Cautious approach in stock investing

Stocks on Wall Street rose on Thursday. The party was mostly led by industrial and pharmaceutical stocks, as investors were more cautious and defensive in advance of jobs data that may perhaps demonstrate how much housing and tight credit markets may have damaged the economy.

Overall on Thursday, most of the stocks were trading in narrow range and lackluster trading session as investors took more cautions approach as the center of attention continued on Friday's nonfarm payrolls report. Also the reports on the job market, service sector, and August retail sales bring up some cheers to investor’s mood by making a positive ending in Thursday’s trading session.

The Dow Jones index ended inch up at 57.88 points (0.44%), at 13,363.35. The Nasdaq Composite Index was up 8.37 points (0.32%) at 2,614.32.

My feeling for today’s (Friday) stock trading session remains a strong volatile day keeping investors in no comfort zone, but as a trader I might take a very short long position if there is any significant dip of about 150+ points in Dow and also I might go for stock investing in highly research stock in small quantity, eying mostly defensive sectors like pharma or telecom.

US Market seems stretched out

September 05, 2007

US market still seems to be stretching more of its bounce back rally from big fall happened two weeks back. The investor’s confidence seems quite good even after a slight negative clue from economic data which was bit slower than expected and slight slowdown in manufacturing growth. Bargain hunting was clearly seen in technology and telecom sectors as these stocks were in limelight even after credit concerns, but demand for computers, cell phones and other such products appears strong.

The Dow Jones industrial average rose 91.12 points (0.68%) to end at 13,448.86. The Standard & Poor's 500 Index was up 15.43 points (1.05%) at 1,489.42. The Nasdaq Composite Index was up 33.88 points (1.30%) at 2,630.24.

Global markets were trading in mix pattern ahead of definitive clue from US economic data and upcoming Fed meeting in mid September. Profit booking was clearly seen in majority of financial stocks in European market on renewed concern about the extent of the credit crisis, and coming event of Thursday's interest rate decisions by the European Central Bank and the Bank of England.

Looking at the present situation, it clearly seems like US market is too stretched after the good bounce back rally and profit booking is clearly evident at this point. From stock investor’s point of view, it is still not a good time to make any stock investing rather than I would prefer to book my profit.

Global market stable

September 03, 2007

Global stock market traded in mix ahead of US Labor Day holiday. The statement made by President Bush and Federal Reserve Chairman Ben Bernanke made the US market stable along with bringing stability in most of the worldwide stock markets. As it is known that US economy plays an important role not only for NYSE and Dow Jones, but it also plays and important role for worldwide stock markets. Any charming news from US market brings joy and cheer in other stocks market. With the discovery of globalization and interdependent economy, stocks market from all over the world tends to react if there is any slight fluctuation in economy of developed countries.

With the positive news coming in from last two weeks have improved the sentiment and confidence of most of the market and hope it will remain till the upcoming Fed’s meeting.

At this point, I will keep my wits away from any stock investing, and would trade stock in selective stock pick till clear picture comes from economic data front and Fed’s next move regarding any interest rate cut.

Mid term stock investing

As compared to long term and short term, mid term stock investing strategy is quite different, in-fact it is purely done by doing technical as well as fundamental analysis. The long term strategy purely depends upon fundamental story of your favorite stock pick, and short term stock pick is purely depends upon technical analysis.

One can differentiate the stock holding categories as
Very short term: Stock holding for very short term basis can be treated as stock trading or just to trade stock, which can be day-trading, or buy today sell tomorrow stock trading, or maximum couple of weeks, but not beyond that.
Short term: Couple of weeks to less than a year.
Mid term: 1 year to 4 years perspective.
Long term: 4 years till the investor wants to hold his stock pick.

Mid term stock investing is basically done to reduce extra burden of tax and to make adequate profit gain from the cash which you have achieved in your bank savings. It is neither a good understanding nor a bad understanding to hold a stock on a medium term basis.

Many a times it do happen even though your stock pick choice is perfect right and you have done stock investing in right stock, at right time, and at right price, but due to some unusual circumstance happening in the stock market, you immediately comes in danger zone, and your stock pick is also hammered significantly keeping you on loosing side, and this can last until the stock market completely recovers from it unusual circumstances. Many good stocks unnecessary gets hammered with any negative influences in stock market, but if your stock pick is just right, you definitely have a chance to make good profit in medium term also.

It is having said that stock investors like returns from their investment, if your stock pick is just perfect, even though after you stock pick gets hammered, it has more chance to bounce back at the same phase, because their valuation becomes more attractive and investors rush in to pick those stocks, giving you the stock rise. So for doing mid stock investing, technically as well as fundamentally the stocks should be good.

Stock market prediction is very complicated process, and looking from the mid term perspective it is still more complication, at such condition stock research is most important aspect which is done with the help of technical analysis and fundamental analysis.

Investor’s Sentiment held by Bush and Bernanke

August 31, 2007

With the end of this month, U.S. stock markets finished with one of the most volatile months in years. No doubt that according to me, as a stock trader, volatility is a paradise, which gives huge swing in the stock from top to down and down to top which helps traders to make good day trading with sufficient gain. For stock investing point of view, volatility is worrisome because it does not give a definitive clue of market direction.

