By Arthur Goldberry
Once you begin to consider making some initial stock trades, you may feel quite overwhelmed. There are so many things to take into account, and at the back of your mind, there is the worry that you will lose your money. This article's tips will help you invest prudently and profitably.
There are many complimentary resources that can help you research investment brokers before you entrust them with your savings. A thorough background investigation will lessen the chances of you falling prey to someone who will defraud you.
Consider investing in dividend paying stocks. With a dividend stock, you can offset most stock loss through the dividend. If the price increases, you will have an even higher profit margin. Overall, these can also give you periodic income.
Before selecting a stock, understand how it fits in with your goals. Some common goals include building your stock portfolio or making low-risk investments to supplement your income. Whatever your goals, being very clear about them can help you choose a good strategy that will help you find success.
Ask yourself what drives the value of a stock. Listening to your instincts can give you a lot of information. As well as looking at the balance sheet of the company and judging that they are honest, the next question is if you would actually use what they offer. If the answer is no, then you may want to think again about investing in the company. It's also possible that you won't be able to make a good judgement call on this particular stock.
Using a constrain strategy can be an effective way to invest. This is seeking out stocks that nobody really wants. Search for value in companies that are under appreciated. The companies that every other investor is trying to buy often sell at a premium. This leaves very little opportunity for any upside. Look for lesser known companies that has solid profits, and you are likely to find a much better investment opportunity.
Finding and attending a local seminar on stock market investing might be a good idea if you are starting your investment career with minimal stock market knowledge. You can usually attend these seminars for a minimal fee, and they are usually taught by people who know a great deal about the stock market and what it takes to be a true success.
Make sure you research any company you are thinking of investing in. A lot of people make rash decisions and invest a little too quick into a stock they hear has potential. Then the company does not go as well as planned, and investors lose a large amount of money.
Anybody has the ability to invest within the stock market, but only some have the knowledge and desire to research in order to earn the highest profit. Concentrate on acquiring as much knowledge as possible about how the market operates, and what companies are good to invest in so you don't end up losing a lot of money. Keep these tips in mind so you can start investing today!
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By Louis Kinchel
You will never usually find penny stocks listed at major stock exchanges like NADAQ or the New York Stock Exchange because penny stocks don't meet the listing requirements. Stocks become listed by meeting the listing requirements such as filing financial reports regularly, having a minimum number of shareholders and a minimum amount of assets. Listed stocks are also supervised by the Securities and Exchange Commission, the SEC.
The penny stocks are normally found on the pink sheets or the OTCBB. If you want to buy over-the-counter securities like penny stocks you need to go to the OTCBB which is an electronic quotation system that is designed just for that purpose. These companies must file finical reports to the SEC if they wish to remain listed here. If this requirement is not met then the company can only be quoted via the Pink Sheets. The Pink Sheets activities are not monitored or regulated by the SEC.
No filings need to be done for a company whose total assets are less than $10 million or if they have less than 500 shareholders.
Penny stocks can be vulnerable to manipulation and scams. Normally the stock price is lower than $5 and as the companies are very small the capitalization is very small as well. Because penny stocks are not heavily reported on this can make it hard for investors to find out information about the company, its situation and its outlook.
Many scammers can use this to their advantage by publishing misleading information to increase the price of their stocks. Because of the lack of interest shown by the public, and the low number of shareholders there is generally not much trading going on. This can mean that with a few buy or sell orders the price of the stock can change dramatically.
The low liquidity of penny or micro-cap stocks are their biggest advantage. Whilst a listed stock can never move in great leaps and bounds penny stocks go that often. The low share price allows you to buy multiple shares in the company with very little money. So it is easy to see that a little change in price either up or down will have a big impact on the performance of your shares.
Whilst the low share prices and the chance at making big money are a lure for young novice investors the penny stock market is definitely a place of experienced traders to play. There is always some amount of risk involved when investing in penny stocks. Some of these companies will not be able to make a turnaround and will end up going bust. This will make your shares worthless.
This could take a while because many penny stock companies have little or no working capital, assets or they are still in the development stages. It is important that you remember that you might not be able to sell your shares for days or even weeks without a big discount because of the low liquidity.
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By Gina Parks
Sometimes investors can feel that they do not have enough clout within the companies that they have invested in. If this happens it can become difficult for the investors to make the most of any opportunities and profit from them. Penny options can help you to increase both your portfolio and your leverage within the companies you deal with.
Many stocks increase gradually, normally in increments f five or ten cents. Penny stock prices don't use this pricing structure, instead their prices rise in pennies. These are a great way for you to increase your leverage as these stocks will require less capital to start up and if they do fail, you won't lose too much.
Because of the reduced competition and lower amounts of money required you can quickly reap large gains from your penny options. Because you won't lose more than your initial investment many investors are drawn to taking stock options. There are some drawbacks to buying options as opposed to buying regular stock. The main drawback is that penny options have the tendency to change massively in a very short amount of time. It is important to remember that these changes could be for the worse instead of the better.
You should always to the work to find out if a particular stock option would suit your requirements. The liquidity of cheaper penny stocks may not make them suitable for your needs. You should check your brokerage cancellation policy to find out what you need to do. You should always make it a priority to find out what the time decay is n any options your are considering. You should only buy options that will expire well after you plan to sell them, for example if you planning on trading your options in 10 days time choose options that will last for 30 or 40 days.
You will not need to worry about the expiry date of your options if your are planning to trade them for one day. In this case the front month option will work fine for you. It is sometimes harder to get your hands on penny options nowadays as they are not as common as they once were. Lots of cunning investors use this method so why not you?
You should always try to be patient when trading penny stocks. Penny options can move quite a lot in a short amount of time, so instead of stressing and panic sit down and relax. If you are a worrier then maybe penny stock are not for you.
A great way to get yourself some extra leverage without the capital you would need for blue chips then trading penny options might be for you.
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By Randall Cox
The Stock Market Industry Beta is the measure of the movement of a stock's trading prices as compared to the market as a whole. By knowing this figure, a person will understand just how volatile stock is. A beta of 1 means a stock's price fluctuates exactly as much as the market. A beta less than 1 means a stock is less volatile than the market and a beta greater than 1 means that stock is more volatile than the market.
Beta isn't just for stock; it can also be used for industries. Industry beta compares an industry's volatility to that of the whole market. For instance, technology stocks would be more volatile than the industry, so the beta would be more than 1.
To find the industry beta, you have to have some historical data of the price of the industry stock and the historical price data of the entire market. For example if you were going to calculate beta over the last year for compare technology stocks versus the S&P 500, you would first gather the historical data you need. Next, you have to determine the movements of the two prices after every trading day. This will give a percentage change versus the previous day. Once we have 365 of these we can average the group to determine the average move each made over the last year. Call the average industry movement Ri and the average market movement as Rm. Divide the technology industry's movement by the S&P's average movement, and you'll have an outcome of 1 (equally volatile), less than 1 (less volatile), or more than 1 (more volatile). If you write the function, it would look like:
Ri / Rm = (Ri, Rm) / Rm
Beta can be of great use in stock research when it comes to judging how risky a stock is versus a stable investment with a guaranteed rate of return. Also know that the longer the period of time beta is acquired, the more accurate beta will be. Beta is also valuable when used with stocks that have a long record of high volume trading. Smaller stocks that don't trade a lot can fluctuate wildly on a busy day and throw the beta out of whack for the period being measured.
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