What is Day Trading?

What is Day Trading?

Day trading is a somewhat complicated and controversial topic. A quick internet search will bring up tons of information on the topic, most of it contradictory.

This short article will break it down into simple terms, discuss the risks and the benefits, and address what type of investor is right for day trading.

So first off, let’s address two important questions.

Who are day traders?

 

And what exactly do they do?

The simple answer is a day trader is anyone who buys and sells a security on the same day.

You may have seen “experts” or the media advertising day trading as a way to “get rich quick.” But in reality, successful day traders are typically those with vast knowledge and experience in the market and those who have lots of risk capital to play around with.

Successful day traders have strategies for how and when to buy/sell and enough capital to withstand significant losses. They also, as a rule, only invest what they can afford to lose. This way a win is a win and a loss does not destroy them financially.

For most, the losses are frequent and often large. So why do they do it?

When they win, they tend to win big.

Day trading can make you lots of money, but the risks are very high. For this reason, it is not a good idea for the average investor.

If you do decide to give it a try, be sure to educate yourself first. Maybe start by hiring a day trader to make these types of moves for you. If you’re the hands-on type, learn all you can about the market and pick a strategy that you think will work for you. Then, stick to the strategy. This can help you mitigate losses.

Day traders provide necessary liquidity to the market, but the role is not for everyone. Most can’t manage the hectic process on their own, and most don’t have the disposable funds to play with.

For experienced professionals, day trading is a way to make large amounts of money, very quickly. For inexperienced investors who like the rush of the gamble, day trading rarely pays off.

 

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Best Ways to Invest your Money

Best Ways to Invest your Money

The first thing to consider when deciding where and how to invest your hard-earned money is what your goals are.

Are you looking for long-term growth, maybe a retirement account?

Or do you need high-yielding, quick growth options to finance your daily life?

Do you want to save what you already have, or put your money to work making more?

The most important factor to consider when choosing how to invest your money is time. You really should separate your financial needs into short-term and long-term.

For short-term financial needs, like a trip or large purchase – like a home or car – you should save rather than invest. The market is too volatile for short-term investments to really pay off for most people. You want to protect money needed in the next few years from the risks.

Good short-term options are:

• High-yield savings accounts
• Money-market accounts
• Short-term CDs and bonds

For long-term goals, however, spreading your investments across a variety of platforms is the best way to maximize your returns.

Some of the best long-term investments are:

• Individual Stocks
• Mutual Funds
• EFTs
• 401(k)s/IRAs/ROTH IRAs.

While the market fluctuates wildly, it usually corrects itself, and any losses will most likely be recouped over time.

Bear Markets typically only last 9-16 months, so even if the market sinks, you should eventually recover if you leave your investments in place.

Holding onto stocks long-term is the best option for most investors.

But you don’t want to risk losing investments too close to retirement.

Experts recommend shifting funds from long-term to short-term options, like those mentioned above, when you are within a few years of needing them.

Once you decide what your needs are, you can begin building your portfolio and planning for your future.

Click here to read more about diversifying your portfolio to help minimize risk and maximize return.

 

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How Does the IoT Work?

How Does the IoT Work?

If you’re not familiar with the term IoT (internet of things), click here to read about what it is.

If you want to know more about HOW it works…read on.

First off, let me tell you I am not a scientist or a tech guru, and most likely, neither are you.

This article is for those of you who, like me, want the basics without all the difficult jargon.

Okay, here we go.

The IoT consists of billions of connected devices using built-in hardware and software to collect, analyze, and send data to one another.

What kinds of devices? What kind of data?

Imagine a vast network. You know, like the one you have at home or work, where all the computers talk to each other and share information.

Now imagine every device you own, no matter how simple – anything you can turn on and off – collecting data and sending it to every other device you own and devices others own, and so on, and so on.

Your phone, obviously, is part of this mega data-collection and processing machine. But so is your toaster, your coffee pot, your refrigerator, your shower, your car, anything we can, or can possibly someday, make “smart.”

Where does all the information go once it’s collected? Into the cloud.

Once there, it gets processed by super smart analytical software. Then it is either stored, or if an action is needed, sent back out to whatever device it needs to go to.

For example, if your smart alarm detects smoke in your house, it could send a message to your phone notifying you and, at the same time, contact the fire department directly.

As you can see, the benefits are astronomical. Life would continue to be made more and more convenient as technology improves and more devices are added to the IoT.

The risks, well, those are yet to be determined. Security is an obvious concern.

But really, our devices have been gathering data and storing/sharing it for years. Learning about the IoT just makes it much more difficult to ignore.

