Stock trading is one of the last true meritocracies. All that matters for your investment success are your own decisions. Stock trading is a precision-based activity and one tiny mistake in judgment could send you plummeting right to the bottom and result in a huge loss.

Likewise, the opposite could happen. You may make a great buying decision that will put you on the path to riches. Traditional stock trading is done at stock exchanges, which are places where buyers and sellers meet and decide on a price, although electronic trading is gaining in popularity. Stock trading is affected by how well the economy is doing and by basic supply and demand considerations.

Stock Trading is a get rich slow process. Money can be made, but it takes time. Stock trading is something that interests many people because it offers them a chance to make money without breaking into a sweat. In addition, it has a lot of excitement attached to it especially when using short term strategies that help pit traders against the stock market.

Stock Trading is trading stocks and shares of different types of companies and organization at the stock exchange. In every country, there is a stock exchange where various companies get their shares listed, when they arrange to raise required funds by means of issuing shares.

Stock trading is a very competitive field and in order to succeed you need to FOCUS on a set of simple strategies that you can implement without hesitation. The real “secret” of the stock market game is enclosed within the trading set ups and market signals you rely on to decide when to buy or when to sell shares. Stock trading is a business (because it is done for making money).

So as in a business, in stock trading, one needs to complete solid planning before making any buy/sell/trade. Stock trading is viewed by some people as a very complicated matter. This is regarded by many as an arena better reserved for those who have extensive exposure and experience in stock trading.

Stock trading is a game in which you cannot afford to be average. Thousands of new and inexperienced traders are being charged hundreds, even thousands of dollars by scam artists and self proclaimed experts for dubious stock picking services and mechanical buy and sell signal generators.

Stock trading is a relatively simple activity compared with other professions, particularly with the tools available in today’s Internet world. It is certainly within your abilities, and as you educate yourself on and build your skills, you’ll find that your fears subside as your confidence grows.

Researching a stock and then buying online it is one part of the story. The other part being how to plan a trade with an exit strategy? You must research the risks attached to online trading to make sure you are prepared for the worst. Be determined and goal orientated.

Exchange traded funds are good to use for trading and investing. By keeping trading simple, there is less stress and more opportunity to profit. Exchange Traded Funds, also known as ETFs, are index funds traded on the major stock exchanges just like stocks. An index fund involves a collection of securities, much like mutual funds, except that ETFs differ from mutual funds in some distinctive ways.

Options are bets about the future price movement of exchange traded securities. The prospect of unusually high returns always signals unusually high risk so be careful about trading options. Timing is everything.

Options are a great way to both earn and lose a lot of money. If you’re interested in involving yourself in the more unpredictable, risky, and spontaneous part of the stock market then trading options is something you should investigate. Option strategy is about selection of the best stock opportunities and following your signals. Here, you can achieve success if you are acquainted with the correct option trading strategy .

There are online resources available that will provide you with free simulated stock and option trading. You will easily find enough information to start your trading venture. You can practice trading stocks, options, spreads, futures, short sells, and so forth. Just run a search for “demo stock trading accounts” and you will find a good list to research.

Stock and option trading is a big game in many ways. But as it is a game involving the exchange of money if you play you need to take the game seriously.



By: Gerald Greene

About the Author:

A few years ago on a Monday morning, I checked my brokerage account and to my surprise it showed that I had purchased 1,000 shares of AMD for a total cost of $15,000. The payment for this purchase was taken out of my brokerage money market account.

Why surprised you may ask. I had not put an order for this purchase nor did I really intend to buy AMD. I get to this in a little bit.

Had I wanted to sell the stock on that day, I would have received around $14,500, a loss of $500 in just a few hours. In the end it worked out and I sold that particular stock a few months later for a handsome profit.

But on that day I had a paper loss of $500 and if I didn’t have enough money to pay for the purchase, the $500 loss would have been the least of my worries.

So, how did I end up with a stock that I did not necessarily want or order?

Automatic exercise threshold for equity options is the reason.

Today, I received the following message from two of my brokerage firms that reminded me of that day.

“Beginning October 2006, the Options Clearing Corporation (OCC) will implement a change to reduce the automatic exercise threshold for equity options. The current threshold of $0.25 will be set at $0.05 for expiring options that are automatically exercised by the OCC. The threshold for index options will remain at $0.01.”

Who cares about a measly $0.20? You can’t even buy a stick of gum with that.

For options traders this could mean a huge potential loss, margin calls and a whole lot of trouble.

