Personal Finance Tips » Good Investments

Stock Market Day Trading Charts And Your Day Trading Software

admin — Fri, 02 Jul 2010 11:09:21 +0000

If you day trade stocks, you probably use some form of intraday stock charts on your day trading software for analysis. Even trading firms which specialize in tape reading may keep an eye on a chart of the overall index just for a quick reference!

While the market’s mechanics are changing due to changes at the exchanges, greater reliance on algorithms by the institutions to execute trades, and other regulatory changes you still can use intraday stock charts to help you in your trading. There are several things you can do to have some foresight when it comes to your day trading:

Use a longer-term time frame on a chart to understand the “big picture.” For example, if you trade using 10-minute charts, take a look at the daily and hourly charts. Even you classify yourself as a “scalper”, taking trades with an expectation of making less than 1% of the stock’s current price (meaning a profit target of less than $0.30 for a $30.00 stock), the larger time frame charts will help you filter out those which are nearing significant support or resistance. Use charts showing the market internals. Intraday charts showing the TICK, TRIN, TIKI (Dow Jones TICK), TIKQ (Nasdaq TICK), Fair Value, and other market internals may be useful to your day trading styles. If nothing else, consider adding at least one or two market internals as parameters if you back-test any intraday trading strategies. For example, back-test the exact same strategy when the TRIN is less than a certain value; and then compare the back-testing results when the TRIN is above, or equal to, that certain value. Some day trading software packages may even allow you to put technical indicators (such as moving averages or RSI) on your market internals charts. Test this capability of your day trading software to determine if and when it will have any relevance for you. Do your end-of-day homework to determine which symbols have a likelihood of going up the next day and those which have a likelihood of going down the next day. While there are absolutely no guarantees in the market, using charts to help you determine POSSIBLE market direction can help you narrow your focus for the next trading session.
These three suggestions are just some of the many ways in which you may use your day trading software charting capabilities to help you possibly become a better trader.

Small Cap Equities – Are They Right For You?

admin — Sun, 27 Jun 2010 21:11:57 +0000

Small cap equities. Most people have heard about them and some have even ventured into them for investment purposes. The one thing many people might have noticed over the past couple of years is that small cap equities can be highly volatile whenever the economic conditions are questionable. (In reality, a lot of medium-cap equities became small-cap thanks to the devaluation of equities over the past two years or so).

Evidently small capitalization stocks are a little more sensitive to uncertainty in the economy. But what made them a little more sensitive during the credit crisis was that the credit taps were essentially turned off. This made it difficult for a lot of companies to obtain new credit or renew existing facilities. In instances where credit was renewed, financial covenants became more restrictive, forcing the companies to evaluate whether to maintain access to capital or to let go of the credit facility altogether. In cases where they had no choice, future expansion programs were turfed and they were left having to survive with whatever equity and cash they had on hand. Understandably, this became difficult and many small capitalization companies ended up going away.

However, the viable small cap companies that found their stock pummelled by the markets were faced with a rare opportunity; they could buy back their stock on the open market at discount prices. This is what many small cap companies did, allowing them to increase their treasury supply of shares so that, when equity markets regain strength, they can either leverage themselves against equity or acquire firms who are not as fiscally strong. Small cap companies that were able to execute on share-repurchase plans are telling stock investors two things:

1. Their stock is undervalued. This may be based on a number of objective financial measurements, such as price/book, price/sales and so on.

2. They have the ability to repurchase shares (meaning they have cash in the bank) and have long term plans for growth, which they will fund with their equity. This is a great tip for investors, particularly small cap investors.

So, are small cap stocks right for you? Well, this type of stock is not appropriate for all investors. In many cases, small cap shares are meant to be held for a longer-term, usually five years or longer. This longer-term horizon allows the companies to mature, sometimes increasing their capitalization and moving into the medium cap range (or even beyond in some cases, and companies like Research In Motion come to mind).

