NetTrade

• Social Networking For Clueless Traders

  Social networking has become a popular activity among online users. In fact, it may have become the most popular online activity that people engage in when they get connected to the World Wide Web. And it seems that social networking may not only help people get in touch with people all over the world and build connections, beginner traders may also benefit from social networking as they try to learn the ins and outs of online trading.

  For beginner traders and do-it-yourself investors, it can be a pretty hard climb towards succeeding in stock trading. For one, inexperience may not do them good in a market that may also be considered as high risk. One way to combat inexperience is to learn more and more about stock trading and market basics in order to get the feel and the right tools to make better trading decisions. What could be better to learn about trading basics than from fellow traders? This is where online social networking may be able to help.

  Zecco and TradeKing, two brokerage firms with an online presence has started an online community for clients as well as for individual do-it-yourself investors and beginner traders who may discuss and offer trading and stock market advice to each other. The two brokerage firms are considered to be the first among various brokerages to offer online social networking on their websites. These online communities do more than just offer a means for online traders to discuss certain trading issues and offer advice. They now allow community members to reveal their portfolios to others as well as provide performance ratings among the top achieving users.

  As an online community, the relatively new social networking for traders can especially be very beneficial to small-time do-it-yourself investors at the stock market. Because of their stature, small-time individual investors usually have no access to certain trading information that may help them better evaluate certain stocks to make more informed decisions. Through social networking, online traders now have the means to interact with fellow trader members of the online community who might be owners of a certain stock to inquire how they might be performing. The advice as well as the knowledge learned through such online social networks may provide additional information that will help even beginner traders make more well informed decisions.

  Not only that, the online communities on Zecco and TradeKing also provides performance ratings to its community members to see who performs and makes the best deals. This adds a little competitiveness among members that can motivate them to become even better at stock trading and investing. It is one of the good reasons how social networking online may be able to help a greater number of people interacting and helping each other out.

  Posted in Online Trading

  August 20th, 2008 / No Comments

• Option Trading Basics

  Trading in options is another way that a stock trader can be more flexible in terms of going through different deals in the market. Options are financial instruments that give the trader the right but is not obliged to engage in a future transaction. Unlike a forward or a future, options give the trader the flexibility of not exercising the right if he so decides not to.

  There are basically two types of options contracts that traders can deal with. Buying a call option gives the trader the right to buy a specified number of stock shares at a set price within a specified time period. Buying a put option give the trader the right to sell. When the holder of an options contract decides to exercise his right as stipulated in the contract, the party that sold or offered the option is obligated to fulfill the terms of the contract.

  Call options usually increase in value as the underlying stock also increases in its value. A put option on the other hand increases in value when the underlying stock decreases in value. By buying both a call and put option on a certain stock, a trader enjoys a certain flexibility in his investments. An increase in stock prices will allow his call option to increase in value while the put option value increases when the stock value goes down. Having a combined position will allow the trader to enjoy increases in stock value when the market goes in either direction. The trader may only lose money when the stock price remains stagnant or within a certain range when the position was started.

  Option trading has a number of advantages over other financial instruments. By dealing with option contracts, traders may have the flexibility and the means to place bets on specific areas of the market that they foresee would become big in the near future. Option contracts also offer traders a large amount of leverage. In most countries, a single option contract can represent a certain number of multiple shares. With an option contract, a trader may get hold of a hundred to a thousand shares for just a small amount of money, giving him control over a considerably large stock position.

  Option trading may be in no way more profitable than other financial instruments there are available. Trading in option contracts may also have its own share of risks that can either let the trader profit considerably in a short amount of time or even lose a considerable amount by being too careless. It is important that traders should try to study and understand better the ins and outs of options trading before putting their whole bet into it. Bear in mind that it is only one of the many financial instruments that traders may invest in to gain and profit from. Knowing and understanding how option trading works can make traders add more investing options in his arsenal and possibly profit from the right deals made at the right time.

  Posted in Trading Basics

  August 13th, 2008 / No Comments

• Stock Market Investing Risks

  Investing money in stocks, just like any other trading methods entails some risks. The risks should always be considered when it comes to investing in stocks wisely. And wise investing in stocks requires that traders know the risks that they are about to face and learn how to deal with them.

  Financial Risk
  Financial risk in stocks refers to the risk that you take in investing in the company itself. A financial risk is actually unique to each individual stock. If the company does well on the stock market, you are taking a small financial risk in your investment. If it does poorly, then the financial risk is greater.

  The only way to manage financial risk in stock market investing is through research. You will need to know more about the company profile of the stock that you are investing in so that you may be able to determine the financial risk that you are taking. You study how capable the said company is, try to look into its balance sheet as well as evaluating its goals to see if it is on its way towards achieving success. The better the research you do on the companies that you invest in, the more effective you can be in managing financial risk.

  Market Risk
  Market risk refers to the general risk that you take when investing in stocks that belong to a certain industry. The risk does not actually involve the stock itself. Market risks rather involves the general movements in the market that can drive the stock prices higher or lower. Market risk involves the volatility of the stock price due to factors that are happening in the business environment. The best way to combat volatility or minimize market risk is by trying to invest in stocks for the long haul.

  Timing
  Timing is considered as another risk in the stock market. Timing can be best be considered if one closely monitors the buying and selling trends of the stocks being eyed. Some people try to check the stock buying and selling habits of wealthier and more experienced traders and use it to time their own stock investments. What people consider here is going the way of the power players in the stock market which have better access to valuable business information than the ordinary stock trader.

  Posted in Investing

  August 5th, 2008 / No Comments