Let’s go over a few simple reminders about options trading. Options are contracts that allow a person to buy or sell securities, for example stocks, at a predetermined price called option exercise price and on/or before a predetermined date in the future called option expiration date.

Options represent a reserved right but not an obligation. In other words, the holder of this right, that is to say the buyer, can exercise this right or not.

For example if you own a Microsoft January 25 Call Option, it gives you the right to buy Microsoft for $25.00 on or before third Friday in January. It is obvious that you would not exercise your option if Microsoft is at $20.00. In that case, if you really like Microsoft, you just go to open market and buy it for $20.00.

However, if Microsoft soars to $40, then you want to exercise your right (option) and buy the stock at $25 and turn around and sell it at $40 or keep it for further potential increase.

To exercise your options you need enough money to pay for buying the stock. Each option contract represents 100 shares of stocks, so 10 contracts represent 1000 shares of stocks. In our Microsoft example, for you to exercise 10 options contracts at the price of $25.00 requires $25,000 to be in your account.

If you don’t have that money, well, you may face margin calls and some other not so pleasant consequence. This is where the new change can cause some serious damage.

Options are a right and not an obligation except that you have to deal with automatic exercise threshold. This is the threshold the Options Clearing Corporation (OCC) uses to determine if they should exercise your right on your behalf.

In the letter I received from my brokerage firm, they informed me that if the price of the stock is only a nickel ($.05) above the exercise price, that would mean they will automatically buy the stock for me according to this new rule.

So what can options traders do not to deal with unwanted stocks?

First, they can and should watch the stock price and be proactive in the process especially on the option expiration date. Option trading is not by any stretch of imagination a passive approach. They can also call their brokerage firm and find out what other alternatives are available to them.

Seasoned options traders know what they should do and the aim of this article is to bring some facts to the attention of those who are just getting started.

In investing and in life I remember what Robert Grant said, “Men and women everywhere must exercise deliberate selection to live wisely.”

* DISCLAIMER: Vishy Dadsetan, http:/www.MyPersonalFinance.com or My Favorite Shop, Inc. do not endorse any product or company. This article does not provide investment, legal, insurance, or other professional services. If investment or other expert assistance is required, the services of a competent professional should be sought. Although Vishy Dadsetan has made every effort to ensure the accuracy and completeness of the information contained in this site, it assumes no responsibility for errors, omissions, inaccuracies, or inconsistencies.

© Vishy Dadsetan



By: Vishy Dadsetan

About the Author:

Stock options trading can be ridiculously tough if you don’t know what you are doing. You can lose the whole of your capital within the first few days or even hours if you aren’t careful. The difference between the successes and those who go broke is most often in the quality of their information. Read on to see how good quality stock information can help you.

The most fundamental thing you want to understand when you are starting out is exactly what it all means. Learn as much terminology and slang or jargon as you can. Do you really want to lose money because you don’t understand what your broker is telling you? Not only will this lose your money quick time, but it will also mean your broker has less faith in you, and will be less likely to come to you with hot tips. That’s not what you want – a broker with reliable tips is worth his weight in gold, so do anything you can to stay on his good side.

Make sure you are getting into stock option trading for the right reason. There are three main kinds of trading: investing, speculation, and trading. If you are looking to invest, this is more of a long term strategy, and to be blunt, there is little point doing this with options. Why? Because options have a limited shelf life. All options contracts expire, mostly within a year, and their value gradually diminishes the closer they get to the expiry date. Not exactly an investment model to rival Warren Buffett is it?

The final piece of the puzzle for anyone looking to get involved with options is to learn the difference between them. There are two main types of options, and they are completely different. Get them confused and you will almost certainly lose everything. The two kinds of options are known as Calls, and Puts. In simple terms, holding a Call option contract gives you the option (hence the name) to buy 100 particular stocks at a set price – regardless of the market price. This means you can buy low, even if the market is flying high. Puts are the polar opposite of Calls, in that they give the option to sell 100 designated stocks at a predetermined price – very handy if the market has taken a downturn!

Hopefully there is enough information here for you to understand the basics of stock option trading.



By: Robert

About the Author:

Upper Saddle River, N.J. – September 12, 2006 – The government’s investigation into the excesses of executive compensation has now expanded into the practice of granting backdated stock options, with at least 100 companies now under the microscope. This seemingly widespread and highly questionable practice has triggered the government’s consideration of ways in which to put a lid on what many consider to be an abuse of executive compensation.

