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Performance Anxiety And Traders

In the world of trading, it can be easy to go through a lot of stress and develop certain psychological problems along the way. One of the most common of such problems that traders have to deal with would be performance anxiety. Performance anxiety is not just a problem affecting traders but can also affect athletes and actors. Performance anxiety usually happens when a trader becomes more aware of the performance, especially the outcome, in such a way that it begins to interfere with the actual act of performing.

Performance anxiety can easily lend itself into the any trading day. It usually affects traders at a time when they either have to go through high degrees of risk or aiming to do better than their previous performance. The skill of how a trader performs can sometimes work automatically especially through experience. But there are times that can make a trader become more aware and scrutinize every action being done in trying to focus the eventual outcome of the performance. This results in the trader trying to have a conscious control over an activity that has been previously honed to automatic mode. What happens is that there is a disruption to the actual performance.

A prime example of performance anxiety can be likened to a basketball player on the free throw line about to make crucial free throws that can win the game. Becoming aware of the very importance of making the free throws, the player may aim at the ring but does not deliver the shot in his natural stroke. For traders, it can happen when one overthinks a trade and it doesn’t set up exactly as planned.

There are many things that can cause performance anxiety in trading. A series of poor trades that creates a losing streak in the mind of a trader can be one. Another can be experiencing situations that a trader did not expect to happen. Being pressured to impress everyone as well as a series of other pressures may affect the mindset of a trader that may lead to performance anxiety. These circumstances can cause certain disruptions to a traders state of mind that can sometimes be exhibited by a change in moods.

Traders should be aware that a number of trading problems can be a direct effect of performance anxiety. Instead of trading performance flowing naturally as usual, certain disruptions in thinking due to increased risk or pressure can allow a trader to perform poorly. Performance anxiety does not just happen when experiencing market losses. Some traders may suffer from performance anxiety even when enjoying market success.

In the same way, perfectionism can lead traders to experience performance anxiety. Traders depend on their achievements to determine their success. Sometimes, this can lead traders to set goals that may be difficult to reach. Trying to achieve such lofty goals can add some tension on the trader that may affect actual trading performance and may bring on performance anxiety.

Posted in Stocks

July 22nd, 2008 / No Comments
A Look At Penny Stocks

Penny stocks may not look much to some investors out there, but there are also some considerable opportunities that it can offer, provided that the investor knows his way through investing in such stocks. Along with the profit opportunities also come considerable risks. To give you an idea, here is a brief look at penny stocks.

Penny stocks in the US are common stocks that are being traded for less than $5 a share. These stocks are usually traded in what is called as the “Pink Sheets”. It is an electronic quotation system that displays quotes of stocks for many over the counter or OTC traded securities. It is through the Pink Sheets that penny stocks bids and quotation prices can be published by broker dealers. But in addition, interested brokers should know that the Pink Sheets is not a stock exchange and is not registered in the US Securities and Exchange Commission. Companies with stocks quoted in the Pink Sheets are not obliged to fulfill any requirements or reports to the Commission.

Penny stocks are usually stocks issued by companies with small market capitalization. With this in mind, investors putting their money on penny stocks are setting their sights on small companies. This type of investments generally are viewed by many as a pretty risky proposition, putting up invested capital on some unproven small company. But this does not mean that investing in such small companied would eventually turn up on the losing end. There are many small companies out there that shows promise and may have good chances of making it big. Sometimes, the “next big thing” or the next great innovation may come from these small companies.

The key to investing in penny stocks is by thoroughly analyzing the small companies that issue them. Most investors are attracted to penny stocks primarily for the low stock prices and rapid growth potential. Some penny stocks, due to their low price can at times be seen increasing prices by several times its original value in a matter of days. But this price changes tend to be very volatile that most investors consider penny stocks to be very high risk investments. The key to successful investing in penny stocks is prior knowledge and careful analysis of the small companies eyed for their penny stocks.

