Guide to the Stock Market


eg: UK or Brides UK or Classical Art or Buy Music or Spirituality

Business & Money

Technology

Women

Health

Education

Family

Travel

Cars

Entertainment

How To Trade The Stock Market

View:

1. Post-opening buying. If stocks rise 5% or more during early trading on any given day and it doesn't make the news it will generally fall off after about 30 minutes or so of trading and the price will level. There are occasions when market makers are attempting to artificially inflate stock prices in order to sell off excess inventory. If the stock doesn't fall off after about 30 minutes it is quite likely that they will continue to rise throughout the day. The tactic for this type of trading is to buy at 1/16 above the high of the day and sell at 1/16 below the low of the day.

2. Post-opening selling. This strategy is the direct opposite of the strategy mentioned above. When a stock opens low with no news it could be that there are nervous investors placing sell orders from the day before. It could also be the result of artificially lowered prices in order to draw in panic sellers so that market makers can purchase shares as the price declines and sell as they rise. The value of these stocks are generally recovered after about thirty minutes of trading and profit makers can make money by selling the stocks they've just purchased on the decline at the average price. If the stock continues to fall after 30 minutes or show no sign of recovery chances are that it will continue to decline throughout the day. The tactic for this investment type is to sell short at 1/16 of the days low and set a stop at 1/16 above the high for the day.

3. Playing the spread. This method is a little easier to understand than some of the others. Buy at 1/16 up and sell at 1/16 down. This method works best with stocks that don't typically see more of a spread than 3/8 of a point. When you manage these trades successfully you will see the growth of a quarter point per trade. The problem with this type of trading is that you cannot always sell as soon as you place the sell order so it may not work, as market makers are more than aware of this tactic. It often takes several tries within a day in order for this to succeed.

4. Grinding. This is another tactic that is considered relatively easy. This is the act of buying an in demand stock as it is on the rise and selling quickly at 1/8 or ¼ of a point for a quick profit.

5. Fading the market. This is a contrarian strategy in which buyers capitalize by buying weaknesses and selling strengths meaning you buy stocks with small declines hoping they will see gains when the market reverses. With this type of investing you should hold on selling until the stock trades above its opening. The logic behind this tactic is that current owners will sell in order to prevent further loss, which will drive the prices down for the short term.

6. Shop the final hour. The last hour of trading on any given day will typically see stocks easing back from their highest prices of the day. The reason for this is that day traders and market makers are exiting their positions in order to ‘guarantee' their profits. This results in lower prices on many stocks during the very last hour of trading and opportunities for short trading possibilities abound as the result of this common practice.

Keep your stops close. Its important to save your capital and live to trade another day.

How To Trade The Stock Market

This is the second installment in a 10 article series on how to trade stock options successfully. In this installment I will discuss where to obtain good information which is one of the most important aspects of trading successfully.

Most people have heard the expression "garbage in, garbage out". Well that phrase applies to options trading as well. You will only successfully trade options if you have good market and stock information. One of the most powerful reasons whay stock options trading is so easy these days is because there is a wealth of great information that is easy to find and free of charge. The internet has made this information easily accessible to any trader whether they are in the office, at home or at the local coffee shop. The trouble is interpreting and discerning the useful information.

I have compiled a list of sites that I visit daily along with an explanation of just some of the information you can find on them.

www.finance.yahoo.com

Yahoo! Finance is a great source for all financial news. Each morning, before the market opens, I check the In Play? report. This report tells you all of the financial and company news that has occurred during the night and before the market opens. This is an excellent place to find out what stocks are on the move and what the market is likely to do at the open. Another good report is the Market Overview which is updated every half hour and provides data on the major indices as well as commentary throughout the day.

When you enter the name of a stock or ticker symbol, Yahoo! Finance has an excellent company overview, with current news and charts, a full profile, key statistics, financial reports and analyst coverage.

Additionally there is a splits calendar that details the stock splits that are currently announced and an economic calendar that not only details upcoming economic announcements but ranks them according to their importance or impact they have on the stock market.

www.msnmoney.com

Again, this website is a good source for all investment news. In particular MSN has a great earnings page that details earnings estimates, past performance, trends and growth rates. It also has a very easy to use Research Wizard that explains and identifies fundamental analysis of individual companies. The MSN StockScouter report rates individual stocks according to a proprietary method of analyzing a stock's potential risk and return.

www.rttnews.com

This website has financial news from around the globe. I particularly like the breaking news feature that can be downloaded and placed on your desktop. A desk alert then pops up with any breaking news as it happens. It can also be customized so that only the information you want gets through.

www.tradingday.com

This is a very rudimentary website that has excellent links to such information as stock gainers and losers, most actively traded stocks, market statistics, after hours trades and analyst and broker rankings. All of which is very useful information when trading short term.

www.prophet.net

Like most sites this has a paid membership service but there is a lot of great information if you sign up for a free basic membership. The industry rankings are a good indication of where institutional investors are putting their money, and as they control the markets it is a good idea to find out which way their money is moving. The historical trends show the change in ranking over a certain time period, another good indication of which way money is flowing. Prophet has two very robust screeners for the more technically minded, the first is called "Prophet Signals" and the second is "Prophet Scan". I encourage you to explore them both.

As I mentioned in the beginning of this article good information is key to good trading, remember though, you must learn how to use this information correctly in order for it to benefit you. Spend some time familiarizing yourself with these websites, make sure you know what all of the terms mean and how to use the indicators and if you find any other good websites out there please let me know! If I may paraphrase Benjamin Franklin I will finish by saying "The best return anyone ever gets on their money is when they invest in knowledge.Next week we will discuss the 3rd key to successful options trading.

US Government required disclaimer: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500 Chicago, IL 60606 (1-800-678-4667).

More Articles from

Trading Strategies

High Frequency Trading Strategies

High Probability Short Term Trading Strategies

How To Trade The Stock Market

Online Stock Trading Rating

Online Stock Trading Services

Stock Market Trading Strategies

Trading Strategies That Work

How to Profit from a Market Correction: Diversified Trading Strategies

Discover The Day Traders Trading Strategies

Commodity Markets Trading Strategies For Starters

Emotional Highs and Lows and Clear, Calm Trading Strategies

» More on

Trading Strategies

Related Articles
Author
Most Popular

•	How Invest In The Stock Market, by Nicky Pilkington
•	How To Get In Stock Market, by Nicky Pilkington
•	How To Invest The Stock Market, by Amit Kheterpal
•	How To Learn The Stock Market, by Robert Michael
•	How To Make The Stock Market Make Money For You, by Olakitan Wellington

About Author

Both Christopher Smith & Roger Cox are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Christopher Smith has sinced written about articles on various topics from Home Management, Finances and Botox. . Christopher Smith's top article generates over 450000 views. to your Favourites.

Roger Cox has sinced written about articles on various topics from Finances, Investments and Finances. Roger Cox was born in New Zealand and has lived in Los Angeles for seven years. He was President of a freight company at LAX before setting up his own consulting firm. Roger has successfully traded stock options for over 4 years and teaches other people h. Roger Cox's top article generates over 2900 views. to your Favourites.

Definition Of Conflict Resolution
Of course its not easy to see it when we are still close and attached to our desires of course not! Nevertheless wait a bit and youll see that the unanticipated episodes, the surprises and disappoi...