Yesterday’s stock market upward move was mostly driven by statement made by Bush and Bernanke which was as per market expectation. Investors were reassured of making every effort to protect the economy from market turmoil.

The major indexes fluctuated but regained after President Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.

The Dow rose 119.01 (0.90%) ending at 13,357.74. The Nasdaq composite index rose 31.06 (1.21%) ending at 2,596.36.

Next week view
According to me, next week will be a volatile week. I will (as a trader) use any 50 to 100 points rise in market as an opportunity to book my profit in my selected stock pick and would buy if there is strong dip of 200 to 300 points. As a stock investor I will keep my holding going on, no matter in which way the stock market will swing.

Stock market surge

August 30, 2007

After getting positive global clues and growing cheerfulness among investor for further chances of interest rate cut by Fed and some strong support at level 13000, NASDAQ and Dow rose higher after previous day turmoil. Stock from many sectors took part to make the index rise higher by 247.44 points ending at 13,289.29. The broader S&P 500 index was up 31.04 points (2.19%) to 1,463.76. The technology heavy NASDAQ composite index rose 62.52 points to 2,563.16.

Previous day stock market CBoE volatility index, also considered as stock market fear gauge, drop significantly to 9.5% versus previous day of 16%.

According to me investors might take a breather at this point and will wait for any definitive clue to play with various factor affecting the stock market further, until then the stock market will move in a narrow range with any 50 to 100 point drop or 50 to 100 point rise from 13,2089 level. My today’s strategy will be as an “investor” I would wait and watch and would avoid buying but will keep my holding continue going on, and as a “trader” I will short the market at every 50 to 100 point higher level and will go long at lower level with any 50 to 100 points drop.

Stock Pick- Dycom Ind.

Dycom Inc. recently announced its 4Q result for the quarter ended June 28, 2007 shows significant jump in the profit margin from $10.1 million to $14.3 million (35%) per share, in the prior-year quarter, which according to report is above street estimation.

Contract revenue rose 25 percent to $317.3 million from $253.2 million in the fourth quarter of 2006.

For the full year, the net income doubled to $41.9 million, or $1.03 per share, from $18.2 million, or 43% per share.

Company’s revenue climbed 14 percent to $1.14 billion from $995 million.

Overview
Dycom Industries, Inc. is a leading provider of specialty contracting services. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, and other construction and maintenance services to electric utilities and others. Founded in 1969, Dycom has grown to become one of North America’s largest specialty contracting services companies and recently has started to provide services on a limited basis in Canada. Its 30 operating subsidiaries serve customers in 48 states and the District of Columbia. Headquartered in Palm Beach Gardens, Florida, Dycom employs a workforce of approximately 10,000 employees in more than 400 locations.

Stock pick opinion
Looking at the company’s fundamental and overall performance and future growth prospectus, this stock pick clearly seems to have good potential to rise further from its current level, but looking at the present scenario and volatility in the stock market, investors should take more cautions approach before making any investment in this stock. According to me any significant fall in this stock would be an opportunity to buy, or who have bought this stock would keep this stock on hold.

Going through company’s fundamental, profit margin and growth prospectus this company is certainly headed toward to become a mid caps company from small caps, but still I would be little optimistic to hold this stock pick on a very long term basis.

Stock Pick Concern
With the growing apprehension among investor about slowdown in US economy can impact this company’s growth prospectus which might impact the company’s profit.

Any stock advice listed on this website is only for the reference purpose. Before investing your money in stock, please do full stock research or take advice of your stock broker or stock expert.

Volatility return to stock market

August 29, 2007

After the yesterday’s sharp correction on NASDAQ and Dow Jones stock market due to growing concerns of credit markets deficiency, which will mostly hurt the financial sectors along with lack of consumer confidence and falling home prices to some extent suggest growing concerns of slowdown in US economy.

Looking at the sharp fall on Tuesday, it clearly seems the volatility has return to Wall Street again along with all the major stock markets of world. Taking clue from yesterday’s fall from Dow Jones and Nasdaq, Asian market opened in red and recovered in late afternoon with news of rising weakness in yen versus dollar/euro giving a strong hand to stabilize the stock market, which significantly help the European market to open in green. No doubt this will help the US stock market to stabilizer around 13000 points and again some 100 to 300 bounce back rally clearly seems to be evident in coming days.

At this situation I would like to take caution approach and would like to do stock investing in selected stocks pick on a very short term basis until the next trigger, possibly the Fed’s next move, hits the market giving a confirm clue to stock market direction.

Stock Investing

Stock investing is an investment done in small, medium or big companies on short term, mid-term and long term basis for the companies which are listed on Stock Exchanges of each country. The main stock exchanges of the world are where large numbers of companies are listed and where big amount of buying and selling of stocks happens and they are DOW, S&P500, FTSE, DAX, Nikkei, MSCI, etc.

One has to be aware that investing in the stock market can be sometime or many a time loss making if not done in proper way but to discount loss making and to make a consistent profit from your online stock investing, one has to acquire good fundamental and technical knowledge of stock market. It is having said that investing in stock is an art of tactic by which one can make a consistent amount of profit and can make their good livings on it. One has to understand that investing in stock market is a part of nervousness and one has to pass through many ups and down to make oneself perfect in stock market.