In order to lessen the risk of investing in penny stocks with its accompanying risks, investors are better off investing funds that they would not bother losing. Investors should avoid putting up essential funds for investing in penny stocks. Setting aside a certain amount considered to be “disposable funds” would be the safest way to go investing in such risky stocks. When the stock rises, it would be a welcome news and investors profit some. But if the penny stock price suddenly crashes, investors would not be a bit bothered, considering that money invested is considered “disposable”. That is the best way for investors to invest in penny stocks.

Posted in Stocks

July 15th, 2008 / No Comments
Stock Trading Mistakes

Stock trading can either be a profitable venture or an investment failure. The end result of trading in this market ultimately depends on the right trading decisions. The risk is always there, but the savvy investor knows how to avoid committing the mistakes that allow many others to fail in this highly competitive volatile market. By trying to avoid the usual mistakes, a wise investor makes sure that decisions concerning the buying or selling of his stocks are founded well on experience and reliable knowledge.

Taking Stock Trading For Granted

One of the mistakes that most starting stock investors make is that they do not consider such trading as a serious business. Some are in it for the thrill and excitement. Some even think that going into stock trading might be fun. Of course, some investors may feel that way, that is, until they realize that they are beginning to lose a considerable amount of investment money in it. Trying to recover the losses won’t be as much fun and exciting anymore. Stock trading is for the level headed individual who looks at it as a serious endeavor and not just for the thrill of it.

Making Ego As A Main Trading Factor

For people thinking that they must win every time, stock trading may not be such a good market to venture in. of course, highly confident people may do fairly well in stock trading since they might be able to make some risks that may pay out well in the end. But for those who may have such an ego thinking that everything that they do will turn out successful, stock trading may not offer the similar or usual fate for such people. Egoistic individuals always think that they already know enough to be successful and would take no other suggestions except their own. Truth is, there is no such thing in stock trading. There is always something happening that every one may not expect. There are things that every body may not know about. And with an ego to go with stock trading, it can be a very dangerous and costly mix.

Investing More Than They Should

The savvy investor is one who knows his limits. He knows how much he can afford to invest and can afford to lose in the stock market. The risks in stock market trading may be akin to gambling, but there should be no such thing as “all in” when delving into stocks. Doing so will only put the trader into a considerable risk that he may not be able to get out of. A wise stock market investor knows that money one cannot afford to lose does not belong or is not worth risking in stocks, no matter how attractive the market may seem. Only the foolish would try invest a child’s college fund or business investment money on stock and expecting to profit from it immediately.

Posted in Stocks

July 8th, 2008 / No Comments
The Stock Price and Market Performance

The stock price is one of the important factors that investors look closely into when deciding to buy or sell stocks in the market and on their portfolio. There are two types of prices that investors should always know- the current price of the stock and its future selling price. It may look easy enough for people to base their investing decisions by virtue of knowing the current and the future selling price of a stock.Many investors try to look at the stock price to gauge market performance. Many investors continually try to review the price history of a certain stock and use that knowledge to predict possible price changes as well as use it to influence their investment decisions. Some investors may form certain biases that can be influenced by the price of a stock.

There are some investors who may avoid buying stocks that have risen its price too sharply, believing that it may be due for a correction at any time. Others will try to avoid buying a stock experiencing a drop in price believing that it will continue to go down. But would such beliefs be considered as fact? Will a stock’s price be a credible gauge to determine its market performance?

Market Trends

Momentum seem to play a big part in a stock price. There is a common stock market wisdom that tells investors not to “fight the tape”. This means that investors should not try to go against the momentum of the prevailing trend. This assumption is based on the belief that the market would continue to move in the same direction and the best bets would be on stocks that go along that direction.

This may have some grain of truth in them, especially when you look at how most investors normally behave. Stock investors tend to bet on stocks that show price increases as opposed to stocks that are falling. And as these lead more people to invest in climbing stocks, it encourages even more people to buy. This presents a positive feedback that may go on for some time.

