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Planning Your Forex Trades
2008-01-21 12:51:00
Online Forex trading is the most competitive market on this globe for traders. One must be vigilant and talented to capitalize on every opportunity that comes in his way. He must have a winning plan and must have the resources and courage to implement the plan. Here are some tips for planning successful Forex trades online.Trade on average unit sizes; increase the number of units to some extent when you currency is on almost sure upward move and decrease the number when opposite happens. Know your position and never predict any thing; in other words respect the unpredictability. Exit trades when you feel uncertain; it is always the wise decision to save your money. Look for consistency; it is good to analyze your success by taking days or weeks as unit, never individual trades. Never add daily episodes to your failures; it is better to stay off when you are getting troubles in a row. Be loyal to your trading style; scalping, day trading, investing, swing trading, etc; overlapping si...
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Weekly Market Newsletter, 8/6/07
2007-09-24 15:34:00
The Week Ahead: The recent lowering of interest rates, although designed to ease liquidity shortages from sub-prime mortgages, is the Fed's response to prevent recession. In doing so the Fed has opened wider the threat of greater inflation and dollar depreciation neither of which are good outcomes. Reports of concern will be the existing home sales and consumer confidence survey on Tuesday, durable goods on Wednesday, the 2nd quarter final GDP along with new home sales on Thursday, and personal income and spending stats on Friday. Stocks to Watch: Companies specializing in fertilizers continue to do well as Mosiac Company (MOS) was upgraded to hold from sell by a major brokerage. Other companies include Agrium (AGU), CF Industries (CF), and Terra Industries (TRA). The en...
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Stock Market Weekly Advice July 30
2007-07-31 07:35:00
The Week Ahead: Despite a strong GDP report showing a resilient and flexible economy, selling capped a wild week in the stock market. Tighter credit and a slower housing market are seen as big concerns going forward. Reports to watch include the construction spending numbers for June, consumer confidence figures for July, and the 2nd quarter employment cost index on Tuesday. With crude oil approaching new highs, watch the inventory report Wednesday and the ISM Manufacturing Survey. June factory orders are out on Thursday and the July jobs report on Friday.Stock s to Watch: Earnings from companies in significant industries will be closely watched this week. They include reports Monday from telecommunications giant Verizon (VZ), and the financial service firm of HSBC Holdings (HBC). Tuesday brings quarterly results from auto giant General Motors (GM) and the mass media company of CBS Corporation (CBS). Wednesday's slate includes Time Warner (TWX), Disney (DIS), and Starbucks (SBUX). T...
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Common Mistakes that DAT Traders Make
2007-07-30 09:22:00
Winning in today?s financial markets is a hard task, especially for novice traders. Direct access trading of DAT can tremendously magnify a trader?s abilities; but it can also magnify his or her weaknesses. Below are some common mistakes that DAT traders make.Trading without right preparation or right strategy.Trading with under-capitalized accounts.Trading inadequate or more than adequate number of stocks or other products.Trading the products at the extremes.Using highly complex tools and strategies.Investing more money to losing positions.Avoiding of stop losses and limit orders.Looking for a pre-determined market condition to enter or exit a trade.Predicting the market direction without analysis or with little analysis.Trading with emotion. Blindly following other traders.Blindly depending on computer-generated statistics and conclusions.Not considering transfer fees and other charges involved in trading.Rapidly changing strategies by adapting to the NEW HOT strategies. Trading ...
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Black-Scholes Options Pricing Model
2007-07-28 08:48:00
Black-Scholes model or Black-Scholes-Merton model was formulated in 1973 by Black, Scholes and Merton. The theory became widely popular and is some extend responsible for the current popularity of the derivates. Black-Scholes model and its variations are still widely used by options traders.The underlying assumption of the Black-Scholes option price is that the price volatility of the underlying instruments follow a pattern and can be predictable. Thus by incorporating this volatility (implied volatility) value with time to options? expiration, options? strike price and time value of money, one can figure out the options price variation. Traders can also calculate the possible volatility if the options price is known. The results are expressed as Options Greeks consisting of Vega, Delta and Theta.The Black-Scholes options pricing model does not consider the arbitrage of underlying instruments, the taxes and fees involved in trading and earnings from the underlying equity. The model ...
