NetTrade

• Avoiding Online Stock Scams

  It isn’t as rare as you think and if you believe that you won’t ever become a victim then you’re setting yourself up. What am I talking about? I’m talking about scams–down, dirty, no-good, two-timing, money-filtering scams. It’s what no one would wish to learn the hard way simply because it involves your hard-earned money. No one would actually want to be able to say, “I’ll just charge it to experience.” after being scammed because it’s not only your experience that’s debited—It’s also your bank book, your wallet and most of all, your ego. You’d never ever want to be scammed by anyone because it involves a big part of your money, time and effort whenever you enter into an investment relationship. So what do you do to avoid these types of fraudulent activity? You wise up. Here are some of the tips that you can follow in order to make yourself more scam-free with online stocks.
  One of the best ploys that the sharks out there use is by “hyping up” a stock. You might see in a thinly-traded company’s website that their stock is one of the must-buys of the season. It would follow that the message boards, the chat rooms and other newsletters would provide sugar-coated information regarding the value of the stock. Some of the other routes that these investors might even go to great lengths as to advertising their stocks on the radio, television and some might even be featured in certain television shows. All of these could be potential stepping stones to losing your money to a shrewd con.
  No matter what other outside sources say, you should be the one to investigate the stock itself. First of all, consider the source. Remember that the people who are voting for the stock may well be people who are inside the company who are trying to promote the company. When unsuspecting investors horde in the stocks for them to be able to sell them at a later time, the people who hyped up the stock eventually stop and the price of the stocks eventually goes down, leaving the group of shrewd cons with a lot money and a lot of grieving people in their wake.
  Just be sure that you’re not one of the people who fall for this “pump and dump” scheme where they pump up the prices of the stocks and then they dump them on unwitting people who wouldn’t know better. Be sure. Be safe and research the company you’re buying from very well.

  Posted in Stocks

  September 26th, 2007 / No Comments

• What To Remember In Online Stocks

  Going into online stock trading is no laughing matter. It will require a significant amount of time learning the ins and outs of the business and you will always have something new to learn. In this type of business, everything else will rely on your technical know-how of stocks. Add to that the complexity albeit real-time mechanism of the Internet and you have a formula for enough confusion to last you a lifetime—or until you run out of money for investment. Here are some short and practical stock tips that you can follow when doing trading online:

  The strategy should be followed as a rule of thumb. If you’ve recently acquired stock and the value goes down the next day even though analysis reports show that the stock is still optimistic, try to buy more shares of this particular stock. You could simply consider the purchase an independent trade. Who knows, other people might clue in on the bullish reports by the analysts and decide to buy those stocks from you anyway?

  Never ever trade stocks that have a large bid-ask spread. This is often the case when the stock looks very alluring. If they happen to catch your eye, try to purchase it at the price between the bid and ask. You may want to use the limit order in this particular case since a transaction cost of more than 3% will make any good strategy unsuccessful.

  Another thing to note is if you are able to notice a particularly large positive price change of around 10% during the first or second day, you should sell this stock early.

  Should you run into some headline news regarding the stock, it is favorable for you when bad news has come out already. You should not be essentially afraid of some bad earnings report or maybe analysts downgrading what you have in your portfolio. Stock will eventually go up anyway. Just make sure that the short seller will be able to close their positions and the bargain hunters in the neighborhood are always ready to take a risk

  Finally, be sure that you’re able to buy equal amounts of shares of stocks. If you have stocks which are smaller in price, they will have a much larger risk. Be reminded always not to always invest heavily your money in small stocks. And most importantly, if the stocks are on a downtrend, be sure not to hold on to them

  Posted in Stocks

  September 19th, 2007 / No Comments

• Investors and IPO Lockups

  From the word itself, lockups occur when the shares of company insiders are “locked up.” Lockup agreements prohibit employees, venture capitalists, and family and friends from selling their shares for a given time period. Typically, the company and its underwriter enter into a lockup agreement before the company goes public. This is to ensure that the insiders’ shares would not enter the market too soon after the initial offering.

