Category Archives: Stocks
The ADX indicator can be a useful tool when it comes to gauging whether a particular trend is worth following in terms of investments. The indicator was created back in 1978, and the letters stand for the Average Directional Movement Index.
Most people are familiar with trends and how they can influence our need to buy something. If a particular fashion look is trendy, more people are liable to buy it. But every trend is only likely to last for a particular time. This means those fashionable slacks you have may not be so trendy next year, so you’d likely ditch them before then.
The same thing applies in terms of the ADX stock indicator. It allows you to see whether a trend is weak or strong, and you can thus gauge whether to buy or sell your investments – in the forex market for example – as a result.
Generally speaking if you see an ADX value that drops below about 20, you can consider that to be a weak trend. The lower it goes the weaker it will be. Conversely if it should go above 40 it will be an indicator of a strong trend.
Which indicator is the most important one to be aware of?
In truth, both ends of the scale are worth looking at. You don’t want to invest in things that have weak trends because they aren’t likely to go anywhere or get you any particularly good results. Of course you can keep an eye on them in case things change, but generally speaking you should ignore them for now.
The interesting ADX indicators are those that start climbing. Some say anything above 25 is worth looking at, so you can see that an indicator measuring 40 is well worth a closer look.
Should you abandon all other methods of choosing stocks?
No – using the ADX stock indicator should form just one part of your overall strategy to find stocks that are worth investing in. If you use the ADX indicator for just one thing, it should be to find the magic number 25 and to see whether the trend is going up or down from there.
This will help you spot the strong trends and avoid the weak ones. A value of 25 that starts going up will be well worth taking a closer look at, for example. If you use this indicator along with a number of other tools, you can narrow down your investment options. Hopefully you will arrive at a far better result than you would have had before.
The ADX stock indicator takes a little getting used to if you have never used it before. As with any other stock picking method, it makes sense to have a few dry runs and to ‘invest’ in chosen stocks in a virtual sense first to gauge your success rate. You can then work out whether you want to go ahead and use it more often.
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If you want to start investing in the stock market, you have two options open to you. You’ve either got to go it alone and make your own investments, or find a broker to do it for you.
This sounds easy on the surface, but if you want to invest in foreign stocks you may want to think about using foreign stock brokers instead of those in your own country. Of course some stock brokers do deal in stocks outside their own country – a lot will depend on the size of the company the broker works for and whether they deal in such markets. So this is worth a look before you do anything else if you are already using a broker.
But if you’re starting from scratch, here are some tips for using stock brokers based abroad that are well worth bearing in mind.
Look around and do your research first
It’s wise to suggest you don’t just jump in and select the first stock broker you come across. There are plenty of them out there, and if you’re selecting one in a foreign country it can be even more difficult to know whether you’re picking the right one or not.
Fortunately the internet has made the world even smaller than it was when we first started using commercial airplanes. Use it to your advantage and research each potential broker you are considering using. Use more than one source to find out about each too.
How easy is it to contact them?
If you chose a broker in the US you’d be able to pick up the phone and call them without worrying about hefty phone charges. This doesn’t apply for foreign based brokers.
In addition, you need to consider whether there might be a language barrier. This won’t apply in all countries, but if you’re in the US and you’re thinking of using a stock broker based in China you might have a problem.
Consider the conversion rates for charges
Remember too that conversion rates will apply if you’re converting your US dollars into a foreign currency. Make sure you work out some sums and find out what charges will be levied if you opt to go with a particular broker. This alone can make a big difference to what you make on a successful deal.
As you can see there are several points worth thinking about before you dive in and find a foreign stock broker. Alongside all the regular points to consider, there are several more that become more important when you want to hire a stock broker in another country. If you think about the above points and make sure you know the process to expect before doing anything, you’ll stand a much better chance of making this task easier and more successful.
There is a lot that could go wrong when you go down this route – but equally there is a lot that could go right as well. Make sure you pick the best outcome by doing your homework first.
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Most people are aware that it’s possible to buy stock in various companies with the hope of it going up in value. However it’s not correct to say that all stock is the same. There are two types of stocks – public and private stocks. Public stocks are the ones most people are familiar with. They can easily be bought and sold so you have complete freedom in deciding which ones to get and which ones to avoid.
However this doesn’t apply to private stocks. So let’s find out a bit more about them and discover whether you can actually buy them.
