In the financial markets, a trend is generally understood to be the current market direction. Markets can be trending higher, trending lower, or trending sideways.

But defining a trend so that it can be profitably traded is something else entirely.

Many would say the S&P 500 Index is currently in a bullish trend. But at the same time, the Nasdaq Composite and Nasdaq 100 Index have been trading sideways for months. So trends can obviously exist for one sector while another is going nowhere.

Just saying that a trend consists of “rising” prices, or “declining” prices is not enough. Every day is different. A trend must be clearly defined in order to be profitably traded.

And what about time frame? Are we talking about a trend on a 5 minute bar chart where it could last an hour? Or is it of longer duration; days, weeks, years?

It is easy to determine trends on a chart of prices that have already occurred. Developing a trading strategy that will keep you on the right side of future trends is needed to profit from trend trading (market timing).

Successful market timers know and use several facts about trends that give them an edge in trading them:

1. While financial markets may spend time in consolidation (sideways trends), they are more often moving up or down for sustained periods of time.

2. A timing strategy that defines trends can be used to take advantage of continued momentum in the market place.

3. Trends tend to go higher, or lower, than most investors expect. So correctly identifying and trading a trend can be very profitable.

4. Profitable trends occur only once or twice a year. The rest of the time the markets trend sideways. The Nasdaq, for example, would have to be considered as being in a sideways trend over the past several months.

Because tradable trends only occur once or twice a year, market timers must be prepared to sometimes wait months before catching that one highly profitable trend.

a. To be consistently successful over time, market timers must have clear rules telling them when to enter, and when to exit.

b. When in a sideways trend, market timers often have multiple trades that result in small losses, or small gains. These small losses and gains “must” be accepted because timers “must” trade every identified trend change. There is no way to know “ahead of time” which trend will be the highly profitable one.

c. Market timers usually make the majority of their profits in only one or two trades a year. If you don’t take every trade, you will likely miss the one that makes most of your profits.

d. When the markets are in a bullish or bearish trend, trading position changes may not occur for months at a time as the trend progresses. Exiting early to lock in profits can cost you dearly. The trend must be allowed to play out without making unnecessary trades because of volatile short term conditions.

e. A profitable trading strategy will “not” allow a market timer to miss that trade!

Correctly identifying and trading financial market trends with mutual funds, ETF’s and even carefully selected stocks, is doable, profitable, and with a well tested trading strategy can achieve results far above “buy-and-hold” investing.

Market timing, when following a well thought out trading strategy, is actually “less” risky than a buy and hold approach.

The active investing style used in FibTimer’s market timing strategies (identifying and trading trends) prevents huge losses in the inevitable bear markets (or any large decline that is of substantial duration).

If bearish strategies are used in the timing strategy, declining markets actually add to profits.

Market timers, when following a well defined and tested timing strategy that identifies market trends, will consistently beat the market over any fair time frame.

Editor Fibtimer.com market timing services

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Certainly, a “complete” course on security analysis is well beyond the scope of this text. There are many excellent books devoted to the subject of how to analyze the value of securities – both from a fundamental as well as a technical standpoint. The goal here is simply to provide a basic understanding of the methods and theories behind each type of stock analysis.

It should be pointed out early on that Fundamental Analysis and Technical Analysis of securities are two fairly radically different approaches to determining the correct [or fair] value of a company’s stock. Let’s start with a general overview of each method and then look into the specifics of each area. Again, for a more detailed examination of each type of analysis, we suggest you refer to our book list and/or the books specifically mentioned throughout this document.

The definitive work on Fundamental Analysis is widely considered to be the classic book “Security Analysis” by Benjamin Graham and David Dodd. This book, which was first published in 1934, is considered by most on Wall Street to be the ‘Bible’ of security analysis.
In fact, it was Benjamin Graham that Warren Buffett studied under when he first started in the stock market. Much of Berkshire Hathaway’s success can likely be traced back to the information and ideas provided in the book Security Analysis and by the teachings of Benjamin Graham (although, it’s widely acknowledged that Warren Buffett put his own spin on things over the years as well).