Investing in stock is a pure business which one has to take a rational risk to gather steady rewards. With enough fundamental and technical knowledge and an adequate amount of discipline, you are all but definite to make a consistent profit in the stock market. Patience and willingness to intersperse your hard money savings across a portfolio of stocks, personalized to suit your age and risk profile will force your revenues at the same time cautions you against any major losses. Investing in a stock market is a method of buying assets in order to make money in the form of reasonably predictable income (dividends, interest, or rentals) and appreciation over the long term.

Why one should do stock investing?
Couple of decades back investing in the stock market for ordinary peoples was not so easy and safe and so utmost of peoples used to prefer to make their savings safe in bank and were satisfied with just very small interest that they used to get on their savings, but with the discovery of internet and advancement of technology the mentality of peoples has changed and instead of keeping their money safe in bank they are now willing to take little and some more risk to shoot up their earnings and to protect them against rising inflation and also with the intention to create wealth for better standard of living, vacations, retirement, etc. Also, it's exhilarating to appraise your stock investing returns and to see how they are accumulating at a faster rate than your salary.

When one should start stock investing?
If looking from stock market perspective you will never be able to catch any specific best time for making trade or stock investing as every day is a new day for stock market with tremendous changes in stock market mood. When entering in the stock market one has to keep a better view in his mind about the time horizon that he is looking for returns from his stock investment. Long term investor can enter the market anytime no matter market is going down or going up, medium and short term investors whom we can also calls as traders enters in the market with full study and risk that they are willing to adopt.

Rewards From Stock Investing

Stock investing basics

Stock investing tips

Learn Free Stock Investing and Stock Trading

Quarterly result - Important thing to know while doing any investment in stock

Mid Term Stock Investing

Fundamental Analysis for stock investing

Long Term Stock Investing

Cautious approach

August 28:

Monday’s fall at NY and Nasdaq stock market was said due to the ongoing slowdown in US housing market, which clearly gives a message out to stock investor about the consumer’s credit deficiency. This concern was clearly seen in stocks like banks, mortgage lenders and other financial stocks which losses their ground after the last week pullback.

Also the additional concern came from increasing rising inflation which added more worries among stock investors, which might impact the economy. At this point, it looks like the investor are more cautious on taking any fresh position except for some selected stock pick and will wait until for next trigger, such as upcoming economic data and what Fed’s will do next.

At this situation I definitely would like to take a short position at every 50 to 100 point rise in Dow Jones and would avoid any stock investing.

The Dow Jones industrial was down 56.74 points (0.42 %) at 13,322.13. The Nasdaq Composite Index was down 15.44 points (0.60%) at 2,561.25.

Stock pick

Stock pick is an important aspect when one goes for stock trading or stock investment. The stock pick consists of features which will take you towards the stock market wealth if you discover right stock at right time and at right price. But going through stock market history you will examine that it is very tough task to catch the rising price of right stock at right time and at right price.

So then how you will discover the right stock at right time and at right price? It is a $100 million question that all retail investor has!

Over here I would like to put some impression on it and it is solely my view and what I think how it can be! It might defer from investor to investor.

Broadly speaking stock market is one kind of bet; you cannot predict what is in mind of other investors and what they think about the stock you want to pick.

• Before you go for a stock pick examine how the overall stock market is doing. Find out the negative influence if there are any which might impact the stock market as a whole.
• Go through sector to sector and find out which business sector is performing well and which sector is undervalued.
• The sector preference fully depend upon the time horizon that you have kept in your mind to hold any selected stock on a short term basis or a mid term basis or for long term basis.
• If you are looking to hold your best stock from purely on a short term or the most mid term basis you definitely should go for good sector performing stocks, which shows consistent interest among investors as well as traders, but if you are looking to hold your selected stock pick on a long term basis you can go for undervalued sector also.
• Undervalued sector does not mean that the stocks containing in these sectors are not performing well or these are not quality stocks but due to some unsuitable reason big fund investor ignores these sectors as a whole and due to this behavior of investor the overall sector tends to fail to appreciate better as compared to other sectors belonging in the stock market, but instead when these sectors start to perform well it gives more high return than other sectors in stock market but only bet is that you should select your best stock pick which has a history of long term good performance.
• For here I would like to give example of banking sector. If there is any hike in interest rate, the immediate reaction appears in this sector and the stocks from this sector tends to get ignored by the investor and this sector becomes undervalued sector, because due to rise in interest rate the investor thinks that the profit margin of this sector might impact, but if you admire, this sector is still a very good long term bet because at some point this sector will again start to perform well and will increase their profit margin and that point investor mood will again change and stocks of this sector will outperform the rest of sectors in stock market.

Once you have finished examining the sector you should now go for the thing that you are looking for i.e. “stock pick”.

There are many factors that you need to look for best stock in your selected sector and also it depends upon the time horizon that you are looking to hold the selected stock pick.