How to find private stocks
This can be easier said than done. The fact they are private means they are much more difficult to find than public stocks. Private companies are not required to release financial information and thus you may not have any information at all to go on. In the past the easiest way to have a shot at buying these types of shares was to work for the company and hope you were issued some at some point.
Furthermore since the shares are not made public for anyone to buy, you may not have any opportunities to buy them. It’s very much a case of knowing someone who has these shares so you can ask if you are able to buy some. There is a relatively new way of doing this that makes good use of the internet. A new website called Sharespost has been launched recently (https://welcome.sharespost.com/) that aims to make it easier for people who want to buy private stock to get in touch with people who have private stock to sell. The major downside is the $2,500 fee required to buy or sell stock on this website. Thus the site is not for beginners.
An alternative is to consider Second Market (https://www.secondmarket.com/private-company) which also has a section that can bring together private stock buyers and sellers.
A notable caveat
As with any shares, it is wise to find out as much as you can before buying any of them. The very nature of private stock is that it is difficult to glean much information about in advance of purchase. This is why you are better off avoiding private shares altogether until you have some experience buying other shares. The more you get to know about the market, the easier it will be to stand a chance of putting yourself in a position to buy private shares.
It can be a good idea to ask people you know who work for these companies to see if this will create any opportunities for you. You never know, simply having a conversation with someone you know and trust could result in an opportunity to buy. However always do your homework and don’t buy simply because you know the person selling to you. Ask yourself why they want to sell and what this may mean for you. As always caution is advised.
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Stock indexes can be confusing at times. There are different types, but before we delve into that, it’s important to have a rudimentary understanding of what exactly stocks indexes are. Every day, millions of investors all over the world are buying and selling hundreds of thousands of stocks.
With so many stocks flying around, things get confusing mighty quickly. That’s why many different tracking companies – or “stock indexes” have popped up over the years. Their job is to track how certain segments of the stock market (or entire stock markets themselves) are doing in their day-to-day trading activities.
Different stock indexes keep tabs on different kinds of companies. Some stock indexes focus their tracking activities on solely large-cap companies, while others keep their sights on just the small-cap variety. Still others track the stock market as a whole. For instance, one very broad stock index in the United States is the Standard & Poor 500 (S&P 500). This index tracks the broadest range of businesses – in fact, it covers 500 of the largest companies in the US today.
Big Stock Indexes
Big stock indexes are the most common variety of stock trackers out there today. Arguably the most well-known of these types of stock indexes is the Dow Jones Industrial Average. This index tracks the ups and downs of thirty of the most highly influential businesses in the United States today. Some examples of these big players tracked by the Dow Jones include General Motors, General Electric, and Wal-Mart. The Dow Jones places precedence on the most expensive stocks out there, however, so a big stock index like this one is actually considered a “price-weighted index.”
This generally means that the index rises and falls depending on the fluctuations of these thirty companies as a whole. Some analysts think that this does not provide an accurate representation of the world’s economy; they don’t think that it paints a real picture of the rises and falls of every company out there.
Market Value-Weighted Stock Indexes
The previously-mentioned S&P 500 is different from a price-weighted index. It’s called a “market value-weighted index,” which means that the S&P 500 measures and tracks the combined value of stocks that all the companies in the index sell to investors. Basically, this means that stocks sold big the largest companies and with the largest market shares will have greater weight within the stock index.
It makes sense for larger companies to have more weight within a market-value weighted index, but this type of index does have its downfalls. For example, sometimes when a bubble develops that artificially inflates one segment of the economy, such as the bubble created by tech stocks in the 1990s, it can cause a ripple effect when it bursts that negatively impacts the rest of the stocks in the index and devalues the stock index as a whole.
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If you’re even slightly new to investing, then it’s imperative to know the basics before you get too deep in the process. One of the most basic things you should learn about the stock market is the types of common stocks that exist. When people talk about stocks in general, they’re most likely referring to commons stocks.
The vast majority of stocks are issued in the form of common stocks. When you buy “common shares”, each share that you purchase represents your partial ownership, or stake, in a company. It’s essentially staking your claim for a portion of the dividends (read: profits) that the company generates. They may go up or down depending upon how the company performs.
In addition, when you buy common stocks, you become an investor in a company, meaning that you get a vote for each share you own. This vote can help elect board members depending upon the amount of stock you own. Let’s take a look at five of the types of common stocks that are out there.