Martingales

But there are also instances that market performance cannot be determined by the stock price, in this case, in its past performance. There are cases that past returns of a stock may not seem to determine its future price. Past returns just don’t matter if you consider what is called as martingales. A martingale is a mathematical series of numbers in which the best prediction for the next number would be the current one. In terms of stock pricing, stock market returns could be considered as martingales. Using this theory, the valuation of a stock does not depend on past price trends or even in estimates of future price. The stock specific inputs that can be used would only be the current price as well as its estimated volatility.

Posted in Stocks

July 2nd, 2008 / No Comments
Characteristics of a Good Stock

Stock trading can be a challenging way to invest your money in. It requires getting adept in knowing which stocks make good investments and which ones are not. Considerable research is usually needed in place of gut feeling in order to succeed in this type of moneymaking venture. For some trading in stocks might be too risky a deal and quite an exciting challenge for the others.

One of the essential skills needed in stock investing is having that knack of finding a good stock. There are quite a lot of stocks out there to invest in. But not all of them may give you a good return on your investment. When looking for good stocks to invest in, you should know how to look for certain characteristics that make up a good stock to invest in. here are some of them.

Product Appeal

Good stocks come from companies that create, produce or have something that people would want and need for years to come. A good indicator of a good stock is if the business it engages in is something that creates a considerable demand from people for a long period of time. A company with the hottest product today would not matter to a savvy stock investor if that demand is only for the short term. Success in stock investing would take you far if you try to look for stocks with such an appeal.

Competitive Advantage

You would usually find good stocks from companies that have established themselves and leading in their field or industry for quite a time. The reason why they are considered good stocks because such companies have been able to establish what is called a competitive advantage.

This competitive advantage can come in different aspects of the business. A great and established company may have a strong competitive advantage in a business where it takes quite a substantial amount to capital to start, such as in heavy manufacturing sector. A competitive advantage may come in the form of a recognized brand or name which has become popular through the years. With these competitive advantages, it is usually hard for new competitors to get a share of the market. Thus, this advantage spell the difference for good stocks.

Market Leader

Another common characteristic of good stocks is that they come from a company considered as a leader in their filed or industry. But there is more to this. The better stocks come from those market leaders who try to set the pace and use their size and experience to protect their position. They try to set the agenda that the whole market and industry try to look up to.

There can also be market leaders that become complacent with their accomplishments and rest on their laurels. Sooner or later, these complacent companies may find themselves being bumped off the top position by an aggressive competitor, losing considerable stock value in the process. You should try to beware of buying stocks from such companies as they may not be playing their advantages right.

Posted in Stocks

April 30th, 2008 / No Comments
Stocks You Should Have Bought Five Years Ago

Hindsight is always 20/20 so they say. The fun part with looking back is tracing your steps and think of what-ifs. It should not always be bad.

That is the thing with stocks. You will never what the next big thing will be, unless you have psychic powers that could accurately predict the future.

For fun, let us look back at the biggest trend the last five years and see if we could see what the future might hold for us. Here are five stocks you should have bought five years ago.

Online games. Yes, it is now more than a fad. It is already a lifestyle. Although online gaming companies are not really bent into playing the stock market game, it would have been rad if they were. That way, the hardcore could be transacting both virtually in real life. Nevertheless, online games already have lives of their own, sustaining themselves with a broad and heavily consuming market.

Google. It was only recently when Google officially became an IPO. Considering all the phantom money that company is earning, its stocks would have been a commodity the first day it started trading.

Nokia. This Finnish company has finally hit paydirt with its business strategy of not putting all of its eggs in one basket, meaning diversifying its products to each and every demographic there is. It also means a less than complete unit, at least features wise, with every release. But it seems that nobody is complaining since Nokia is now considered a major player in mobile technology, finally penetrating the US market.