Fundamental Analysis is just as it sounds. It is based on examining the fundamental pieces of a business and its operation. There are no exotic formulas used. You do not need to be a mathematician. Anyone with a simple calculator and some basic information about a business should be able to employ Fundamental Analysis quite effectively.
The basic idea is if you put a dollar into the business (in the form of buying the stock) how much of a return can you expect. How much yield will you likely see and/or how much growth will you experience based on the operation, markets, competitors and costs of the business. Obviously, not all aspects of these fundamentals can be quantified. Areas such as “good will” or changes in the economy or the consumer can be difficult to nearly impossible to calculate. However, to a large degree Fundamental Analysis throws these items out as uncertainties and simply looks at the cold hard facts which you do have available to you. Things such as costs of goods sold, margins, tangible assets, expenses, etc.

Armed with these basic and tangible numbers, one should rather easily be able to calculate the value and profitability of any business (given the numbers available and/or provided are accurate of course). Once a valuation is arrived at, the person performing the valuation can decide whether or not the market place (in this case the stock market) is applying what could be considered a fair market value to the stock. Certainly, when attempting to make a profit on Wall Street, it is advisable to search out stocks which are (or at least appear are) being improperly or undervalued by the market. For the Fundamental Analyst, once an undervalued security is found, it’s simply a matter of buying the stock and waiting for the market to realize the “more accurate” value of the security (assuming of course he/she is correct in their assumptions).
Find a cheap security, buy it and become rich. If only it were that simple. Or perhaps it is? Just ask Mr. Buffett.

If the definitive work on Fundamental Analysis is provided by Graham and Dodd, then perhaps the definitive work on Technical Analysis is provided by Martin J. Pring in his book “Technical Analysis Explained”. To quote this well regarded book on the definition of Technical Analysis:
“The technical approach to investing is essentially a reflection of the idea that prices move in trends which are determined by the changing attitudes of investors toward a variety of economic, monetary, political, and psychological forces. The art of technical analysis — for it is an art — is to identify trend changes at an early stage and to maintain an investment posture until the weight of the evidence indicates that the trend has reversed.”

Technical Analysis is nothing new. It has been used in one form or another for as long as stocks have been traded. In fact, the star character in one of my all time favorite books (“How I made $2,000,000 dollars in the stock market” by Nicholas Darvas) used mainly Technical Analysis principles in his investing – whether he knew it or not. However, “Charting” also commonly called “Chart Reading”, which Technical Analysis is also referred to as, has become much more popular and widely used in perhaps only the last 20 to 30 years on Wall Street. This may be largely due in part to its more wide spread teaching and acceptance in colleges in more recent years.
If, based on my own experience and knowledge of this method of analyzing securities, I had to summarize all of Technical Analysis down into one central idea, I would put it like this:

The corner stone of Technical Analysis is the concept that no single individual can ever hope to know as much about a security as the whole of Wall Street does at any given time. Because “Wall Street” is made up of everyone who is invested in – or may invest in – the stock market, their collective knowledge about any specific stock and/or the market is such that this mass of people and combined knowledge (i.e. Wall Street) can valuate securities nearly instantaneously and far more accurately than any single individual.

As such, in the mind of the Technician, it follows that there must be no need to use something as “archaic” as Fundamental Analysis to value a stock, when everything known about the stock (and this includes the business fundamentals) is nearly instantly reflected in the stock’s price. In this situation, it would make much more sense to use the recent and historical trends and movements of the stock price to deduce not only the current fair market value of the stock, but where the price “may move” in the future. This future price movement is largely extrapolated based on historical chart patterns and how the stock has faired recently in relation to support and resistance levels. Any Technical Analysis book worth its salt will quickly introduce you to chart patterns such as “double tops”, “trend lines”, etc. It is these patterns which are the core of Technical Analysis.

However, the question of whether or not these patterns on charts can always accurately predict future price movements of a stock is (and probably always will be) up for debate between Fundamental and Technical Analysts. If there is one fundamental (again no pun intended) flaw to Technical Analysis, it is perhaps that over the years Technical Analysis has been [incorrectly] extrapolated to mean that the market will “always perfectly” evaluate a security based on all information known by the markets. Unfortunately, that is not “always” the case.
This brings to mind a funny joke I once ran across in a book (I believe the book was by or about Warren Buffett) regarding how Technical Analysis has been elevated to levels beyond its true capabilities:

A Technical Analyst and his friend were walking across the street. His friend noticed a $10 bill laying in the middle of the road and exclaimed, “Look, there is a $10 bill in the road”. At which point the Technical Analyst said “If it were really a $10 bill, it wouldn’t be laying in the road”.
This joke underscores the idea that Technical Analysis may not always evaluate the market without error. However, as long as you keep this point in mind, then Technical Analysis and chart reading can be a helpful tool in both investing and trading.

