By Mike Drabble
Even with the present difficulties in the stock market, buying stocks and shares remains one of the most profitable ways for private individuals to invest their money. If the right stocks are selected, a healthy return on investment can be realised that will provide not only an increase in the value of the initial investment but also a regular income through dividend payments. It is important to remember, though, that such an income is by no means guaranteed: stocks and shares are risky investments and their value can fall as well as rise. If a share buyer is to have a chance of avoiding such bad investments, a number of factors must be considered before purchase.
The first is to determine why the shares in question are being bought. This may sound obvious, but relatively few amateur investors consider this. Are the shares being bought to provide an income? If so, the level of income desired must be determined and the past performance of the shares in question examined to check if such an income level is probable or even possible. With this desired outcome, other considerations such as corporate governance should be less important. Alternatively, shares may be purchased not to provide an income but to provide access to a company's AGM (Annual General Meeting) in order to question board members: in this case, past or possible future income is irrelevant, and a no more than the minimum of shares necessary to qualify for AGM attendance should be bought.
Once the reason for buying shares has been determined, it is essential that potential stock purchases be researched comprehensively and time taken to consider the impact of purchase. Again this appears self-evident, but too many small investors buy on a whim and end up with a diminishing investment due to a lack of research. A variety of factors must be considered, both specific to the company being invested in and external to it. What is the company's financial history? Is there any trend in reported profits? Is the share value close to its highest or lowest point over the last year, and if so what are the reasons for this? Are any external factors influencing the share price, such as impending government legislation or imminent changes to the supply of raw materials (for instance the increasing price of oil and gas and its effect on energy companies)? These are just a few of the questions that must be addressed when researching stocks to purchase: it is essential that no relevant question is left unanswered as gaps in research could lead to the purchase of shares in a risky company.
There are many sources of information for research into companies and their shares. Current and past prices and share trading volume can be ascertained from newspapers, websites and the like, while good sources of information on specific companies are the company's website and annual report: the latter should contain a substantial amount of financial and technical information, though of course it should be borne in mind that such information is likely to be presented in a way that suits the company.
Since if an investment declines in value no-one but the investor and his or her dependents will be affected, it is essential that investors take responsibility for research and to do everything possible to avoid risk: too many amateurs don't invest wisely and then seek to blame others for a bad investment, when almost without exception the cause is their own lack of research. The key when thinking of buying or selling stocks and shares is to research diligently, and to do so by using as many independent sources of information as possible, whether in the traditional media or on the web. One such source is the website http://www.sharesadvice.co.uk which explains the basic concepts of stocks and shares and gives advice on researching them as well as buying and selling. There are many others, though: the wise investor will seek out as many as possible before buying, as failing to do so can mean losing a substantial amount of money, something no serious investor wants.
Article Source: http://EzineArticles.com/?expert=Mike_Drabble
Friday, October 10, 2008
Thursday, October 9, 2008
Make Money Through Stock Trading
By Amit Malhotra
Do you reckon that money rules the world? If yes, then you are absolutely right. If you are financially strong, you can enjoy your life to the fullest, you can provide good education to your children and will never have to compromise with your needs and wants. Everybody wants to achieve this economical stability, but how many of us could really attain this financial constancy? Well, it is a tough question to answer, but everything is possible in today's Internet world.
It is said that money produce money, and it is true in the real sense. You can make money from your savings or you can invest some money and earn profits in terms of interest rate after a period of time. If you search the market, there are many investment companies available - all offering lucrative deals for consumers. However, there are some common things these companies share, such as lock-in period, fixed interest rates, etc. This means that if you choose to invest money for a particular time period, you might not have access to that money during that period. However, there are other options available for investment, such as online stock trading, which is not associated with these limitations.
In addition, there are several advantages of Internet based trading. First, you can invest money in accordance to your financial strength; second, you will have easy access to manage your funds online and finally, it is the most rapid and intelligent method of making profits. All you need is an online account and once it is activated, you can start trading! Whether it is at home or anywhere a computer with Internet connection!