Stock pick for short term: Short term basis can be said as stock trading for only couple of days or mostly couple of weeks, beyond that the trader sells their stock holding and take out the profit on their desk that they have gained, no matter the gain is just minimum 3% or quite big or at some point the traders sell their stock pick holding in a loss. Stock pick on short term basis is purely done only on technical basis and very little bit with fundamental story of that stock pick. Liquidity, volume average, momentum, stock news, trigger, technical charts are some of the features which clearly defines the correct stock choose.

Stock pick for long term: Investor finds out that any specific stock of certain sector is suddenly trying to move out of their 200 days moving average in upward direction and there is sudden rise in stock volume as compared to average volume for the last few days or few weeks or for few months, along with sudden rise in liquidity which clearly gives an indication of that stock pick interest by some of the big financial funds, which is just a right indication that specific stock is now in rising mode and it can be bought.

Stock pick

Stock pick is an important aspect when one goes for stock trading or stock investment. The stock pick consists of features which will take you towards the stock market wealth if you discover right stock at right time and at right price. But going through stock market history you will examine that it is very tough task to catch the rising price of right stock at right time and at right price.

So then how you will discover the right stock at right time and at right price? It is a $100 million question that all retail investor has!

Over here I would like to put some impression on it and it is solely my view and what I think how it can be! It might defer from investor to investor.

200 days Moving Average

Why Every Trader Needs To Watch The 200-day Moving Average

Moving averages (MA's) are among the most popular tools available to portfolio managers, analysts, investors and traders but are they being used in the most effective way? We have stressed the importance of MA's many times and this article will teach you how, and why, we use them.

The simple moving average (SMA) is the most common type of MA used. This method uses a fixed number of data points as the data series moves forward. For example, a 200-day SMA will average the most recent 200-days worth of data (usually closing prices). With each new day, a new data point is added and the oldest data point is removed. In other words, the 200-day SMA displays the arithmetic mean of the most recent 200-days of closing prices.

It is important to determine the right length MA for your intended purpose. We use the 200-day SMA as a trend filter for stocks and indices. A stock or index trading above the 200-day SMA is considered to be in an uptrend, while a stock or index trading below the 200-day SMA is considered to be in a downtrend. Our research shows that using the 200-day SMA in this manner improves the test results.

We have also published research that uses the 5-day SMA or 10-day SMA to take profits/exit trades. We use these shorter MA's because our research shows them to be among the better exit strategies available.

Why the 200-day MA is so important
Here's a look at how the S&P 500 and the NASDAQ 100 has performed in relation to the 200-day MA. The test period covers from 1/1/89 to 6/30/06. The tables below shows the average percentage gain/loss for SPX and NDX during our test period over a 1-day, 2-day, and 1-week (5-days) period.

S&P 500 (SPX)


• Historically, the SPX outperforms when it is trading above the 200-day MA, 2-days and 1-week later.
• Historically, the SPX underperforms when it is trading below the 200-day MA, 1-day, 2-days and 1-week later.


NASDAQ 100 (NDX)


• Historically, the NDX outperforms when it is trading above the 200-day MA, 1-day, 2-days and 1-week later.
• Historically, the NDX underperforms when it is trading below the 200-day MA, 1-day, 2-days and 1-week later.


This research can be extended to cover stocks too. We looked at over seven million trades from 1/1/95 to 6/30/06*. The table below shows the average percentage gain/loss for all stocks during our test period over a 1-day, 2-day, and 1-week (5-days) period.

Stocks


• Historically, stocks slightly outperform the benchmark when trading above the 200-day MA, 2-days and 1-week later.
• Historically, stocks underperform the benchmark when trading below the 200-day MA, 1-week later.



This information, combined with our days of the month study, PowerRatings, and the other research we have recently published (view archives) shows how to build successful trading strategies.

How to use this information
When you go to the new TradingMarkets Stock Indicators page you'll see that all of the indicators (bullish and bearish) use the 200-day MA. The bullish stocks are all trading above the 200-day MA, while the bearish ones are all trading below the 200-day MA. The lists are filtered this way because our research shows an even greater edge can be obtained.

Ashton Dorkins is Editor-in-Chief of TradingMarkets.com.
editor@tradingmarkets.com
Larry Connors is CEO and Founder of TradingMarkets.com, and Connors Research.
* Our research looked at 7,050,517 trades from Jan 1, 1995 to June 30, 2006. We applied a price and liquidity filter that required all stocks be priced above $5 and have a 100-day moving average of volume greater than 250,000 shares.

Stock portfolio

Stock portfolio is a very strong professional stock trading tool if managed in proper and effective way gives you high and high returns in stock market by any other mean is not that quite possible. Stock portfolio provides you an additional security and decreases your risk appetite in significant way in stock market.

Stock portfolio is a mixture of any number of stocks mostly preferable for small stock market investor or stock market trader is 10 to 15 numbers. Stock market traders prefer to have 10 to 15 numbers of best stock collections in their favorite stock portfolio which helps them to execute stock trading almost on daily basis. It always does not happened that day traders are able to conduct their day trading in only one specific stock on daily basis because they know that only one stock cannot give them a perfect entry point on daily basis to conduct day trading so to overcome this issues they prefers to have 10 to 15 stocks or more which helps them to give chance to enter in any 2-3 stocks for day trading on daily basis.