1. Penny Stocks
Don’t invest too heavily in penny stocks unless you’re feeling risky. They’re the most speculative form of stocks around. The rule of thumb for a stock to be considered a true “penny stock” is whether it’s priced at $5 or less per share. If it is, then you have yourself a penny stock. Companies that sell penny stocks are not quite established yet – and most are still deep in the development phase of their growth. A second kind of penny stock company is the kind that is offered by a company that is flailing financially. Penny stocks for either type are highly risky because there’s a huge chance that the companies you invest in may fail.
2. Blue Chip Stocks
The biggest companies in the world – think Wal-Mart, Google, and the like, only offer blue chip stocks. These companies have higher-priced shares with little room for growth, but who cares? Adding a healthy mix of blue chip stocks to your portfolio will lend a great amount of stability to it because the likelihood of these companies failing is extremely low, and returns are as close to guaranteed as you’ll get in the stock market.
3. Utility Stocks
Utility stocks are simply stocks issued by companies that offer public works services such as power and water. There’s limited competition since most of these companies almost have monopolies in the areas they service. That’s why utility stocks are low-risk, because their returns are almost guaranteed. However, the amount you’ll profit is marginal.
4. Emerging Growth Stocks
Emerging growth stocks are offered by up-and-coming companies that are still in the growth stage and figuring out the best tactics for management and company structuring. Investing in these kinds of stocks may not yield anything at first. There is a chance for huge rewards down the road, but there’s also the chance that you’ll have a bankrupt company on your hands. Companies that offer emerging growth stocks tend to be volatile while in development, plain and simple.
5. Established Growth Stocks
Companies that offer established growth stock have a proven track record, and they’re established enough not to be a high risk for bankruptcy. At the same time, the rewards are minimal compared to other types of stocks. There’s room for massive growth down the line, however.
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Company names and stock symbols are commonly confused. To make a long story short, a stock symbol (which can sometimes be called a “ticker symbol”) is simply a short abbreviation that investors use to uniquely identify all of the shares that are publically traded within a particular stock market. There are many different formats for stock symbols, and they may consist of numbers, letters, or even a combination.
The reason that stock symbols are occasionally known as “ticker symbols” is because the symbols were originally printed on the tape that ran from a ticker tape machine.
History of U.S. Stock Symbols
Standard & Poor (S&P) had the desire to add uniformity to the investment process, so the stock exchange implemented stock ticker symbols that were more modern and boasted only letters. Before that time, one company may have had dozens of different ticker symbols floating around depending on the stock exchange in question. Needless to say, that way of doing things became mighty inefficient in a hurry. The S&P changed all that, and then years down the line, the securities industry as a whole standardized the method to make it official – it had finally become the industry standard. However, to this day, for preferred stocks, stock symbols have yet to be standardized.
Examples of Stock Symbols in the United States
Let’s take a look at the standardized stock symbols for some of the biggest companies in the United States to get a better feel for the way companies are tagged in the marketplace. Some of the larger company stock symbols are as follows:
AAPL – Apple Inc.
BAC – Bank of America
C – Citigroup Inc.
GOOG – Google
HNZ – H.J. Heinz Company
HPQ – Hewlett-Packard
INTC – Intel
KO – Coca-Cola Company
MSFT – Microsoft
TGT – Target Corporation
WMT – Wal-Mart
WAG – Walgreens
For the beginning investor, understanding these symbols makes it easier to get into trading without feeling like you’re in a completely foreign world. You will be able to read stock tickers more easily and gain a better grasp on the process more quickly.
The SEC Changes the Rules
In the past, all an investor would need to do was look at a symbol in conjunction with its appended codes in order to figure out where a company’s stock was trading. But a move by the SEC in 2007 changed all that.
The SEC approved a rule that changed how companies that moved between the New York Stock Exchange and the Nasdaq were known. The rule allowed them to keep their three-letter symbols even though they moved between exchanges. At the beginning, the law excluded companies that only had one- or two-letter stock symbols, then after 2008, companies slowly began keeping their shorter symbols intact when making the switch. This trend started with CA, Inc., which traded using the symbol CA.
Knowing stock symbols is a great way to get your feet wet in the world of stocks. It will help you get accustomed to the companies that are trading and read the tickers more prudently.
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