How To Trade Stocks

BY.-  http://www.MomentumStockPick.com

A beginner usually feels very attracted to the stock market while for example discovering a small cap stock that’s being reported in CNBC or the news program and watching it rise steady fast and make new highs from $10 to $70 in just 2 months.

While learning about this successful news story he’s saying to himself “Oh boy if I was one of those lucky guys who bought that stock back when it was priced at $10 I easily would have tripled my money by now… That means my 10 grand would transformed in to a whooping 70 K! hassle free … I would have been able to grab one of those big HUMMERs on the spot and probably pick up a nice Rolex by the way!”

The stock market news constantly reports of hot small cap stocks that are breaking out and making tremendous gains on the same day or doubling in price in just a few hours. Back in the bull market of the late 90’s you could easily see a good number of hot stocks sprouting out every week.

Those years surely made it look like every body could easily take LONG SHOTS and make a shiny pile of gold every day in the stock market. But today’s market is a different story. A totally different animal.

Some say that the stock market has gotten more realistic. Fantasy land is over and GAMBLING YOUR WAY TO RICHES is not an option anymore. You might get lucky a few times, but your constant loses can wipe you out sooner or later.

The fact that the bull market period has ended for now doesn’t mean that you can’t make a great deal of money in today’s market. A lot folks from many walks of life keep making excellent profits on a daily basis, pocketing hundreds & thousands of dollars by trading stocks online.

Success in stock trading starts by applying a wiser and REALISTIC methodology for choosing hot stocks as well as for getting in and out of them with profits in mind.

You need to look at the stock market more realistically. You got to learn that you can benefit when stocks go up and also when they FALL down.

You got to WORK SMARTER and get more selective about the hot stock trading opportunities that you choose. You need to embrace the nature of day trading and be fully prepared to take advantage of stocks that are poised for a BIG RISE on the same day.

The bottom line is you have to PREPARE YOUR SELF to be successful, just like you would do it in other areas of your life in order to achieve success.

BY.-  http://www.MomentumStockPick.com

The stock market should present you with a wide variety of NEW hot stocks in 2009. Many of them are going to be new technology stocks that come from the nanotech, biotech, financial, energy, healthcare & communications sectors.

Most of them might seem promising, but the truth is that a good number of these trading & investing opportunities could be extremely risky, while others are simply not as good as they look. That’s why it’s very important to know how to choose among the best especially if you want to day trade them.

When you know how to pick and approach the best hot stock trading opportunities, you are able to generate a consistent and respectable amount of money in a very short period of time.

Experienced day traders recognize that trading hot stocks on momentum can be the fastest way to make money in the stock market, especially on uncertain times like these.

You don’t necessarily have to trade momentum hot stocks all the time. But you can learn how to take advantage of them when you encounter the best opportunities for going long or for shorting them to make money when they are poised to fall down.

If You decide to day trade stocks just keep always in mind that for a trader to survive and be consistently profitable, its necessary to keep things as simple as possible. To much confusion and technical indicators will most of the time make you slow in your decisions and froze you up when a good opportunity is right in front of your screen.

In the end, stock market day trading is all about picking the best daily stock opportunities and following your buy and sell signals with ease and simplicity. Once you learn to master your trading decisions, you can aspire to produce consistent profitable results.

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What does it actually mean to trade stocks? This was a question that I had in high school that no one could suitably answer for me. Barring a great at-home financial education, high school is probably the first time most of us consider what it would be like to trade.

Most senior classes have an economics program that has a unit on the stock market, and some even allow students to trade stocks on paper. This was my experience, and I thought I had a great strategy to trade. However, there were many myths and misconceptions that needed to be dispelled before I could actually begin to trade stocks.

Many newcomers and novices are unaware of some basic facts about the markets, and are afraid to ask. Worse yet, supposed authority figures oftentimes don’t even know the answers. This article is intended for anyone who would like to trade but has always been afraid to ask these simple questions.

What Does it Actually Mean to Trade Stocks?

In economics class, my plan to trade was simple, and “guaranteed” to make money (or so I thought). I found the “cheapest” (lowest price) stocks I could find in the newspaper – preferably around $1-2 per share – and looked for ones that were near their 52-week low. My strategy was to buy these stocks in huge volumes, and then sell them whenever they ticked up by a measly 1 percent.

For example, if I could buy 10,000 shares of a $1 stock, it would only have to go up $0.01 for me to make $100! Sure, the stock could go down, but what were the odds that a $1 stock would never see $1.01 again? I would just hold on to it until it hit $1.01 (or higher) and then sell. Oh, if only it were that simple to trade stocks.

There Are Commissions When You Trade Stocks – Both Buying and Selling

I knew that you were charged a commission to trade, and I factored this into my strategy. However, none of my teachers could tell me exactly what a “trade” was. I assumed that a trade was exchanging one stock for another – exchanging one thing for another is the definition of trade, after all.

But I had a sneaking suspicion that you might be charged to trade when you bought and when you sold, and of course, I was right.

Don’t be confused by the term “trade.” We normally don’t think of making a purchase at the supermarket as “trading.” We think of swapping an old TV for a newer bicycle at a garage sale as trading. But whenever you make a purchase, you are actually trading money for an item – and this is the definition of trading that matters when you want to trade stocks.

So the first flaw in my strategy was my underestimation of commissions. Instead of $15 roundtrip, it would be $30 to get in and out of my trade. That reduced my profit from $100 to $70. But it would get worse!

The Bid/Ask Spread When You Trade Stocks – The Silent Killer

When you trade, there is also something called the bid/ask spread. This means that the price to buy a stock is higher than the price to sell it at a given time. Market makers trade stocks from their own accounts in order to provide a fluid market, and this is their way of making money.

When you trade stocks of $1 companies, this can be a real killer. Since these companies are normally less liquid than big firms like Microsoft or GM, their bid/ask spreads are wider. So the $1 stock might cost you $1.03 to buy and yet you could only sell it for $0.97.

So much for my early plans to trade. Hopefully, this article answers some questions for you. If a strategy to trade stocks seems too good to be true, then it probably is.