Professional stock market investors also prefer to maintain 5 to 10 numbers or a bit more of best stocks in their stock portfolio. By investing money not only in one stock but diverting the money in mixture of stock gives them an additional security and reduces their risk appetite. The stock portfolio consists of mixture of stocks such as large cap, mid cap, highly volatile stock, highly defensive stock, highly liquid stock, very less affected by external factor stock, etc. The stock investor prefers to maintain portfolio as per their investment horizon and amount of money they want to invest in their best stocks.

Now you might be thinking about how the stock portfolio will give high return and will reduce risk?
As it is know the stock trading or stock investing is a risky factor to make money. No doubt that if your stock pick selection is perfect from all angle chances are evergreen that you will make handsome of money, but still it is having said that there is still risk associated in it, because the external factors which might impact your stock pick is not in your hand and nor you can imagine it, which might cause the stock dump.
The external factors might consist of
• interest rate.
• crude oil dependence
• government policies
• natural disaster, and many more
which might negatively influence the specific stock pick you are holding, so to overcome this issue you need to make stock trading or stock investing in more than 2 to 3 stocks of different categories as mentioned above which will help you to trim down your risk associated only in one stock.

The stock portfolio is only established after a strong stock research which you want to include in your portfolio. Stock research includes the fundamental as well as technical study which gives a correct view about the overall performance of your favorite stock pick. The some of the categories in stock portfolio but not limited to are:

Large Caps
• Large cap stocks are stock with market capitalization of more than $5 billion such as IBM, Microsoft, Wal-Mart, etc
• You need to keep these types of stock in your stock portfolio because these stocks are consistently out performer in their whole history and will remain out performer in future also
• This stock has a deep market penetration, endurance and solid business management background and has a capacity to cope with any unsuitable condition.
• These stocks make consistent good innovative changes in their product which gives you an assurance and faith that you money is always safe and will give you high returns.

Mid Caps
Mid cap stocks are stock with market capitalization between $1 billion to $5 billion.
• There is slight risk as compared to large caps in doing stock trading or stock investment in these stocks because mid caps stocks does not always give that much of consistent performance as compared to large caps.
• Also there is lot of competition in mid cap companies which might impact their profit margin in significant way along with inconsistent market base
• But still if your have done strong stock research and have pick out a good mid cap stock which might sustain at any unsuitable condition and has a capacity to become a large caps in coming years then you have a very good potential to make good money in coming days.
• The advantage of investing your money in mid cap is that the mid cap stocks has a big room to become a large caps which will increase it market capitalization giving you high stock price return along with other benefits.

Small Caps
Small cap stocks are highly risky stocks and are also called as penny stocks.
• There is sudden inflow and sudden outflow of funds from these stocks which makes these stocks more vulnerable.
• If at any point any uncertain situation arise in the stock market, these small caps penny stocks are the first which are hammered significantly, but also if there is any strong rally in stock market, these stocks have a big potential to go high giving you high returns.

So to increase your efficiency and to maintain consistent profit from stock market you need to be more specific in selecting your stock portfolio. Consuming mixture of stock pick of different categories and of different business aspect will end up giving you consistent money at low risk.

Impact of interest rate cut on stock market

The Fed Reserve’s decision of key interest rate cut on August 17, 2007 had given an indication to worldwide stock market investors about loosening of liquidity crunch and trying to prevent disturbance that started in the market for household mortgages from scattering through the economy. The Fed reserve decision on interest rate cut was taken as surprise that boosted the stock market sentiment and worldwide stock market rallied on.

From last couple of weeks the ways the worldwide stock market was behaving was quite annoying and was spreading a fear among investors regarding the liquidity crutch which was impacting in significant way in many of the stock market worldwide along with the Dow. The stock market from Europe, Japan, Korea and other developing countries like China, India, Taiwan, Brazil, etc was hammered quite significantly from their peak level. Due to this situation, the thing was going quite tough for the small investor to take a call on stock trading.

Now with this interest rate cut move made by Fed Reserve, and also big brokerages believing this interest rate cut move will continue in the next Fed meeting also, will bring down the liquidity crunch in market and will help to raise economy rate.

The Dow ended the day up 1.8 %, 233.30 points, at 13,079.08.

Long term stock investment

Stock trading done for long term basis can be purely said as long term stock investment. Investing in stock if done in more regular strategic investment way can give you high returns. Many stock market investors basically retail investors are quite interested for long term stock investing plan rather than going for short term margin gain which is quite risky. Long term stock market investment gives an additional leverage position to a stock market investor if the stock pick choice is right, and also it does not get affected by the short-term volatility in the stock market.

Long term stock investment is more profitable and with regular performance of chosen stock pick (company) the stock investor gets regular dividend as well as bonus which is quite encouraging and cheering to investor as well as it spreads a message among stock market investor about the company’s goodwill, which helps to keep on consistently rising the stock price and generating high return to stock investor.

Long term stock investment is basically done keeping in view for making an investment for minimum of five years to as long as the stock investor prefer to keep it as an investment. Investors who generally gets regular returns via that stock pick through a source like regular dividend and bonus does not sell that specific stock pick and keeps on holding that stock pick as long as their best stock market investment is performing good by maintaining the current market share and well as increasing its company brand to more customer base.

