One more painful day on Wall Street

The stock market is certainly witnessing lot of pain. Investors are worried and maximum of stock traders are avoiding to take any buy call on painful and helpless stock market. The credit market is crunching, housing market is plummeting and entering of recession in US economy is almost dreading the investor.

The Dow Jones is almost at it strong support level of 12,000. Though the market is witnessing heavy pressure; I strongly feel the Dow will not fall below 12,000 levels, but still if it falls below 12,000 levels, then I don’t see any hope remaining. At such situation, maximum of the investor will try to pull out their money, and then worries will deepen to such extend that no support level will help the market. The market will not follow any technical or fundamental story and turmoil in stock market will continue for no definite period. It will take long time for one to see the market gets stabilize at some level.

Couple of years back where the market was looking as a paradise is now looking as a torment for me.

Wall Street Crash by Worse Credit Fears

Sunday, January 13, 2008

Friday was again a worse day for stock trading session on Wall Street, in the midst of fears that the financial sector's trouble with worse credit won't soon end. It is having said that some consumers are collapsing under the influence of a slowdown in economy.

Stock investors are worried about how banks and brokerages will turn out in this quarter after suffering losses in the collapse of the subprime mortgage market. Stock Investors are also anxious after American Express Corp. warned that slowdown in spending and more negligence on credit card payments will impede profit throughout 2008.

Stock traders seemed to grow more distrustful in advance of quarterly result reports due next week from the nation's biggest financial institutions. Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co. are slated to weigh in next week.

With the beginning of New Year, the stocks have slipped lower. Dow Jones repeatedly falling by whopping triple digits in many single sessions.

The major indexes each lost more than 1 %, including the Dow Jones industrials, which finished down nearly 250 points. The Dow is down 4.96 % for the year. The S&P is down 4.59 %, and the Nasdaq has lost 8.01 %.

Penny stock trader

Penny stock trader are traders who basically looks for trading stock which stock prices level are below $5. Owing to extremely low prices, these penny stocks become a point of attraction for maximum of the small, novice as well as retail individual online stock trader.

It is having said that penny stocks are highly risky for online stock trading but still maximum of the peoples tries to do it or falls in love or avoid without trading it and suffers heavy losses, but on the contrary it is also having said that expert penny stock trader who are really extraordinary makes lot of bucks through it, because they are different from losers, they acquire extraordinary talent, knowledge and skill which helps them to be winner in penny stock trading.

The some of the quality that penny stock traders have are listed below but not limited to following

• Trading penny stock has not more to do with fundamental analysis but needs to do lot with technical analysis so successful online penny stock traders attentively look after charts and protect some hours for market analysis. They identify the strongest sectors of the market and then the strongest stocks in those sectors. They identify the level through chart that they are going to enter at and approximate targets for the predictable move.

• Successful penny stock trader does not overtrade but only waits and watch for exact and accurate entry point and predetermines their target for exit.

• They know if the overall market is in trending zone or in trading zone and depending upon this they determines their timeframe for stock trading, whether they need to exit taking small profit or need to wait for large move. They know if the stock is in trending zone then they keeps their stock position long and as soon as they find the stock is loosing their support level they exist the stock. They also know if the stock is in trading zone then they buys such stocks at every weakness and sells stocks at strength.

• While trading penny stock they knows the risk they are taking and predetermines their trading losses and keeps strict stop losses to avoid big losses.

• Penny stock trader know penny stocks are not for stock investing and so they does not remain invested in such stock for long period but they exist as soon as they find their profit margin has achieved.

Stock trading software

What is stock trading software?
Stock trading software is definitely a new generation tool which has helped many stock traders to execute their option trading, day trading as well as short term stock trading positions.

Who can use this software?
This software can be use by a person who has basic knowledge of stock trading and one who knows every aspect involved in it. By using this software it does not mean that you will be able to make money very easily without any efforts, but instead this software will ease your work quite considerably and will assist you to take the stock trading decision more precisely making your trade successful.

Many of these stock trading software are fully automatic and also semiautomatic and just by defining your requirements the software will scan and will find out perfect stock pick that are based on your requirements. The automatic software also has a capability to automatically execute your buy and sell signal stocks which need to be programmed by you depending upon your requirements.

It having said that maximum of the active stock trader uses this software more often to buy/sell their stock position.

Benefit of using stock trading software
• The software will help to quickly find out the perfect stock pick which best fitted your requirements in terms of price level, volume, liquidity, etc
• The software will help you to manage your stock portfolio.
• It will help you in assisting which stock to buy and which stock to sell at their specific price.
• • It also helps how many quantities of stocks to buy and how many quantities stocks to sell with stop loss order price for avoiding any further loss.
• It will help you to avoid entering in bad trade
• It will constantly help you to find the trend of the stock either in downward direction or upward direction to take precise decision.