Finally, we should point out that the term “Quantitative Analysis” on Wall Street simply refers to someone (also sometimes referred to as a “Quant”) who employs a mix of both Fundamental and Technical Analysis in attempting to properly evaluate stocks.

Good luck in the markets!

No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included. Questions and comments can be sent to Ray at articles@daytraders.com.

Ray Johns is the founder and Senior Market Editor of Daytraders.com, Proudly serving day traders & short-term investors since 1996, at http://www.daytraders.com Daytraders.com is the publishers of the award winning Morning Stock Market Report and the home of the Interne’ts finest real time trading desk. Ray has been on the forefront of trading and investing in the markets and has appeared as a guest on a number of radio and television shows including CNBC’s Market Talk. If you would like a free trial of the newsletter and the live trading desk log on to Daytraders.com. Comments and questions can be sent to marketing@TraderAide.com.

There are many who believe that the markets today, require the same skills as 30 years ago – but today’s markets are actually much harder to trade.

It may surprise you, but markets have changed and are now harder to trade – but if you know why, you can increase your profits dramatically.

If you don’t already understand why online currency trading has made making money harder, then you need to know – because you can then make huge profits, at the expense of other traders.

The Internet has Increased Volatility

Online currency trading has brought all the trading tools, once reserved for institutional investors, into the hands of any trader with an Internet connection.

This means that traders anywhere in the world can get all the news in a split second – just 30 years ago, this was not the case. Then the information flowed out more slowly – this meant that volatility was lower and trends were smoother – making it easier to catch, and follow the trends.

Online currency trading has now made this much more difficult.

Today, volatility is higher than ever, and pullbacks are more severe – causing traders big problems when trying to stay in a trend, without getting stopped out.

A Common Problem

Today, all traders get into moves at the same time – which increases volatility.

Example:
The market moves in the perceived direction quickly, and then recoils back (stopping traders out) – the market then continues – but many traders are stopped out, and left frustrated – as the trend continues the way they thought it would – but instead of making thousands of dollars in profit, they’re stopped out at a loss.

Does this sound familiar? – All traders face this problem.

So how can we trade more effectively with these changes in online currency trading?

Here are some tips to help you gain an edge over the other traders:

1. Staying power

As the chances of being stopped out on reactions are greater, you need staying power – so options are an ideal tool – if they’re used correctly.

Make sure you only use “in the money” and “at the money” options, to increase your odds of success.

2. Don’t Predict!

Don’t try and predict market moves in advance – wait for confirmation.

The best way to take advantage of a move, is to use a breakout method that will confirm the move – you should already have your orders set to take advantage when you reach your specified levels.

3. Trade Long Term

One thing that has not changed is that currency trends last a long time – months or years. These are the trends you need to milk for serious profits.

Forget day trading, with its high levels of volatility, and the impact of commission – all you will do is lose.

4. When in a Trend don’t worry about Pullbacks

Today, pullbacks can be severe – and no one likes losing short term. Don’t be deceived, if the longer trend is up – stick with the trend.

Don’t trail stops to close – allow for the volatility, you have to take it short term, to win long term.

Some traders are so obsessed when online currency trading, to protect their losses, that they can never follow a long-term trend.

5. Trade Infrequently

Don’t trade frequently – have patience.

Only trade the big moves and make sure you hold them.

Keep in mind, that the big trends last months, or years – and these are the ones to milk for maximum profits.

Forget, the commonly touted phrase: “If I am not in the market I may miss a move”
– you won’t, if you focus on trades selectively.

6. Money Management

Don’t fall into the trap of you should only risk 5% on a trade – which is a frequent number touted by many authorities on trading.

On a $10,000 trade, that’s just $500.00 – if that all you’re risking, your chances of losing, or being stopped out are high.

Use 10 – 30% on trades that look good – and have the guts to go for the trade, if you believe in it.

Volatility is greater than ever – but so to is opportunity, if you know how to deal with it.

Following the above advice, you could be making big profits from online currency trading.

Good luck!

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and online currency trading Visit our web site now and grab your CD http://www.tradercurrencies.com

A forward contract is a customized contract between two parties to buy or sell a specified quantity of a particular commodity at a specified price on a specified future date. Futures are exchange-traded forward contracts, i.e., forward contracts done in organized exchanges like stock or commodity exchanges.

