because the price of the stocks goes up and at the same time, you are constantly adding to the fund with your contributions.

How quickly those funds grow and to what extent depends on your tolerance for risk. On the one hand, a volatile stock, like gold, could (in the short term) yield a return of ten fold. You invest a thousand dollars and in a short time, you have made ten thousand. But, timing when to sell that stock is the key — gold is notorious for ebbing, so you need to get out of the stock before it falls. Most people do not have the time or talent to play the market in this way. Better to invest in mutual funds, which by their very nature, are less risky because they are made up of many kinds of stocks.

When you leave one job for another, you do not want to lose your hard work. That is where the 401k rollover comes in. By a simple process, you can bring your 401k plan with you to the new job. Many companies offer the 401k to new employees after 90 days or, sometimes, 6 months. When the time comes, you simply fill out the form and send it to your old employer. It sometimes takes weeks or months for the rollover to execute. Generally the fund manager is only going to calculate matching funds twice a year and so the rollover 401k happens during that time. Luckily, during this lull time, your account is still growing; it is just not getting any fresh influx of money from you.

The key to good retirement planning is to have a good grasp of how much money you spend right now (so that you can wisely choose how much to contribute to the 401k plan) and how much you will need for retirement. Once you have these figures nailed down, the hard part is done. Then you let time and the market work their magic.

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After testing some lows in 2010, the Dow seems to want to go up again and apparently, people don’t want to get left behind. They might have been watching AAPL stock go way up or they might be aware of the year end Santa Claus rally that often happens but whatever the reason, there are a lot of people interested in buying stocks online right now.

Sometimes the stock market goes up even though the economy is bad and that is called the wall of worry. When market conditions and news stories are all negative, you would think people would be more apt to sell stocks than buy. But occasionally people continue to buy and the market goes up when you think that everything indicates it should be going down. Right now is one of those times that the market might be climbing the wall of worry.

With the November elections just weeks away, people might be counting on Republicans winning and taking over more seats in Congress. Republicans are seen as more business friendly than Democrats and a win by them would be good for the market. People might be looking for the best stocks to buy right now in anticipation of that happening.

There has been a lot of money on the sidelines for quite some time and people have been waiting for an opportunity to buy. But on the surface this doesn’t seem like a great opportunity as the economy is still awful and unemployment remains high. Why then does the market keep bouncing back up and appearing like it want’s to go higher?

It might just be a case that people sense things aren’t quite as bad as the news stories say they are and they don’t want to miss out if it does continue to go up. People hate to miss the chance to make money and they hate being on the sidelines while the market rises. Greed is a powerful force in our lives and greed does play a factor in stocks. It is often why the market (and particular stocks) get bid up higher than it should before it comes crashing down. Lets hope that greed isn’t playing a part in the stock market moving higher right here and that it is just a case of the economy being better than it seems.

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There are terms that we often hear on the news or read on news articles that has something to do with the stock market. Although we often encounter these jargons, we may still have difficulty in determining the meanings of these. But thanks to books like stock market for dummies, which may also referred to as stock investing for dummies, understanding these terms have become a relatively easy thing to do.

The words below are some of the most commonly used terms in the stock market industry. Although some of us are already knowledgeable of these jargons, many people have only vague definitions of these terms; therefore, it is important to learn the exact meanings of these rather basic stock market terms.

• Share – refers to the portion of the company’s stock, basically a small part, in which the company’s stock is divided.
• Stock – refers to the total quantity of shares issued by a company or corporation. Specifically, it refers to the smallest unit of ownership of a company.
• Shareholder – also referred to as stockholder, it refers to an individual who owns one or more shares of the company’s stocks.
• Stockbroker – refers to the person who buys and sells stocks, shares, and other securities for the clients
• Ask – in stock market for dummies guide, it refers to the lowest value of a stock that the seller will accept in selling the stock
• Bid –refers to the highest value of a stock that the buyer is willing to pay
• Bear – is an individual who thinks that the stock market is slowing down
• Bull – is an individual who thinks that the stock market is thriving
• Blue Chip – in stock trading for dummies books, it refers to a high-profile company that has a track record of strong revenues and profits.