In addition to the time horizon, investors should have the risk tolerance to invest in such securities. Since there is more financial pressure on small caps, there is a good chance that they can disappear, particularly if the underlying companies have shrunk from large or medium cap shares to small. Companies that come to mind are Nortel Networks, General Motors, and so on.

For investors with the right risk tolerance and appreciation for the minimum time period will do fine with this segment of the investment world. However, entering into such an investment blindly will only result in frustration and, ultimately, failure.

A Stock Market Timing Secret Revealed

admin — Sat, 26 Jun 2010 12:49:08 +0000

Relative Strength Index (RSI) is a well known and much used
momentum indicator. It was invented by J. Welles Wilder Jr.,
a great technical analyst.

RSI compares the magnitude of a stock or index’s recent gains
to the magnitude of it’s recent losses and that information is
turned into a number that ranges from 0 to 100. A single
parameter is used, the number of time periods for the calculation.
14 periods is recommended by Wilder.

Common practical use of RSI in stock market timing is to measure
the underlying strength of the market and to determine if it’s
getting overbought or oversold. Wilder’s own recommendation was to
use 70 and 30 levels, to indicate an overbought and oversold market,
respectively. If RSI rises above 30 it’s considered bullish for the
stock or index. If the RSI falls below 70, it’s a bearish sign.

Bullish & Bearish Divergences
Stronger buy and sell signals can also be generated by looking
for positive and negative divergences between the RSI and
underlying prices. For example, a falling market index whose RSI
instead rises from a low point of 10 and back up to above 50. The
underlying index will often reverse it’s direction soon after
such a divergence. Divergences that occur after an overbought or
oversold reading, usually gives more reliable signals.

Center Line Break

A bullish or bearish indication is given with readings above and
below the 50 level. A reading above this center line indicates that
average gains are higher than average losses. A reading below 50
indicates that bears are winning the fight. For confirmation of
bullish and bearish signals, some traders look for moves above and
below 50, respectively.

Below is the author’s special indicator combination and settings,
for short & medium term stock market timing.

Daily Chart:

- 200 ema (exponential moving average)

- 89 ema (closing prices used for both ema calculations)

- RSI set at 25 periods with horizontal lines at 60 and 40

Weekly Chart:

- Walter Bressert’s Cycle10 plotted with horizontal lines set at 70 and 40

- MACD plotted with Signal Time Periods set at 5

By the use of a 25 period RSI on a daily chart, in combination
with Cycle10 and MACD, plotted on a weekly chart, larger tops and
bottoms can often be found. This special indicator setup can be a
contributing factor for more accurate stock market timing, although
no guarantees are given. Examples for 2005 are the significant April
and October lows in the OEX, (S&P 100) where the RSI dipped below 40.

Later in 2005 and so far in 2006, three RSI moves above 60 all alerted
about important OEX peaks, in November, January and March.

Below is how i use this as an alert system in my own technical analysis:

By using this 25 period RSI, instead of the standard 14 RSI, some
whip-saws will be filtered out. When RSI 25 climbs above 60
or falls below 40, odds are greater more significant tops and
bottoms are forming, respectively. This part of the system acts
as a warning, a trading opportunity shows up on the Long or Short
side and more attention is given.

Long (Bullish) Entry Parameters:

Weekly MACD must be in bearish mode (closing prices).
When Daily RSI closing readings falls below 40, (for a bullish entry
consideration) weekly Cycle10 must be in it’s buy zone (below 40)
and make a positive reversal on a weekly closing basis, before entry.
It’s important to separate between the daily and weekly charts used
for each indicator.

A less aggressive approach is then to wait for the high of the weekly
bar that caused the Cycle10 reversal, to be broken by a few points.
Depending on the risk tolerance, a protective stop can be placed a
few points below the swing low or below the low of the bar which caused
the weekly Cycle10 reversal. When weekly MACD’s signal line crosses it’s
moving average, a bullish trend reversal confirmation is given.