Before going for any long term stock investment approach, proper study of best stock is needed along with proper strategic investment plan. Long term stock investment is usually done in the stock which has a good reputation, which has gained stock market investors’ confidence and which is performing very well at every time interval. Stock prices are always volatile and do not remains stable at any point, with keeping this in mind, no full investment in stock is done at one point, but professional stock investor use strategic investment plan which help them to make regular investment in their same favorite stock at various prices of their stock pick. The strategic investment plan is done in two ways.

1. Stock market investor who are more confident on their chosen stock pick make regular investment in stock at every significant dip in their favorite stock pick, keeping in view the long-term returns. The stock market investor who makes investment in stock through this strategy uses every dip in their favorite stock pick as an opportunity to make their investment.
2. The second way the stock investors invest their money in their favorite stock pick is by regularly investing at every rise that happens in their stock pick. Stocks which are consisting performing well always have a chance to rise higher by gathering more attention of fellow stock investors.

With the help of these strategic investment plans, the stock investors invest their money in their stock pick at every specific time interval which reduces their risk appetite and protect their money at every ups and downs of stock market.

The some of the long term stock investing benefits

1. Your long term stock investment return is always high than of fixed deposit or small savings in bank.
2. Gives you an additional leveraged position against rising inflation.
3. Regular returns from stock investing in the form of dividend and bonus if the stock pick is consistently performing well.
4. You are always a share partner of successful corporate of whom you are holding stocks.
5. Historical out performer than any other asset classes.

Day Trading

Is typically believed to be an excessive high risk profile job in stock market. There are a number of categories in day trading which day traders needs to examine and depends upon the situation he has to develop his day trading strategy. No moment in stock market is identical and very often the stock market tends to move in opposite direction rather than in the way the day trader are hoping to move, and this is a typical experience which every day traders go through so it is called a riskier job, but still day trading plays an eminent role in overall stock trading i.e. because with the good thing of day trading the stock market is capable to preserve adequate liquidity in the market and are able to preserve adequate volume for maximum of the stocks. Liquidity and volume are the main elements of stock trading, devoid of which it will be an intricate task for every investors in addition to traders and also to stock market to function in a good way.

Usually day trading is a course of action of executing either buying-and-selling or selling-and-buying of stocks in same trading session. Day trading is normally carry out by day trader who brings in enough liquidity and volume in overall stock market and it is one of the most important subparts of stock trading. Maximum of the peoples (excluding professional day traders who are very less in number) tend day trading as a gambling market like casino, poker or hoarse racing and does not follow the basic and most important rules of day trading and gamble away maximum of their money is day trading. Professional day traders do not treat day trading as a gambling place but instead they treats this profession as small business and are always capable to maintain their high profit margin. No doubt that day trading is very similar to a gambling place but if you reliance more on your knowledge and proper strategy along with tremendous discipline than you are more likely to be able to maintain your profit margin in significant way while doing day trading.

For doing day trading the day traders does not require to hold actual delivered stocks in their stock portfolio but instead they can burrow the stock for conducting day trading. In other words the stock broker where the day trader have registered themselves for conducting stock trading provides day traders a facility by which day trader can burrow the stocks and can do day trading. Also many of the stock brokers provide day traders with facility of burrowing money from them. If a day trader has minimum required amount of $25,000 for conducting day trading in NYSE and he wants to execute order for $100,000 than Broker provides him with additional money that is required for executing that order, due to this high lending money by the Broker to day traders, the day trader can make big deal in day trading by executing large quantity of stock, the higher the stock quantity high is the risk involved and low the quantity of stock, low is the risk involved and profit and losses are also in the same order.

Genuine day traders are very professional peoples and they do not enter in the market at anytime or in anyway but instead they wait for an appropriate entry point to jump into the market and exist in the same way maintaining their profit margin. Their entry point is pre planned i.e. they believe that if the stock is moving in the mode they crave than only they compose their mind to penetrate in the market or else they stay away from the market in anticipation of a clear entry point is exist so no matter in which way they want to do day trading i.e. short (selling) the stock in a anticipation that stock will go down and then covering the day trading position by buying the same stock or else buying the stock in a anticipation that stock will move up and covering the day trading position by selling the same stock.

There are various different categories in day trading such as the day trading can be implemented for only a few seconds or for a few minutes or for only a few hours within the same settlement day and this is done by different categories of day traders. Not all day traders apply the same rule but instead many of them have their own different strategies in place for doing day trading and that strategy is applied by day traders as the day trading stock situation arises. Many of these day traders had gained a substantial knowledge through books, guidance from stock gurus and through experience.

Any new beginner no matter he/she is young or old, male or female anticipating starting this exciting home based career of online day trading should need to gather substantial knowledge and experience. Before going to start investing any money in this field, the beginner should first need to start it by doing paperwork. Paperwork is very good strategy for a beginner who wants to do day trading. Assuming as you are investing your money in stock, you write down all your stock pick entry and exist point of day trading on a paper by which you will be able to learn a lot and with the help of this strategy you will be able to make out the mistake which you are doing...you need to continue this strategy for at least 3 to 6 months. Once you are sure you are going on right track then start trading a very small amount of money in day trading, once you have got that confidence and experience and comfortness than you will be able to make a good profit by doing day trading.

