Stock Questions You Must Answer

Before you buy a stock, there are three questions that you need to answer. Too many people buy stocks based on price alone or a gut-feeling. You should look beyond the price or the hot tip to the company behind the stock.

You may think that it doesn't matter that much -- you are a long term investor. However, it never hurts to choose your investments wisely. You need every stock in your portfolio to perform well. Otherwise, you are losing your future money.

Ask yourself the following questions before you purchase a stock:

Question Number One: What does this company do?

You need to be able to explain what this company does in a few sentences. Pretend that you are explaining it to your spouse or a teenager. They should understand the company after you describe it.

You don't have to know how they do what they do to explain what they do. For example, you don't need to know how to program computer operating systems to explain that a company makes computer software and hardware work in together. One more sentence, and you've just explained Microsoft.

Some companies have more difficult business models. But there are plenty of companies out there that are simple and offer great investment potential. Things don't need to be complicated to make money.

Question Number Two: Is the company growing?

You want to see a growth in earnings, a sustained growth history and revenue growth. Many investors overlook revenue, but it is fairly important. If revenue isn't growing faster or at the same pace as earnings, you need to research why. It could be a sign of decreasing earnings in the future.

Increasing revenue and declining earnings can be indicative of several situations. The company could be rolling out a new product line or entering a new market. Or, the management could be having trouble. Perhaps the company can't really compete and be profitable.

You have to do the research and see what the growth is and why it is. There is more to a stock than just a few numbers, you have to get the entire picture.

Question Number Three: What will you pay?

You've done a lot of research. The company looks pretty good, so you may be eager to go ahead and buy the stock. But you need to make sure that the stock isn't trading for more than it is really worth. It could be near a high point or riding on a hot market. You need to know where the stock price should be.

If the actual price of the stock is higher than where it should be, you would benefit from a little patience. Wait until it corrects itself before you buy. Watch the market for a bad day when everything is down. Sometimes industry news will affect an entire sector. The goal is to find a low entry point.

If the stock is much lower than you anticipated it would be, it might be a good time to buy. But you should try to find a reason why the price is under its true value. You may not find one, but it doesn't hurt to look at the company one more time. It may be that things have changed and your analysis is off. It is better to walk away than to take a loss.

When looking at a stock, you need to take a good hard look at the company behind it. Ask yourself the questions above to see if the stock is the right stock for you. Don't be afraid to take a second look if necessary. It is better to be sure than to lose money.

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What is Online Trading and How You Can Benefit From It

Trading has been around for the longest time, from since way back in the day in the old kingdoms when an egg was considered a form of currency and that could get you a relatively good dinner and a pint of grog at your local tavern. Fast forward to today and trading has caused a storm in the world economy. Anything that is within the sphere of demand and supply and can be traded between two parties is called a commodity, and this is the term being thrown about by traders. Traditional trading was done through phone, meetings, talks and a lengthy process of introduction that took some time before an agreement could be reached. Remember how long a free trade agreement used to take? Well in a certain sense traditional trading is similar but on a smaller scale. Now with the internet, online trading is the new 'it', because it is easier, faster and much more accessible for anyone to get into online buying and selling, making easy money from an upturn of demand and a drop of supply.

Online trading has crossed over to all sectors on the internet - from commodities like Forex capital, futures, stocks and bonds, metals, precious metals - even plantations in Burma and livestock in the Middle East, they are all goods and services that come under the umbrella term of commodities that can be traded with all over the world. This means more and more opportunity for you to make the money fast and open up several revenue streams for your benefit. It's all about the business inflow and outflow - how a business is performing in a particular market. You have to be a sort of economics Nostradamus - knowing how much business there will be in the future or even predicting trends, if any. For example, the Beijing Olympics and the developments that preceded it increased the demand for base metals and iron about 100 fold in the world metals market, which caused its price to rise a lot. Prudent traders bought up as much of the commodity as they could and sold it back to the Chinese market and thus made quite a bit of money from it. You see how easy it is? Well don't judge world shaking events like this as the only way you can predict how much or how little a commodity will cost. With a recession like the one we are currently experiencing, the demand for certain things is bound to drop and rise at the same time; it's just a matter of identifying what you can or cannot buy and when to do it.

Online trading is simply buying and selling and this is something anyone can do - a fact made that much more tenable by the fact that you can do it on the internet from home, with just a click of a mouse and market watching on your cable T.V. Learning is also an important part of your investment journey and once you wise up to the market you choose, you will sure make good money on the side.