The transition from traditional brokerage system to the Internet based stock trading is commendable. In the beginning, online trading was a new concept and many investors had doubts because it was quite different from the traditional system. But, with time, everyone now realized that the new concept is quite advanced and easy to use. Trading companies are now promoting their websites with several lucrative features and services. And that's why more and more investors are now showing their interests in online stock trading and making profits from it.
It is true that online stock trading process is easy and hassle free, but it is also true that without some groundwork, no one can reap the benefits from the volatile stock market. The market is quite flexible, share prices always go up and down and no one can predict the market condition. However, a market analysis can actually tell you about the share price fluctuations. It is a must-do for investors who really want to make great success in the market. Stock trading company websites offer these market analysis tools - upload the required data and analyze the market. After the analysis you can easily buy and sell stocks and make maximum profits.
In addition, you should know how to read charts and stock quotes. It keeps you updated with the latest market news since buying and selling of stocks need some important decision. Your positive attitude also plays an important role at times. However, many expert professionals say that before buying a particular company shares, you should know the company profile, growth curve, and its market reputation. Therefore, one should always target major company shares. Keep these important points in your mind and trade intelligently. Financial back up is must if you want to enjoy life without any hassle. Therefore, invest now and reap the benefits from it.
Open an account with SogotradeIf you are new to Sogotrade: Online stock trading investment
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Do you reckon that money rules the world? If yes, then you are absolutely right. If you are financially strong, you can enjoy your life to the fullest, you can provide good education to your children and will never have to compromise with your needs and wants. Everybody wants to achieve this economical stability, but how many of us could really attain this financial constancy? Well, it is a tough question to answer, but everything is possible in today's Internet world.
It is said that money produce money, and it is true in the real sense. You can make money from your savings or you can invest some money and earn profits in terms of interest rate after a period of time. If you search the market, there are many investment companies available - all offering lucrative deals for consumers. However, there are some common things these companies share, such as lock-in period, fixed interest rates, etc. This means that if you choose to invest money for a particular time period, you might not have access to that money during that period. However, there are other options available for investment, such as online stock trading, which is not associated with these limitations.
In addition, there are several advantages of Internet based trading. First, you can invest money in accordance to your financial strength; second, you will have easy access to manage your funds online and finally, it is the most rapid and intelligent method of making profits. All you need is an online account and once it is activated, you can start trading! Whether it is at home or anywhere a computer with Internet connection!
The transition from traditional brokerage system to the Internet based stock trading is commendable. In the beginning, online trading was a new concept and many investors had doubts because it was quite different from the traditional system. But, with time, everyone now realized that the new concept is quite advanced and easy to use. Trading companies are now promoting their websites with several lucrative features and services. And that's why more and more investors are now showing their interests in online stock trading and making profits from it.
It is true that online stock trading process is easy and hassle free, but it is also true that without some groundwork, no one can reap the benefits from the volatile stock market. The market is quite flexible, share prices always go up and down and no one can predict the market condition. However, a market analysis can actually tell you about the share price fluctuations. It is a must-do for investors who really want to make great success in the market. Stock trading company websites offer these market analysis tools - upload the required data and analyze the market. After the analysis you can easily buy and sell stocks and make maximum profits.
In addition, you should know how to read charts and stock quotes. It keeps you updated with the latest market news since buying and selling of stocks need some important decision. Your positive attitude also plays an important role at times. However, many expert professionals say that before buying a particular company shares, you should know the company profile, growth curve, and its market reputation. Therefore, one should always target major company shares. Keep these important points in your mind and trade intelligently. Financial back up is must if you want to enjoy life without any hassle. Therefore, invest now and reap the benefits from it.
Open an account with SogotradeIf you are new to Sogotrade: Online stock trading investment
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Wednesday, October 8, 2008
The Fundamentals of Succeeding in Stock Market
By Amit Malhotra
Most of us often wonder why despite the surfeit of information and assistance available round the clock such as Internet, newspapers, magazines and television, success at stock trading remains elusive. It is quite bizarre to see people losing money in stock market.
Thousands of people across the world spend millions of dollars on stock trading courses and stock analysis software and yet they fail to make money in stock trading.