A futures contract is standardized. To be more specific, futures being traded on exchanges have terms standardized by the exchange. The standardized items in any futures contract are: the quantity of the underlying product; quality of the underlying product (not required in financial futures); the date and month of delivery; the units of price quotation (not the price itself) and minimum change in price (tick-size); and the location of settlement.

In case of futures, after a trade is confirmed by two members of the exchange, the exchange house itself becomes the counter-party which guarantees every trade. Futures contracts are much more liquid and their price is more transparent due to the standardization and market reporting of volumes and price. A futures contract can be reversed with any member of the exchange. If futures contracts are priced above the spot price, it is known as the Contango market. If the futures price prevails below the spot price, it is known as Backwardation.

An option to buy is known as a call option, and is usually purchased in the expectation of a rising price; an option to sell is called a put option and is bought in the expectation of a falling price or to protect a profit on an investment. Options, like futures, allow individuals and firms to hedge against the risk of wide fluctuations in prices; they also allow speculators to gamble for large profits with limited liability. It costs nothing upfront to enter into a futures contract, whereas there is an immediate cost of entering into an options contract, called a premium.

Options Trading provides detailed information on Options Trading, Stock Options Trading, Futures Options Trading, Options Trading Software and more. Options Trading is affiliated with Options Trading.

Did you know that $1000 Invested one time, if it returns 100% a year would be worth over $1,000,000 in 10 years? Here is how it breaks down

Start $1,000

End of Year 1 $2,000

End of Year 2 $4,000

End of Year 3 $8,000

End of Year 4 $16,000

End of Year 5 $32,000

End of Year 6 $64,000

End of Year 7 $128,000

End of Year 8 $256,000

End of Year 9 $512,000

End of Year 10 $1,024,000

That is doubling your money every year.

Of course that scenario doesn’t include taxes etc.. However if you had a 401K you wouldn’t get taxed on it.

Maybe you have seen that before but that shows that the person with a Long term strategy can make a great deal of money from not a big investment. 100% a year isn’t a lot when we are talking about HYIP investments but how many of those are going to last 10 years as well? NONE

Did you know a good percentage of Stocks double each year? I just did some quick research on this with the newspaper. I opened up the Stock Market section for the Nasdaq/AMEX. I decided to check the 52 week high and 52 week low for some stocks. What I was searching for is how many stocks under a certain letter were at least double from its 52 week low. In other words for a stock like “Hansen” (I have NO IDEA WHAT THEY DO OR ANY INFO ON THEM THIS IS JUST AN EXAMPLE) This company (Hansen) had a 52 week HIGH of $44.25 and 52 week Low of $8.51 and was trading above $44. So from the low of $8.51 to the high that is over 5x increase. Point being their are a LOT of stocks that move up 100% in a year, Hansen moved up 400%+!

I did research on a few different letters. (I only looked at letters that had a small # of companies just to show you the research. I didn’t want to do like the letter “S” which would have hundreds of companies)

I did the letters “H”, “J”, “O”, and “XYZ”. In my paper the letter “H” had 33 companies listed for the Nasdaq/Amex of those 33 companies 16 of them had a 52 week hi/low difference of at least 90%. 17 of the companies did not.

The letter “J” had 9 companies that had a 52 week hi/low of 90% or better, and 5 companies that did not. The letter “O” had 27 companies that had a 52 week hi/low of 90% or better and only 15 companies that didn’t. The letters “XYZ” had 17 companies with a 52 week hi/low of better than 90% and 6 that did not.

So of those 6 letters listed above companies under those letters had companies with a 52 week hi/low of 90% or better 69 times and not 43 times.

My point of this is MANY stocks each year double in value no matter what the overall stock market does. All you need is to find 1 a year that can double. That could go from .50 cents to $1. Or $5 to $10 or $20 to $40. You ONLY need 1 stock!

One stock I mentioned on our Alley Cat Trading Newsletter went from .26 cents back in late November to almost $1 in early January. That more than doubled in less than 2 months!The stock was CYGX. I am sure there are many stock trading newsletters online and off. Do some research on them and the companies they recommend. Remember you only need 1 good stock a year. You could very well have a situation like with CYGX where it doubled in a very short time You take your profits and go hunting for the next stock. You don’t always have to be in a trade. If that trade took you 2 months you are 10 months ahead of schedule take your time to find the next stock that could turn. Maybe that stock ends up taking 14 months to double.

Copyright 2006 Steve Hoven

Steve Hoven has had years of experience trading.
check out his free newsletter at http://www.alleycatnews.net.

