Trading Low Volume Stocks

Low volume stocks can make it much more difficult to trade profitable. For that reason it is better to stay out of these stocks regardless of how the set up looks.

Volume should be looked at every time you place a trade. What volume does is tell you exactly how much of a given stock was traded during the day. Every number counts as 2 trade's one buy and one sell. So if volume is 10 million it means 10 million people sold and 10 million people bought that day.

It is very important to look at volume because if volume is too low it could pose problems if you plan to make money trading it.

The first problem low volume stocks give you involves getting in and out. If there are only 40,000 trades on a given day you might find it very hard to get in especially at a price that you want to.

The second problem is similar, if a stock turns against you it could be hard to get out. Falling price on a low volume stock could make a crowd of sellers with no buyers around. By the time you get out you could have a loss so far under your original stops that, you would be hurting.

The last way low volume stocks work against you is the mere fact that you can't use the volume to help you. Normally you can use volume to help determine the strength of a price action. High volume on an up day means that the stock is likely to keep going up in the short term.

If volume is low to begin with however, it makes it harder to tell where high volume and low volume are. No one is trading the stock anyway.

So what is good volume? Every trader has a different opinion, but I believe you should be able to find a stock that is trading at least 1 million shares per day. That should allow you to move in and out pretty easily.

As your account gets bigger however you may want to move the bar up. Only trade stocks with more and more volume. Just remember to keep volume in mind the next time you make a stock trade.

For more information about trading volume visit http://www.stocks-simplified.com/volume.html For more information about the stock market visit http://www.stocks-simplified.com Article Source: http://EzineArticles.com/?expert=Shaun_Rosenberg

Stock Market Profits - Trendlines

A trendline is a sloping line drawn between two prominent points on a chart. Rising trendlines or Up trendlines are usually drawn between two troughs (two low points) to illustrate price support while falling trend lines or Down trendlines are usually drawn between two peaks (high points) to illustrate upside price resistance.

Trendlines are often excellent places to start trading points with a low-risk entry, because a penetration of the trend line is a break of the trend, which provides an exit signal. The more times the price touches the trend line, the more significant and valid that trend line becomes. When trend lines first begin to form, they may require redrawing to be sure to connect significant lows and highs, but as a trend line matures, it will rarely need to be adjusted. The steeper a trend line's angle, the less reliable it becomes.

USE OF TREND LINES:-

1) Once a trendline is decisively penetrated, if it not a very steep trendline, it generally signals a reversal of trend. Sometimes, it indicates a temporary interruption of the prevailing trend and the current-trend (up or down) remain in force with a lesser degree of ascent or descent.

When a trend line is broken, there is no way to understand to whether it is a reversal signal or it is a temporary interruption. You have to find out and judge other price patterns (e.g. if there is a rounding top/bottom or a head and shoulder formation etc. etc.) for understanding the signal arriving out of trend line violation.

2) W.D Gann favored a 45-degree trendline as a major trend indicator. This idea has been will accepted by many analysts.

3) Once a trend line is penetrated, it reverses its role as support and resistance. Once a Up trend line, i.e. a support trendline is penetrated, the Extended trendline acts as a resistance. Once a Down trendline, i.e. a resistance trendline is penetrated, it acts as a Support line.

The greater significance of a line as a support or resistance prior to its penetration, the greater it support or resistance role in reverse after the violation taken place.

More about Trendlines So as to make sure success, a person should ensure the strategy they choose fits with the recent market. In other terms, if the market is going up, a trader doesn't want to use a bear call spread. Such an action would be counterproductive. Just remember, while options can be very profitable, they take risk. You have the potential to lose all of your investment. To trade well, the correct state of mind is very important. Moving Averages are very useful in trending market. Article Source: http://EzineArticles.com/?expert=Indrani_Bhattacherjee

Understanding the Stock Market!

Considered as one of easiest ways to make money; stock market is seen as a profitable venture to grow your investments. However before entering in to the game, you must acquaint yourself with the rules first. For an average individual, understanding the pros and cons of this business is yet a mystery. Getting started into this industry may appear to be a complex process unless you have a sound knowledge of finance sector and economy.

Initially the most important thing is the research. You ought to know every related topic about stock market. Get a clear understanding of what actually is a stock, how the economy impacts the performance of a stock, how to buy a stock, and stock interest rates etc. This could be a lot of complicated financial education to handle. It is always preferable to opt for the services of an expert. There are market experts available who may guide and educate you through the entire process of this sector.

The next step is to open an account into your desired brokerage. It is quite similar to opening a bank account but do not forget to read and understand the terms and conditions. Although it's a tiresome process but you must understand your financial rights and must know where and how your money is being invested upon. You can either invest in a mutual fund, a stock, an option or an ETF (Exchange Traded Fund). To be on the safer side, never invest a big amount initially. Such businesses are quite tricky, so unless you know how to play well, do not go for big bets.