What generally happens is that gullible people are first duped into believing that that they will master the art of making profits in stock trading just by joining tutorial classes. When they have shelled out, say, $1,000 as course fee, they are made to buy videos showing intricate charts and graphics that are beyond their comprehension. Those who try to invest according to the instructions will end up losing thousands of dollars. Small gains here and there only add up to frustration. The more they try to learn, the less they appear to know. The result will be they keep spending more and more and losing more and more.
If success in stock trading could be achieved just by buying the software, there would be no shortage of people minting millions of dollars and the streets of our cities would be jammed with chauffer driven limousines.
The truth, however, is that most stock traders do not understand even the ABC of stock trading and that is why they are not successful.
You must know that by the time you start trading in stocks, you have already built up a sufficient reservoir of general trading sense without actually being aware of it. For example, who does not know that you can make profit when you buy an item at lower price and sell it at a higher price? You do not have to enroll yourself in a pricey stock trading tutorial, buy costly books or videos to learn this elementary fact of business.
Strange as it may appear, most people do not have the confidence in their ability to put this elementary principle into practice. They do not understand that they do not need to know any thing more about making profits in stock trading than this basic principle of buying low and selling high.
The third requisite of being successful in stock trading is the attitude. Were you not told even when you were a toddler playing with your peers not to cry when you lost in your games? Do you need to be told in special coaching classes this very childhood lesson? The truth is that you already know a lot about successful trading but you are not just aware of it.
You have to take your profits and losses with a certain level of equanimity and objectivity. Losses do not occur only in stock trading, but in every business. Success and defeat occur in every area of life. You have to remain calm, detached and unemotional whether you earn and you lose. Excitement at gain may turn your head and you may not take the right decision next time. Loss may depress you, blur your vision and lead you to further losses.
Most of the traders learn how to analyze charts and understand the financial reports of the companies. They are happy when they place orders but they start losing their wits. Soon after the prices start will go against their predictions. They feel scared thinking that their analysis was wrong and they would lose money that they honestly think they cannot afford to lose.
This kind of attitude leads to the loss of focus. You start making losses. Your confidence in your ability to take right decisions starts faltering. Instead of looking inwards for the causes of your failure, you start questioning the system you are using even though it was working pretty well. How could the same charts and graphs that helped you to predict the future prices correctly have gone wrong now? You had taken lots of pains to test this system over several markets. [It was so solid, but now ......]
What needs to be fixed is not the system but your own attitude towards it. You have to eliminate fear of failure and greed for profits from your attitude. Accordingly, you need to make small changes here and there in your trading plan. For example, you need to reexamine at your stop loss limits that you had earlier fixed. The one simple trick can change the matrix of your trading success or failure.
Open an account with Sogotrade
If you are new to Sogotrade: Online stock trading investment
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Most of us often wonder why despite the surfeit of information and assistance available round the clock such as Internet, newspapers, magazines and television, success at stock trading remains elusive. It is quite bizarre to see people losing money in stock market.
Thousands of people across the world spend millions of dollars on stock trading courses and stock analysis software and yet they fail to make money in stock trading.
What generally happens is that gullible people are first duped into believing that that they will master the art of making profits in stock trading just by joining tutorial classes. When they have shelled out, say, $1,000 as course fee, they are made to buy videos showing intricate charts and graphics that are beyond their comprehension. Those who try to invest according to the instructions will end up losing thousands of dollars. Small gains here and there only add up to frustration. The more they try to learn, the less they appear to know. The result will be they keep spending more and more and losing more and more.
If success in stock trading could be achieved just by buying the software, there would be no shortage of people minting millions of dollars and the streets of our cities would be jammed with chauffer driven limousines.
The truth, however, is that most stock traders do not understand even the ABC of stock trading and that is why they are not successful.
You must know that by the time you start trading in stocks, you have already built up a sufficient reservoir of general trading sense without actually being aware of it. For example, who does not know that you can make profit when you buy an item at lower price and sell it at a higher price? You do not have to enroll yourself in a pricey stock trading tutorial, buy costly books or videos to learn this elementary fact of business.