Web 2.0. Here is another abstract stock that could have made it big in Wall Street. If only MySpace, Friendster, YouTube (which is now owned by Google), pooled their resources and infiltrated stock trading, then maybe traditional businessmen and financial analysts would not pencil them in as just another fad. However, they might have learned when the net bubble bursted the first time around.

Nanotechnology. This may be a product of sci fi, but we are getting there. They are now already developing self-repairing gadgets with the use of intelligent microscopic robots. This is more of an investment to look forward to.

That being said, this may be a techie-biased entry, but trends do point in that direction. This is not the dawn of the information age. We are already standing with the midday sun blazing right above us.

Posted in Stocks

April 24th, 2008 / No Comments
Broker Basics

If there is a time that you want to trade stocks online, you have to select an online broker first. Your online broker will be able to execute your trades for you instead and consequently store your money as well as other stocks in an account. The online trading industry has a lot of different mergers as well as acquisitions in the past but there are still so many types of firms to choose from. These firms are able to offer different levels of help and can also offer you different types of accounts as well as other services. If you’ll be hiring a broker, be sure to keep your eyes out for these things:How much money you plan to invest
Most of the firms that operate today require that their investors have a certain amount of money to open an account for stock investment. This is quite different from the minimum account balance which is also what most brokerage firms have as well.

How frequently you plan to make trades
Will you be buying one type of stock and then hold on to it for quite a long time or will you be trading lots of times. Regardless of the type of trading that you’ll be doing, you might want to look into the type of transaction that you’ll be doing and then see how much using the site will cost you.

Your level of trading experience
There are some brokerages which do not offer much research with regard to your trades so they expect you to know a little bit of stock trading basics when you join their site. It’s quite seldom that sites assist the trades. There are other sites, however, which offer market analysis and different articles on successful trading from various licensed brokers in the field. You might want to look at those sites and compare them with those that don’t assist with your trading to see what style will suit you best.

Added services that you might want
Some trading sites allow you to buy and sell stocks with nothing else on the plate. Other sites act also like major banks which also offer debit cards, mortgage loans and other various opportunities for investments like bonds and futures.

These are just some of the primary things that you would want to take note of when you’re shopping for an online brokerage firm. Make sure that you consult with other reliable sources such as Keynote and Smartmoney so that you’ll be able to get the best brokerage site to help you.

Posted in Stocks

January 16th, 2008 / No Comments
Choosing an online stock broker

Once you’ve decided to start investing your money in the online world through stocks, you have to take into consideration some of the aspects and factors of online stock trading. You need to be able to find a stock broker so that it will be easier for you to keep track of the progress of your stocks. Trying to do everything alone on your first try is almost like giving away your money because you might not know the ins and outs of trading online stock. If you Google your way to different stock broker sites, you might notice that there are tons out there. So how exactly do you choose what online stock broker is best for you and your wallet? Here are some practical tips on how to go about choosing a partner for you and your stocks.One of the most important things that you have to note about getting an online stockbroker is that it should be able to provide you all of the basic necessities that one would need for a successful stock investment. There should be educational materials that are available with real-time stock charts and streaming news. You also might want to look into various high-quality tools as well as a user-friendly stock trading platform.

You might want to look at the brokerage fees that the online stockbroker is giving you. The various online brokerage firms nowadays have different types of brokerage schemes that you may want to look into. This varies according to the balance as well as the number of trades that you transact per day or per week. Some even offer a per month basis if that is what you would like to get into. The bottom line is: The more transactions that you get into, the lower the brokerage fees become. This essentially gets you more profit in less trade margins which essentially means more earnings for you.

A lot of the best online stockbrokers offer different options whenever you would like to inquire about them. They offer investment opportunities such as stocks, stock future and options, mutual funds, IPO’s, ETFs of exchange traded funds as well as fixed income investments which also help you to branch out your investment portfolio. These are just some of what other online stock brokerage firms offer.