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Day Orders and GTC Orders
2007-07-27 08:52:00
Good for Day Orders , popularly known as Day orders are unspecified orders which expires within the order entered day, unless executed. These orders usually have price points closer to the current market price. Day orders entered after the trading hour will remain open for the next trading day. They are better for traders trading with short-term goals.Good Till Cancelled or GTC orders specified orders which remain open until they are cancelled by the trader or executed by the broker. Most brokers keep these orders open for 60 days unless executed. GTC orders typically have price points much higher than that of order entered day. The broker executes the order when the price reaches the specified point. The execution fee may differ for GTC orders, as their may be separate commissions for fulfilling a big order by several days; but there is usually no commission change for executing an order by multiple transactions in the same day.GTC orders are available for stocks and options. They h...

GARP Stock Investing Strategy
2007-07-26 10:22:00
GARP or Growth At a Reasonable Price is a hybrid stock market investing strategy which combines the merit of two most popular investing strategies named Growth Investing and Value Investing. The investors following GARP investing strategy looks for growth company stocks which are to some extent undervalued.GARP stock investing strategy requires high degree of customization of trading platforms. GARP stock investors performs both growth and value analysis of each stock individually and concentrates those on middle region by avoiding extremes. The major areas of technical analysis include intrinsic worth, P/E ratio, book value, and assent to liability ratio. The typical growth rate for a GARP stock is between 10% and 20%, above and below percentages holds great risks.GARP stock investing strategy holds both advantages of growth and value investing. But often it was noticed that the earnings of GARP investors differ considerably from that of strict growth or value investors. GARP inves...
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Elliot Wave Theory
2007-07-25 10:22:00
Elliot Wave theory is one of the oldest and widely followed theories regarding the stock market trend. It was developed by R N Elliot in late 1920s. The theory has its root in the traders? mind ? ?the continuous bullish trend force tempt to sell the products they holding and the continuous bearing trend attract them to buy more insruments.?According to Elliot Wave Theory , the stock market trends occurs in cycles which can be represented in waves. These upward and downward trends follow a peculiar wave pattern, which can be represented by a Fibonacci series (1, 3, 5, 8, 13, 21, 34??..). A cycle of trend includes 5 + 3 waves. The five waves are towards the main trend and 3 waves are the corrective waves.There are different categories of waves according to the cycles. They are Grand Supercyle, Supercycle, cycle, primary cycle, intermediate cycle, minor cycle, minute cycle, minuette cycle and sub-minuette cycle, arranged as per size. For maximum profit traders can buy stocks in the begi...
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Pit Trading Vs Electronic Trading
2007-07-24 08:58:00
Pit trading and electronic trading are the two major methods of trading used by traders trading financial products. Pit trading also known as floor trading is the trading of stocks or futures manually in the exchange floor, known as Pit. It was the main type of trading until late 1990s. But the introduction of electronic trading of stock and futures have certainly lowered the popularity of pit trading and now more and more pit traders are moving to electronic type.Electronic or online trading of stock and futures holds much more advantages than pit trading as,No need of extensive physical strain.Faster order entry and execution.Ability to trade a number of exchanges.Choice of order routing destination.Ability to trade multiple products simultaneously.Instant market data as charts and instant news.Access to advanced trading programs integrated with powerful analyzing tools.Speedy access to account details.Even broker independent trades.But still floor trading is practiced quiet exten...
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Why Demo Trading Performance Better Than Actual One
2007-07-23 09:46:00
Perhaps the most common question that novice traders ask themselves is ?Why my demo trading performance is better than the actual one, even when I am trading with the same trading system and strategy??The most common cause for this is the change of your mind, not the system. With a demo trading account you are risk free, you can place orders of your wish, and can experiment a lot with your strategies. You will be much relaxed as not a penny from your pocket is at risk. But in actual trading atmosphere you will be so much timid. Most novice traders will be in defensive mood to track and protect every possible loss to your invested money, rather than tracking possible profiting possibilities. More over, he or she may be over careful in placing your orders and choosing order sizes.The standard demo account size of $50,000 or so allows traders to manage their risks easily, which is not so possible with actual accounts ? usually with lesser size. For most traders paper trading of instrum...