Strange as it may appear, most people do not have the confidence in their ability to put this elementary principle into practice. They do not understand that they do not need to know any thing more about making profits in stock trading than this basic principle of buying low and selling high.
The third requisite of being successful in stock trading is the attitude. Were you not told even when you were a toddler playing with your peers not to cry when you lost in your games? Do you need to be told in special coaching classes this very childhood lesson? The truth is that you already know a lot about successful trading but you are not just aware of it.
You have to take your profits and losses with a certain level of equanimity and objectivity. Losses do not occur only in stock trading, but in every business. Success and defeat occur in every area of life. You have to remain calm, detached and unemotional whether you earn and you lose. Excitement at gain may turn your head and you may not take the right decision next time. Loss may depress you, blur your vision and lead you to further losses.
Most of the traders learn how to analyze charts and understand the financial reports of the companies. They are happy when they place orders but they start losing their wits. Soon after the prices start will go against their predictions. They feel scared thinking that their analysis was wrong and they would lose money that they honestly think they cannot afford to lose.
This kind of attitude leads to the loss of focus. You start making losses. Your confidence in your ability to take right decisions starts faltering. Instead of looking inwards for the causes of your failure, you start questioning the system you are using even though it was working pretty well. How could the same charts and graphs that helped you to predict the future prices correctly have gone wrong now? You had taken lots of pains to test this system over several markets. [It was so solid, but now ......]
What needs to be fixed is not the system but your own attitude towards it. You have to eliminate fear of failure and greed for profits from your attitude. Accordingly, you need to make small changes here and there in your trading plan. For example, you need to reexamine at your stop loss limits that you had earlier fixed. The one simple trick can change the matrix of your trading success or failure.
Open an account with Sogotrade
If you are new to Sogotrade: Online stock trading investment
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Tuesday, October 7, 2008
Learn the Basic Stock-Trading Concept
By Amit Malhotra
Why do you invest in stocks - if anyone asks this question, your immediate answer would be to earn profits in a short time period. Yes, profit is the main key for such trading system. But do you think you know the key to successful trading - ask a professional trader and find the correct answer. According to experts, stock market is an unpredictable entity and therefore, the whole success factors depend upon the market knowledge, experience, your decision-making capability and finally your positive attitude.
All the above factors influence trading process. However, there are many investors who do not follow these things and often lose money in the market. And if you ask these people about what they think of stock trading, you cannot expect the overwhelming answer from their side. But the truth is different. Many professionals are continuously gaining profits from the same market. What is the secret of their success - well, the secret lies in their knowledge and the strategy they follow during the whole trading process.
What kind of market knowledge you need to know? If you search online trading on the Internet search engine, you will find several content on the same topic. You cannot read all the content and all open resources are not valuable as well. Therefore, the basic strategy is to get familiar with the terms that are being used in the trading process. You might have heard of day trading - try to learn the basic philosophy behind the concept. In the same way, learn the meaning of stocks, how to buy and sell stocks, the role of stockbrokers, etc. In addition, you should know how to read stock charts and stock quotes.
All trading terminologies are very important and you can find the meaning of these concepts on the Internet. Once you get familiar with these terms, you can plan your investment. If you know someone who has some knowledge about the market - you can take advice from him or her. However, you can contact online financial experts and discuss the issues and they will help you find the best solution for the problems you have in planning or any other stock related problems. Once your planning is done - you can open an online account on the stock company's website. And after online account activation - you can start trading online.
In the present trading system, the stock trading companies play a very crucial role in trading. The company where you have an online account is directly attached with you. First of all you need to browse the company website to login. All your account information is also uploaded on the website account. With advanced security tools, the company website keeps your account information secured. In addition, you can access a wealth of information from the company's website such as market analysis tools, charts, educational content, articles, newsletters, reviews, etc. Therefore, you need not to go anywhere for stock news, and to access other related information. The company charges a very minimal commission rate for every transaction you make during the trading process.
Professionals from all across the globe are making profits from stock trading. And, you can also be one of successful traders if you do the job intelligently and effectively. In addition, you should know which company share you have to buy and which one to avoid. And for that you need to keep you updated with latest market news. Try to learn the changing market moods and trade accordingly. Invest now and enjoy your life always.
