How Trade CheckList

1. Economy

The first and the most important step in determining whether it is the perfect time to invest in stocks is to look at the economy. The reason why stock prices rise and fall in value lies in the company's ability to make a profit. If the economy is not in good shape it is because businesses which makes or breaks a country's economy are having a hard time to be efficient with their day to day operations. If company sales are slow it affects growth therefore investors would not be willing to pay more for a single share of a company's stock if they are not making a profit.Although there is always a bull market and a bear market somewhere, it is important to determine where the economy is going in general to help you decide which stocks you should trade long or short regardless of where the economy is heading. Going long or going short on stocks without first assessing the economy is like driving a car at night without headlights on.
Examples of economic indicators to keep a close eye on are the CPI, PPI, housing market data, currency data, non-farm payroll and interest rates. One good website that provides these data would be the national bureau of economic research

2. Pick a sector

A sector groups companies by the type of business they conduct on a daily basis. For info on which sector your stock falls into, one good destination would be yahoo finance A sector mirrors what area of the economy would be greatly affected.For example interest rate cycles that goes from very low to very high in a short period of time, chances are during the time when interest rates are so low it would be profitable for banks to lend out money to people but when interest rates spiked all of a sudden the amount people have to pay for the loan would increase, if the borrowers can't keep up there would be a credit crisis. At this time it is clear that the financial sector would be heavily hit. You would stay out of anything that provides financial services when you discovered that the economy's problems lies in the financial sector or go short on financial sector stocks if you can anticipate the problem looming ahead.

3. Select stock

After determining which sector would be the most active at the current economic condition, it is time to pick the stock within the sector.It doesn’t matter which stock you pick. It could be the best performing in the sector at a time when the sector performs well or the worst performing onewhen the economy is not in favor with the sector.If you’re looking for a long position it is obvious to pick the top three best performing companies in the sector and have a side by side comparison.Shorting the worst performing stock on a bad performing sector gives you the profits in a reverse fashion. This step is an apples to apples comparison in which you pick several stocks in the sector and comparing it with the other ones using their income statements and basic metrics.

Trade Market Movers

We have covered the basic causes of stock price fluctuations based on supply and demand and the firm’s perspective. Companies have a given number of shares available for trading and the price is determined depending on the quality of the business and its stocks’ current supply in relation with the current demand for it. But what would be the pivotal point to which investors’ sentiments are shifted that influences the value of a given security?
It is common to hear from a hardcore economist or investor that the equities market is an efficient market, whereas, an event that occurred moments ago has already been priced long before you hear the news whether it is good or bad. You don’t have to be a psychic to determine an ultimate target price for a group of securities you are keeping a close eye on. Trading the news is effective, but most of the time those are just small inconsistencies from an already unfolded trend that occurred way back. Jumping right in front of it could be costly; you don’t want to be standing along side a group of bulls running in different directions it’s going to be crazy out there if you would! This is what they call the noise in the market whereas when viewed at a much wider and bigger perspective it cancels the noise and all that is left is a clear trend that identifies its motives. The market also is a self winding spiral to whichever direction it is headed. It can be described as a herd which follows a general and influential direction and reverses when a single unit in the herd tries to turn around because of some unknown interruption and others followed which when seen by more members in the herd would interpret it as a change in course signal. For more about this, see Elliot Wave Theory. Putting all these together, determining the general price direction for the stocks you are keeping an eye on lies on a more general economic scale.
When a group of securities goes south or the market as a whole, there was a chain of event that went down over which if identified in a timely manner, would give you light years ahead worth of warning or notice. Knowing what caused the failure or the advance down to its very root would give you a better chance at playing “psychic” on the equities market. The word magic depends on the viewer’s perspective, magic means something that can’t be explained or outside the realms of understanding of the audience. On the master’s perspective, or the performer, it could just be merely pulling a string on something that produces the effect known to the audience as “magic”. A new technology in the eyes of someone that had never seen it before would interpret it as magic, but as soon as the technology was revealed behind let’s say laser guided bombs, the God-like magical effect would vanish. Applying this to the market, researching down to the very root of possible causes allows you to draw a conclusion on which group of securities would be highly influenced based on the current economic standing of a country or international trade balances at a particular moment. This is like setting a spot light on an area to which the current economic condition would take its effect the most.