Click Here to claim your Free Forex "Basic Momentum Analysis" report today! Christopher Lee helps thousands of traders learn the proper way to trade currency.

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INVESTING AT THE END OF A BEAR MARKET by Scott Cole

At this point in time, many traders and investors have no desire to be in the stock market after 40-50% losses in the major averages in just a year, and 70-100% losses in many individual stocks. However, as the market has tried to find its bottom, now is the time to scour the market for the next big winners.

How can you identify these potential big winners? Well, the first good sign is a stock that has actually been rising while the market has been heading lower. The list of these stocks is actually pretty small. You can find a list of stocks making new 52 week highs or with high Relative Strength ratings in Investors Business Daily or in the Wall Street Journal. Personally, I use the TC2000 software produced by Worden Brothers.

Once you have found a list of stocks that have been outperforming the stock market, it is time do dig a little deeper. One method of identifying potential big winners is the CANSLIM method outlined in his book "How to Make Money in Stocks" by William O'Neil, founder of Investors Business Daily. This book is an excellent read and a great source for learning how to invest and trade individual stocks. However, it is not a mechanical method for trading and requires some knowledge about a company's business, management and products.

I prefer a method more similar to that discussed in Nicholas Darvas' classic book, "How I Made $2 Million In The Stock Market." This methodology identifies the stocks that have been rising the fastest on good volume, and then, using his Box method, determines a point of entry. Exiting the trade is a little more subjective as far as the initial stop loss is concerned, and using the pyramiding boxes as trailing stops can leave a lot of money on the table when the stock's trend is over.

With that in mind, based upon my background in trading commodities and developing trading systems, I developed a more mechanical method for trading these high momentum stocks, which I outline in detail in my ebook, The Ultimate Stock Trading System. This trading system combines the overall stock market timing ideas of William O'Neil and stock index and mutual fund trader Gary Smith with the Darvas methodology of identifying high momentum stocks, and the added touch of a mechanical trend following system.

Now is the time to start looking hard at the stock market for the next group of big winners. They may not appear for a few months, but the easiest and fastest money made in the stock market is in the first couple years of a bull market. Furthermore, even if the next big rally turns out to just be an intermediate term rally within the context of a larger bear market, there will be a few stocks worthy of trading to catch that ride up.

Do your homework, and your portfolio will benefit handsomely in the years to come!
Scott Cole www.theultimatestocktradingsystem.com www.kungfutrader.com

About the Author
Scott Cole is a real estate professional and stock and futures market trader and analyst. In the 1990's he focused mainly on commodity trading, working for two Commodity Trading Advisors as an analyst and execution trader. He continues to develop models and strategies for trading stocks and futures. He is owner of websites www.theultimatestocktradingsystem.com, www.bestdaytradingstocks.com and www.kungfutrader.com

Stock Trading Online - A Quick Guide

There is no doubt about it, stock trading can be a risky business and one of your first steps must be to get acquainted with the various tools of the trade. Stock trading is one of the most fun things you can do, but does require a lot of skill and discipline to succeed. You must be realistic and understand that becoming successful at stock trading can be a very tricky task, and is not for everyone.

Traditionally, stock trading has been carried out at an exchange, places where buyers and sellers get together and decide on a price. Day market online stock trading is no more risky than any other sort of trading, but even so, extremely large losses or gains can happen in a very short space of time.

Online

The term “online stock trading” describes the easy way to buy and sell stock from the comfort of your computer chair, and is a good starting point for anyone interested in gaining from the big opportunities the stock market can offer.

Online stock trading is quickly becoming a way of life for a lot of people and, eventually may render stock brokers obsolete, with several online companies opening their doors to cater for the rising client demand. These stock market websites usually have a lot of extra services on their websites, and they are able to provide online market traders with stock market insight, and other good info.

So, as more people trade in stocks online and are joining the online trading fraternity than ever before, it must be remembered, that stock trading is still a form of gambling and unfortunately can have the same outcome. With the volatile and fluctuating online stock trading market, investors need to be able to make quick and informed investment decisions. Online stock trading is all about selecting the best stock opportunities and following your buy and sell signals.

James Hunaban is the owner of http://stockscreening.jims-info.com/ a site with information on how to pick great stock.

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