Best Stock Trading Platforms And Or Software Research for Investing?
Trading in the money markets is changing. People want to control their own investment options and learn trading options. Whether they trade day after day in stocks, options, futures or foreign exchange (forex) the new movement is DIY trading.
It is a simple matter to go online and sign up for stock trading platforms or multiple trading platforms like ‘TradeStation.com’ that offers powerful software tools for devising your own investment strategies. You can analyze the various markets by personalizing your own analytic ideas and then automate and test your moneymaking prowess with actual the trading technology of the money markets, and all in a single trading platform.
Trading independently means much lower trading costs because brokerage house are not cheap. What you have to put in instead is time. To learn trading options for example you can register with any number of trading platforms and do simulator trading for as long as you need in order to become proficient before you put any money at risk.
At Thetradepros.com you can do simulator trading in stocks for less than $7 a trade. There is plenty of advice on the Internet on stock trading strategies or strategies to make money every time you learn options trading. People no longer need to be apprenticed in a finance or brokerage house, and the real beauty is that you can trade day by day without leaving your house and commuting to an office in the city somewhere.
Simulator trading is the same in principle as an airplane flight simulator. Simulator trading uses the exact same computer trading platforms as are available on the stock exchange floor. In this sense they are even closer to the reality than a flight simulator. The FAA would never let you fly a plane single handed until you had landed perfectly in a simulator over and over again. You would also need to have flown for real with a qualified pilot before going it alone. This last is where simulator trading and flight simulation part company. Nobody is going to hold your hand when you go live trading.
Trust me on this. If you crash and burn on simulator trading you will crash and burn and lose your shirt in reality! So take your time and treat simulator trading as the real thing. Develop your own unique trading strategies, test them to destruction and only if and when you are confident then put some money where your mouth is.
How old do you have to be to buy stocks?
With custodial investment, as with so many things, 18 is the magic age at which you can and sell stocks in your name and on your own behalf. Of course before 18, while you may have the money you would not be able to operate your custodial bank account without the backing of a ‘responsible adult’. You are officially a minor, or one who is not of majority age.
This does not mean that you cannot buy stocks. Just that you are not old enough to buy stocks. A custodial bank account is one with a brokerage firm that will allow trading in stocks on your behalf. It is in your name but it must also have the signature of a responsible adult every time a transaction, especially a custodial account withdrawal is carried out.
A custodial investment account is a demand deposit account with a service provider. The custodial bank or company takes funds deposited, interest accrued or escrow (third party) funds. There are 3 types of custodial accounts. 1)Principal and Interest (P&I) Custodial Account, 2) Escrow (T&I) Custodial Account, and 3) Buydown Custodial Account.
Custodial investment accounts are for people who want to give money to a minor for them to use when they come of age. There are no restrictions about the age of the minor who gets the custodial account nor on the spending of the money from the custodial account once the person is no longer a minor. Really the only stipulation is that the money is for the benefit of the young person, and the account must be passed to the young person when they reach 18 or any age up to 25. It varies in this stipulation from state to state.
There are two reasons for setting up a custodial bank account for your favored minor. The first is as a gift and what a gift it is. A gift of cash at the time of the custodial account withdrawal of course but also a lesson in investment, compound interest and finance management.
The second reason for a custodial bank account is to cut back on the estate taxes you may be liable for. Estate taxes are those that your heirs pay after your death. By putting some of your assets into custodial bank accounts they are left outside of the estate tax net.
How To Buy bonds, Treasury bills, And Or Municipal Bonds?
When you buy bonds you are acting like a bank. You are buying the debts of an organization because a bond is like an ‘I Owe You’. A bond is a piece of paper explaining the size and conditions of the debt, the time period the interest rate etc. When you buy a municipal or ‘muni’ bond, you are lending money to a city or municipality. When you buy a treasury or ‘T’ bill you are lending money to the government.
On the payback side the city or government that issues the bond is promising to pay a stated rate of interest for the term of the bond and to payback the money value of the bond at the end of the term. It is the way the government raises money to do all the things it need to do such as build and runs schools or hospitals.
How to buy bonds? The majority of bonds are traded in what is called the over-the-counter (OTC) market. Some corporate bonds are also traded on the NY Stock Exchange as well. The OTC market is made up of hundreds of companies that deal in securities and banks that trade bonds. It isn’t done hand to hand but usually by phone or Internet. Some companies keep a stock of bonds and trade them as their own business while others act as middlemen in trading with other dealers on behalf of other clients.
