Category / Investing

Investing

How Penny Stocks Can Mean Big Profits

In the traditional investing world, penny stocks are looked upon with disdain. The pink sheets or OTC stocks, names thrown around with derision because of how penny stocks have always been looked at. Smaller cap companies were listed on actually pink-colored sheets back in the day and old school Wall Streeters looked the sheets and over-the-counter stocks as beneath them. Because of that, though, they have always had kind of an appeal for outsiders and mavericks.

Which is a great for day traders. Those labels fit day traders perfectly. Day traders by nature go against the grain and they are always searching for outliers. And volatility. Which you can get a ton of when you are trading penny stocks. Penny stocks are notorious for their volatility. The price goes up and down very often, due to fluctuations that can be discerned into a pattern. If you spend enough time looking at the screens.

Screen time is very, very important when you are trying to learn how to become a day trader. In the old days, logging screen time as a day trader meant putting some cold, hard cash into a brokerage account and trading it. No classes, no practice, no safety net. Just real, actual risk for your nest egg. Day traders in the late 1990s and early 2000s put their money on the line, took their lumps and learned on the job. Penny stocks were a way to make money for them, but they had lose money on penny stocks first, in order to find out what not to do.

That does not apply anymore. Today, you can use a day trading education site like Warrior Trading to get out into the world of day trading without actually risking money. You can take the online classes to understand strategies and techniques for finding the best penny stocks to trade. Then you can hang out in the chat room in order to understand how traders actually do it and talk about it on a day-to-day basis. And, best of all, you can spend time paper trading, which means getting into a simulated trading environment and trading virtual currency at the speed of the real market.

But before you do all that you want to be able to find penny stocks that are ripe for big gains. First off, what is a penny stock. It does not actually cost pennies. Penny stocks are generally thought of as companies that trade between $2 and $10 per share. That share price range can cover a whole range of companies, from fintech and biotech to mining concerns and low-level media companies. The range of business is huge. But the good thing is, you do not have to be an expert in those industries in order to trade the stocks. You just need to be able to look for patterns and jump on the trades early and ride them to the right result.

Profit/loss ratio is important and so is overall risk management. You can’t be right on every single trade, so you need to be prepared to be wrong about 40% of the time. Just try to make the profits at least double the losses so that the 60% success rate will leave you in the black.

Investing

Forex: the Trading Option That’s Taken the World by Storm

Forex or foreign exchange is the process of buying and selling currency. The simplest way to think of forex (or FX as it is sometimes known) is to think of a travel agent. When you go on holiday you buy the currency of the country you’re going to and sell the currency of the country you’re in. Essentially, you’re trading currency and this is very similar to forex trading.

What is Forex?

The forex market is one of the most liquid financial markets in the world and the daily volume of trade is around $4 trillion. This is because currencies have to be traded constantly in order for business to be conducted between countries. There’s no central forex location due to the global nature of the markets and its size means that it cannot be influenced by a single person or company. Realistically, it can only be shaped by world events.

Buying, Selling and Exchange Rates

Forex trading involves the simultaneous buying of one currency and the selling of another. Each transaction has to happen in a pair and each currency has an abbreviation e.g. EUR for the euro. The ability to trade these currencies stems from the fact that the value of both currencies in the pair is constantly changing.

In forex, any exchange rate between currency pairs are labelled as the bid price and the ask price. The difference between these two prices is known as ‘the spread’ and this is how your forex broker will make its money. As with any business, prices will vary between brokers, so shop around to make sure that you get the best deal.

Points and Pips

 

In order to turn a profit, you have to know exactly how spreads are measured. So, let’s look at an example:

If USD/EUR has a bid price of 1.400 and an ask price of 1.403 then the spread is three points or, as they’re known in the world of forex, three ‘pips’. A ‘pip’ is the smallest denomination that a currency can move by and this is the same for all currencies the world over.

How Often Can You Trade?

Due to the fact that the forex market is global and doesn’t have a central base, you can trade whenever you want from anywhere in the world. The forex market does not open at weekends, however, and this is the only time that you cannot place a bet. Just think of it being open 24 hours a day, 5 days a week. This means that you can trade at practically any time you want.

So, Why Invest in Forex?

If you regularly keep up with the news and follow the latest financial announcements then you have the opportunity to make a profit from forex. There’s no experience required and you can start from scratch whenever. Try watching some educational videos on trading basics to learn more and, if you think that forex is right for you, find yourself a broker and start investing. 