Always keep a keen eye on the market trends and the interest rates. This will enable you to decide when to sell or buy a stock. As you know that the interest rate plays a vital role in the entire stock business, when the rates goes up spending witness a downward slope and visa versa. The whole idea goes like this "buy low and sell high". This means that always prefer to buy a stock at lower rate from a company whom you can trust upon and who has the ability to perform good in future. The better the company performs the higher the rate of his stocks will be. Never forget to know everything about the past performance of the company you are investing in. The demand and supply theory goes well with company and the stock market.

With more and more people investing in this lucrative business, it has opened a wider avenue for the economical growth of an individual and the country as well. Today, with the easy access the internet buying and selling of stocks is a no big deal. Basically it teaches you to be patient with your investments. This fluctuating business is all about speculation and sharp market observation. Business news, market information, trading trends, interest rates etc can make a real difference in your selection of stock or the company. Better keep yourself updated every moment to be a winner in this fortune game!

Article Source: http://EzineArticles.com/?expert=Vinod_Karan_Singh

Seasonality and the Stock Markets

"To everything (turn, turn, turn)
There is a season (turn, turn, turn)
And a time for every purpose, under heaven

A time to be born, a time to die
A time to plant, a time to reap
A time to kill, a time to heal
A time to laugh, a time to weep" - The Byrds

Just like the seasons in which flowers blossom in the spring, torrential downpours come in the summer, the leaves change in the fall, and snowflakes fall in the winter, there are patterns that exist within the stock market that recur year after year.

For example the Santa Claus rally usually takes place during the last 5 trading days of the year and the first 2 trading days in January. This time period has averaged a 1.4% gain since 1969. If Santa fails to appear this usually portends a bear market.

One of the most famous and consistent patterns is the so called "January Effect," in which small cap stocks have outperformed large cap stocks 41 out of 43 years. The run up generally begins in mid-December and most of it ends by mid-January.

Then there is the January barometer in which the first 5 trading days of the year act as a gage for how the rest of the year will turn out. This has been a very effective tool in which the last 36 times the first 5 days have been up has led to gains for the year 31 times. The average gain in each of the 36 years has been 13.1%.

In nine out of the last fourteen post election years the S&P has shown a loss during the first five days of January, six of which resulted in a full year's loss of 11.1%. This leaves five post election years where there were gains during this period. One of these years ended up being a loser, but four of these years the average gain was 22.6%. So investors should watch the first few days of January closely.

There are other things one can take a look at when examining yearly patterns. For example the days before and after certain holidays generally show a tendency towards bullishness. Under the democrats markets usually show bigger gains than when republicans are in power. The last two years of a presidency have been substantially more bullish than the first two years, with the third year showing an average of a 10.6% gain and the fourth year a 6.7% gain.

When considering seasonal patterns one should never rely on these alone for taking trades, because unusual events like war, acts of terrorism, and acts of God can disrupt these patterns. However when combined with with technical and fundamentals these patterns can act as a road map for decision making in the markets.

Palmer Owyoung is the Founder of http://www.OptionSpreadTrades.com A website dedicated to educating the small investor and helping them to achieve financial independence. Averaging returns of 5-15% a month. To subscribe to the free newsletter and receive a 9 part options trading course go to http://www.OptionSpreadTrades.com Article Source: http://EzineArticles.com/?expert=Palmer_Owyoung

How Will Stock Markets Perform in 2009?

I am sure that most people will agree that 2008 was a bad year for stock markets from around the world. Who could have predicted at the start of the year the turmoil that was to follow? 2009 may well be even worse, unemployment is likely to rise in a major way and many household names will cease to exist. The question on many investors' lips is how will stock markets from around the world perform in 2009?

Now it is important to state at this stage that I am not a financial adviser and that what I am going to write in this article is purely my opinion. I am however an experienced investor who actually is finding the current financial turmoil as making very interesting reading and who believes that a lot of people will make a lot of money during this crisis. I for one will be taking a chance, a gamble as it were, as I like to buy when the markets are low and to sell when they reach new highs. Think about it for a while, when do markets fall? When something major goes wrong, but history tells us that they do eventually recover.

The UK and US are taking massive steps to put the wrongs right. Interest rates have fallen to new lows, lows not previously seen. The governments of these countries have stated that they will do whatever is necessary to get their people through this credit crunch. This is not the normal "wait and see" policy and is something that should be applauded.

Stock markets may well lose a further twenty percent in 2009 however I feel that by 2011 they may well see new highs. I personally like to invest on a monthly basis which helps me to take advantage of what is known as "pound cost averaging". It has worked very well for me during previous downturns and I am more than confident that it will work again.