Taking Profits

Deciding when to take profits is often viewed as the most difficult
part of trading. I would consider taking profits, when the 38.2%,
50% or the key 61.8% Fibonacci retracement levels (of the previous
bearish trend) are reached. It depends on how overbought the market
has become, when those Fibonacci retracement levels are touched.
Another, usually slower approach, is to simply take profits when MACD
turns bearish again (MA crossover).

The odds for a successful trade would increase if weekly MACD has just
been through a bullish divergence pattern formation first, before
entering bullish mode (MA crossover).

Other profit taking suggestions are when weekly Cycle10 makes a bearish
reversal up in it’s sell zone (closing basis). A drawback with this
method, is that Cycle10 doesn’t always reach it’s sell zone, before
making a bearish reversal.

Another good point to take profits, is those times when the key 61.8%
Fibonacci price level is reached and Cycle10 at the same time is in it’s
sell zone. In this case a bearish Cycle10 reversal is not waited for.
Any market wants to reach it’s key 61.8% Fibonacci zone, 60-70% of the
time, before making a new trend reversal.

Short (Bearish) Entry Parameters:

Weekly MACD must be in bullish mode (closing prices).
When daily RSI rises above 60, weekly Cycle10 must be in it’s sell zone
(above 70) and make a bearish reversal on a weekly closing basis, before
entry. Again, a less aggressive entry, is then to wait for the low of the
bar which caused the Cycle10 reversal, to be broken by a few points.
A protective stop can be placed a few points above the swing high or the
high of the weekly Cycle10 reversal bar. When MACD’s signal line crosses
it’s moving average, a bearish trend reversal confirmation is given.

Taking Profits
The same suggestions as for the Long entries, it depends on how long you
are willing to stay in the trade.

When the 38.2%, 50% or the key 61.8% Fibonacci retracement levels (of the previous bullish trend) are reached.
When weekly Cycle10 makes a bullish reversal down in it’s buy zone.
When the key 61.8% Fibonacci level is reached and Cycle10 at the same
time has entered it’s buy zone, without waiting for a bullish reversal.

For your profit taking decisions, the 89 and the 200 EMA, plotted on the
daily chart, can also be used as important resistance and support levels
to be aware of.

In general, not more than 2-5% of the total trading capital should be at
risk in any trade. This prevents the trading account from being wiped out,
when a streak of losses may occur, as can happen in any system.

The trading strategy outlined in this article is in no way the “holy grail”
of stock market timing. It’s an opinion of when important market tops and
bottoms can be expected and hopefully be useful information in this regard,
a tool in the tool box, if you like.

(c) Copyright Arild Myklebust

Investment Information For Beginners

admin — Sat, 26 Jun 2010 06:02:50 +0000

To find out information to begin your investment life you should have a good understanding of why you are investing. Do not invest just because somebody told you start investing. The why is often more important than the how. The reasons behind your investment decisions will give you the motivation and the clarity to make your decisions wisely.

So lets assume you have the reasons for your investment decisions. Next you need to to look for information that will tell you how to invest.

If you are investing for the longer term you are most likely looking at property investments or a superannuation fund. . The investments will require research. Some people often enter blindly into these investments without much consideration for the long term outcomes.

Consider The Outcomes

Consider the outcome you wish to achieve for your long term investment and plan backward to achieve it. This is done by looking a compounding growth factoring and allowances for fees and charges and expenses along the way. This way, you will have a good understand each year of just how your investment is performing against your calculated expectations.

Look to real estate agents for information on costs related to council rates, body corporate fees, and other ongoing maintenance fees. Look to builders for costs associated with repairs, maintenance, and structural improvements that will be needed over the longer term. Look to financial planners for ongoing fees, interest rates and any extra charges that may occur over the longer term. Contact and talk to your accountant for calculations on taxation matters and the best way to structure your investments.