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How to Buy Stocks: A Step-by-Step Guide for Beginners

How to Buy Stocks: A Step-by-Step Guide for Beginners

You’re ready to start investing. You’ve decided you want to buy stock. Maybe you already have one in mind, or maybe you haven’t even started thinking about specific stocks yet.

Where do you start? How do you just start buying stocks?

It can be a bit daunting for beginners. So here’s an easy step-by-step guide to get you started!

Step 1:

Decide whether you want to use an online broker or find a face-to-face broker. While some companies allow investors to buy stock directly, without the use of a broker, most do not.

• Some firms offer both online platforms and the option to speak with a live broker in person or over the phone.

Step 2:

Choose your broker.

• There are many online tools to help you decide which of the many brokerage firms is the best option for you.
• Some things to consider are brokerage fees, account minimums, and ease of trading platform.

Setting up an account is easy. You’ll have to prove your identity and decide how you want to pay for the stocks you buy (and the brokerage fees).

Step 3:

Choose which stocks you would like to buy. It helps to start with companies you may already be familiar with. Below are some things to keep in mind when evaluating a stock.

• Start with the company’s annual report. This will give you financial data as well as management’s statement – the context this provides can be invaluable.
• Other analytical tools like P/E Ratio, EPS, etc. should be available on your broker’s website. Most brokers will also have tutorials to help you navigate the statistics.

Step 4:

Decide how much stock you want to buy (i.e. how many shares). It’s a good idea to start small. Maybe just buy shares in one company to start, or even one share in one company. It can take a while to get a feel for the ups and downs of the market. Starting small gives you time to decide if the market is really for you.

• You should also decide if you want to buy the stock at the current market price or set a limit order. If you decide on a limit order, you will set a price at which you want to buy (or sell) the stock, and only if/when the stock gets to that price will your broker purchase (or sell) it for you.

Finally:

Once you’ve purchased stock in a company, you become a shareholder. You can then decide to hold that stock long-term or sell it at a certain price.

Be sure to do plenty of research to determine which option best suits your needs. And remember, there are no guarantees.

For more on the difference between stocks and shares, click here.

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What are Penny Stocks?

What are Penny Stocks?

The definition of “penny stock” changes with the market. Traditionally, the term applied to stocks which sold for under $1 per share and which were only available on the over-the-counter (OTC) market.

Now, the term refers to any stock selling at under $5 per share, some of which are available on main exchanges like NASDAQ.

Penny stocks are highly speculative, highly volatile stocks suitable for those comfortable with a high-risk investment.

Companies who issue penny stocks are typically very small, very new, or are nearing bankruptcy.

Adding to the risk is the fact that penny stocks are not as regulated as blue-chips, and companies issuing this type of stock are not required to report to the Securities and Exchange Commission (SEC).

So, if they are so high-risk, why do people buy them? Simple. The chance for high-reward.

Because they are so inexpensive, penny stocks have the potential to explode. However, most don’t.

Buying penny stock can make you a lot of money very quickly, but it can also cost you your entire investment.

If you are looking into buying penny stock, be sure to do your homework.

Unlike more stable companies where the P/E ratio can be a useful tool for measuring a stock’s potential, those issuing penny stock often have little to no income. In this instance, the PEG (price-earnings-growth) ratio can be more useful. Provided the projected growth is reliable.

Ultimately it is crucial to remember that there is never any guarantee that buying stock will pay off.

And with penny stock, the risks are as exponential as the possible returns.

 

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What is a Bull Market?

What is a Bull Market?

Generally speaking, a Bull Market is when stock prices are rising, investors are confident, and the market is stable or in an upswing. People are investing and hopes are high.

The term can be applied to just about any industry. But when referring to the stock market, the technical definition is a bit more specific.

A Bull Stock Market is defined as a rise in stocks preceded and followed by periods of at least a 20% decline. For this reason, we can never truly identify a Bull Market until after it’s over.

If stock prices fall less than 20% and then rise again, we call it a market correction. And we remain in a Bull Market.

When stocks drop 20% or more, the Bull Market ends and a Bear Market begins.

Investors love a Bull Market because it is a general indication of a thriving economy. Employment rates are down, businesses are making profits, and demand for stocks is high.

It’s easy to see why Bull Markets tend to be long-running. When investors are confident, more people buy stock, which in turn keeps the market strong.

Where do we stand now?

We are currently in the ninth year of a Bear Market, and experts are predicting a tenth. That means chances are the market will continue to see growth, and investors should see impressive returns on their expenditures.

Bull Markets are the time to hold on to stock long-term and watch your investment grow.

But don’t worry, if you haven’t invested yet, there’s still time. Look for value stocks with room for growth.

 

 

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