IRS Section 162m, in force since 1993, allows companies to deduct compensation above $1 million, for certain executives, only when it is performance-based. The rules interpreted stock options as being performance-based, whereas restricted stock grants are not, if the restriction is tied to time vesting. Because of the variable accounting treatment for performance-based stock options and restricted stock, most companies have not attached specific requirements to these grants. According to a recent article in the Wall Street Journal , Congress is open to considering the elimination of the performance exclusion. Although they expect stiff opposition to this change from publicly-traded companies, the recent introduction of Sarbanes-Oxley and expensing of stock options under FASB regulations appear to indicate that mass public and media outcry are more successful currently at driving reform than any actions from the business community.

It is interesting to note that some individuals within the government recognize that changes in the regulations can have huge and totally unexpected consequences. The exponential increase in the use of stock options that began in the second half of the 1990’s was a clear result from the enactment of Section 162m. The total elimination of the performance exemption would have a tremendous impact on the financials of many companies; any change in the regulations may therefore be tempered by only eliminating the exemption currently tied to nonperformance- based stock options.

What should a company do? Other than giving input to your representatives in Washington, the most important thing to do is to take a hard look at your current executive pay programs and determine if they will pass the “sniff test”. Are they performance-based, and are the underlying performance criteria tied to increasing owner/shareholder value? Is the amount paid out commensurate with the competitive market, and is it appropriate, given the level of performance achieved? Does the overall program address the four major objectives of compensation: 1) focus attention on desired results; 2) attract qualified talent; 3) retain valued and productive employees; and 4) motivate them to achieve improved results. If these questions can be answered positively, there is a good chance that the programs reflect a balance between executive needs and those of the company and its stakeholders. If some of these questions are answered negatively, the programs should be further examined and revised so that they will pass increased scrutiny.



By: Paul R. Dorf, Ph.D., APD

About the Author:

Have you ever lost all your money in Stock Options trading?

If you are like most of us, then you might have lost an entire trading account just trading stock options before. No matter how hard you try, you seem to always lose all your money eventually even if you made some initial profits. Why is that so?

The truth is, stock options trading is risky business! Why is it risky business? Stock options trading is risky because you could lose all your money on any stock options trade if the stock eventually close with the options out of the money during expiration! Yes, even stocks that seem to be rising very quickly and steadily could take sudden and unexpected drops near expiration, taking your in the money call options way out of the money before you can react to it! This means that no matter how certain you are in stock options trading, there is always the possibility of a total loss. Stock options are fantastic leverage instruments but if you simply throw all your money into every trade and hope to strike lottery, then stock options trading would one day wipe out your entire account in one fell sweep.

So, how do we avoid such a predicament?

Simply by applying the golden rule of stock options trading! That is:

Use Only Money You Could Afford To Lose!

Yes, if you could afford to lose only 10% of your account at any one time, you should use no more than 10% of your account on any single stock options trade! This rule is especially important if you are trading out of the money options which have an incredibly high chance of expiring worthless.

For example, if you have a $10000 account and you do not wish to lose more than $1000 at a time, $1000 should be the amount you use on any single stock options trade. Simple as that! The obvious drawback of this rule is that you will not make as much money as you would have if you had simply punted all your money on a single trade, however, just like you would never bet all your money on a single gamble, you should also never put all your money into a single options trade no matter how confident you are! In fact, this applies to any form of trading as well. It takes a little discipline to stick to this rule especially if you are “on a roll” and tempted to go for a “show hand”. Let me assure you that there never is a problem with making lesser money but there always is a problem losing more money!

In fact, when you are using only money that you could afford to lose in stock options trading, you sleep better knowing that you cannot lose more money than you have decided to lose! Your holding power becomes greatly enhanced and you could ride out temporary downturns better than those stock options traders who punted all their money in one trade. This consequently translates to a higher chance of a win as most stocks eventually come back profitably after temporary pullbacks!

So, stick to the “Use Only Money You Could Afford To Lose” golden rule of options trading and you will be safe in your journey to financial success with stock options trading!



By: Jason Ng

About the Author:

A lot of traders now favor option stock trading because of its many advantages. For one it can be highly profitable if used rightly, it offers the investor more flexibility and a larger option to diversify. This trading system offers more protection to the portfolio gives more control to the investor and offers a higher possibility to generate more returns on investment. They can be used under any market condition. They offer the investor the advantage of making returns on a change in stock price without actually owning the stock. Options stock trading can be used in combination with other option contracts and/or other financial tools to maximize returns.