Education Can Cost

Finally learn as much as you can about your investment. Attend seminars. These hold a wealth of information and people who are like minded in their approach to investing. Ask questions relevant to your investment decision, and gather further sources of information from the seminar providers and people attending the seminars.

Don’t be afraid to invest some money in learning more about your investment decision. Often information and knowledge will cost. All schools are setup and operate on this basis. The cost of education can be far less than the cost of the mistakes made in making the wrong investment choices.

Invest With Confidence

You will know when you are ready to invest for the long term because you will feel confident in your decision when you do invest. You will have the relevant knowledge and information to act confidently. Your plan will fall into place and you will be able to measure your results as your investments age. Should your investments not be performing as well as expected, you will be ready to act will alternate plans and actions based on your previous and current research. Corrective action will come easily and effortlessly.

This is a brief outline of how to invest when you are a beginner. Follow these steps and you will so be a professional investor. For more information on

Investment Tips

admin — Tue, 22 Jun 2010 21:14:31 +0000

1. Widen your horizons

The expression, “don’t put all your eggs in one basket” is meaningful when it comes to investing. Don’t put all your money in one stock. Also, buy bonds, debentures and stocks. Don’t pick only one type of investment. Your portfolio must be diversified.

2. Examine the existing date

Obtain and analyze as much information as possible before making your investment decisions. This will provide you the basis for investment. And on the basis you would be able to take correct decision.

3. Establish your goals

Determine the price at which you’re willing to buy and sell. Analyze interest rates to decide what return you want. There are various types of investment where you can invest. For achieving the goals , you financial decisions must be based on your risk bearing capacity.

4. Higher the Risk : Higher the return.

If you want to have a higher returns you need to take higher risks. So if you can not afford to loss, do not invest beyond your limits.

5. Only Long term investments are good investments

Company stock prices will fluctuate, sometimes unfavorably, in the short-term. Invest for the long-term, but keep your current financial needs in mind. In long term, the market will repeat the history and you should wait for that.

6. Don’t take sudden decisions.

An impulse buy, whether at the mall or on the stock market, is still an impulse buy. Stick to your plan.

7. Tax Planning Is vital

Consider income-splitting techniques.

8. Focused assist

If you’re starting out, you must hire the best professional help . Professional advice will likely pay for itself within a short period of time.

Stock Newsletter Can Improve Your Trading Acumen

admin — Thu, 17 Jun 2010 22:47:56 +0000

The World Wide Web has opened up a whole new venue for the method in which investors make stock picks. In today’s world, by downloading the appropriate software, anyone can view the performance of their investments online in real time. In previous years, only full time stock brokers had this information available to them; now, it is readily available to all investor savvy individuals.

The flow of information had changed dramatically. An example is the stock newsletter. Then, a stock newsletter was mailed and the information will typically be several days behind when it arrives at its destination. Today, your information reaches you in the form of either e-mail or in the form of you visiting a website that may have been updated several times daily. Although some information requires a fee, there are others that are free. Quality is not always assured by price paid.

The goal of the market investor is to make money quick by recognizing hot stocks. However, investing in long term stocks are equally as important. By spreading out investments over a multitude of companies, the risk significantly decreases. Companies who “put their eggs all in one basket” face the risk of a detrimental downfall if their investment does not do well. To successfully understand the market, a stock newsletter is highly beneficial because it allows the investor to get a thorough understanding of the entire market and provides essential tools in choosing what investments are right for them.

While a newsletter could never take the place of a good broker, a knowledgeable finance advisor, or even your own experience, it can provide additional information to consider and use to your benefit and will give you a good general overview of the markets as a whole.

What exactly should you look for in a stock market newsletter? A good newsletter will highlight the possible price changes in stocks, forecast future industry trends, and give an overall view of the market. It should also offer some educated opinions regarding future price and volume movements. But a good newsletter isn’t about guessing the future, it’s about basing predictions on data gathered from historical statistics and presenting them for your own analysis as well.