Bonds are one of the safest forms of investment but that is not to say that there is no risk involved. Even governments and cities can go bankrupt. If you wish to take advantage of a new bond issue, you should seek out a professional independent advisor who will give you guidance on the offering statement or prospectus for the bond in question. The offering statement is the official terms and conditions of the bonds. It will also layout the risks that investors must take into account before investing.
There is also a secondary market in bonds. You can buy these bonds in the same place and in the same way as new bonds but they are what you might call ‘second hand’. People and organizations hold bonds for a while and for whatever reason want cash for them, even though they have been previously issued.
Bonds traded over-the-counter market are generally in $5,000 denominations while the secondary market bond prices are broken down into in $100 lots. So for example a bond offered for say 95 refers to one that is priced at $98 for a $100 lot, or at a 5% discount. Bond prices will always reflect the dealer’s costs and profit margin.
Best mutual funds for a Traditional or Roth IRA
It really means going back to basic principles and shopping around when choosing the mutual funds for a ‘Roth’ IRA, or indeed a traditional IRA. An IRA is of course an Individual Retirement Account. It is the money that you invest in order to provide an income throughout your sunset years.
The money in mutual American funds comes every month from the salary accounts of individual workers everywhere and is also contributed to by the employers of those workers. While the money is taken automatically from pay the individual still has some discretion over how their retirement fund is invested. So ‘which are the best funds for your IRA’? is an important question.
The obvious answer to the question is; the mutual American funds that perform best in terms of earnings and capital growth are the best funds for an IRA. But how do you know the future performance of the funds will be as good as the past performance. There are many league tables of mutual fund performance and indeed the funds themselves and advertisements push one year and three year performance figures to attract new investors.
While past performance is important when looking for the best funds for your IRA there are seven other things to look out for:
1. Check out the fees charged for the various fund services. Never put your money into a mutual American fund that charges more than the average in its category. Morningstar’s web site compares all of the fund’s expenses with the average. Past expenses are a good indicator of future fees. There are many good low-cost mutual funds.
2. Check out turnover rates. The lower the turnover rate the better because dealing in shares is expensive. For example the Mairs & Power Growth fund has turnover rate of 2% per annum but it also has a 10-year average annual return of 17.5%.
3. Don’t fall for the hype. Advertising is an expense out of the current fund. They are using your money to attract new investors.
4. The best funds for an IRA over the long term will be the funds that have continued to produce results over the long term and in particular over the extraordinary times as in1999. How did they perform then? It shows how the managers cope with the market fluctuations. The Morningstar website gives full historical returns for all mutual American funds.
5. Are they well balanced in terms of size. The best funds for a Roth IRA are those most committed to managing funds rather than going all out for growth. Look for those that close the doors when they have the optimal fund dollars.
6. Index funds are those that simply follow a particular stock market index such as the Standard and Poor 500. Some mutual funds are index funds in disguise and charge more for the privilege. Avoid them, they are not the best fund for your IRA.
7. Finally the best funds for an IRA are those that have a stake in the investment along with the IRA contributors. They aren’t simply paid professional managers but they also win when the fund wins and lose when it loses.
What are the best mutual funds on the market today?
The best mutual funds now are the same best mutual funds that were around twenty years ago. Longevity is the second key criteria by which to judge the best mutual fund. There isn’t just one but rather many ‘best’ mutual funds. The first key criterion when looking for the best mutual funds is performance. The positive percentage return above money invested.
Visit the website of any best mutual fund right at this moment and you will see on the landing page, in big bold headlines, their current rate of return. These are dire economic times and those websites may well be showing zero returns. Do not be discouraged because mutual funds performance tracks the performance of the stock market and no stock market anywhere is doing well at this moment in time.
It is important to understand what mutual funds are and how they operate in order to select the best place to put your precious retirement money. The best mutual funds now are like large baskets. In the basket are a variety of finance products but mostly stocks. Stocks are certificates of ownership of parts of all the companies quoted on the stock markets of the World.
People all over America see money taken from their pay packet each week or month at source. That money is transferred into their IRA, Individual Retirement Account. It is then invested in ways to make it grow by more than it would if it were simply deposited in savings account. One of those investment products is the mutual fund.
Mutual fund managers take the investment funds and buy and sell stocks making the money work hard to build the maximum retirement payouts for the fund members. While mutual funds hold stocks in their basket on behalf of fund contributors the units of the fund themselves become financial products and are then traded in their own right.
The essence of the best mutual funds is their ability to pick the best performing stocks. Best performing stocks are those in companies that pay good dividends from consistently growing profits. In this way the individual IRA investor builds a cash generating fund for the time when retire.