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Stochastic Oscillator Momentum Indicator
2007-07-20 09:45:00
Stochastic oscillator is one another most followed technical momentum indicator by traders trading almost all financial instruments like stock, futures and forex currencies. Stochastic oscillator was developed in late 1950s by George C Lane. It is one of the powerful tools to generate the market divergence signals.A Stochastic oscillator includes two values as %K and %D each having its value somewhere from 0 to 100. The values are calculated using%K = 100 x (Closing Price ? Lowest Price for N period) / (Highest Price for N period ? Lowest Price for N period)%D = 3-Period Moving Average of %K (That is simply %D is the smoothed form of %K)Usually the period used is 14 days. The results are plotted as two lines and the alerts are usually generated when %K line crosses that of %D. If the value of %K is above, then the market is considered as overbought; and if the value of %K is below 20, is considered as oversold. A positive divergence is usually confirmed with the second break a...
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More Trading Tips for Online Traders
2007-07-19 09:43:00
We have already discussed many tips useful for traders trading stocks, options, futures and forex. Here are some more.Trade only those you know ? you must know some thing about the company, industry etc.Always keep your eyes open ? many times great opportunities are discovered outside the market and trading system. From media, friends, family members, etc.Do some extensive research ? Research all those opportunities you find around. Always look on fundamental values like PEG ratio, percentage of sale, competitors, industry performance, cash position, debt-to-equity ratio etc.Never be predetermined ? Starting trades with a predetermined mind, with our analysis, can wipeout you from the market.Be strict to your style of trading ? if you are an investor, and is pretty sure about direction of movement the stock or other investment you earned, never panic about the daily or weakly market fluctuations.Never try to over-diversify ? diversification of portfolio is always an important step. ...
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Market Opening and Closing Prices
2007-07-18 09:46:00
By definition the opening and closing prices are the first and the last traded price for a particular financial instrument respectively. When combined with previous day prices, they are good indicators of market trends. Today they are available from virtually all media and are widely used by both highly active and less active traders to find out trading opportunities.But today pre and post market trading services are available, which enable traders to trade before and after regular trading hours (9.30am to 4pm) respectively. Some media take the first and last trades in these trading hours as opening and closing price, while others take the first and last trades in the regular trading hours as opening and closing price. Thus you may find two different opening or closing price for same instrument in the same market.One another situation is in forex market, where the market is open 24 hours and continuously 5 days a week (Sunday 5pm to Friday 4pm EST). So the actual forex market openin...
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Stock Market Trader Newsletter
2007-07-18 04:11:00
The Week Ahead: In contrast to the nations chain store sales report, the government reported June retail sales had the biggest drop in 2 years with higher gas prices getting the blame. Despite this, the DOW pushed toward the psychologically important 14,000 level. Watch the June PPI and industrial production numbers on Tuesday, the June CPI and housing starts on Wednesday, Fed chairman Bernanke's semi-annual congressional testimony on Wednesday and Thursday, and June's leading economic indicators on Friday.Stock s to Watch: Baker Hughes (BHI), an oil service company, traded sharply lower as it sees 2nd quarter earnings below estimates do to poor results from its Canadian operations. Shaw Group (SGR), a maker of pipes etc., received an upgrade from Citigroup with a price target of $70 because of a huge 3rd quarter backlog. Radio Shack (RSH) broke below its 50 day moving average after being downgraded to a sell rating. Smithfield Foods (SFD) is in talks to sell pork to China as its s...
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Bollinger Bands for Technical Analysis
2007-07-16 09:37:00
Bollinger bands are one of the most widely used technical analysis tools by all types of traders trading stock, bonds, forex currencies etc. It was developed by John Bollinger. Bollinger bands consist of three bands. One middle band showing the simple/exponential moving average and two standard deviation bands plotted above and below the simple moving average band.The volatility in the price of the financial instrument can be easily noticed by the widening of the bands ? As the volatility increases, the width between middle and side bands increases. The moving in of upper band towards the middle band informs that the market is becoming more over-brought (time to sell instruments), and the moving in of lower band towards middle band informs that the market is becoming more oversold (time to buy instruments). Bollinger bands also give the information about support and resistance levels.There are many advantages of using Bollinger bands for technical analysis. They include easiness to...