You should seek out newsletters that are referenced and quoted by other reliable financial publications. After all, if other leaders in the industry seek out a given newsletter, its content must be rather good. Ask experienced investors and other financial professional which newsletters they subscribe to and trust. Wireless technology can now deliver quotes and updates instantly whenever events occur;

Personal Finance Topics Explained

admin — Wed, 16 Jun 2010 16:57:34 +0000

The various ways and methods you use to obtain money and the things you spend it for are what make up your personal finances.It implies not only the various channels through which you acquire funds for your personal use like loans and credit cards; it also includes the process of budgeting, saving and expenditure.

We need to, first of all, take a glance at the differing ways we borrow money. If you borrow money through credit cards you have to pay it back later with interest. Today the use of credit cards is quite widespread, but it is necessary to take caution when using them. Overspending when you are using credit cards is easy to do, so you may regret it when it comes time to make payments on the high interest balances.

In contrast, personal loans will reduce your spending because you will be borrowing only the amount you need for the purpose of your loan. You may use a personal loan for differing purposes, like home loans, auto loans, debt consolidation loans and to do cosmetic surgery. A personal loan has interest attached too, so you must abide by the terms of this loan to make repayment. If your loan is secured by collateral, you have to be more careful because if you fail to repay, you stand a chance of losing your assets.

The best results with the financial opportunities you have offered to you may be simple to arrive at and it could begin with you. The characteristic of prudence, and being economically minded and taking the time to research the loan market are all helpful. When you understand your financial limits and ability to repay, you can create a proper budget and maintain the habit of keeping with it. If you keep accurate record of your expenditures and begin to understand your spending habits and make the changes you feel are necessary, you will also be given an understanding of your credit card usage.

The loan market has trends and offers you must become acquainted with before you make any final loan deals. Do not hesitate to ask for a loan quote, this is the best way to get an idea of the cost of the loan. When you have the loan quote you will better understand whether or not you can afford the loan and comfortably pay for it, however, make sure you read the fine print to carefully look for hidden fees and costs.

Personal finance controls your quality of life and measures your ability to keep the economy of it under your control. When handled well, your finances will take care of the other parts of your life, but when mishandled, your finances will cause you nothing but anxiety and concern. If you gather as much information as you can on personal finances and learn how to handle your own you will be able to live a relatively safe and stress free life. Personal finance for each one of us consists of our own particular puzzle pieces to fit together to form a complete financial picture for us.

Behavioral Finance – Can Penny Stock Prophet Still Profit?

admin — Sun, 13 Jun 2010 10:05:35 +0000

Recently, there has been a new development in the field of finance that I find worth mentioning. With all things being studied and analyzed today, financial economists have teamed up with behavioral psychologists to create the new field of “behavioral finance”.

In studies of college students, questionnaires are given asking for comparisons on various skills and abilities. The idea is to get a feel for how individuals see themselves in relation to their “average classmate”. Interestingly enough, the overwhelming majority see themselves as above average in their opinion of their abilities. This holds true across the board, even in areas you would think it would be difficult to delude oneself like athleticism.

The point I want to make here is that people generally feel that they are above average. So how does this relate toward investing? The research shows us that people are not always rational. When someone makes a successful investment, they can easily become overconfident. In a bull market like the one at the end of 1999, with tech stocks skyrocketing, it was almost routine to double your money in an investment. Perhaps opportune timing or just plain luck could be interpreted or confused with skillful trading.

People tend to think that they have more control over things then they actually do. Remember, the market can do anything it wants at any time. There is no dependable way to predict the future movements of the market. Try to keep your grip on reality firm, your feet have to stay planted on the ground. Patterns in the stock market will never last forever. Any trend that you notice, once it has been discovered will eventually be exploited.