When you start your Penny stocks trading career you first need to decide how much you are willing to invest. You need to remember that this is not a “sure-fire” income opportunity and that it is possible that you may lose everything, so be sure to not to invest more than you can afford to lose.

That said when you have decided on an monetary amount, whether it is $100 or $10,000 you should avoid the temptation to put all of it into one or more Penny stocks. But why you ask? Surely the whole point of putting the money into your stock broking account in the first place is to invest it.

Well yes and no. . . if you have all of your funds invested at the same time then you lose a lot in flexibility. You have few options when faced with the need to respond to a rapidly rising market. Or to profit form a newly acquired piece of information that one or more penny stocks are about to move upwards.

If you have invested all of you cash and your present portfolio is flat, the only way to buy into rising penny stocks market and get a piece of the action is to either. Use “your own money”, for example money that is not part of your penny stocks investment fund (and is not money that you can afford to lose) a very bad idea. Or to get on the phone to your broker and see if can sell some of your existing shares so that you can buy into the rising penny stocks.

The first is obviously not really a good thing to do and is more akin to gambling than investment. After all if you couldn’t make a profit with the first group of penny stocks, why do think you could with the second. A more likely scenario is that you are throwing good money after bad, except that this time it is not money that you can afford to lose.

The second, though more sensible than the first, is not really what trading penny stocks is all about. The whole point is to be able to buy quickly if you think that a stock is about to rise. T sell quickly, as well, when the market seems to have to have peaked for your penny stocks, so that you can maximize your profit and sell before the market starts to fall.

If you keep a portion of your assets as liquid in your stock broking account, then you have the flexibility to move quickly as the market conditions dictate. A penny stocks trader without the ability to move quickly is likely to be missing out on many lucrative trades. By keeping around a third of your investment fund as cash allows you to buy into a rising market without having to rush into selling any penny stocks that may be under performing at that time.

That way you get to benefit from the rising penny stocks but can also hold onto the non performing or flat ones until they start to rise or you have decided that you need to cut your loses and get rid of them. Either way the point is that you are not rushed into a decision and can decide based on research and rationality, rather than a need for quick cash to fund your next investment.

The ability to move quickly in response to rapidly rising penny stocks can greatly affect your potential for profits in this most volatile of the financial markets. Keeping a portion of your penny stocks fund liquid will help you to achieve profitability and make the success of your investing venture into the world of penny stocks trading more likely to be a profitable one.

Buzz Scott has 12 years of Penny
Stock investing. Big profits can be made in Penny Stocks, but there are also
many dangers. Find some insider secrets at:
http://www.penny-stock-secrets.com

If you want to make big profits from currency trading, you need to lock into and follow the longer-term trends.

“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.

What is the Art of Contrary Thinking?

Humphrey Neill’s book, “the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:

“When everybody thinks alike, everybody is likely to be wrong”

“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.

Why Contrary Trading Works

By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.

If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits.
Contrary thinking can be used in any market and is highly effective in currencies.

Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.

In any currency you look at – The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!

Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.

Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.

It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.

You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.

Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and currency trading info. Visit our web site now and grab your CD http://www.tradercurrencies.com.

A seminar is a workshop conducted with an intention of teaching the audience about a subject. Currency trading seminars are basically helps advise the traders or potential traders about the subject. Seminars could address any issue that affects the market.

The forex market is an attractive short-term trading option and, because of its low transaction costs and unmatched liquidity, more and more professional traders are turning to it. However, to understand the nitty-gritty of currency trading, one must attend currency trading seminars conducted by renowned companies like Refco Canada.

Currency trading USA conducts seminars and online courses for people who are either currency traders or keen on starting. The training sessions are tailored to meet the requirements of the customers, which would help them in understanding the nuances of the trade. For newcomers, they have courses designed that can take them step-by-step through the basics of currency trading, while people with experience are given training on trading strategies with live examples. Most of these courses focus on issues like what influences currency exchange rates, which currencies to trade for profit, essential trading rules, order executions, stop placements and much more.

Swiss Net Broker offers one-on-one technical analysis courses for people interested in methods of doing on currency trading. The courses are provided in the seminars organized in Geneva, Switzerland.

Currency trading is one of the quickest practices for earning money by investing small amounts, and these seminars aid in understanding the fluctuation of money in a better manner as well as providing the knowledge to reduce the risk associated with the trade.

Online Currency Trading provides detailed information on Online Currency Trading, Foreign Currency Trading, Currency Day Trading, Currency Trading Seminars and more. Online Currency Trading is affiliated with Online Currency Trading.