Stock Market Overview

Stock market is a place where buying and selling of stock happens and the whole process is called as stock trading or stock investing. Fundamentally stock market is recognized as heart of each countries economy; in fact it is called as mirror of economy. Any unusual impact on economy puts a significant immediate effect on stock market. If stock market is able to give out consistent gain to investor, it shows a good sign of healthy economy.

Stock market performance is dependent upon the companies listed on stock market, in-fact if the stock market is performing very well, it becomes a chance for new companies to get listed on stock market via route of bringing their IPO, by which they can raise money, which they can use for their expansion plan or can use money to acquire new company or for any good reason by which the companies value will increase in future giving high returns to company owner as well as investors.

If companies listed on stock market are profiting good, it gives out a positive signal of healthy economy, which creates a center of attraction to local as well as large number of foreign institutional investor to invest their large amount of money. If more money comes into the market, it creates enough liquidity, which helps stock investors as well as stock traders to make more profit. If stock market is performing poor, it gives out negative impression of slowdown in economy which is bad sign.

With the globalization and increased standard of living of citizens it had become mandatory for government of every country to monitor and maintain their economy in healthy condition. A large amount of stock market performance is dependent on government policies. If the government policies are suitable to increase the profit growth of companies than it will show a healthy sign in stock market. Stock market is more active at the time of government announcement like budget, policies, regulations, etc

Other factors that impact stock market is increase of interest rate, increase crude oil price, unsafe global environment, and many other major external factors which might have adverse effect on economy.

History of stock market
The history of stock market is quite old. Centuries and centuries back, small amount of community traders come-up with an idea of stock trading/stock investing. With the development in technology, stock market also come-up with different look and developed ideas to conduct stock trading/stock investing and now a days with the recent development of technology, basically the internet which had brought a new revolution in stock market, many and many small retail investors as well as traders are able to do stock trading as well as stock investing from comfort of their home; and investors and traders with good understanding of stock investing and stock trading are able to make a good sort of money from comfort of their home.

Myth of stock market
It is having said that no one in the world, neither the stock market gurus like Warren Buffett, George Soros or Jim Rogers can predict the behavior of stock market but still these peoples makes consistent money through stock market by doing stock trading as well as stock investing because they are thorough with their stock market knowledge and adopts proper strategy which helps them to make consistent profit. Many of the experts also believe that stock market is a gamble market. A lot of time speculation plays an important role in stock market and it becomes a hard task for newbie to conduct stock trading or doing stock investing. Any euphoria in positive side makes a significant move of stock market in upward direction and it is good sign for many investors as well as traders to make a large amount of money, but if there is any negative significant rumors than it becomes a worst phase for stock traders as well as stock investors and particularly the small retail investors who are the worst impacted person in whole stock market. At many occasions millions and billions of money of stock investors are washed away in stock market due to any sudden significant negative occurrence and millions of the investor’s money is completely dried up in within few days due to this phenomenon of stock market, so having proper strategy and deep understanding of stock market is only a perfect thumb rule to make consistent profit in stock market.

Technical analysis of stock trading

Technical analysis is an important aspect of stock trading by which one can easily understand the direction of stock i.e upward or downward. Technical analysis is a tool mainly used by traders as compared to investors. Determining exact entry and exit in any stock is quit tough, but with the help of technical analysis one can easily discover exact entry and exist point in a stock in which traders or investors want to do trading or want to make investment.

Technical analysis had come up as an effective tool for many traders and investors for doing stock trading. Many technical analyses believe in price charts formation for conducting stock trading. With the support of price chart technical analysis determines the direction of stock, they can determine the exact bounce-back position of stock if the stock goes downward, and they can determine the exact reversal of stock if the stock moves upward. There are also various factors which fall under the technical analysis standpoint such as volume of the stock, moving average of price, overall sector performance, % of stock holding by big financial institution, mutual funds, per day, per week, per month, per year stock performance, etc. Technical analysis more believes in the same stock trends rather than undefined trends. If there is no clear trend pattern technical analysis loves to stop their stock trading or likes to remain out of market until a clear trend is form no matter how the overall market pan out i.e. move upward or downward.

More than investor, trader basically finds technical studies useful while doing stock trading. Fundamental analysis and technical analysis goes hand-in-hand. If there is significant fundamental change in any particular stock, an immediate impact is seen in stock performance and with the help of technical studies one can get a clear trend about the same stock. If at any point fundamentally stock is showing poor performance at that point technical analysis looks from fundamental point of view to a stock and makes his technical decision how big that particular stock will fall down further and same vice versa if the stock is fundamentally making good performance.

Fundamental Analysis Of Stock Trading

Stock trading is a very tricky task and one needs to be acquainted with how to do a fundamental analysis of whichever company in order to make a consistent profit in stock market. Fundamental analysis is a basic of stock trading or stock investing, which gives you a clear idea about the company from all aspect which might impact the business of any company either in positive way or in negative way. From investor point of view fundamental study of company and implementation of proper stock investing strategy can give high returns from your selected stock pick.