My attitude is a very simple one, sit tight, have a lot of patience, do not panic, stick to the principals that have worked for you in the past and then go and collect your winnings!

Steve Hill is a speech coach from Birmingham, he has a number of websites including: stuttering therapies DVD authoring Article Source: http://EzineArticles.com/?expert=Steve_Hill

How Does Stock Trading Robot Stack Up?

I know very little when it comes to the stock market and shares although I have always thought that it would be quite exciting to get involved. When I heard about a Stock Trading Robot called Marl I thought I might as well buy into it and get a slice of the action.

Marl's creators are Michael and Carl. It is a home computer system that was developed on an actual stock trading model. Marl will scrutinize the stocks and compare them against it's massive database and come up with some stocks that are about to increase. (Bullish trading patterns). Marl will add these to it's watch list so it can keep track of them. Marl can analyse stock charts about sixty time faster than a human stock trader.

Stock Trading Robot can monitor many stocks at once and the clever thing is that the longer that it is running, the better it gets at making future predictions because it's adding the new information to it's database all the time. Marl can analyse stock charts about sixty times faster than a human stock trader.

When the stock reaches a phase called the 'breakout phase', which is when a stock starts to rise above a certain value, Marl will keep a tab on it then decide when the best time is to buy the stock.

This stock is sent out to all subscribers in a weekly newsletter called 'Doubling Stocks'. Michael and Carl decided to send out a weekly newsletter because the actual cost of Stock Trading Robot is a cool $28,000 dollars. Obviously, that is way above the reach of most people.

When you get your weekly newsletter with the selected stock on it, you then go to your broker or you can trade over the internet.

It's not necessary to have experience but it is an advantage. There is an ebook that guides you through the whole system. Setting up a trading account should not present a problem

If you have a high tolerance to risk then you can play it differently to someone who has a low tolerance. I personally don't like to go too mad because I am quite cautious about the way I trade. The penny stock market isn't that predictable so I would advise caution at first.

I have had some good returns as a whole so in future I will be more adventurous.

For those who are astute and brave enough, the credit crunch doesn't have to be the big downer that we are led to believe. Get more information on Marl Stock Trading Robot and bite back at the crunch The Stock Trading Robot. Article Source: http://EzineArticles.com/?expert=Martin_Loader

How to Lose Money on the Stock Market

For rookie investors, the stock market can be an exceptionally risky place. While the long term gains of investing can be very high, buying shares without doing your homework in the belief you'll make quick returns will leave you disappointed and sometimes out of pocket. There are plenty of magazines and websites out there that will point out 'dead cert' gains and suggest making money stock trading is anyone's business, but few that will point out the basic pitfalls of many rookies. If you're looking to invest, but not aware of the risks that the stock market will present to you, then take a read of this article to see the easiest ways to lose money on the stock market.

Trading for Short Term Gain

Becoming a day trader and making speculative trades on the value of shares is effectively gambling, and really only profitable for your broker. Every time you make a trade, you'll be paying a broker fee, which means you'll need to make a certain amount back before you break even. By not trading daily, you'll cut out this fee, lose an element of speculative risk and generally be in better stead to make even larger gains over the long term.

Following Bull Markets

When investing, you will hear of bear and bull markets. The former refers to a market where trading is low, because people are wary of prices, while the latter refers to a market where trading is high and the price is beginning to soar. The clearest example of a bull market in recent times is in commodities, with many FTSE 100 listed mining stocks charging up more than 50% in twelve months. It's easy to spot the top performing shares, but it's not always easy to put your money in at the right time. Too many rookie investors see a share that has risen, and then put their money into it on the premise that it will rise higher. Some people refer to this as 'bull market baloney', because if a stock has risen to very expensive levels, why should it continue to rise higher? There's always a ceiling to stock prices. By following bull markets, you'll probably buy stocks at highly inflated prices, and then suffer if the market runs out of steam. The commodities boom in Britain has done exactly that, losing the 50% of value that it chalked up last year. If you went in at its height, you'd now be much worse off.

Investing in Just One Company

Another one for gamblers only is to put all of your eggs in one basket and speculate on the price rising fast, leading to potentially massive gains. At the moment, a lot of people are doing this on ultra volatile bank shares. The problem is, that while it is possible for prices to rise, will you ever be able to time your trade right and pull all your money out? With this kind of speculation, you lose out if you sell and the price rises, or if you buy and the price falls, so it's incredibly risky. Instead of opting for this kind of volatility, which will probably end with you unable to sleep at night and making a catalogue of bad trading decisions, spread investments over the long term in something like a unit trust or diversified portfolio. For more on unit trusts, take a look at Legal and General.

About the Author: Save up to 43% on home insurance with Legal and General. Article Source: http://EzineArticles.com/?expert=Georgie_Tylor