Aside from these basic terms, there are many more common terms in the stock market for dummies. Furthermore, you can also find more helpful tips regarding investing and other important things involving the stock market. Indeed, a stock market for dummies reference guide is very helpful for future investors and ordinary people alike. What are you waiting for? Get a jump start and start investing today!

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When you buy an option, you are not buying anything tangible. You are buying the right to buy something at an agreed upon price. The same goes for selling options. For example, you could buy the right to own 100 shares of IBM at $128.00 a share. If the price of the stock goes to $132.00, you can still buy it at $128.00 because you own the option to do so. This transaction is called a call option. If you believe the stock is going down in price, you could buy what is called a put option. A put option can be used to protect the value of a stock you already own. Options are often used in this way to hedge risk and exposure in the stock market.

An options price moves is the direction of the stock price, but usually at a higher percentage. The price is affected by many things such as time value. Options expire on the third Friday of the month for which they were purchased. If you bought a December call option, the option would expire on the third Friday of December. As the option gets closer to the expiration date, the value starts going down. If you do not exercise the option or sell it by the expiration date, the option expires worthless and you will lose your initial investment. Other factors affecting the price are volatility of the stock and intrinsic value that has to do with how close the current price is to the option price.

These are some of the basics to understanding options. If you are considering trading options, you should plan to do a considerable amount of research before risking money in the market. When approached correctly, options trading can be very rewarding.

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What is a Penny Stock?
A Penny Stock is a stock whose shares trade for less than $5. These stocks are a bit risky to invest in, but also have the potential to generate huge gains.

What are some of the Dangers?
One of the greatest dangers of penny stocks is their lack of visibility. Because most of these companies are newly established or small, there is less information about them. This fact requires you to make decisions based on limited information compared to what is available for larger, more established companies in major stock markets. Another great risk is that these stocks can sometimes trade slowly from low liquidity, making it difficult to cash out on your investment.

What are the positives?
By its nature, a penny stock has a lot of potential. That is to say, it has a lot of potential to move either up, down or disappear completely. That being said, there is much more potential for growth than there is for loss. As a result, a good penny stock pick can reap huge returns and give a nice boost to your investment portfolio.

What else should I keep in mind?
Even some of the top penny stocks to buy are not quick, easy money. Despite what anybody tells you, these stocks require great care and educated investment. You should take into account that these shares trade slower than larger shares. Many of the companies selling these penny stocks have high debt loads and are selling stocks to reinvest into the growth of their companies.

Some of this may sound scary. However, with the correct knowledge and prudence, penny stocks can not only be profitable but enjoyable to trade. There is a certain rush that you get from trading in a volatile environment. You also have the opportunity to be part of a someday great company. Many of our largest technology firms were funded in this way. With the correct penny stock guide, you could be well on your way to taking part in the next big venture.

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There is a popular saying among rich people and that it isn’t about the money they make but it’s more about the money they keep. This is actually profound advice if you consider that so many people invest in the stock market hoping for fast money without any savings to their name. Having money in the bank will definitely help in influencing you NOT to sell in rough times.

When people are investing, they should think about investing for the future with long-term stock picks. This is for a few reasons. Hopefully, you’re able to spot some growth stock picks that will be worth more in the future and it takes time for a company to build. Given the time you need to wait, they should be selling at a value price.

Other reasons to invest in the long term include just not triggering so many commission fees with buying and selling transactions like a lot of traders do. This eats away at your initial investment and like stated above, being rich is about the money you get to keep. While day trading might seem glamorous and there’s no doubt that you can make a lot of money fast, you can also lose it as quickly as the money came in.

One of the rules of investing from the famed investor Warren Buffett is to never lose your money. And given his track record of being a billionaire stock picker, who can argue with him? It takes discipline not to invest in losers and that is why Buffett is known to hold billions of dollars in cash. Going in and out of trades and being forced to make decisions when you don’t have money is not a good way to invest. If you want to be rich investing, you need to your money to pounce on opportunities when they do come along.

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