Investing

The Advantages of an Annuity over a Certificate of Deposit

When it comes to your money, you have a ton of options. Should you invest it? Should you choose to invest in an annuity? Should you invest in a Certificate of Deposit? Here’s an explanation of what they are and a few reasons why you should invest in an Annuity over a Certificate of Deposit.

What They Are

A Certificate of Deposit, or CD, is a time deposit. They’re similar to a savings account because they’re insured and risk free. They’re different from a savings account in that the CD has a fixed term (monthly, quarterly, annually, or longer) and a fixed interest rate. It’s held until maturity and can then be withdrawn along with the interest accrued.

An annuity is when an individual pays a life insurance company a single premium. That premium will later be distributed back to the party over time. You can set the annuity to be distributed over a specific amount of time via fixed payments, until your death, or until the contract’s final date.

Interest Rate Bonuses

annuity

Image via Flickr by 401 (K) 2013

Annuities and Certificate of Deposits have similar interest rates, but fixed-annuity accounts offer a first-year bonus rate. It may not sound like a lot initially, and that’s the truth. However, your the interest compounds over the year of the annuity. Fixed-annuities also offer a minimum rate of return, which helps you budget future income. Certificate of Deposits are subject to whatever the rates are at that time.

Emergency Access

Sometimes, the unexpected happens. In times like that, it’s nice to know that you have options. With a Certificate of Deposit, you don’t have that option without incurring penalties. With tax-deferred annuities, that’s not the case. Depending on the type of annuity and the provisions, there may be some options that allow you to withdraw a portion of your funds completely free of any sort of penalties.

No Impact on Social Security Benefits

With a Certificate of Deposit, the interest income is included in the calculations used to determine taxation on your Social Security benefits. Taxable and tax-free earnings are both reportable and must be included in this calculation. With a tax-deferred annuity, the interest income isn’t reportable until it’s withdrawn. It’s not included in the calculations for Social Security crossover taxation, which preserves the value of your Social Security benefits.

Taxing and Reporting

Certificates of Deposits are reportable and taxable as it’s earned, regardless of whether it’s received or you’re leaving it there to build up. The interest income from tax-deferred annuities is not required to be reported and is not taxable until it’s withdrawn. The advantage here is that when it’s withdrawn, the account holder is likely no longer in their peak earnings years, so they’re in a lower tax bracket.

Multiple Types to Fit Your Needs

Unfortunately, there’s only one type of Certificate of Deposit. You’re extremely limited with your options. With annuities, that’s not the case. As you might imagine, it’s important to know the Fundamentals of Annuities. There are multiple types of annuities:

  • Immediate Annuities – These begin payments for life or for a specified amount of time. Payments can be received monthly, quarterly, semi-annually or annually.
  • Deferred Annuities – These can be funded through a single premium or through flexible payments distributed over months or years. These can help you accumulate money for retirement.

For premium payment methods, there are several options:

  • Single Premium Annuities – These can provide you with a way to turn a large amount of cash into guaranteed income. This option is great for those with cash from a legal settlement, a business sale, or money that has been inherited, and can fund either an immediate or deferred annuity.
  • Flexible Premium Annuities – These are funded over a period of time and allow you to pay premiums of different amounts, either on a schedule or randomly. These can fund fixed or variable deferred annuities.

When assets are invested, there are several options:

  • Fixed Annuities – These guarantee you a specified rate of interest for a certain amount of time and can preserve your assets and protection from market volatility.
  • Variable Annuities – These provide you with a greater opportunity for asset growth through multiple investment choices. Of course, with greater growth comes greater risk.

In many ways, it’s plain to see that annuities hold a clear advantage over certificates of deposits. If things come to a pinch, you’ll be able to get the money you need. Annuities won’t impact your social security benefits, you’ll get interest rate bonuses, and the interest isn’t required to be reported until you withdraw it later in life. What has your experience been with these two financial products?   

Author Bio: 

Author Jane is a freelance writer who loves to write about anything from tech to mommy stuff. She is featured in many blogs as a guest writer, and can write with authority on any niche or subject.

Investing

Investing in Gold by Collecting Gold Coins

Have you ever considered buying coins as a hobby or for investment purposes? If you haven’t, then you should start doing that now. Today, our bank and stock trading accounts are present online. Moreover, most of our purchases happen electronically. Nowadays, we hardly get to see our money as a tangible object. For this reason, buying and investing in physical or solid gold such as gold bars and coins gives you an extreme sense of satisfaction. So, how can you buy the aforementioned-gold and use it for investment purposes? Let’s find out.

Why Invest in Physical Gold?