The first thing you should know and this is one of the main reasons that any rise in stock price is dependent upon the profit made by the company. The stock price is a reflection of profit and loss made by the company. Any consistent increase in profit of a company gives rise to increase in stock price and any decline in profit or loss made by the company gives rise to decrease in stock price, however at some situation this theory might be wrong as this could only be a temporary phenomenon appear to that company due to some external factor or internal factor that needs to be taken in account.

What is Fundamental analysis?
Fundamental analysis is a study done on a company to find perfect view about the company’s overall past performance and future growth prospectus.


The some of the points that comes under fundamental study is described below but are not limited to following.


Business Category:
Knowing the business category of company is more important for a stock investor to do stock investing. Investor usually looks in which business category the company is conducting business. There are several categories such as Information technology, consumer goods, commodities, cement, agriculture, auto, auto ancillary, hospitality, tourism, construction, telecommunication, finance, airlines, shipping, etc.

Investor who has a medium to long term perspective usually makes a correct view about the future prospect of the company by determining in which business category the company is happens to be. With the season changes, external factor, government decisions or any other internal or external factors various business categories are consistently impacted either positively or negatively so taking all the factors into view investors has to make his investment decision and time horizon. The company that captures, protects and manages intellectual property effectively can expect to profit from greater net revenue and higher market value. Companies which are aggressive in their particular business category, making innovative things, doing lot of research and development and are eager to make their policy changes according to the situation arises are mostly thought to be a winner and can make consistent profit and can rewards their shareholder also with that.

Profits/Loss or Bottom Line Growth
With the growth of internet it is now achievable for every investor to take a look at company website for their quarterly result. It has been mandatory for every company listed on stock exchanges to declare their quarterly result. The quarterly result clearly shows the overall performance of the company i.e. company is making profit or loss. If the company is consistently making net profit it is a positive sign for stock trading or investment.

Sales Growth
Same like profit/loss, investor can also review at the sales figure of the company and can compare that with the peer group for getting an exact idea how well the company is achieving big sale or loosing their market sale. Company which shows steady sale or increase in sale indicates a positive sign for stock trading or investment and will have a positive impact on stock valuation.

Market Capitalization
Market capitalization can be determined by the current market value of the company's shares which is the total number of shares multiplied by the current price of each share. With the help of market capitalization investor can determine in which category size the company happens to be i.e small-caps, mid-cap or large-cap.

Management Team of a Company
The management team plays important role in any company’s overall performance. Company growth depends on management decision and execution process along with the future guidance that company management predicts in coming days. Investor makes a careful look and reviews the management capability in future growth of the company. An efficient, trustworthy and integrity management team indicates a positive growth sign of a company and investor finds no harm in making investment in such a company.

Volume
Volume is an indicator from fundamental and technical analysis point of view. Investors as well as trades usually prefer doing stock trading or to do investment in high volume stock as it protect them from any future uncertainly if happens in the stock. If investor or traders want to buy or sell the stock, due to more volume their order is executed easily and fast. Low volume stock usually are traded infrequently and large selling and buying of stock cause the price to rise or fall significantly which involves high transaction cost. More the volume indicates more amount of buyers and sellers which help both the side investors and traders to execute their order in low transaction cost. Volume is also an indicator of the liquidity in a stock. Low volume illiquid stocks tend to carry large spreads i.e. the difference between the buying price and the selling price. Volume is a key way to measure supply and demand, and is often the primary indicator of a new price trend. When a stock moves up in price on unusually high volumes it could indicate that big player like institutional investors, mutual fund or a high net individual are accumulating the stock. When a stock moves down in price on unusually heavy volume, major selling could be the reason.

Return on Equity
Stock market guru’s believes that 20% and above earning is considered as a good return on equity.

Price-to-Sales Ratio
Usually investors prefer this number to be below 3, and preferably below 1. This measures a company's stock price against the sales per share. It is believed that a price-to-sale ratio above 3 roughly guarantees a loss while those below 1 give you a large amount of chance to success.

Earnings Per Share (EPS)
Along with other important factors from fundamental point of view, earning per share ratio is also that much important. It gives us a good understanding of company; it determines how much the company is earning for every share. Many of the investors who follow and believe in fundamentals look into EPS before purchasing that particular company stock. Earning per share is calculated by dividing the earnings (net profit) by the total number of equity stocks.

P/E ratio
Price-per-earning gives a better understanding how expensive or inexpensive a stock is. High P/E is said to be expensive and it clearly means investors are paying high price for a stock. Stocks with low P/E's are typically considered a good value. P/E ratio is derived as Price per Stock divided by Earning per Stock. For some investors high P/E ratio does not make any difference from investment point of view. If the company’s earning potential is increasing at higher rate; investor feels no problem paying high price for such a stock.

Debt-to-Equity Ratio
Debt-to-Equity Ratio find out how much debt a company has compared to the equity. The debt-to-equity ratio is done by dividing the total debt of the company with the equity capital. Debt-to-equity ratio more than two is believed to be more, but instead if the number is low, more the company is in safer side and is positive from investment point of view.

Beta
The Beta factor is a comparison with the overall index with a specific stock; basically it determines the volatility of a stock versus overall index. The higher the beta, the more volatile the stock is. Beta stock swings in contrary with the overall index, if the index falls, the stock rises and if the index rises the stock falls.