It would be prudent enough if you look into what the best online stock brokerage firms can offer. Understand first what you are getting into and what your firm’s limitations are. If you’re ready to commit, then you’re good to go.

Posted in Stocks

January 10th, 2008 / No Comments
Playing With Money

Have you ever been curious about how trading works? Do you feel like you have an understanding of the online stock market and how the different things that you know stack up on your favor? If you would like to break into the stock market without investing any money, you can literally do it with this ingenious simulation game offered by Virtualtrader.co.uk. This is the United Kingdom’s biggest and most genuine stock market simulation game.In this simulation game, you will be able to fully invest in different stocks and experience the thrill of investing without risking your money. You get to experience the joys and pains that come with investing money and you essentially get in some practice regarding the different stocks with their actual and current prices. Best of all, you can play for free!

The advantage of being able to invest virtual money and see how you fare with the different stock options presented to you is that you are able to test all of your abilities under real market conditions. You get to build up your portfolio of £100,000 of virtual money and trade stocks listed on the London Stock Exchange which is also known as the FTSE 100. You call all of the shots if you want to limit or expand your orders.

Of course, when you get profits by selling and buying, your portfolio has the option of being made public to others or private. This will determine whether your portfolio will be accessible to others or not. You may create as many private portfolios as you like but if you will be only allowed to enter one competition portfolio.

The end goal of the game is to “master the stock market”. Should you be able to trade the different securities that you have, you should also be able to get the highest return among the rest of the virtual traders who are also playing the game. Buy low and sell high is the name of the game. Your success depends largely on your ability to make the right decision at the right time.

So if you want to be able to have a shot at mastering the erratic world of the stock market without actually investing real money, you might want to take a shot at this game as it will harmlessly introduce you to the world of investing and enhance your current stock trading skills.

Posted in Stocks

December 13th, 2007 / No Comments
The New York Stock Exchange In The 90s

The New York Stock Exchange is one of the best online trading sites that cater to stock trading. The NYSE traces its origins to the time that New York City stockbrokers as well as different sellers signed the Buttonwood Agreement which essentially set into motion the assurance to investors and issuers.
Here, we chronicle the different milestones and memorable moments for the NYSE in its very colorful and flourishing history.
1990
The NYSE conducts an industry-wide test which shows their capability to trade around 800 million shares a day. It was during this time that 51 million Americans owned stocks according to the census conducted by the NYSE
1991
It was the year when the NYSE held a symposium in order to amass data as well as a fresh perspective on how to improve director independence and other corporate governance issues.
It was also during this time that the NYSE began its first off-hours trading sessions which started from 4:15-5 P.M.
The Dow Jones Industrial average also exceeded 3,000 for the first time since its inception.
1992
It was during this year that the average daily volume surpasses 200 million. Former president Ronald Reagan and Mikhail Gorbachev toured the trading floor when they visited the NYSE to commemorate its bicentennial anniversary as one of the world’s most vital and enduring financial institutions.
1993
This year saw an integrated technology plan which saw to upgrade the trading floor networks which included the hardware and software to be able to radically improve the capacity, efficiency and quality of almost every aspect of trading floor operations.
1994
This was the year of the Market 2000 study which was conducted by the U.S. Securities markets. This is when the SEC approved a uniform shareholder voting rights policy to be used by the New York Stock Exchange as well as other securities dealers.
1995
An aggressive plan to re-engineer the trading floor to make it much more sophisticated with the use of the top-of-the-line technology gave the NYSE an upgrade. It was now composed of high-definition flat-screen technology as well as fiber optics and cellular communications.
1996
NYSE launched a real-time stock ticker on CNBC as well as CNN-FN. Before, the market data was delayed for 20 minutes. It was also in this year that a new volume share record was set on July 16 wherein it traded 681 million shares. This year also saw 59 non-U.S. companies joining the New York Stock Exchange which brought the total to a whopping 290 companies.

Posted in Stocks

October 17th, 2007 / No Comments