Over The Counter Bulletin Board stocks (OTCBB) and the Pink Sheets are the two types of penny stocks you will encounter. The main difference between the two is that OTCBB stocks are required to file with the SEC and the pink sheet stocks are not. Some traders refuse to trade pink sheets because of this, those traders are missing out on some great opportunities. Even Warren Buffet has been known to look for undervalued companies in these markets.

Beware, trading in the OTCBB and Pink Sheets is not for everyone. Often the stocks are illiquid and have a large spread between bid and ask. There are also a lot of companies that are completely worthless and will try and masquerade as great companies while diluting their shares. Another worry about these stocks is the fraud involved or “pump and dump” schemes where traders or company insiders have their stock “talked up” on bulletin boards or in chat rooms. The posters make unrealistic statements about where the company and the price per share are going, while selling you their shares. The price per share then plummets. You can avoid most of these problems with due diligence on your part. Take the time to read filings, call the company and investigate thoroughly. This investigation should take place with OTCBB stocks and Pink Sheets. Do not expect to find everything you need to know in the filings.

After you find a stock that you wish to purchase, you pull up the price and find that there is a 30% difference between the “bid” and “ask” price. The bid being what a trader is willing to buy a stock for and the ask what a trader will sell the stock for. Finding spreads of 30% or more is very common in these markets. If the stock is thinly traded with a big spread, you will want to buy on the bid, or a small fraction above the bid. If the stock is moving fast because of news or an announcement, you will probably be forced to buy at the ask. When you place your order to buy on the bid or slightly above, it may take a long time to get filled. You may never get filled. At these times patience is a virtue. You may also want to try buying shares somewhere between the bid and ask.

If you have done your homework well and the company announces great news, such as winning a high paying contract with IBM, the stock will then take off, gaining 100% or more before others can even call their broker to buy shares. This is the reason for investing in these markets.

I do not recommend that you place all of your money in such a “High Risk, High Reward” market, but spend some time investigating penny stocks and you may be rewarded greatly. Remember: exercising due diligence is important for all investment decisions in any market.

About the author:

Keith Guyette M.Ed, J.D. is a professional trader and the owner of a stock talk board http://www.thepennystockblog.com as well as the head stock analyst for http://www.bottompicks.com

Dividend is a crucial part for investors’ investing return historically. According to Wikipedia, when dividend yield is high or rising, it is when investors’ return among the greatest. For example, dividend yield of the Dow Jones Industrial Average plunged to a low of 3.2% during the market bubble of 1929 and rise to 15% during the stock market collapse of 1932.

I do not have a hard cold fact to back it up but let’s just assume a historical average dividend yield of 3 %. Since the world war II, stock market index has returned investors 10.5 % return annually. That implies that dividend contributes to 28.6% of overall investors’ return. Ignoring dividend will decrease your investing performance by that much, which can be devastating in the long run.

Having said that, what is the characteristics of stocks giving out dividend yield of more than 3 % ? One thing that can help is to find companies trading at below their fair value. The fair value of a common stock is when it is trading at around a P/E of 13.4. This means that a company trading at $ 13.40 would have to earn $ 1 annually. Assuming that it pays half of this profit as a form of dividend, you can then expect a dividend yield of ($ 0.50 divided by stock price $ 13.40 ) = 3.73 %.

For growth stocks trading at 50 times earnings, you can rest assured that they won’t have pay dividend that yields 3% year in and year out. The reason is quite simple. If a company earns $ 1 while its stock price is trading at $ 50, the most dividend it would pay is $ 1. At $ 50, the dividend yield for that stock is a measly 2 %. Your dividend yield will actually be lower since most companies do not pay all of its profits in the form of dividend.

In summary, to boost your investing return by 28.6%, you need to find stocks trading at above average dividend yield of 3 %. You won’t find these dividend payers at a company whose stock is trading at 50 times earnings. The reason is simple. Even when they are paying out all of their profits as dividends, their dividend yield is still less than what average stocks pay historically. To find stocks paying dividend yield of 3 %, you can start by buying companies trading at below fair value, which is defined as the stock trading at a forward Price/ Earning Ratio of 13.4, assuming a 0 % growth in earnings.

Would you want to boost your investing return by 28.6% in one simple swoop? Of course you do. It is like catching two birds with one stone. Finding stocks trading below fair value will enable you to extract capital gain as well as dividend payments.