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Options Vs Futures - The Hot Dispute
2007-07-14 09:19:00
Both options and futures were invented to limit or to avoid the trading loss because of market volatility some where in future. Both are fairly similar in their set up except in exercising methods. Options and futures are traded extensively today, are available for almost all financial instruments, and contribute largely for the stability of markets.According to most experts, Options really have some added advantages over futures. The option holder is fully free in exercising the option. The maximum loss is a fixed one, the initial premium. Options can be exercised at any time before the expiration date. The trader can implement multiple trading strategies to ensure profit from even a worthless option. They can be traded for both long-term and short-term profits and the trades needn?t to have much knowledge of the underlying instrument. More over options are available for a variety of instruments including futures.But futures trading include unlimited risk as the delivery of underly...
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Advantages of Online Futures Options Trading
2007-07-13 08:05:00
Futures and options almost similar financial instruments invented to hedge the risks of trading loss in a point of time in near future. Futures options, as the name implies, are option contracts for futures. From their introduction in 1982 by CBOT for US Treasury bond futures, they became one of the popular financial instruments for active traders.Today futures options are available for nearly all type of futures contracts, like those for agricultural commodities, financial commodities, energy commodities, interest-rate commodities, forex currencies, stocks, indices etc. Online trading with direct access to futures option markets have enabled traders to day trade with real-time market info and to develop some complex options trading strategies based on technical analysis.Trading of futures options give the traders much more advantages than trading futures contracts. They includeLesser risk ? as the maximum loss is the initial option premium.They don?t involve any obligation to buy o...
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Trading Exchange-Traded Funds (ETFs)
2007-07-12 10:24:00
Exchange-traded funds or ETF are traded just like the stocks. They are funds traded in exchanged like the stocks. Traders can buy them, hold them and sell them when ever they want. ETF have same set up like the mutual funds but with the ever changing net-asset value; the net-asset value (NAV) of mutual funds are calculated on daily basis.Most of the ETF are based on indexes of different stock exchanges, Like Spiders (SPDRs) for S&P 500 index and Cubes (QQQQ) for Nasdaq 100 index. Sector wise or industry wise ETFs are also available for trading which are based on different sector wise indices of exchanges like Vanguard?s Health Care Viper for Health Care Sector stock index. Other major types includes those based on indices of large cap, mid-cap and small-cap stocks, value stocks, growth stocks, foreign country exchanges, metals etc.Now there is a marked surge in the number of ETF fund traded in various exchanges. Currently there are more then 400 ETF funds available for trading. But...
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What are Limit Orders?
2007-07-11 09:42:00
Limit orders are one of the order entry practices by which the trader tells his or her broker to buy or sell stock (or any other financial instrument) at a specified price. Limit orders can be practiced by any type of traders want to limit their risks, especially in volatile market conditions.Limits can be placed to both buy and sell orders. If a trader practices a buy limit order, then he or she is telling the broker to buy a specific stock only when it is on or below a specific price. Example - $10 buy limit order for stock ABC is filled by the broker only if the price is $10 or below. Sell limits orders are practiced to tell the broker to sell a specific stock only when the price is on or above a specific value. Example - $15 sell limit order for stock ABC is filled by the broker only if the price is $15 or above.Limit orders are filled only when the price is below (buy limit orders) or above (sell limit orders) the limit price. Thus some times it can take a long period for the f...
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Weekly Stock Review Letter 09 July
2007-07-10 08:49:00
The Week Ahead: Despite declines in Gross Domestic Product, new hiring continued as evidenced by a steady employment report. This provided new evidence that the economy remains vibrant especially after May's numbers were revised upward and labor costs rose 3.9% year over year. Watch the wholesale inventories release on Tuesday, the jobless claims and International trade balance numbers on Thursday, and retail sales, import prices, and business inventory reports on Friday.Stock s to Watch: Shares of Target (TGT) moved to new highs after speculation that an activist shareholder may push for the sale of the company's credit card business. The board of directors of Brilliance China Auto (CBA) has decided to de-list the ADS's from the NYSE and trade on the OTC. The market seems to approve as the shares rose. Genzyme (GENZ) fell hard on news their late stage drug for diarrhea failed to meet expectations. Parametric Technology (PMTC) broke down after cutting their 3rd quarter revenue for...