One of the few investments that you can physically store, gold is able to preserve or increase its value over time. So, you can investment in gold by simply buying it. For investment purpose, you can buy physical gold such as gold bars or coins. Buying and investing in physical gold such as gold coins is a sensible thing to do due to the following reasons:

  • When other investments decline, gold tends to go up
  • Gold provides a defensive wall against inflation
  • Until you sell the it, you don’t have to pay tax on the gold you hold
  • If you want, you can keep your gold assets/investments a secret
  • You can use the physical gold owned by you buy and sell in case there’s massive currency devaluation or other similar adverse financial situations

The astounding increase in gold and silver prices has led many people to buy platinum, gold and silver coins. You can buy these investment instruments at a fair market prices form a reputed coin dealer. However, you should thoroughly research the dealers before buying from them as there are many fraudsters looking to sell you the coin for much more than it’s actually- worth.

Before you buy the coin from any dealer, find out as much about the dealer as you possibly can. To ensure you aren’t paying ‘more’ for the coin, find out how the price of the coin offered by dealer compares to the price to the coin offered elsewhere.

How to Make an Informed Decision

When buying physical gold, it is important to ensure that you’re purchasing the gold at a fair market price. By doing this, you’ll brighten your chances of making a profit on the gold in the future. Now, to make an informed purchase, you need to consider three crucial factors. The first is the actual cost per ounce of the coin, the second is the timely delivery of the metal and the third is the collector’s value of the coin versus the bullion value. By considering the aforementioned-factors, you’ll be able to make an informed purchased which in turn will help you make a profit on your gold investment in the future.

Collecting coins made from gold is a good way to invest in gold. Using the aforementioned-information, you can buy the coins in a way that allows you make a profit from your gold investment in the future.

Investing

How To Create A Binary Options Trading Strategies To Profit From Simple Market Trends

If you have spent any time reading about financial trading then you will no doubt have come across references to the trend. The trend is the directional basis in which financial markets move and is considered to be one of the most important factors when identifying future market moves.

Analysis of the trend is used by all styles of traders.  It can however prove particularly powerful when combined with binary options trading methods. The ability to identify whether a market will move higher or lower when combined with the Call and Put digital contracts available in the world of digital options can make for a simple strategy from which the individual can earn high profits.

Trends basically refer to the dominant direction that the price of an asset has moved over time. This is driven by a strong momentum and demand from either buyers or sellers in the marketplace. It is commonly observed that once a trend is in place, it is more likely that it will continue than break down. In most trading approaches it is assumed to be better to always trading in the direction of the trend in order to gain the backing of the market. This not only lowers the potential risk, it also gives a greater chance of the opportunity proving successful.

When analysing an asset it is important to realise that trend can exist across all different time periods on the chart. While trending on higher time-frame charts will determine the overall direction that the price of an asset will move over time, many shorter term instances will also exist. These will be the result of price rallies and short term changes in sentiment towards the asset. What this means is that it is possible to trade both long and short term strategies using these signals.

As the trend signals the direction in which a market is most likely to move, it provides a power indicator which can be used to create basic binary option trading strategies. If the market has been moving higher, then a ‘Call’ option contract can be used to profit. Similarly if the price is heading downwards then the binary trader can make use of ‘Put’ contract to capture the move. When trading in this way the ‘Intra-day’ market trend should be the focus of the trader. However results can be improved by keeping a close watch on the wider market picture and dominant direction that the market is moving.

There are many technical indicators which can be used to identify the trend of the market. The most common of these is known as the ‘moving average.’ This indicator is plotted onto the chart and is able to calculate the  market direction by using a basic mathematical calculation. This takes into account the preceding daily price movement of the asset to provide a view of the average gain of the price. By configuring the parameter settings it is possible to find out the direction that the price has been moving over a set number of preceding days.

One way that is often used to capitalise on this movement is to find opportunities by waiting for a low time-frame moving average to cross one from a higher time frame. Once this happens it is taken as a signal to enter the market in the direction that the cross occurs. Essentially this provides a signal that the near term market direction is gaining increased momentum.

Trading with binary options brokers provides a modern and easy way in which to speculate on the price movement of assets. Unlike many methods of trading you only have to forecast a higher or lower movement in price to earn a high fixed return. For this reason they are particularly suited for use with strategies which can identify strong market momentum. By predicting whether the market will finish higher or lower, simple strategies for binary options can be created which exploit the use of the trend.

Guest Post provided by Phil Moore. Phil is a full time trader and investment contributor for the website BinaryOptionsProfits.net. You can visit the site now by going to http://www.binaryoptionsprofits.net.