You can write your own investing articles and get your free investing idea at
http://www.noviceinvesting.com

Choosing a Trading Method

While there are many ways to achieve currency-trading success, all methods have the following salient points in common:

1. Simplicity

Most of the best trading systems are simple.

There is no correlation between how complicated a strategy is and how successful it will be.

In fact, the simpler a system the more likely it is to be robust in the face of changing market conditions.

Some of the most successful systems of all time have been extremely simple and you don’t need much mathematical knowledge to understand them.

2. Liquidate Losers Quickly and Run Big Profits:

The basis of any successful trading systems that deals in leveraged products is:

You need to be able to run the big profitable trends and exit losers quickly.

All good trading methods do this, and use strict money management rules, to ensure preservation of equity.

3. Understand your Method

This may sound obvious, but you need to understand your trading method, and the logic behind it, so you can execute it with confidence and discipline.

4. The Importance of Discipline

Currency trading success is rooted in a successful method applied with discipline. This means a trader has a method and follows it. This however is much harder in practice than many traders believe.

When money is on the line all traders emotions come into play and unless they can maintain discipline, currency-trading success will elude them.

Let’s look at some ways to maintain self-control and discipline when making trading decisions:

Firstly, you must be confident in your trading method. You should know exactly what you are going to do:

· When a signal indicates that you should enter a trade

· When a signal tells you to exit

You must execute your trading method in a disciplined fashion; if you don’t, you won’t have a method in the first place!

Secondly, and perhaps the best way to maintain self-control and discipline, is to feel confident in your trading method from the start.

If you have confidence when you execute your trades, you will “know” that over time they will be successful – even if you are suffering a string of short-term losses.

You must execute the buy and sell signals with confidence – these signals will lead to currency trading success in the long run, as you rigidly adhere to your method.

You need to stick with your method through good and bad times, and confidence in the underlying logic, will help you remain disciplined.

The more disciplined you are in trading, the more profits you will make longer term.

You should not underestimate the need for discipline, if you want long-term currency trading success.

If you read Jack Shwager’s Market Wizards, and the New Market Wizards, where he interviews the top traders of all time, you will see how all of them place an influence on discipline.

Currency trading success relies on a number of factors and these are:

Robust trading method + discipline = currency trading success

Remember, when trading any method, it will be of little use to you, unless you have confidence in it and can execute it with discipline.

There are a number of variables involved in longer-term currency trading success and the above are the salient points to keep in mind when deciding how to trade currencies.

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Currency trading success can be achieved by anyone, as everything about trading currencies can be specifically learned, by any trader wishing to put it in the time and effort to do so.

Trading currencies successfully is a combination of two factors:

Firstly, you need a successful trading method for long term currency trading success to predict market direction and these systems fall into two categories:

1. Fundamental analysis

A currency trader who makes trades based upon fundamental analysis, will look at the supply and demand situation relevant to the particular currency studied, and try and predict the impact of such factors as:

· The health of the economy
· Interest rates
· Balance of payments
· Employment
· Trade deficit
· Other factors

In today’s markets with the all-fundamental information available in seconds anywhere in the world, fundamental news is quickly reflected in the price.

Traders therefore, can have difficulty acting quickly enough to position themselves in the market in relation to breaking news.

In light of this, more traders looking for currency trading success are using a technical approach to the markets.

2. Technical analysis

Technical analysis is the study of a currency, based strictly on using only the price history of the currency.

Technical analysis uses no information about the currencies supply and demand situation – it simply focuses on price action.

The common belief is that the currency price reflects all the known information about the currency as it is immediately discounted in price action.

Technical analysis however does something more – it indirectly studies human psychology.

Since price patterns reflect shifts in human psychology, one can assume that certain patterns, cycles and trends, will repeat themselves again, as human nature has remained constant over time.

Technical analysis takes into account both the fundamentals and the market participants psychology and this gives us a simple equation:

All known fundamentals + human psychology = Price action

The fundamentalist studies the cause of market movement, while the technician studies the effect.

For currency trading success, you need to catch the longer-term trends that yield the big profits. The technical trader does not care how and why these trends develop; all they want to do is make money from them when they occur.

Look at any currency price chart over time and you will see long-term trends and many of them last for years.

The secret of currency trading success is using technical analysis to spot them.

Long Term or Short Term Trading

For long term currency-trading success, is it better to be a long term trader, rather than a short-term trader.

While traders can, and do make money with short-term methods of trading, the fact is, currencies trend longer term and these are the trends that yield the biggest profits.