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Importance of Stock PEG Ratio
2007-07-09 10:11:00
Stock PEG (Price/Earnings to Growth) is one of the most popular stock market indices used to figure our tradable stocks. The stock PEG ratio is certainly more important to value investors who want to figure out good undervalued stocks with greater profit providing abilities.Stock PEG ratio is a comparison of the stocks P/E (Price to Earning) ratio with the growth rate of the stock. That isStock PEG = (P/E)/GrowthThe growth rate can be of annual or of six or three months, according to which the trader can design a short or long term strategy. The lesser the value of the stock PEG the greater the stock is preferable. If the value is well lower to 1, the stock is undervalued and good for trade. If the value is around or beyond 2 then is considered overvalued and not so good for trading.Although PEG ratio itself is a good indicator of the profit potential of a stocks, it is not risk-free as it employees the assumed values or figured out averages. The better results can be obtained from ...
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Forex Brokers Offering Mini Accounts
2007-07-07 09:18:00
As you may know trading mini forex accounts holds many advantages, especially for small sale and less experienced traders. Forex mini accounts have also provided an opportunity to traders whose primary trading area is equities or derivates to come and make profit from forex market; and also to diversify their portfolio to reduce risks.Now, compared to older days, traders can find an increased number of forex brokers offering mini trading accounts. For some brokers mini accounts have became the primary area of focus and the primary earning market. But still not all forex brokers offers mini accounts and even among mini forex brokers there are large differences in minimum account size, leverages offered, minimum deposit to open account, currency pairs offered and pip spread offered for each currency pairs. There are also differences in the standards and features of forex trading systems and order entry, risk management practices and demo trading accounts offered by them.An ideal mini ...
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Currency Futures Trading - Overview
2007-07-05 08:26:00
Currency futures trading suits all those who want to profit from the exchange rate uncertainties of the forex currency market. They had surely established as one of the best trading instruments in a short period of time. Currency futures can the day traded, swing traded or position traded according to the trading ability and profit goal of the traders.There are a number of different currency futures available for different currency pairs; usually one currency of a pair is the USD. But it is recommended to stay off from highly volatile currency pairs; mostly those include a currency from problematic countries or nations with political and economic instabilities. The best traded currency futures are the most traded currencies such as Euro, British Pound, Canadian Dollar, Japanese Yen, Australian Dollar etc.There are many advantages of trading currency futures.You can trade virtually when ever you want.Profiting from one of the most liquid markets.Diversification of the portfolio.Hedgi...
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LEAPS Options Trading Strategy
2007-07-04 08:35:00
LEAPS or Long-term Equity AnticiPation Securities are option contract for an extended period of time. They are introduced in early 1990s and are quite popular among active option traders. LEAPS are similar to traditional options contracts except the long-term nature. Because of this extended expiration date, trading LEAPS are considered as ?Investing? not ?trading?.Long-term Equity Anticipation securities are available for both equities and market indexes. The usual expiration date is one or two years; the expiration date of an equity LEAPS is Saturday after the 3rd Friday of a month where that for index LEAPS is the January 1st of the expiration year. The option premium for LEAPS options is usually higher than that of short-term options. LEAPS option trades can also can roll LEAPS to more periods by selling older LEAPS and buying new LEAPS without any additional costs.LEAPS options trading strategy provide the investors an opportunity to make more profit than trading short-term opt...
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Weekly Stock Market Letter July 2
2007-07-03 10:04:00
The Week Ahead: The holiday week opens with increased volatility after news of a tame inflation report for core prices, but rising food and energy prices as oil pushed above the $70 a barrel level. Reports to watch will be the Institute for Supply Management's June numbers release on Monday and the June auto sales and factory orders on Tuesday. After the Independence Day market break on Wednesday, the weekly jobless claims along with crude oil and gasoline inventories arrives on Thursday. An important June employment report is due by Friday.Stock s to Watch: Education provider, Apollo Group (APOL), earnings came in flat year over year but were better than expected, and the company will buy back up to $500 million of its stock. Baidu.com (BIDU) continues to dominate the Chinese internet market as its stock recently soared to new all time highs and price targets were raised to $195 by Citigroup. Office Depot (ODP) shares continue to weaken after announcing that a softening economy wil...