It is only by picking the best stocks consistently that the best funds can grow the IRAs of their investors. It costs a lot of money to operate a mutual fund. They have to pay their fund managers; they have to pay the stock market costs every time they buy or sell stocks and they have all the other costs associated with a commercial operation. They, in short have to be moneymaking machines.
Investing in futures and or commodities
Futures/Commodities… How do you invest in these?
Commodity and futures trading is a rather specialized way of trading and you will need to know how the futures market works.
A futures market was started in the United States in the early 1800s in an attempt to insulate traders of agricultural commodities, for example wheat or rice, against the huge swings in price caused by gluts and shortages of those commodities which were being traded.
In 1972 the International Monetary Market was created to enable futures trading in foreign currencies such as the British pound, Canadian dollar and Japanese Yen amongst others.
The futures markets today, are very different from the original commodities and futures markets, and play a considerable part in the global financial system. In 2006 the first transcontinental Futures and Options Exchange was formed between the United States and Europe. It is expected that eventually all futures and commodities trading will be done electronically.
The futures market is a place where negotiation of futures contracts for commodities or currency takes place. Investment in the futures markets is possibly one of the most risky of investments.
A futures contract is made between a buyer and seller of a commodity, currency or stock where an agreement is negotiated for delivery of the goods at a fixed date in the future for a set price. Futures contracts are binding and all details bar the price are standardized. The details of the contract are what the commodity is, the quality of the commodity, quantity and the date of delivery. The contract will also detail how the contract can be settled, whether in goods or money.
As for all trading you would be advised to learn as much as you can about commodity and futures trading. Then look for an experienced broker who has a proven track record. Obviously the more experienced full-service broker will charge more commissions but when you are just starting out the guidance an experienced broker can give is very useful, especially in commodity and futures trading. The advice of a good broker can help you avoid making some costly errors. On-line brokers do not normally give out much advice. The commissions’ on-line brokers charge is less than that of full-service brokers and because of this they like to keep their costs down. All trading is done through a broker. Some brokers specialize in futures trading. You can find lists of brokers: full-service, on-line and managed futures & options brokers on the Internet.
Once you have opened your trading account with your chosen broker and financially met your broker’s requirements you will then be in a position to start commodities and futures trading.
Buying and Selling Stock
Thinking of trying your hand at being an investor on the stock market? If you want to stick your toe in the hot waters of the stock market be sensible and learn how stocks are bought and sold before you ever invest any money. There are a number of books for beginners on the market to help you learn all about investment buying.
After reading as many books as you possibly can about how the stock market works and the best way to trade etc., you will be eager to try out all your newfound knowledge. However, the next step should be for you to research thoroughly the investments you are interested in and to open a virtual account with one of the free, on-line trading platforms. With a virtual account it will feel like the real thing but even if you lose on your trade you won’t be at risk of losing your hard-earned money.
When you are confident that you have done all your homework and are ready to trade in the real world you will have to open a “trading account” with either an on-line broker or a full-service broker. All trades are done through a “trading account”. On-line brokers are not as expensive as full-service brokers are so most individuals use on-line brokers.
Check the Internet for brokers who will be able to offer you the facility to invest in stock on-line. You will find that there are a number of lists available, which will give you help in finding an on-line broker. However, although these lists are useful the tests they apply to create their broker rankings may not always be appropriate for your situation.
Another point to think about is that while a broker may be good at trading in one type of stock they may not be so good in another. Depending where your interests lie you may think it worthwhile opening a trading account with two different brokers enabling you to use the different strengths each broker offers.
Check out the brokers thoroughly. There are plenty of user comments on the Internet, which will help you to decide if a broker is suitable for your investment buying and selling. For example, if you wish to close a trading account with a broker and transfer your holdings some brokers will charge for this while others will be free.
Once you have opened your trading account you will need to place funds into the account. You can do this either by mailing a check in or sending funds by electronic transfer. These funds will be credited to your account and you will then be able to place your order to buy or sell stock by telephone or on-line or even in person if your broker has a local office.
What is a good stock to invest in?
We all want a good stock to invest in and to avoid the bad ones. So what is a good stock? What are the best companies to invest in?
You will need to do your homework and plenty of reading to find the right stock for your investment.
As with all markets the price of the goods relates to supply and demand. Therefore, when a company is expanding and earning more their stock price will also increase, as more people want to invest in the company. If a company is not performing well and has a poor growth record and low profits the basic value of the company goes down. Then this in turn will cause their stock to go down, as fewer people want to invest in the company.
One simple way you can discover if a company is worth its stock price is by dividing the average price of the stock over, say, a one-year period by the earnings per share over the same period. This is not the best nor is it the only indicator you should use to discover if a company is a good stock to invest in.