Open an account with Sogotrade
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Why do you invest in stocks - if anyone asks this question, your immediate answer would be to earn profits in a short time period. Yes, profit is the main key for such trading system. But do you think you know the key to successful trading - ask a professional trader and find the correct answer. According to experts, stock market is an unpredictable entity and therefore, the whole success factors depend upon the market knowledge, experience, your decision-making capability and finally your positive attitude.
All the above factors influence trading process. However, there are many investors who do not follow these things and often lose money in the market. And if you ask these people about what they think of stock trading, you cannot expect the overwhelming answer from their side. But the truth is different. Many professionals are continuously gaining profits from the same market. What is the secret of their success - well, the secret lies in their knowledge and the strategy they follow during the whole trading process.
What kind of market knowledge you need to know? If you search online trading on the Internet search engine, you will find several content on the same topic. You cannot read all the content and all open resources are not valuable as well. Therefore, the basic strategy is to get familiar with the terms that are being used in the trading process. You might have heard of day trading - try to learn the basic philosophy behind the concept. In the same way, learn the meaning of stocks, how to buy and sell stocks, the role of stockbrokers, etc. In addition, you should know how to read stock charts and stock quotes.
All trading terminologies are very important and you can find the meaning of these concepts on the Internet. Once you get familiar with these terms, you can plan your investment. If you know someone who has some knowledge about the market - you can take advice from him or her. However, you can contact online financial experts and discuss the issues and they will help you find the best solution for the problems you have in planning or any other stock related problems. Once your planning is done - you can open an online account on the stock company's website. And after online account activation - you can start trading online.
In the present trading system, the stock trading companies play a very crucial role in trading. The company where you have an online account is directly attached with you. First of all you need to browse the company website to login. All your account information is also uploaded on the website account. With advanced security tools, the company website keeps your account information secured. In addition, you can access a wealth of information from the company's website such as market analysis tools, charts, educational content, articles, newsletters, reviews, etc. Therefore, you need not to go anywhere for stock news, and to access other related information. The company charges a very minimal commission rate for every transaction you make during the trading process.
Professionals from all across the globe are making profits from stock trading. And, you can also be one of successful traders if you do the job intelligently and effectively. In addition, you should know which company share you have to buy and which one to avoid. And for that you need to keep you updated with latest market news. Try to learn the changing market moods and trade accordingly. Invest now and enjoy your life always.
Open an account with Sogotrade
Article Source: http://EzineArticles.com/?expert=Amit_Malhotra
Monday, October 6, 2008
Stock Market Ticker
By Owen G Stanley
A stock market ticker provides stock information in real time streaming format. The tickers are used to track either a single stock or all the stocks in your portfolio. If you ever look at a stock market program, you will see stock quotes and other information running horizontally along the bottom of the screen. This is a stock market ticker.
Stock market tickers provide not just stock quotes but also market news as well. Stock tickers usually run horizontally from left to right. Some of the stock information on the stock information will be the last price of the stock,whether the last price is up or down and the volume of shares traded of the stock. Most tickers have numbers and letters running across them. the numbers represent the current stock price and the letters usually denote the stock symbol.
Stock market tickers can display the stock information of one stock or many stocks. It depends on how you customize the stock ticker.
The purpose of a stock ticker is to provide news and stock quotes about a particular stock or a group of stocks. stock tickers today are online stock tickers or electronic stock tickers. They are displayed on your computer, over the internet or on television, usually during a financial or business program. You can download a stock ticker program to your computer.
The first stock market tickers were manual and printed out stock information on a thin strip of paper called a ticker tape.However stock tickers are electronic today. A stock market ticker is a very useful tool for trading stocks and making money.
Learn how to make money in the stock market for free at my blog. Read the Stock Market
Article Source: http://EzineArticles.com/?expert=Owen_G_Stanley
A stock market ticker provides stock information in real time streaming format. The tickers are used to track either a single stock or all the stocks in your portfolio. If you ever look at a stock market program, you will see stock quotes and other information running horizontally along the bottom of the screen. This is a stock market ticker.