Trade Short Selling

Buying low and selling high has always been the primary objective of investors, but most of the time they end up doing the reverse by buying high and selling low. The market in general, trends in an upward direction, so buying a stock cheap and selling it higher would be the obvious thing to do. A growing economy would always equate to an increasing revenue for businesses so as their stock prices. On an uptrend market, stock prices steadily increase as long as their underlying company's profits hit the mark towards growth. Market directions are fueled by what is going on in the minds of investors. It is a common saying that reputation takes time to build but only seconds to destroy. Same thing happens to investors' confidence towards a company on their radar. It takes time for a stock to reach a mark but when bad fundamentals hit the company even just a small hint of it would cause the price to fall faster than it did rose to its previous price. In this scenario, an investor could profit from the decline by shorting the stock. When you buy a security and selling it higher, you are trading a long position, hoping the price would increase at a later date. When we see that a stock is overpriced for its current fundamentals and expect the price to drop at a later date, we assume a short position. Its like riding a time machine and jumping right at selling a stock at a high price without first buying it at a cheaper price and you don't even own the stock you're selling. Shorting is done by borrowing a stock from someone and immediately selling it at the current price. When the price drops, those borrowed shares are purchased at a lower price and finally returning it to whoever owns it. For example, you're shorting Archer broadcast company (ABC) and you borrowed 1 share of its stock from your sister. You sold that single share of Archer broadcast company as soon as you got a hold of it and got $10 from the sale. Three months had passed, the price of ABC fell to $5 a share, since you owe 1 share from your sister and sold it, you need to give it back. You then bought 1 share of Archer broadcast company at $5 and finally, you returned that single share to your sister, therefore you profited $5 from that activity since its cheaper to replace the share you borrowed and sold. But if the price of ABC never fell and instead rose to $15, it takes an extra $5 out of your pocket to replace that single share you owe.
Selling shares applies downward pressure on the stock, shorting can only be done when the stock is on an up tick meaning when the stock is trending up to prevent the share price to fall further. However, a stock that is constantly being shorted through time would definitely cause it to drop in value. That up tick rule by the SEC only prevents it from falling faster say, in a single day.

Trading Intro

Starting a business could be a major goal for some people, with a startup capital that is sufficient and efficient enough to run it and a well polished balance sheet you're good to go. The owner should have a good knowledge about the fundamentals of the business he or she is into otherwise it's just like a piece of free falling meteorite burning cash and disintegrate long before it hits ground instead of a hen laying golden eggs that it should have been.A startup business might take a while to get it running under its own steam, lets say, you might be uncertain if there is a strong market for your products or services. Other factors would include convenient access for your target market, visibility and current demand within an area. Buying a business that has been proven profitable is an easier option. In this case, It's a step ahead since we wouldn't have to worry about setting up everything and building a huge customer base. Since after thorough research about the business you're aiming at buying, it might just need a little tweaking to further boost profits. So what if it's not profitable? would we still want to buy a business that is not going to provide any return? Well, sometimes it all depends on who is at the helm of the company, how they conduct operations and resource allocation. So if you think you can run that business better than the current owner and you can see its real potential plus it is being sold at a price in which you consider it to be cheap, then, you have nailed a perfect business opportunity. That is if you have enough cash to purchase it entirely. But what if you only got just little over a half or even a quarter of the total amount? could we still be able to own that business and have control over its operations?

Trading stocks

Stock shares are fragments of the total value of a company. Each share represents a degree of ownership on a business by the holder. Stocks are a direct reflection of the performance or potential of a company, in other words its like a corporate report card graded by investors in the market from which it derives its value from. For businesses, it is one of the many ways they could raise cash without the burden of debt.

Types of stocks:

Common stocks as the name implies are ordinary types of shares that is widely available. When talking about buying stocks of a company it is usually common stocks that are being traded. Each share of a common stock represents a single vote for matters concerning the company. In the event of company liquidation, common stock holders are at the end of the line to receive payments over preferred stock holders and creditors.
Preferred Stocks represents a higher degree of ownership over common share holders. Holders of preferred shares receive fixed dividends and are paid with assets before common stock holders in an event of a liquidation. Voting rights on this type of stock depends on the company if they would give the option to its holders, but once it does, preferred stocks have greater voting rights over common share holders. Companies have the option to redeem outstanding shares of its preferred stocks from its share holders at a higher price. Preferred shares can be converted to common shares.

Tips For Trading

I was one among the common man who was watching the market silently but sounds from media and analyst’s everyday crossing decibels. Let me also contribute to that since I have some regular visitors to my site.
Remember it is market psychology that drives the market now and not rationals. When we are emotional we don’t think about what we do and simply utter words and the market is behaving in the same way.
As I always said don’t be a herd in the market. Have your own taste of success or failure in the stock market. If you really study the fundamentals of the company not by Ratios or High funda financial terms but by common knowledge it will form the basis first in most of the times.
First let me put my views on the market.