Another useful way of discovering if a company is a good stock to invest in is by comparing the book price of a company to the market price, or by checking how much the company pays its shareholders in dividends. Not all stocks pay dividends but a dividend is a piece of the company profits that is paid to the shareholders.
One thing you must know is what type of investor are you. Are you in it for the long or the short term? If you are after good stock to invest in for the long term then you should be looking at the larger well established and well known companies. These investments will not offer the best short-term profit but they will prove to be stable and give long term profit.
If, however, you are more interested in short term investment then good stock investment will be in smaller companies, which are showing current growth. This is a riskier strategy but can be very profitable.
Short term investors looking for good stock to invest in will not be interested in the general health of the company but will be looking at the trends the stock price is showing. You will have to decide which way you think the market is going to go.
You need to establish which strategy is right for you and to be committed to seeing it through and you will discover what is a good stock to invest in.
What are penny stocks? How do I buy them?
A penny stock is a low priced stock of a small company. The term penny stock is generally used when referring to a common stock that is traded at lower than $5 per share somewhere other than the major exchanges. These penny stocks are normally traded via services such as the Pink Sheets or the OTC Bulletin Board. The US financial markets frequently use the term “penny stock” in a derogatory way when referring to any stock, which is traded outside the main exchanges. However, penny stock as defined by the Securities and Exchange Commission in the United States (SEC) is a low priced stock of a small company whether the stock is traded on the major exchanges or through other services.
Penny stocks can be traded in large volumes running into hundreds of millions. However, many penny stocks are considered to be “thinly traded” which means that transactions only take place occasionally and the number of interested parties is limited. Information on penny stock companies is frequently difficult to uncover. This can make it easy to control the stock involved in an unfair or fraudulent way.
New investors are often persuaded to trade in penny stocks because of the low price and potentially short-term high gain. However, many penny stocks lose all their value in the long term. This means that penny stock companies are considered high-risk investments. Investors should make themselves aware of the risks involved such as a lack of liquidity, often poor accounting practices and fraudulent activity when investing in penny stock companies. Penny stock prices often rise or fall by several hundred percent in just a couple of days. This together with limited liquidity can leave penny stocks open to manipulation.
Penny stocks are usually purchased from listing services such as the Pink Sheets or the OTC Bulletin Board. However, these listing services do not have to meet the same standards of the major exchanges. For example stock which is traded on the Pink Sheets has virtually no regulations to meet, which are there to protect shareholders.
There are a number of free listings available on the Internet of penny shares to watch and these can help you make choices but you still need to do your homework.
Money can be made buying and selling penny stocks but the amount of profit you make is linked to the amount of work you put in to discovering the background of the company whose penny stock you intend to invest in. It is possible to make huge profits but equally easy to take huge losses.
How does the stock exchange work?
The stock exchange works simply as a globe spanning market place for financial products. Money is given in exchange for company stocks instead of fruit and vegetables in a physical market.
There is no single easy answer to the question; ‘how does the stock exchange work’? Mostly it depends on the viewpoint of the questioner. There are four major stakeholder groups in the stock market; the companies that issue the stocks, the buyers and investors who take ownership of the stocks, the brokers who are the market traders working in the exchange, and the stock exchange company that owns and operate the actual marketplace and electronic support systems.
The stock exchange works for the companies quoted on it as a source of cash. They offer stocks or certificates of ownership in their company in order to raise money for capital investment such as building a new factory or buying a fleet of trucks. Once the stocks are issued and sold they become commodities in their own right and may be traded many times in exchange for money that passes from the buyers to the sellers and only affecting the companies named on the stock certificates when it comes to communication and annual dividend payout. The people who are holding the stocks each year when the company announces it’s statement of accounts are paid a lump sum of earnings per share.
The stock exchange works for the buyers and investors in stock also as a source of cash. They earn returns on their investment cash through dividend payouts and the appreciating value of their stockholdings as long as the named companies are doing good business and in demand from investors. The number of stocks for each company quoted on the stock exchange is finite. What happens to the price of a stock when the supply is fixed and the demand increases? The price goes up.
The stock exchange works for the brokers as guessed what? Yes you guessed it, a source of cash. They earn money from their clients with fees when they acquire or sell stocks on their behalf. They also charge fees for consulting and advising their clients on the best buys or profit making opportunities. They also store the actual stock certificates mostly electronically these days but also physically.
The stock exchange works for the stock exchange company that owns and operates the actual marketplace and electronic support systems as a source of cash. No surprise there then. The New York Stock Exchange NYSE for example is owned by a company called ‘Euronext’ and as accompany they are quoted on the stock exchange too.