Stock market tickers provide not just stock quotes but also market news as well. Stock tickers usually run horizontally from left to right. Some of the stock information on the stock information will be the last price of the stock,whether the last price is up or down and the volume of shares traded of the stock. Most tickers have numbers and letters running across them. the numbers represent the current stock price and the letters usually denote the stock symbol.
Stock market tickers can display the stock information of one stock or many stocks. It depends on how you customize the stock ticker.
The purpose of a stock ticker is to provide news and stock quotes about a particular stock or a group of stocks. stock tickers today are online stock tickers or electronic stock tickers. They are displayed on your computer, over the internet or on television, usually during a financial or business program. You can download a stock ticker program to your computer.
The first stock market tickers were manual and printed out stock information on a thin strip of paper called a ticker tape.However stock tickers are electronic today. A stock market ticker is a very useful tool for trading stocks and making money.
Learn how to make money in the stock market for free at my blog. Read the Stock Market
Article Source: http://EzineArticles.com/?expert=Owen_G_Stanley
Friday, October 3, 2008
Stock Market Basics - How Great Research Can Bring Great Wealth
By Barry Wallis
Not understanding the stock market basics impacts almost all unsuccessful stock traders negatively.
To many mediocre and unsuccessful traders, lack of control over research may sound like a strange point to pick as one which can lead to poor trading results. But every exceptional and successful trader I know would say methodical research is a corner stone of their success.
Let's look at the 2 opposing position. Many traders who do "OK" trade on news, tips, ideas that come across their desk or over the newswire, or some other haphazard method for finding trades. A key characteristic of their trading is that it is reactive.
The exceptional trader doesn't take such risks...he is proactive. Of course, great traders are also reactive. They will allow the news and other events to generate trades for them. This is part of their pro-activity. In addition to that, great traders are is purposefully and methodically trawling the markets looking for opportunities. This regular trawling, one of a key set of stock market basics that they have totally mastered, is a key difference that separates mediocre from stellar traders.
The great traders research is regular, wide and eventually deep. His missed opportunities are few and far between and the quality of his average trades far surpasses the average trades of reactive traders. This is simply because he has a greater catchment area in which to find trades...and therefore probability works on his side because a methodical and repeated process throws up many sterling opportunities regularly.
So, to try to ensure repeated or higher success in the markets, try and do your research methodically. If you aren't researching methodically and are a reactive trader, you are without question leaving money on the table over a long enough time horizon...and this could come back to bite you....hard.
Why risk it? As Nike says....Just Do It! (right from now on)...and master the stock market basics.
Barry Wallis has been teaching beginning and struggling traders to profit from understanding the stock market basics for 4 years. Find out how more and more people are changing their lives fast with his new book which gives a fantastic stock market education.
Article Source: http://EzineArticles.com/?expert=Barry_Wallis
Not understanding the stock market basics impacts almost all unsuccessful stock traders negatively.
To many mediocre and unsuccessful traders, lack of control over research may sound like a strange point to pick as one which can lead to poor trading results. But every exceptional and successful trader I know would say methodical research is a corner stone of their success.
Let's look at the 2 opposing position. Many traders who do "OK" trade on news, tips, ideas that come across their desk or over the newswire, or some other haphazard method for finding trades. A key characteristic of their trading is that it is reactive.
The exceptional trader doesn't take such risks...he is proactive. Of course, great traders are also reactive. They will allow the news and other events to generate trades for them. This is part of their pro-activity. In addition to that, great traders are is purposefully and methodically trawling the markets looking for opportunities. This regular trawling, one of a key set of stock market basics that they have totally mastered, is a key difference that separates mediocre from stellar traders.
The great traders research is regular, wide and eventually deep. His missed opportunities are few and far between and the quality of his average trades far surpasses the average trades of reactive traders. This is simply because he has a greater catchment area in which to find trades...and therefore probability works on his side because a methodical and repeated process throws up many sterling opportunities regularly.
So, to try to ensure repeated or higher success in the markets, try and do your research methodically. If you aren't researching methodically and are a reactive trader, you are without question leaving money on the table over a long enough time horizon...and this could come back to bite you....hard.