  Most lockup agreements prevent insiders from accessing their shares usually for a period of 180 days, but these may vary depending on the company situation. The number of shares that can be sold over a selected time period are also limited by lockups.

  When considering investing in a company that has recently undergone an initial public offering, determine if the company is under a lockup and know when it expires. This is crucial because the company’s stock price may be affected when anticipating the lockup shares being sold into the market before and after the lockup ends. The stock that is valued at these agreements can be large enough, that is why potential sales level upon expiration should be a major consideration among public shareholders.

  The existence of lockup agreements also somehow drives a wedge between the interests of the insiders and investors. Share values are enhanced by lockup agreements as investors believe that any negative information will most likely be revealed before the expiration. As such, investors would continue to hold a large stake in the company and align their interests with those of the shareholders. But recognizing the existence of lockup agreements does not necessarily close the information gap between insiders and outsiders. Insiders could withhold negative information during the lockup period prompting investors to feel anxious about selling towards the expiration date.

  Nearing the lockup date does not imply that there is large selling of stocks by investors. Shares of IPO do better during the days directly before and after the lockup expiration. This is the time when shareholders feel certain about the future actions of insiders. But having fewer opportunities to indicate firm values and with the added concern for investors handling large amounts of stock, companies having high shares in locked-up stocks face negative market reactions. The ownership of venture capitalists who are more likely to sell their shares than their managers also impacts the price negatively.

  Meanwhile unit issues, where the IPO issuer collects a share offer with warrants in one single unit, come out better in comparison. In this case, continued ownership is important. Investors believe that insiders would have an incentive to continue their commitment with the firm. They also feel more confident knowing there is management commitment to the company, by way of the insiders retaining a high degree of ownership after the offer has been made. Large firms also fare better than small firms, as investors generally have more information about them.

  Posted in Stocks

  September 17th, 2007 / No Comments

• Online Trading Education

  Most people are not as quick to pick up the terms that are common to online trading. Of course, no one expects you to simply just get all of the terminologies from the very first day. However, as you work your way up the ladder, you will be surprised to see and know that there are opportunities for you to fast-track your growth as an online trader. One of the things that you can do is to consider training and getting an education in an online trading academy. This will not only instruct you regarding the nomenclature but it will also give you practical tips and advice on how you can apply the things you’ve learned in the stock market. By the time that you’re through with an online academy course, you’ll be able to expertly tell the difference between commodities and stocks and in the future you’ll be able to define NASDAQ, FTSE 100 and other ambiguous acronyms.
  There are other online trading academies who will send you all kinds of newsletters which give you some sort of information about how the stock market operates and how it works. This is how they are able to sell themselves to you. There are also people in those online trading academies who will give their credentials in order to boost their appeal to you. These people will have probably worked for the stock market before and have become quite successful on their own. There are also people who work in these online trading academies who have been able to buy and sell stock for a living. These are those people who have been able to make through their way by selling and buying stock as a means of life. The advice that they give to beginners will become the stepping stone that they need in order for them to break into the stock market business. If you are a stock market veteran however, they also offer some little secrets with regard to the stock market that only some people know.
  When you do sign up, however, you’re not only going to learn about stock trading. You will also learn about the essentials of FOREX and the futures trading. You will eventually come across hot stock tips on what you need to purchase and where. More importantly, you’ll be able to know how long you’ll be able to hold onto them. By the time you finish with these online trading academies, you’ll have had enough knowledge to work your way up the profit ladder.
  One of the other alternatives is to be able to purchase an e-book that comes along with the program of the stock market. It will usually give you enough information that is also provided in the course online. However, if you are not as diligent as you should be in studying, then that e-book alone will be unable to give you the necessary skills that you need to become an excellent and profitable online trader. After all, if you don’t put in the work, you have no right at all to demand that you be paid.

  Posted in Stocks

  September 12th, 2007 / No Comments