Stock Market Trading Systems

Archive for November, 2009

Technorati Tags: playing the stock market, stock market for dummies, stock market trading systems, understanding the stock market

Can middle class American invest at NYSE??? How much it cost to buy a very small stock???

When I read the news it says about the stock that costed like 10 or 50 dollars and after some year it was like a million dollar. I dont really understand the stock market, even less the many number at Wall Street.

Yes. Anyone can invest that has some money. BUT. Those stories you read about the person that invested $100 and 40 years later it was worth a million are a 1 in 10 million sort of thing. They never write about the millions who lost thousands doing the same thing.

The probability of turning a $100 investment into a million is about 1 in one million or more. Might as well buy a lottery ticket for a $1 and hope to hit the jackpot.

The biggest obstacle to doing this is that people who have invested the $100 can not wait to take their profit once they have hit the $500 or $1000 mark. Just seems too good to be true and they do not want to loose it, so they cash out.

Im a stay home mom and I would to do something with my spare time, and the stock market seems interesting to me.
I live in Edmonton Alberta Canada, can someone help me out or give some advice?
Any good sites?

If you are cluelss then ‘playing’ in the markets is a very good way to lose a lot of money. I have an MBA in finance and I wouldn’t ‘play’ in the market. There are way too many participants in the market with expertise and sophisticated computer programs waiting for you…

If you want to invest then put your money in a mutual fund. The key to investing if you aren’t an expert is to diversify and hold for the long run (10 years or more.) Unless you can diversify (buy 20 or more companies stock) then a mutual fund is the only way to go.

If you are determined to play, try this. Take any market index The djia is one, rank all the stocks by their price-earnings ratio. Buy the bottom quintile, (the bottom fifth) wait a year. At least one of those will be way undervalued and make a lot. The others will muddle along. But this should get you a return of 12-14% over the year. Rerank one year later and buy the bottom quintile again, etc.

I know a stock price is determined by supply and demand, but what I am actually asking is: Who monitors the supply and demand then sets the price accordingly? Is it done automatically by a computer system at the stock exchange market, or is there a person who monitors the daily action and then modifies the stock price manually during the day according to that? And if the stock price is modified each day by a person, does this person work directly for the company who issued the stock, or for the stock exchange who trades it? Also what about the bid/ask prices? Are they set by an automated system or by a person?

The NYSE is a bit more ancient. I don’t know if they still use this system or not, but they have specialists for a given stock. More popular traded stocks may have multiple specialists, and a specialist might take a bunch of thinly traded stocks. Usually, brokers are the ones placing orders to the specialist and the specialist will match up the buyers and the sellers and take a cut. They might have gone electronic by now. The specialist works for the stock exchange and pays a large fee for a seat on the exchange.

The NASDAQ is a fully automated computer system. The tons of brokers instead of talking to the specialist just input their orders. The array of buy and sell orders form the bid/ask. When there’s a match, the trade executes by computer.

The stock market in dummy terms

The stock market is a place where they trade stock (pieces of ownership in different companies).
Rather than people/firms running around the country trying to buy pieces of Walmart, Goodyear etc etc, they formed a meeting place and called it the stock market.

Firms meet there so they can buy and sell stock in differenet companies.
The market is an auction market, there are those bidding to buy a stock and there are those offering their stock for sale.
The highest bidder & the lowest offering price forms what is called a quote.
So if someone wants to buy, they have to go to someone who is offering it for sale at a price, if they want the stock they have to pay the offering price.
If someone wants to sell a stock, they go to the person that wants to buy it (the one bidding), if the seller likes the price, they buy it at the offering price.
So there’s always someone bidding to buy and there’s always someone offering to sell. If the come to an agreement on a price there is a trade (a buy & a sell)

The are many stock markets. Companies pay to have shares of their stocks trade on the various exchanges.
The is an over-the-counter (OTC) market where there is no building or physical structure but rathr a listing of companies that can be traded.

So the stock market is a place broker/dealers go to and have an auction for buying and selling shares of stock.

I would like to know how to understand the stock market and how to use it to my advantage. Where would be the best place to begin learning about this subject and then learning how to apply it without destroying my financial future.

I’m a trader – I earn a living trading the markets. But for investors its a whole different world. Investors have totally different goals to traders.

I would recommend you start your learning by looking up best sellers in the investment genre and then go to a bookshop and buy the book or borrow the book from your library.

One good investment book I picked up (and bought) was Beating the Street: Books: by Peter Lynch

Good Luck!

www.investopedia.com is the best and help can be found at www.investyourbest.com

Virtual money is not the best practice though because your decisions in real life are greatly influenced by greed and fear.

If you trade futures, stocks, FX: do you use the same Trading System or a different system for different markets.

Also what is/are the Trading System that you use for each market:
1) one you bought off the shelf;
2) put together yourself from existing indicators & techniques (ie MACD, Moving Averages, Chart Patterns, etc);
3) developed entirely by yourself through mathematical programming into a new proprietary system
Not fishing for the secret all infallible holy grail of trading system (if it even exists).

Just want a simple answer like:
I trade using point (2) using candlestick patterns and moving averages as trailing stops. Use it to trade FX.

Dont need to know the time period of your moving averages or secret mathematical formulae you’ve programmed into TradeStation or MetaStock.

I currently trade both Stocks & the Forex market both on the same platform. It’s provided through EFX Group. You can check them out @ http:ISB.EFXGroup.com
They offer tight spreads and flat commissions.

I’m looking for a book (not Stock Investing for Dummies, because I already have it), that will teach me how and why I should buy stock. When to invest and so on. I basically am looking to invest in the stock market, and want to know how I can find the companies that I should invest in. THANKS!

For awhile I read a lot of such books and found most didn’t cut it. I simply taught myself a good deal–from reading those books, magazines (like Forbes, Money, Fortune, Smart Money, Fast Company, etc.), listening to shows such as the Saturday morning Fox block–The Cost of Freedom–which is 4 half-hour shows back-to-back. (BTW, my favourite for investment advice is Wayne Rogers. Seriously.) I also just did it. Turns out I had a knack for it, but it involves a lot of work.

Anyway, I still read some books, and I liked Mary Buffet’s The New Buffettology. In an interview I saw with Warren Buffett (and I prefer results to degrees, so I am happy with his results), he said he doesn’t read any of the books about him. However, as that’s a former daughter-in-law I think she had the inside track.
BTW, Buffett puts some interesting stuff on his site:
http://www.berkshirehathaway.com/
You will do worse than to read that.

You also need to understand, especially now as things are particularly wild, that you do NOT invest money you can not afford to lose. You don’t go in with a negative attitude, but no one has any business borrowing money to invest in the market. If you’re that good at it, you’ll run up value from savvy trades and dividends; if you’re not that good, you’re going to default.

I highly recommend Scottrade when you decide you’re ready to open an account. I think people should be able to manage their own affairs. I’ve known too many people who handed their money to "experts" who messed up. The experts were paid, the person whose money was lost was SOL. Personally I get better returns on my investments than most of the fund managers I hear about, but not as good as Buffett And NO I am not soliciting to do any advising for free or for a fee because I’m not appropriately licensed for that. I manage my father’s pittance and get him more in dividends per month than his pension. I advise my brother and recouped the quarter-million plus his "experts" lost for him. My main income is dividend income. I could do more if I’d get more sophisticated and do options and such but I don’t have the energy for that (I’m ill. I use my time as best I can and sometimes I do something completely different–like these answers–to try to distract myself from pain OR to not get into a rut on my financial thinking. THIS is a "break" activity for me.)

You should be sure to understand things like basics:
difference between market and limit orders

stop-losses

what an ETF is

Personally I don’t like mutual funds–had a couple in the early days, but I do better on my own.

You need to decide how much risk and volatility you can handle.

You need to decide if you’re going to value DIVIDENDS or not. I do. Not only is that my main source of income, BUT it is harder to cook the books and pay regular dividends. Capital appreciation of dividend paying stock does NOT suffer either. I see NO downside to dividends.

You also have to decide if you’re an investor or a trader. Traders can literally sit there for hours buying and selling to catch a profit. I did a little of that for my father as he started with an investment of $2K. I don’t waste my time and energy on that now. I am an investor–in it for the long-term (which also tends to be good for tax purposes as well. And I don’t give tax advice other than to say to FILE and if you need help, hire a pro.)

Stock market investing is interesting and can make you rich or poor–it will take time to learn what you NEED to give yourself a decent chance of making this an investment instead of a gamble.

Forex charting is popular. These charts provide investors with readings from the stock market progresses. Investors’ odds in stocks improve, since the readings show them the changes in the high/low. The investors use these results to know when the best time is to bet/ask, trade/sell, etc.

You have a selection of Forex charts, which may include the Web and Java charts. With the Web charts, it supplies the investors with specs. Often they receive details from various stock markets streaming from different banks around the globe. These banks have a big institutional bank, which is located in New York. London banks, Irish banks, Hong Kong and other banks link to the headquarters in Stock or Forex marketing.

Charts will supply the investors with valuable tools. This technology arranged software programs would give accurate readings. Some of the programs will read out rate of changes, stochastic, (Random probabilities), Bollinger Bands, Common Deviations, and so on.

Some of the readings, such as Bollinger’s are an indicator. This indicator enables the investors to evaluate volatility and prices on a timeline. Indicators make up bands that rotate, moving toward averages in the stock exchange to the center of Forex Charts. The bands at the crown of the charts deviate, the stands (SMA) to sum up, while the low bands will subtract these stock deviations. Clearly, investors must know how to read instabilities in the stock as well as learn how to read pricing. This will help investors at the buy/sell, trade, ask/bid, etc stages.

Change rates permit the investors to track all percentages. Sometimes the oscillator moves back and forward, fluctuating. This means that at the time the market reaches “subzero” additional changes may occur. At this time Forex, stock investors can read the results to see positive/negative results. Each result will display high/lows in the stock market and will show divergences within Forex. When the lines cross over the subzero mark, signals are sent that indicate to the investors when to bid.

You want to learn about these changes, charts and more when considering this stock market. Most starters must invest $10,000 to enter into the Forex market exchange. If you are new to this stock market, then be sure that you become well informed before opening an account.

The advantage that Forex stocks provide that stock market exchange do not is that when the markets are low you still have a chance at winning. This is because you are betting on currencies amidst countries, which these currencies may change at any given moment. Currencies pair, which may include EUR/USD, or JYP/USD, USD/JYP, and so on, which you need to has an understanding of these currencies to know when to bid/ask, trade/sell etc in Forex stock exchange.

Martin Lukac
http://www.articlesbase.com/currency-trading-articles/forex-charting-in-stock-market-exchange-128856.html