Archive for October, 2009


It’s Time to Pay Off Debts

Filed Under: Personal Finance by Bill — Comments Off
October 14, 2009

I can no longer deny that debt has much more added risk than simply the spread between what I think I will earn versus what I pay for the debt.   I personally know that monthly payments are impeding my ability to grow my stock portfolio, online business, and horse business the way that I want to.  The narrow cash flow made by raises I knew I would get, low savings accounts because nothing bad can happen, and giving into general I wants has caused me to miss many great opportunities in all facets of my life.  I’m pledging now is the time to pay off my debts.

I’m starting now with the pure inner fire to be debt free besides a mortgage within two years.  This will be tough as I have two ridiculous car payments, but I’m going to try to do it without selling the cars.  Personally I think I can grow income faster than I can save more money, so I’m going to cap my spending at current rates and try to grow myself enough cash flow to pay off debts.  Hear that government, you can grow your way out of a problem only if you don’t grow your problem as well.

I’m going to start to pay off credit card debts first.  The high interest rates are killer (though I did call and beat one of the cards down) and the temptation to use them again is always there.  No family vacations or new horse purchases this year; the bonus is going onto the credit cards.

The next way I’m going to pay off debts is by asking for money (debt relief) gifts for my birthday and Christmas.  My family spends way too much on presents anyways.  I hope to make a general stand on the issue with this request.  I’ll probably get the guilt trip from the mothers.

For you small business owners could you imagine what would happen to your business if you took these credit payments and hired help with that money instead?   I know I provide more value doing the parts I do best, but I just can’t afford to offload the other necessary parts of the businesses to those who could do it better.  This is the small business doldrums.  I know two years of sacrifice will break it all free.

These are my credit solutions if you have your own, either by growing your income, saving more money, or reducing payments leave them in the comments below.

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Cheap Stock Trading

Filed Under: Money Management by Bill — Comments Off
October 13, 2009

For some reason a keyword that is commonly searched to reach my site is invest 5 dollars.  Now I don’t know if people are looking for stocks under 5 dollars (penny stocks) or they only have 5 dollars to invest, but either way cheap stock trading is a very hard way to go.  The numbers are stacked against you.  However, if you’re looking for the cheapest online stock trading then you’ll probably have a hard time beating $7 a trade that’s unrestricted.  I’m pretty sure Sharebuilder still does $4 trades, but they have an odd execution platform.  Generally they don’t trade all the stocks and they have set buying window, definitely geared for people with a very long term mindset.

If you’re looking for cheap stock trades you could always look at buying way out of the money (OTM) options or puts.  On a really volatile stock you could buy options for .05 per 100 ($5 per option plus fees) and the minimum they could move is a nickel so you lose it all or double your money.   Trading the Nasdaq index (QQQQ or “the Qs”) was very popular in the late 90s early 2000. 

Your other option is to buy one share of a cheap stock, but with trading cost this is only worth it if your buying a gift for a friend, not as an investment.

The bottom line is even with cheap stock trading online cheap stock trades just aren’t cheap.  Cheap stock trading just doesn’t exist you have to have enough money to handle the ups and downs, market maker spreads, commissions, taxes, and make it all worth your time.  I’m very hard on these costs because I think most new stock market investors overlook these and they don’t realize how much they eat into their returns.  I want you to win.  If you’re looking for a way to invest your five dollars please put it in your savings account, pay it on a debt, or put it in a retirement account and when you’ve saved your first $1000 then it’s time to start looking how to trade.

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How To Buy Stocks

Filed Under: Investment Strategy by Bill — 2 Comments
October 12, 2009

I’m going to assume this is the first time you’ve ever bought a stock, or your stock buying has just been random or sporadic.  There are a series of mini tasks you need to work through when buying stock.  None of them individually are difficult, but if you are new and look at them in whole they look pretty overwhelming.  This causes most people to simply skip the steps and get mediocre results.  Sure you can get lucky, but just go to Vegas then; it will be a whole lot more fun.  This isn’t going to be a generic how to buy and sell stock, but very specific how to buy stock.

Prescreen Your Stocks

This conversation differs from stock sector to stock sector, but you should predetermine which stock you want before hand.  The decision making is different if your question is how to buy gold stock versus how to buy oil stock, but this is where you should begin.  If you’re stock trading then your prescreened stocks also needs to meet your timing criteria.  What triggers is telling you now is when to buy stock.  If you’re just buying the whole market on a routine basis (dollar cost averaging) then you can skip this step.