The reason for this is obvious:

Currencies reflect the underlying health of the economy.

These cycles of expansion and contraction, tend to last for many months or even years and a long term position trader has huge profit potential, if they can lock into and hold these longer term trends.

The choice between long term, and short term trading is subjective, but generally the longer-term price trends tend to be easier to predict, and offer better risk / reward, so a long-term approach is the one to focus on.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and currency trading success. Visit our web site now and grab your CD http://www.tradercurrencies.com.

The peddlers of hot penny stocks today peddle their wares much like the hot cross bun streetsellers of the 19th. Century. They don’t exactly hawk their wares round the shopping malls crying out “Get your hot penny stocks tips here”, but telemarketers and professional rumor mongers are making sure that you get their message loud and clear. The message is the same – buy my stock – it’s just the medium that’s different. The telephone, newsletters, the internet and word-of-mouth are the vehicles used to ensure the message is heard.

The old streetsellers were certainly streetwise; two a penny buns were seen as bargains to be snapped up before they went cold. Bought too many? The nursery rhyme offers a solution: “If your daughters do not like them, give them to your sons”. Buy two a penny hot penny stocks and that’s what you are likely to be doing, too: giving them away because they’ll be almost worthless. Two a penny hot penny stocks sell like hot cakes only because the hot stock tip comes from unscrupulous promoters eager to spread the word that the stock is about to go through the roof. You won’t make a killing, but the promoters who pocket your money will.

Let’s pause for a moment and reflect on why anyone would want to go around circulating these rumors or peddling ‘hot penny stocks’ over the ‘phone. It just doesn’t tally with human nature nor with the way in which power operates in the real world. Just think about it: isn’t it far more likely that a small number of self-interested individuals are intent on dumping over-the-counter stocks onto you? Why, if they had genuine information on a hot penny stock about to take off, would they want to share it with you?

It’s perhaps a truism to say that knowledge = power = money, but in the real world it’s also true that individuals who wield the most influence and power, and incidentally tend to make the most money, operate quietly behind the scenes. That’s not to say that these background figures, who buy and sell stocks over the counter, necessarily operate “under the counter”. Nor is it true that there’s no such thing as a good, informative penny stock newsletter. However, it does mean that, when being harangued by a zealous telemarketer to part with your money, you can be sure that a sinking company and a few unscrupulous individuals are lurking in the background.

Perhaps, though, you see two a penny stocks as providing a real opportunity to get in at the bottom and then make a big killing? Perhaps, when a stock has dropped, you might think that the only way to go is up? Don’t get fooled, though, into buying “bargain” stocks solely because they cost less than before. They could continue to sink without trace. As children we must have been extraordinarily prescient when we added an extra line to the nursery rhyme and chanted the virtues of four-a-penny bargains: “If you haven’t got a halfpenny, a farthing will do”. It won’t do, though, if you’re buying hot penny stocks. Don’t ever feel pressured into buying a “bargain” that will almost certainly end up virtually worthless.

If you still think that you’re acting rationally in buying hot penny stocks then you’re behaving exactly as our 21st. century streetsellers would wish. But, remember, you’re not a consumer buying hot cross buns: you’re an investor aiming to make money by buying and selling hot penny stocks. Buying two-a-penny hot cross buns might make some sense, but two-a-penny hot penny stocks can mean buying, but not selling, for the price you want.

Not only selling but buying, too, becomes difficult when stocks are being traded at very low volumes but, at the same time, are being flagged up as the next hot penny stocks tip. A consistently high volume of traded stocks is absolutely essential, preferably on a daily basis. Average figures might seem good enough, but can often mask one insider’s buying and selling activities. Lack of trading opportunities precludes any chance you might have of becoming a rational, educated trader as you will not develop a “feel” for where the stock is heading.

Learning how to become a rational, educated investor takes time. There’s no easy shortcut to the undoubted profits which exist in the market. Those individuals who want to reduce the risk of their hot penny stocks investment must be proactive and subscribe to a newsletter, research companies, and track investments.

Only when they feel comfortable, and have set themselves a limit of 20% of their portfolio to invest in hot penny stocks, should they prepare to do quiet battle with the market and silence the two-a-penny hot cross bun merchants.

Maureen Cook gives you a clear understanding of Hot Penny Stocks. She signposts the beguiling words of the tipsters, and the dangers inherent in trading penny stocks.
To find out more, visit:
http://www.penny-stocks.myknowledgevault.com