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What is Top-Down Investing?
2007-03-02 04:07:06
Top-down investing is one of the popular investing approaches that many traders follow. In Top-down investment the trader finds suitable investing opportunities by analyzing deep from a big picture or a global view.The procedure of top-down investing usually involves the following steps.Assessing of global economy strength Finding suitable economic regions by eliminating bad ones affected by war, internal tensions and calamities.More depth-analysis to find suitable countries with bright futures; can be done using analysis inflammation rate, health of stock markets, interest rates, employment, GDP etc.Find the health of stock market indices using fundamental and technical analysis tools. Important ones are dividend yields, price-to-earnings and price-to-sales. Find sectors of the country with right investment background. The comparison of growth of each sector (like mining, health care, IT services, technology etc.) with detailed statistics is done in this step. Finding the suitable ...
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Online Forex Currency Trading ? Interesting Statistics
2007-02-28 10:05:03
As you may know, Forex Currency trading market made it foundation in 1971. From there the market had undergone many changes and expansions. In 1980s the increase of money movement across the country borders made forex currency trading more popular. In 1990s, with the introduction of computers, internet and trading/monitoring systems the market have become an enormous one with traders all over the world, form Metro cities to small villages.Today, forex currency market is the biggest financial market on our planet. The daily trading market volume of currency trading is over 2,000,000,000,000.00 (2 trillion) U S dollars. This is around 30 times the daily trading volume of NYSE and Nasdaq together. The five most trading currencies are U.S Dollar, British Pound, Japanese Yen, Swiss Franc and Euro. Together these five currencies constitute more than 70% of forex trades done in North America.The main beneficiaries of forex currency trading are banks. Most banks involved in forex trading d...
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Weekly Stock Market Newsletter, February 26
2007-02-27 22:04:17
The Week Ahead: An economic report card of data are due out starting with Tuesday's durable goods orders for January and an important existing home sales figure. The consumer confidence index for February will also be released. Wednesday brings the 4th quarter GDP and January new home sales as well as the crude oil and gasoline inventories. Thursday continues with personal income and spending for January along with construction spending. The ISM manufacturing index and auto sales numbers for February also come out. Finally, Friday has the University of Michigan consumer sentiment reading.Stock s to Watch: Profits at Lowes Cos. (LOW) came in better than estimates sending the stock to new highs but are speculative here because of the housing slump. Chesapeake Energy (CHK) came in with better than expected earnings and the stock strengthened crossing the 200 day moving average. American Reprographics (ARP) stock looks poised for further gains as the company reported excellent earnings ...
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What are Over-The-Counter (OTC) Stocks?
2007-02-26 10:03:02
Over the counter stocks are stocks which are traded outside major stock exchanges like NYSE and Nasdaq. The two major types of over the counter stocks are Pink Sheet securities and Over-The-Counter Bulletin Board (OTCBB) stocks.The term over-the-counter means that the stocks are traded through dealer network, not through a centralized stock exchange. Mostly the stocks traded through over-the-counter are stocks of small companies, delisted companies or mysterious companies having no sound financial history. The instruments such as bonds are also traded over-the-counter as their moving usually requires a phone call.Over-the-counter stock trades are done through direct interaction between broker-dealers either by phone or through computer networks. The trader must first open an account from a broker allowing OTC trades. When you place an order the broker contacts with an appropriate market maker. And after the process of bid and ask the money and stocks are exchanged. Today there are s...
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What is Short Selling?
2007-02-24 16:00:27
Short selling is another stock trading strategy that some traders follow. A short seller makes profit from the fall in the price of stocks. Short selling is a complex process and requires precise market timing.A short selling trader trades stocks of companies, of which he/she expects a price fall. They usually burrow stocks of these companies from others through their brokers on contract that they will return them later. The trader trades the stocks instantly for the present market value and later when the price drops, he buys the shares for lesser amount and returns to the original holder. So the profit is the commission and burrowing fee deducted difference between the prices of individual stocks multiplied by the number of stocks traded.Short selling is only for experienced traders having the ability to find overpriced stocks and dooming companies. Short selling involves higher level of risks. If the prices of stocks increase, rather than decrease, the trader can face unlimited l...
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