Determine How Much Stock

This area comes down to good money management.  Personally I never let a single purchase consume more than 1% of the buy in commissions.  Your taste for slippage may differ.  So if I’m going to buy stock xyz and it costs $10 to buy I will make sure I at least have $1000 to invest on this purchase. 

My other criterion has to do with diversification.  I don’t like to lose more than 2% of my whole portfolio in any one trade.  So I compare this purchase to my entire portfolio, likely loss potential, and shrink my purchase size if necessary.

Where to Buy Stock

Where you choose to purchase stock has to do with many factors.  My first question is which portfolio this is going into.  I personally do my medium risk investing in my retirement plans because if they do get larger gains over time (if not I’m doing something wrong) then I want the tax savings there.  I do my long term blue chip investing in my normal accounts because if I hold over year, the tax rate is currently very low anyways.  Sometimes you know someone personally who is selling off their stock in bulk and you may want to do an over the counter trade.  So this is situation dependent. 

After you determine this then you want to decide the broker you want to go through.  I don’t personally use their information services, so this is of little concern to me on longer term trades so I mostly look for good execution and low commissions.  If you’re a day trader then you’ll want to factor in accurate quoting systems.  If you don’t like computers or are prone to making silly mistakes consider paying the extra for a live stock broker.  There are much more forgiving.  Those who buy stock online can almost always tell you of that one fatal error.

Use Short Term Technical Analysis

Even if you are a fundamental stock investor to the core I believe that you should use short term technical analysis before you purchase your stock.  Even just using simple moving averages to pick the next resistance point up or down you’ll be ahead of just blindly putting in market prices.  Set your buy point just above the nearest resistance point.  If you’re concerned about a big rally set two buy points, one at the support below the current stock price, one just above the resistance above the current stock price.  Earning 1 or 2 % extra at your initial buy does a lot to help over all returns.  This is also the time to set your stop losses.  Do it.  It’s not worth the risk of not having them; you can always buy back into a stock. 

Now just place your stock order and move on to the next purchase!  That’s how to buy stock.

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Forex Signals For Beginners

Filed Under: Forex by MikeyO — Comments Off
October 5, 2009

If you are something of a novice when it comes to Forex Trading, you may be be a little confused about forex signals. There are after all so many trading systems and software packages out there that generate signals for buying and selling various currency combinations under different circumstances. But where do you start? What kind of forex signals should you pay attention to and which ones should you avoid at this early stage of your trading adventures?

Short-Term or Long Term?

One of the first things you need to get straight in your own mind before investing any money in the forex markets is what kind of trader you plan to be. What’s your outlook? Do you want to hold positions for a fairly long period of time (days, weeks, months even)? Or do you want to be a day-trader, quickly trading in and out of the market and making sure all your positions are squared off at the end of the day? This is a pretty fundamental decision that you need to make from the start if you are to use forex signals effectively, as signals for short-term trades differ widely from signals for long-term trades.

Long-Term Forex Signals

One of the most simple methods of calculating buy and sell signals for a long-term trading outlook is the moving average charts. Moving averages are calculated by adding a number of days worth of closing price data and dividing the answer by that number of days. So for example a 10 day moving average would be the average of the last 10 day’s closing prices. The moving average serves to smooth out short-term price fluctuations and helps identify trending markets. A buy or sell signal is generated when two separate averages (e.g. a 5-day and a 20-day average) cross paths, or when a single moving average crosses the price itself (e.g. if the forex price drops below the moving average, it could signify a sell signal).

Short-Term Forex Signals

If you are a day-trader with a short-term outlook, moving averages will probably not interest you because by their nature they are behind the action in the market right now. So you need a different set of forex entry signals and forex exit signals. One of the most basic strategies, used by many day traders, is swing trading off support and resistance levels. These are basically points below (support) and above (resistance) where the prices hit but struggle to break through. So they offer simple and effective signals for buying and selling a particular currency combination.

Of course, it goes without saying that any forex signals should be used carefully and that stop-loss orders should be placed at appropriate levels (particularly for the novice trader) so that any risk is kept to a minimum.

Good luck with your trading!

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