Why risk it? As Nike says....Just Do It! (right from now on)...and master the stock market basics.
Barry Wallis has been teaching beginning and struggling traders to profit from understanding the stock market basics for 4 years. Find out how more and more people are changing their lives fast with his new book which gives a fantastic stock market education.
Article Source: http://EzineArticles.com/?expert=Barry_Wallis
Thursday, October 2, 2008
Understanding Risk Models - Ways to Mitigate Risk
By Shilpi Ganguly
Stock markets never offer any guarantee, but an understanding of risk models associated with bonds and stocks and a little discipline while investing can help you mitigate unnecessary risk. While trying to figure out how to invest stock, keep in mind the risk factor and which of these risks can be eliminated or reduced.
There is always a relationship between risk and returns. Consider the following factors while weighing the risk in bonds and stocks:
1) Since returns are not predictable investors base their decisions on return expectations. These expectations should engage with reality.
2) Uncertainty entails risk. The greater the uncertainty surrounding an investment, greater the risk.
3) It is also possible the actual return won't meet the expectations of the investor. There can be many reasons for this: business risk or corporate risk, market risk, inflation risk, liquidity risk etc.
4) High potential returns also carry higher rate of risk and vice versa. Any claim of high return with low risk is seriously questionable.
5) The period of investment matters a lot. Do not invest in stocks or other volatile investments if the period of investment is less than five years.
Following these points will certainly be helpful. For example, during the last year share prices of real estate companies shot up sky high for a brief period and gave the impression of extremely high returns. Many people rushed to invest in these stocks at that point thinking that their returns would show a quantum jump, not realizing that their expectations were not grounded in reality. When the share prices crashed again many of them lost a lot of money.
Another example of risk associated with high potential returns is equity stocks. Equity stocks of companies such as Reliance, Tata, and Birla generally offer returns up to 25-30% but the risk associated is high as your capital can go down significantly. In comparison to that, bonds such as RBI bonds are more stable but offer between 5-10% return. So it would depend upon your risk appetite which scheme you would like to go for.
Another important but common way to tone down risk is to diversify your portfolio. Investments can be made in various categories of assets, such as money market funds, stocks, bonds and precious metals. Spreading your funds across different asset classes reduces overall risk. You can also diversify across industries so that your returns are not solely dependent upon one. These risk-reduction strategies can help you secure your future to a large extent.
Shilpi Ganguly is a blogger who frequently writes on various topics. Find more of her maximizing wealth in the stock market.
Article Source: http://EzineArticles.com/?expert=Shilpi_Ganguly
Stock markets never offer any guarantee, but an understanding of risk models associated with bonds and stocks and a little discipline while investing can help you mitigate unnecessary risk. While trying to figure out how to invest stock, keep in mind the risk factor and which of these risks can be eliminated or reduced.
There is always a relationship between risk and returns. Consider the following factors while weighing the risk in bonds and stocks:
1) Since returns are not predictable investors base their decisions on return expectations. These expectations should engage with reality.
2) Uncertainty entails risk. The greater the uncertainty surrounding an investment, greater the risk.
3) It is also possible the actual return won't meet the expectations of the investor. There can be many reasons for this: business risk or corporate risk, market risk, inflation risk, liquidity risk etc.
4) High potential returns also carry higher rate of risk and vice versa. Any claim of high return with low risk is seriously questionable.
5) The period of investment matters a lot. Do not invest in stocks or other volatile investments if the period of investment is less than five years.
Following these points will certainly be helpful. For example, during the last year share prices of real estate companies shot up sky high for a brief period and gave the impression of extremely high returns. Many people rushed to invest in these stocks at that point thinking that their returns would show a quantum jump, not realizing that their expectations were not grounded in reality. When the share prices crashed again many of them lost a lot of money.
Another example of risk associated with high potential returns is equity stocks. Equity stocks of companies such as Reliance, Tata, and Birla generally offer returns up to 25-30% but the risk associated is high as your capital can go down significantly. In comparison to that, bonds such as RBI bonds are more stable but offer between 5-10% return. So it would depend upon your risk appetite which scheme you would like to go for.