What’s the reason for Bull Run till now?

It’s simple. The value of Indian companies were reaching heights because we hadinvestorsbuying from outside.We have to agree that it was over valued to a certain extent because of the bullish mentality of FIIs and the credit availability terms they had like less interest rates etc.

What happened suddenly and markets became bearish?

When credit was tightened and interest rates were hiked in US most of the mortgage loans were on floating rate and many people defaulted.This led to liquidity crises for lenders.
There arouse a demand for money in US market. FIIs so who needed money started to sell their investments in India to get back money for their livelihood and hence notional value of Indian stocks are going done. Indian economy is certainly insulated. Indian economy in terms of imports is not much dependent on US. The good part of the story is that unlike China, which had an export oriented economy, the Indian economy was based on the domestic market. The India’s trade theory is changing a lot as it is turning out to be more of a manufacturing export oriented country. The net trade of services done by India accounts to about just 22% just reflecting the risk on trade services is tried to be minimized. Also in the current scenario the trade practices of India with US has decreased and on the other hand has relatively increased with China reflecting out that the risk of US recession has been deflected.Also recent crisel research indicatesIndian banks have limited vulnerability. (CRISIL RESEARCH). Indian banks’ global exposure is relatively small. nternational assets at about 6% of total assets. Even banks with international operations have less than 11% of their total assets outside India. The reported investment exposure of Indian banks to troubled international financial institutions of about $1 billion is also very small.

What’s Behind Indian Companies?

Indian companies’ notional value of its share prices has gone down but nothing like mortgage crises in US.They are strong on the asset base and in terms of fundamentals.
Just take a company like HERO HONDA. Just let’s look from layman point of view. I had invested two years back and it never went up and it is going up now. In an average Indian mindset this bike is something very common. The availability of credit will impact the sales but it won’t have a drastic impact since it is almost a necessity as far as Indian market is concerned when compared to other industry. I am not saying blindly buy by this. Take this as core then do all fundamental and technical analysis and ponder on it.Indian companies’ debt equity ratios are decent. Nothing like there is an internal failure in terms of technology or accounting malpractice.
Only thing is companies in IT sector got projects from US and when their economy is down no projects and hence no profit and its effect will be there in other industry as well.So the basic thing is that there is money problem which Indian investors thought that their investments will go up but no one to buy their portfolios. Others who has gained some profit turned towards safer side seeing the risk in the market.RBI measures will benefit banks on short run and companies on short run but the pumped in 1.4 lakh crores by CRR cut and others will be useful for stabilization if the companies gain back their money which they have as inventories before the money pumped by RBI is eroded as working capital.This is a slow process and it will take nearly a year for the positive sentiment to gain back in the market but our companies are fundamentally strong with less overseas exposure in their investments in the collapsed financial institutions.

INTRODUCING CASSANDRA RAE

Cassandra has joined forces with AFW as a Beauty Editor. She will offer advice and reveal trade secrets in her monthly articles on Makeup Application, featured here on AFW. Cassandra Rae Ferguson is a Freelance Makeup Artist of over 8 years.
With a wealth of knowledge and experience in the Fashion, Film and Television industries, Cassandra has worked alongside many of Australia’s best photographers, fashion designers, stylists and cinematographers.
Cassandra is well-versed in Makeup Artistry and her accomplishments extend the Makeup industry. Since gaining qualifications in 1999, Cassandra has built a career from experience in Sydney and in Perth. She has worked on television programs, commercials, films and catwalk events such as Fashion Week and the Perth Fashion Festival. Her makeup design has featured in catalogues, magazines and calenders nationally. In addition to this, Cassandra’s roles include Makeup Instruction and Styling for Australia’s top model and casting agencies, as well as Beauty Editor and Columnist for various online Bridal and Fashion Magazines.
Cassandra currently resides in Sydney, specialising in Bridal Makeup, having gained a high profile in the Bridal Industry over the past 8 years. She is always happy to share trade tips and secrets with her clients. With the belief that makeup application should be fun, Cassandra aims to cut out the myth and mystery, without being dictatorial.
Therefore, Cassandra is delighted to offer beauty advice on All For Women. Cassandra will provide advice on all aspects of makeup application. Learn how to achieve different looks, use products/equipment and get great makeup looks on a budget.
Are you stuck in a makeup rut and need some expert advice, or would simply love to learn some insider tricks? Ask Cassandra!

CFD/Share Trading

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CFD Products
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CFDs Explained

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