Furthermore, a lot of trading is done on the floor of the stock exchange; one of such is referred to as stock option trade. Sometimes the trading could just be more of speculative activity. Speculative activity trading is done on stock exchanges through stock options trading. The term option in stock parlance means “a right”. There exists the right to sell as well as the right to buy. In a deal involving an option, the right to buy or sell a certain amount of securities, within a particular period at a given price can be bought off a dealer. If the purchased right was an option to buy securities it would be called a “call option”. If the right was the option to sell, it is called a “put option”. Instances where the two possible options are combined, to buy or sell a certain quantity of securities at a particular price up to a given future date, it is then referred to as “a double option”, or “a put and call option”

Speculative activity or stock option trade is carried out for anticipated profit. Here is how it works. If a speculator expects the price to go up, he buys a call option. This allows him in future when the price has arisen to buy at the old lesser price and sell at the higher prevailing price. When the reverse happens and a drop in price is anticipated he buys the put option.

When a speculator notices that his predicted or expected rise or fall in price did not occur he can chose not to exercise his right or stock trade option that he had purchased. The party that grants or sells the stock option trade to the speculator is paid a premium for granting it.

This premium is also called the option money. This is the fee that is earned by the trader who grants the speculator the stock option trade. When the speculator desires not to exercise his option he loses the option money or premium. But his loss is restricted to the option money alone. Stock option trade is useful for speculators who want to protect their capital and yet seize advantage of fluctuations in prices. He has the choice to decide whether to exercise his option or not.



By: Wincent Loh

About the Author:

You make money by day trading online. So, bullish call and bearish put spreads are two of the very basic option trading strategies. However, it is not guaranteed a 100 % win from the stock market. You still need to learn to predict the stock price direction accurately using technical, fundamental and news analysis.

Your choice of what method to enter and exit stocks plays a critical part in your stock market success. Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, they’re the ones who create opportunities for prudent, long term oriented investors.

Are you ready to follow the wealth cycle so that you’re earning more when you’re ready to retire? Or, do you want to depend on social security and the ever-volatile stock market for your future well-being. You can choose a wealth cycle today. All it takes is the first step.

But be very aware. The NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual funds had rude awakenings after the huge losses and scandals in many of the famous fund names.

I remember reading some years ago that 97 percent of all gamblers lose over time. If you gamble on the stock market then the odds are well stacked against you. However, if you invest in the stock market then you have the potential to do very well.

Also be wary of mechanical trading systems, the thought of having mechanical trading systems you can simply use to generate automatic profits, is obviously very attractive to many traders. Most traders however, end up disappointed with mechanical trading systems, as they never seem to live up to the sales hype, and the performance figures used to sell the system never seem to be repeated in real life.

Another problem is curve fitting or optimization of mechanical trading systems. These systems yield extraordinary performance in back testing because of the tweaking of the system rules to make them fit the data. A trader once likened this to shooting holes in a barn door, and then drawing circles around every hole to make each shot a bulls-eye!

Not all mechanical trading systems are doomed to failure, but if you want to get one that works, be realistic and do your homework first. As mechanical trading systems need historical data inputted into them in order to calculate what might happen in the future. Of course what has happened in the past is not always an accurate predictor of how any kind of stock will behave in the future. If this was true then we would all be rich!



By: Allen Jesson

About the Author:

Sometimes investors feel that they do not have sufficient leverage. When this happens, they find it difficult to use the opportunities that present themselves and make a profit from them. Penny options are one good way to gain leverage and build your portfolio at the same time.

A lot of stocks are priced incrementally – for example, at five or ten cent increments. Penny stock pricing methods do not use increments but vary by pennies. Traders can increase their leverage with penny stocks because they can get into trading with less capital to start with and if their stocks should fail, they have not lost too much.

With penny options, you can make a profit in a relatively short time because you are playing in a smaller field and with less money. A lot of people like the penny stock idea because you cannot lose more than your initial investment. Options, as opposed to underlying stock, do have some drawbacks though. Penny options can change massively in a short period of time. These might be positive changes for you or negative.

It is important to find out whether a penny option would suit your requirements. A penny stock might be cheap but perhaps the liquidity does not suit your needs. You have to find out what the brokerage cancellation policy is too. Also, ask what the time decay of the options is before purchasing them. Before you buy anything, ask yourself for how long you plan to be trading the options. You should buy options that expire well after when you plan to sell, so if you want to trade an option for 10 days, choose one ending in 30 or 40 days.