To keep yourself from making the mistakes that can come from being overconfident, let’s use an amateur tennis analogy. The player who doesn’t try to do to much usually has the advantage. Don’t beat yourself by over-hitting or trying to be too fancy. Keep the unforced errors down and steadily return the ball.

If you use this same philosophy with your stock market choices, it will take you far along the road to achieving your long-term financial investment goals.

Three Real Estate Investment Tools You Must Have

admin — Thu, 10 Jun 2010 22:28:16 +0000

There are three real estate investment tools that all investors must have and use. Each tool is common sense but unfortunately not used. Each tool can save you thousands of dollars or in investment terms make you thousands of dollars. One of these tools is free and the other two cost only around $400 dollars total. Get your tool belt out and make room.

Tool number one is get a home inspection. I don’t care if the home is brand new you need to get it inspected. The obvious reason is to protect yourself from major repairs and the repairs that no amount of money can fix, but there is a not so obvious reason. Getting a home inspection can help you get a much better price for the home. The home inspection is a great bargaining tool. Let’s say that after you get a home inspection the estimated repairs are $10,000 dollars. You can now go back to the seller and negotiate either the sales price or get the seller to fix the problems. The other reason is peace of mind. I don’t want to buy a home without knowing what is wrong with it. How can I make a good investment if there could be unknown cost? A serious investor knows the true cost of the investment before making he investment. Make sure you order a home inspection before you buy.

Tool number two is a termite inspection. I live in the south and termites are eventually going to invade a home. It doesn’t matter what type of treatment you get on a home you will eventually get termites. The big question is what is the extent of the damage. Most homes in my area have small amounts of damage around the garage and doorways. The main reason you need a termite inspection is to protect yourself from major damage. It is easy to see the termites from the outside of the home but near impossible to see the damage inside the home. Do yourself a favor and get a termite inspection.

Tool number three is a home appraisal. I know what your thinking, doesn’t the bank take care of this. Yes, but their ordering an appraisal to protect their interest not yours. You need to know the value of the home before you make an offer. To often people look around the neighborhood they are buying in and get a ballpark figure. This is not good enough. There are several free online real estate appraisal serrvices on the internet and you should take advantage of each. It only takes a few minutes to receive reliable appraisals from these sites. Once you know what the property is worth it makes negotiating much easier.

Make sure you use all three tools religiously. Each tool will make you money and make your investment dollars go a long way.

Insurance Investment Vehicles – Personal Financial Book Review

admin — Thu, 10 Jun 2010 03:49:36 +0000

Most people don’t want to think about life insurance, and they certainly don’t want to think about dying. And then there is that famous quote; “I don’t want to be worth more dead than I am alive, otherwise someone might get a big idea.”

Since no one wants to talk about it, and it makes it very difficult to sell life insurance. But consider if you will using this type of insurance as an investment vehicle, one that will provide for you in your retirement years, and one that will take care of your family once you are gone; if you think of it that way if the double win.

If this topic interests you, but you really don’t want to talk to a life insurance sales person right now, then perhaps you need to do a little bit of research, and perhaps, buy a few books on the topic. Indeed, I have a few books like this in my personal library. One that I like to recommend to you right now. The name of the book is;

“Life Insurance Investment Advisor; A Guide to Understanding and Selecting Today’s Insurance Products” by Ben G. Baldwin and William G. Droms, 1988.

This book is a wonderful book and it discusses all types of life insurance, broken down by section and chapter. A good part of the book is about Annuities along with;

Whole Life Variable Life Universal Life

The book also discusses taxes, trusts, and other strategies. Yes, it is true the book is somewhat old, but nevertheless, the fundamental theory behind life insurance as an investment vehicle remains the same. And there have been lots of law changes, but the book also has a chapter on the future, which now is the present. And it presents some good philosophical arguments, and this book is well balanced with both the pros and cons. Therefore, I’m going to have to recommend it to you.