Tips - Buying at support level and selling at resistance level

While doing stock trading the one of the tips or strategy could be to buy stocks at support level and sell stock at resistance level. Normally any stock tends to trade in a narrow range with very limited liquidity and volume. At such situation maximum of the stock investors avoid entering in these stocks but stock trader thinks this as good stock trading opportunity as long as these stock are trading in their specific price zone range. Stock traders always keep monitoring these stocks and enter in such stock pick at their support level and normally exit at their resistance level.

Say for example XZY Company stock is roughly trading in a very narrow range of $52 to $55. Stock trader immediately enters in such stock at $52 and exist their position near to $55.

Now you might be thinking of how stock trader makes out to enter in this stock at $52? Looking to the previous chart history of this stock the stock traders immediately make out $52 as strong support zone. In many previous sessions this XYZ stock had came near to $52 and had bounce back and not made a downward breakout of $52. Whenever this XYZ stock had touch $52 or is very near to it a significant buying had emerged and stock has bounce back from $52 and this gives a clear indication that at $52 the XYZ stock has strong support which could be a buy signal at anytime if this stock touches or is near to $52.

Precautions to take
Stock trading has always been risky as no person in world would give you 100% prediction. Now in above example XYZ stock shows strong support at $20 but unfortunately if the stock breaks $52 and moved further down with significant increase in average volume clearly gives a signal that this stock had break its support level of $52 and at such point making a stop loss near to $50 to $51 could be a very good sensible strategy for avoiding any significant money loss.

Bull Market

What is bull market?
Bull market is a condition in stock market where maximum of stocks make all time highs along with the index and this phenomenon continues for many days, weeks, months and even years. As long as the overall main index of stock market is making new highs one can easily call it as bull market. Maximum of the stock investors rush in for stock investing in bull market.

It is having said that no one can make out or predict exactly how far the market remains in “bull” stage but as long as overall indexes and maximum of stocks are making new highs it gives out a clear indication that market is in bull stage. It also does not mean that bull market has no correction and no stock can make news lows but companies (stock) which are showing bad performance in terms of their year-on-year or quarter-on-quarter profit margin performance are beaten down significantly and companies which are showing high growth potential are preferentially given thumbs up.

In a secular long term Bull market there can be many small bear market which can last only for few days or few weeks or few months and this may be mainly due to some external factor affecting the stock market but overall the bull market resumes its upward move again and makes its new high.

Maximum of the stock traders as well as stock investors make significant money in bull market through stock trading and stock investing.

Skills required for mastering the stock trading

Stock trading is very complicated and stressful job but with lot of hard work and gathering of deep knowledge and understanding the details of stock can make one successful in mastering the stock trading. There are various factors that need to understand for a person who want to develop the skill and master the stocktrading to make consistent profit.

Stocktrading is not a clerical or simple job which requires same repetitive thing to repeat again and again to execute it but it needs things such as

• A will to study the stock trading thoroughly
• Strong discipline, patience and very cool mind which are strong points of very good stock trader.
• To adjust the stocktrading strategy accordingly the need arise
• Strong money management skills
• Strong stock market knowledge along with knowledge of stock behaviors
• Strong technical analysis skills
• Strong ability to learn and keep updated with stock market news, resources, etc
• Creative mindset and ability to think properly and exactly to take immediate decision accordingly the need arise.
• Ability to detect and avoid getting in bad stock which will make you loser
• A newbie should devote maximum of his time to master trading of stock by studying, executing initial stock trading through paperwork and devoting several months to this until he collect enough experience and expertise to start stock trading through his real money.
• Ability to understand the mindset of other stock trader as well as stock investor is a great plus. Knowing the strategy of other will gives you enough room to adjust your strategy.

Stock trading versus stock investing

In my previous post I have detailed about stock trading and stock investing, but still once again I would like to summarize it in brief.

Stock trading is basically and usually done from short interval of time. Stock traders who usually prefers to do stock trading buys the stock for very small interval of time and exist immediately once their target price is achieved or their predetermined profit get triggered while stock investing is done keeping in view the long term returns which is basically performed by stock investors.

The is a huge difference between trading in stock and investing in stock

• Trading in stock is basically a business done on day to day basis to make profit while investing in stock is an investment done in stock only for long term returns.
• Trading in stock involves lot of risk while investing in stock has low risk if the stock pick is just right.
• Trading in stock done by stock trader does not make use of Fundamental Analysis of stock but they usually like to use Technically Analysis to predetermine their entry and exist point, while stock investor who usually invest in stock make use of Fundamental Analysis and very less of Technical Analysis.
• Trading in stock requires very high technical skill, experience, patience and mentality to accept losses if the stock triggers against their way, while stock investing requires basic fundamental knowledge and person from any category can do it very easily.
• % of success in trading stock is less while % of success in investing stock is very high.
• Stocktrading needs continues monitoring and needs to keep in touch with their stock portfolio on day to day basis while Stockinvesting does not require that much of monitoring or does needs to be in continuous touch with their stock portfolio.