If you already decided that you are going to trade for one day only, there is no need to worry about expiration dates. The front month option should work fine for you in this instance. Penny options are not actually that common these days. Traders and crafty brokerage firms use the method so others should catch up soon.

You have to be patient when trading penny stocks. The options can move quite a lot in just a few minutes so if you are too nervous, you need to relax rather than panic. If you are prone to panic and stress, maybe penny options are not a good idea for you.

If you are interested in increasing leverage but do not have enough capital to begin with blue chips, penny options are a good way to start.



By: Mark Crisp

About the Author:

Trying to make money from the markets even armed with a set of rules is likely to be met with failure. Over 90% of traders fail to make consistent money in the markets because their expectations are beyond their skill levels and their resources. Ill-equipped they are easy prey for the trap that is the financial markets.

Skills include knowledge and knowledge starts with the basics, but it doesn’t end there. Knowledge means understanding how the brokerage side of things works and how your trading platform works, your legal requirements, your method of analysis and process for trading and much more.

Then there is skill level. If you’re hopeless at fixing a computer, what are you going to do if it crashes right at the point where you’ve placed a trade but haven’t put your stop loss in yet?

What about your math skills? Can you quickly determine the exchange rate between your own currency and the currency the asset you want to trade is in, and determine the effect this will have on your own account?

Do you know how to calculate percentages for risk management (do you even know what that is)? This is highly important because it determines how quickly your account diminishes with a losing streak.

What about your emotional level? Are you quick tempered or do you beat yourself up easily? Maybe you’re strong and resilient or have you come from a disciplined background. Either way, these emotions all have their place in the scheme of things.

Having a poor emotional habit (such as being impatient), doesn’t mean you won’t succeed at trading, but it does need to be addressed, however you must also look for your strengths, as these are pillars to your success.

It’s also very important you understand what your resources are. These include your capital, and how much of that can you afford to lose? Why trade a system requiring a large capital base if all you have is $10,000.

Time is also a resource. How much can you allocate to trading, learning, back-testing, managing etc? Do you honestly think trading is just placing trades? The longer you are a trader, the less learning time will be required.

Skills, as mentioned before, these are resources too. Are you good at certain things but need help with others such as using a computer? Math is an obvious one, but there is also the writing of journals and logging your trades, keeping accounts and so on.

Strengths are resources. When you are strong at something such as being disciplined this will become one of your assets and one of your edges in trading. Know what you’re strengths are.

Software and hardware are resources. Do you know how to use your trading platform? Is your internet speed and your computers processing power sufficient for your method of trading?

When you list your skills and resources, and everything you can think of that may contribute to and affect your trading business, you’ll find choosing the right style and method of trading that is going to help you achieve your goals that much easier.

You won’t spend good hard earned money on trading systems that can not possibly function with your list of resources. It is better you know yourself, your resources and what you can bring to the markets than trying to fit into something created by somebody else who has a completely different list of skills and resources.



By: Dean Whittingham

About the Author:

I should preference this by telling you that I do not day trade for a living. However, it is a reality that you can make day trading a career or a part time job to generate extra income. Personally I do it as a hobby in order to generate income. There are two very big differences if you are considering getting involved in the Stock, Option or Forex markets. You need to decide and be realistic about what you are really looking to do. Do you want to make some extra or do you want this to be your full time job?

There are two major differences between doing this as a full time or part time. Obviously the first is time, are you committed to being in front of your computer 6-7 hours a day and the extra hours required doing research. Secondly, if you are doing this as a full time job, then you will most likely be learning a trading “system” or specific trading techniques. The emphasis will be on a system and not on individual stock selection.

If you are looking to do this as a hobby or part time then your emphasis will be on specific stock selection. Generally you will need to use some of the popular stock picking services that are available. If you think you can pick stocks on your own then I would think twice about getting into this business. There are people that get paid a lot of money that still cannot do it on a consistent basis.

It does not matter if you do this full or part time you are going to need help and support to be successful. The full time traders that I know were trained by professionals and only after several years, as mentors were able to successful begin trading at home on their own. It should once again be noted that they are “traders” and not “stock pickers”; they have a trading system and techniques that make them successful. I hope this information makes you think what is the best way for you to start in the trading business. If you are interested in reviewing some top Work At Home Career including trading you can get more inforton at mysite http://www.WAHRS.net



By: Tim Crist

About the Author: