Online Stock Trading

What Is In A Stock Report?

kcestra — Tue, 19 Jan 2010 17:22:08 +0000

A Stock Report

Many people can read a newspaper or look online and simply obtain the amount a current stock is trading at per share. It is usually in plain sight and easily understandable to even the most novice investor. The information contained in the stock price is helpful if you are just sitting on an investment, but there is much more to be known about a stock. A stock report is a standardized list of relevant stock data that tells a lot more about a stock than its current close price for the day. Investors use all of this data in an effort to better educate themselves on what a stock is doing, going, where it has been, and a lot more. Now there exist many online stockbrokers that take this information a step further offering the financial information of publicly traded companies, news, and much more that pertains to a given stock. Combined with the stock report information it is a lot of stock data to digest. However all this information combined gives the real picture of what a stock is doing, and learning all you can about a stock report can be the path to smarter investment.

Understanding The Numbers: Stock Report Information

Included in a stock report is a lot of data. Most of this data is in the form of numbers, both positive and negative, and percentages. Also included are many industry terms and acronyms that explain the real data contained in a stock report. Below are the standard stock report details and what each ones means to the investor and company reported:

YTD % CHG: this means year-to-date percentage change for a given stock. Meaning how much did this stock gain or lose in value in a calendar year from the date of the report.

52 Week HI LO: this represents the highest price the stock has been trading in the last 52 weeks, or year, and the lowest it has traded at.

DIV: this means dividend, the amount paid out to shareholders at the last scheduled payout based on company performance.

Yield %: this represents the percentage of the dividends given out to stockholders over the stock price.

PE: A very important and frequently overlooked part of the stock report is the Price to Earnings ration. This is the actual per share earnings of a given stock divided by the stock price.

VOL: this represents the sales volume. The last two zero digits are omitted due to volume. This amount represents how many shares of the stock were sold in the previous trading day.

Close: this is the final sale price of a given stock for a given trading day when the bell rings.

Net Change: this is just the difference in value change of a stock from the previous day’s close.

What Is Day Trading?

kcestra — Tue, 19 Jan 2010 17:17:04 +0000

The Day Trader

A day trader is a relatively new type of investor. Day trading stocks has been around for several decades but really only arrived into the homes of the average investor in recent years. Day trading is what it sounds like: trading stocks in a given trading day, and usually closing out your stocks, meaning selling off in the same day. Day traders are considered active traders for the reason that they actively sell and trade stocks on a daily basis. Day trading stocks is not a typical investment strategy. The typical investor thinks long term and buys stocks and fund shares based on what they hope will be future and steady returns. In day trading one does not worry about what Company X will do in the next quarter. Day traders care only about what that stock will do today, meaning will it increase a few cents or percentage points now, or later. In the world of stock market investment, many involved in day trading stocks are seen as cheaters or gamblers. In a sense they are as day trading is not based on analyzing stocks or making long term investments for the future. In fact the company or fund being invested in is irrelevant to the day trader, only where that stock will move today is.

Tools Of The Day Trader

Active traders need all the tools they can to help facilitate their trading. Day traders can make millions of dollars a year only day trading. This seemingly easy money can be lost or gained in a single day very easily. To get started in day trading, many active traders invest in several computers, trading software to assist them, and a strong high-bandwidth internet connection. Additionally day traders will need a direct access online stock broker. With direct access there is no retail trader, simply an ECN (Electronic Communication Network) to execute multiple trades in single day. Many day traders make thousands of trades a day and therefore utilize discount online brokers who often, once someone is trading several thousand stock transactions each day, offer prices per trade as low as $.004 each.

Techniques For Day Trading

The techniques and tricks utilized each day by day traders are too long to list. They range from scalping, where one makes their profit by presetting buy amounts a few tenths of a cent over sell, to buying on margins, short selling, and more. Many day traders simply follow the news and buy and sell based on which companies are getting pushed up or down based on positive or negative news stories regarding a company´s performance.

What Is A Covered Call?

kcestra — Tue, 19 Jan 2010 17:15:28 +0000

A Covered Call

A covered call is a somewhat tricky stock trading option that has been in use for the last several decades. What a covered call offers the stock trader is a sort of insurance policy against the stocks he owns. Additionally it will allow the investor to make money from his stocks in more ways than just waiting for the stock share price to increase. In covered call trades the trader is offering options to other investors. An option means there is a set price for a given stock for a future date. There is also a premium assessed which serves as the fee to the stock options seller. Whether the options buyer makes the future stock purchase for the price offered does not mean the premium is not paid. In options the premium is always paid regardless if the stock options are purchased. To better understand options, and therefore know how covered call trades function; see this example of stock options:

Seller A offers 100 shares of Stock X to the Buyer for $50 per share. The options contract is for one year, with a premium of $5 per share.

Stock X currently trades for $45

Buyer accepts stock options contract. Guaranteed payment in the form of premium to the options seller is $500

In one year the stock is trading for $49 per share. At this amount it is cheaper for the investor to not execute the options and buy Stock X on the open market.

Options seller keeps $500 premium as profit for making the offer

The Covered Call Advantage

The advantage for covered call trades for the investor is that in a covered call, they literally own the stock or security they are offering for purchase on the option. In this way they can safeguard their investment, the stocks they own against future loss by making money off the premium. To continue the previous example, see how this works out well for the investor when the stock takes a loss. In the previous example if the option was a covered call, meaning the stocks offered were owned by the seller, he (Seller A) would have:

Made $500 from the premium from his option offered

Increased his 100 shares in value from $4,500 to $4,900 while adding the premium for a net gain of $900

In this way stocks are also protected against loss. If the stock had gone down in value from $45 to $40, the investor would have lost $500 on their stock holdings. However if they had utilized a covered call as in the example, the premium paid to them on the options contract would have given them $500, negating their loss on the stocks.

What Is An Online Virtual Stock Trading Website?

kcestra — Tue, 19 Jan 2010 17:13:19 +0000

Virtual Stock Trading

Online virtual stock trading is one of the newest tools available to the novice investor. There are millions of people across the world making a fortune in the stock market each year. More and more people are using online stockbrokers to execute trades themselves. The advice, counsel, and most importantly the cost of a real stock broker are quickly becoming a thing of yesteryear. There are many investors who solely trade stocks on a daily basis as their income. These so-called day traders execute online trading sales and purchases to increase their portfolio. Many make several thousand or more dollars in a single trading day. More traditional traders see their income investments increase on average 20-30% annually. So for the novice investor, where to start? No one wants to experiment in the stock market trading and more likely losing their own money. So there now exists online virtual stock trading websites. Real stocks, real market movements and real-time simulated trades but with fake money.

Why Online Virtual Stock Trading

Online virtual stock trading may seem like a silly waste of time to some, but don´t be fooled: virtual online trading is a godsend to novice and even intermediate traders. With these online trading websites you get to see the market as it actually is on any current trading day. The stocks involved all exist, and their value and trading mechanisms are true to their real daily moves. The only difference is the money you invest and the stocks, at least their value, are not yours. Its all virtual stock trading, just fake money. The benefits are obvious. One can learn how the market moves and functions while not investing their own money. One can test out a buy, make a sale, and see if their decision would have been profitable. In this way online virtual stock trading let you play the stock trading game without losing your assets. In the meantime the knowledge you gain making virtual trades will lead to the experience you need when you start putting down your own money.

How To Find A Virtual Online Stock Trading Website

A virtual online stock trading website is easy to locate and simple to get started. Google a few online and find one which appeals to you. Set up an account and you are ready to start investing for fun, and more importantly, for experience.

What Is An IRA?

kcestra — Tue, 19 Jan 2010 17:12:26 +0000

The IRA

An IRA is an Individual Retirement Account. They were established to assist citizens looking to provide money for their future retirement needs without the worry of being double-taxed by the IRS. An IRA account is not without conditions however, including how much one can invest annually, what types of investments are allowed to be included, tax penalties for making early withdrawals, and so on. A traditional IRA, and its new twin, the IRA Roth account, are excellent means to save for the future without facing heavy taxation.

What Comprises An IRA

An IRA consists of contributions from the IRA account holder. When opening an IRA account one may include cash, securities, stocks, bonds, and even certificates of deposits. These will all contribute to increasing the wealth of the IRA account and provide for retirement uses. When depositing in a traditional IRA account, there are established limits for how much one may deposit each annual year. At present the current amount one may deposit annually in a single IRA account is based on their age and income. As of 2009:

$5,000 Age 49 and below

$6,000 Age 50 and above

These are the maximum amounts currently but are still subject to income. If your income falls below these amounts, then that is the maximum amount you may place in your IRA for the year. It is expected these amounts will be adjusted this year for inflation. It is also important to note that these amounts are based on a single IRA account. You may contribute and own several.

Advantages To IRA Accounts

IRA accounts for the purposes of retirement have many advantages when looking to avoid being double taxed on your money. That is why they were created and are in heavy use. Without utilizing an IRA account, you would be taxed on your original income to get the money used for investment. You would then be taxed on the earned interest as you save it for many decades towards retirement. A lot of tax. Additionally IRA accounts can be excellent tools to pass on money to your heirs without facing penalties in the form of taxes after passing away with assets. In the event of death, the IRA account can be passed automatically to a spouse or heirs unlike with social security payments, and there will be no so called ¨death tax¨ to be concerned about.

What Is After Hours Stock Trading?

kcestra — Tue, 19 Jan 2010 17:10:36 +0000

After Hours Stock Trading

Most people know the daily markets, such as the New York Stock Exchange, have a schedule both by the day of the week and an opening and closing time. What many do not know, and less take advantage of, is after hours stock trading also known as extended trading. By definition, any trades, meaning sales or purchases that take place outside the normal trading hours of the major markets is referred to as after hours trading. In the United States, after hours trading includes the pre-opening trading period in the morning and can be performed roughly 5 hours before the market opens and 4 hours after. Trading stocks during extended hours is not only legal, but can be lucrative if the investor is well versed in what it is he is trading. Until 1999 trading stocks after hours was limited to only large investment institutions and heavy traders. After this time the after hours market has since, due to pressure from equal opportunity seeking investors, is now open to all.

After Hours Trading And ECNs

After hours trading has existed only since 1975, and for only one reason: the advance of the computer and the creation of Electronic Communication Networks (ECNs). These so called ECNs process stock trades without the need for a person, or solicitor, to execute them. It’s all electronic. The ECNs place buyers with seller digitally, and when there is a match, the sale is executed. If there is no match than the sale will push to the next business day and be executed during normal market hours. By using the ECN networks, now most commonly operated by online stock brokerage firms, investors have access to the markets after they close and everyone has gone home. Much like using online banking to move money or pay bills after the branch is closed, so functions after hours trading.

Potential Advantages To After Hours Trading

There are potential advantages to trading stocks in the after hours market. After the markets close there are simply less people at the table buying, which can be an advantage, and in some cases also a disadvantage. The after hours markets let people capitalize on news and movements outside of the trading day. For example if a company announces earnings profits after hours, there is time for investors to buy in hoping for a big opening the next trading day. Likewise bad news travels fast when trading stocks after hours, meaning there could be large sell offs of stocks reporting bad news. All in all the after hours markets can be a good place to make some trades, but be warned as it can also be notoriously volatile.

What Is A Trust Fund?

kcestra — Tue, 19 Jan 2010 17:08:18 +0000

A Trust Fund

A trust fund is an account, a savings account of sorts, which is used to benefit a person, persons or a charity or organization. A trust fund is typically opened by a benefactor, the person wishing to protect their assets for another institution or person. A trust fund can be used by a parent or parents to cover their children´s future needs, by any relative in fact such as a grandparent looking to provide money or future assets to a loved one. Additionally trust funds can operate to fund organizations or charities, such as a non-profit organization. Trust funds in times past were typically only a tool of the wealthy to be used for protection of assets or to care for their family. Nowadays trust funds are common and their benefits are being realized by more and more average every-day Americans.

What Comprises A Trust Fund

When investing in a trust fund, there is almost no limit to what can be included in the trust fund account as an asset. The following is a list of common items and financial instruments included in trust funds these days:

Cash

Gold and other precious metals

Stocks, bonds, certificates, Treasury Notes

Homes and Property

Vehicles

Paintings and other valuable works of art

Family heirlooms such as jewelry

Basically most anything of monetary value can most often be used to fund a trust. The trust has no limits as far as what amount can be included, so there is no telling what you may wish to include in your trust fund.

How A Trust Fund Operates

A trust fund is operated by a trustee or trustees depending on the contract expressed in the trust fund at its inception. Most personal family trust funds are managed by a single trustee while larger ones, usually those tied to charities, are managed by a board of trustees consisting of several people. The trustee sees that the trust is both managed and that those included in the trust, the trust fund benefactors, are cared for. In the case of a trust fund for a child, this can include structured payments, care such as providing rent and food, or any needs the child may face. In the case of trust fund for a charity, the trustee will typically approve money transfers or allocate stated timely payments to the organization as dictated by the trust fund.

What Is A T-bill?

kcestra — Tue, 19 Jan 2010 17:06:57 +0000

The T-Bill

A T-bill is a debt purchased from the U.S. Government. They are commonly referred to as Treasury notes as well as T-bills as they are issued from the Treasury department of the United States. A T-bill represents an amount bought from the government as a sort of loan. The government issues the T-bill to the investor and agrees to pay the amount back with interest. In this way the government, or more precisely the Federal Reserve, is able to secure money to operate the country´s budget. The investor is allowed to purchase the T-bill for guaranteed interest payments when the Treasury bill matures. It is an excellent way for the Federal government to raise money while a good investment for the buyer as the amount is borrowed plus interest is guaranteed by the U.S. government meaning the payout is a very safe investment unlike stocks or mutual funds. A T-bill is referred to as the long bill as it has a maturity of 30 years. Meaning that the amount it is guaranteed for, plus the interest cannot be cashed out for 30 years from its date of purchase.

T-Bill Uses

The vast majority of T-bills are purchased by banks, mutual funds, and international governments. This is largely because for the common investor 30 years can be a long time to wait. For governments, it is seen as good investment in a stable world economy. As of September 2009, China is the largest holder of U.S. Treasury Notes with an estimated maturity value of more than 700 billion U.S. dollars. Domestic banks as well as large mutual funds also purchase large amounts of T-bills. This is done to secure long-term assets in a very safe manner, meaning low-risk to collect the return on the investment.

How T-Bills Work

A T-bill transaction works based on auction. Meaning the price of a T-bill issued this week is not set but will be based on demand from buyers. Each Thursday the U.S. Treasury offers T-bills to consumers, banks, international governments, and mutual funds alike. Based on what someone is willing to purchase the face value of t-bill for combined with its coupon amount, the maturity interest that will be collected after the 30 year time period, determines the sale price. The interest rates on T-bills are not high, but the fact that the return is all but 100% guaranteed to be paid makes treasury notes an attractive option.

What Is A Stock?

kcestra — Tue, 19 Jan 2010 17:05:30 +0000

A Stock

A stock is a single unit of measure in for a holding, or ownership of a publicly traded entity, or fund. The actual stock itself represents the holding in the company, as a receipt might for a purchase. Stocks are issued by companies or funds as an avenue to increase capital investment. In the case of a publicly traded company, a stock share is issued as a means to inject cash into the company for growth or operating expenses. In the case of a fund, such as a mutual fund, a stock is used to increase the value of the fund, thus increasing its buying power and ability to make money trading in the stock market. A stock value is determined by the stock market, and is based on what is viewed as the relative value of the company or fund at any given time. Stock values fluctuate; they go up in value and often go down in value to. On average stocks increase in value over time, but as an investment, there is no guarantee.

Where To Buy Stocks

Buying stocks is not difficult these days. In times past most well to do people invested some money in the stock market to make money. These investments consisted of stock shares. Nowadays most everyone is getting involved in taking advantage of buying stocks through online stockbrokers. These online stockbrokers have eliminated the need for investors to hire stockbrokers, agents to assist them. Now people can invest a little or a lot online using online stockbrokers. There are usually no minimums with online stockbrokers and the fees for their assistance in buying stocks are typically per trade, or stock purchase. In this way anyone can get invested in the stock market for almost any price.

Non-Typical Stocks

Aside from the typical stocks traded in such common places such as the New York Stock Exchange or NASDAQ markets, there are many other types of stock. One type of stock is what is called a penny stock. A penny stock trades anywhere from a few fractions of a cent to several dollars. Penny stocks are not traded on the major markets but on what are called the Pink Sheets. Another non-typical stock is for those investing in precious metals. Exchange traded funds as they are known let investors purchase stock in precious metals such as gold, silver, platinum and palladium.

What Is A Share?

kcestra — Tue, 19 Jan 2010 17:03:38 +0000

The Stock Share

A share is a unit of ownership in a publicly traded company, stock fund, or other investment enterprise. A single share is issued or bought as a measure of investment in a company. When speaking of the stock market, such as the New York Stock Exchange, a stock is a holding, or representative part, of a publicly traded company. Companies which are not privately owned are comprised of stock holders, or shareholders. Each stock share represents a portion of the company as whole asset. Those investing in shares, buying shares through a stockbroker, are buying a piece of ownership in the company. The publicly traded company will issue shares in the amount it wishes determined by how much investment they are looking for from the public. Stock shares can easily number in the millions or tens of millions for a company traded on the stock market.

Why Stock Shares

A stock share serves two main purposes: as a method for companies to increase their capital, and for the investor as a way to increase their invested money. In theory, as far as for investment purposes, an investor buying shares in a company is looking to make a return. While there exist dividends, payments to stockholders based on positive earnings from publicly traded companies, most investors make money on the stock shares themselves. A publicly traded company issues shares at their current worth. This worth is based on the company´s current value in assets and also on marketplace supply and demand. An investor buys a stock share at its current value which can be from a few to several hundred dollars depending on the company being invested in. With the hopes that in a few to several years the company will increase in value, assets, etc. thus increasing the stock share value. As the stock share value increases, so would the investors amount of money invested.

Buying And Selling Shares

Buying shares and selling shares of stocks entails the use of a stockbroker. The stockbroker will execute the purchase and issue the investor their share holdings certificate. Stockbrokers work based on commission or on a per trade basis. They can be found either in the yellow pages or online. More and more stock shares are being bought and sold online through online stockbrokers who typically charge as little as $8 or less to buy a stock share.