Another important but common way to tone down risk is to diversify your portfolio. Investments can be made in various categories of assets, such as money market funds, stocks, bonds and precious metals. Spreading your funds across different asset classes reduces overall risk. You can also diversify across industries so that your returns are not solely dependent upon one. These risk-reduction strategies can help you secure your future to a large extent.
Shilpi Ganguly is a blogger who frequently writes on various topics. Find more of her maximizing wealth in the stock market.
Article Source: http://EzineArticles.com/?expert=Shilpi_Ganguly
Wednesday, October 1, 2008
Stock Market Basics - Controlled Trading Leads to Huge Returns - In Good Times and Bad!
By Barry Wallis
As far as stock market basics are concerned, this one is key. If you really want to turbo charge your returns and change your life drastically, you need to have complete control. Not having control over trading methods catches a lot of new traders in their first market cycles or two. They don't fully understand how to behave in certain market conditions.
Maybe they have made a ton of money during a roaring bull market, and can't see the writing on the wall fast enough when the market turns. We all know people who have lost a lot of money during bear markets. I did before I figured out how to protect myself. Only when I lost a lot of money did I learn the painful lessons. It's your choice whether you repeat my lessons or bypass them.
The old ways of doing things needs to change if you are in your first market cycle and a sea change happens. What works during bull markets will get you busted out of the game during bear markets...make no mistake about it.
Market turning points throw up many opportunities for strategic adjustment and further profits. How do you use margin? How much of your account to you leave invested? Do you look for shorting opportunities? Do you sit completely on the sidelines? These are critical stock market basics to master.
When you have control over the way you trade in all market conditions, then the world truly is your oyster. Not only will you make out like a bandit during the good time, but you'll make even more during the bad times by simply recognizing they are bad and switching tact.
So, make no mistake about it...learn the differences in strategies that should be applied during bull markets and bear markets. In addition, learn what market turning points are and how to identify them. When the tide goes out, all boats sink eventually. When you learn these fundamental stock market basics...then you will make no mistakes that can bust you out of the game!
Barry Wallis has been giving new and inexperienced traders a solid and profitable stock market education for 4 years. Find out how more and more people are changing their lives fast with his new book on advanced trading techniques, including tons of information covering the stock market basics Be a winner from the start!
Article Source: http://EzineArticles.com/?expert=Barry_Wallis
As far as stock market basics are concerned, this one is key. If you really want to turbo charge your returns and change your life drastically, you need to have complete control. Not having control over trading methods catches a lot of new traders in their first market cycles or two. They don't fully understand how to behave in certain market conditions.
Maybe they have made a ton of money during a roaring bull market, and can't see the writing on the wall fast enough when the market turns. We all know people who have lost a lot of money during bear markets. I did before I figured out how to protect myself. Only when I lost a lot of money did I learn the painful lessons. It's your choice whether you repeat my lessons or bypass them.
The old ways of doing things needs to change if you are in your first market cycle and a sea change happens. What works during bull markets will get you busted out of the game during bear markets...make no mistake about it.
Market turning points throw up many opportunities for strategic adjustment and further profits. How do you use margin? How much of your account to you leave invested? Do you look for shorting opportunities? Do you sit completely on the sidelines? These are critical stock market basics to master.
When you have control over the way you trade in all market conditions, then the world truly is your oyster. Not only will you make out like a bandit during the good time, but you'll make even more during the bad times by simply recognizing they are bad and switching tact.
So, make no mistake about it...learn the differences in strategies that should be applied during bull markets and bear markets. In addition, learn what market turning points are and how to identify them. When the tide goes out, all boats sink eventually. When you learn these fundamental stock market basics...then you will make no mistakes that can bust you out of the game!
Barry Wallis has been giving new and inexperienced traders a solid and profitable stock market education for 4 years. Find out how more and more people are changing their lives fast with his new book on advanced trading techniques, including tons of information covering the stock market basics Be a winner from the start!
Article Source: http://EzineArticles.com/?expert=Barry_Wallis
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