Tag Archives: investing

Stock Trading

Inverted Hammer Candlestick Pattern Can Make You Rich!

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Inverted Hammer Candlestick Pattern is a trend reversal pattern. This pattern can be bullish as well as bearish and occurs rarely or what you can say not frequently.

An Inverted Hammer is a quite rare pattern as the price action needed to produce it does not takes place frequently. But if it does, it is an important signal that you shouldn’t ignore. Now an inverted hammer can get formed in a downtrend as well as an uptrend. In a downtrend, the first day is a bearish candle signalling that the bears are still in control of the market.

How to identify an Inverted Hammer? Identifying an Inverted Hammer is not difficult. It looks just like an inverted hammer! What this means is the high of the trading day is way above the body. So most of the trading took place close to the small area near the low. Now, this low serves as the support for the coming days. An Inverted Hammer has a very small body at the bottom of the candle with a long wick on the upside.

Now, you should wait for the confirmation the following day in order to trade this bullish inverted hammer pattern. If the open of the next day after the appearance of the inverted hammer pattern is higher than the low of the previous day, the inverted hammer pattern is a true pattern and you can trade it by putting the stop at the same level of the open of the day.

Now, when an inverted hammer is formed in an uptrend, it means that the uptrend is about to reverse itself into a downtrend. On the first day, you will find the usual bullish candle signalling that the bulls are in control of the market. This is followed by a gap opening and more buying.

But at some time, the bears take hold of the market. The bears start to push the prices lower. The close is equal to or very close to the low of the day. When you spot a bearish inverted hammer, you can sell or go short by placing the stop close to the open of the second or the signal day.

However, as an aggressive trader, you can place the stop at the high of the inverted hammer formed on the second or the signal day. Always follow the rules. Place the stops and wait for the market to move further. If the market moves in the direction anticipated, you can make a nice profit. If not and the candlestick pattern is not confirmed by the subsequent price action, the stop loss order will take you out of action at a very small loss. Sometimes, the price action can retrace itself but stick with the rules, this is what disciplined traders do!

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Forex Trading

Futures Trading Like The Turtles Can Make You Rich!

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A futures contract is a security just like a stock or a bond with some similarities and many differences. A stock gives you the right to own a small part of the company while a bond makes you a lender to a company or the government.

Futures contract as the name implies is a binding contract between two parties for the delivery of a commodity or an asset or even a financial instrument at some future date between the buyer and seller of that contract. Futures market is a highly regulated market with the CFTC responsible for its regulation. Buyers and sellers don’t come in direct contact with each other. In between is the Central Clearing House that enforces the contract reducing the risk of party default!

Futures market is a very important financial market that sets the prices in the retail and wholesale markets of commodities like wheat, corn,heating oil, oil, gasoline, gold, silver, cattle, soybeans, meat, hogs, coffee and many other foodstuff. Futures market was primarily developed for helping farmers hedge their risk while growing agricultural commodities. Agricultural commodities are a very important part of the futures market. Over the decades, futures contracts become popular on a host of other commodities and contracts.

Futures contracts are by design meant to limit the amount of time and risk exposure experienced by hedgers and speculators. What this means is that all futures contracts are time bound and at some point in the future they expire.

Now you can easily trade these contracts by opening an account with a FCM brokerage and deposit an amount to start trading these contracts on margin. The minimum amount with most of the brokers is something like $5,000 but it can less too! Brokers allow leverage upto 10:1 when you trade on margin. Compare this to the leverage of 2:1 allowed by stock brokers. In the last decades, electronic trading has become highly popular among the traders. This includes futures as well.

In US, open outcry trading still takes place during the official hours at the different futures exchanges. However, most of these futures contracts also get traded electronically. GLOBEX allows electronic trading of most of these futures contracts 23 hours each day. Electronic trading provides a more level playing field, more price transparency and lower transaction costs.

The most popular futures contract that get traded on GLOBEX are S&P 500 stock index futures, NASDAQ 100 futures, Eurodollars, CME E-mini futures, foreign exchange rates, gold futures and crude oil futures. You can also trade options on GLOBEX.

GLOBEX trading overnight tends to be thin and more volatile than during the official trading hours that are from 8:30 AM EST to 4:15 PM EST. If you trade financial news on Bloomberg or CNBC before the stock market opens officially, you will find quotes on S&P 500 futures and other taken from GLOBEX.

These quotes are real time. There are many contracts that you can trade and the possibilities of making money in futures trading are immense. Imagine the prices of crude oil going up again just like what happened in the summer of 2008! Futures trading can be highly profitable but risky as well. Before you dabble in them, you should paper trade these contracts for at least a month just to get a feel of how to do it.

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Initial Public Offerings

Important Concepts Of Initial Public Offering / IPO Investing Strategies

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Are you searching for the most profitable avenues of investment that are available to you today? Are you wondering which stocks hold the most promise? Are you also hoping to avoid facing any issues due to overpriced stocks? If you are searching for the perfect type of stock to invest into, you should certainly seek out initial public offering / IPO opportunities.

When you invest into IPO stocks, you are obtaining a very unique opportunity to invest into a company before the rest of the market has been given a chance to invest themselves. By investing into a stock early, you can be sure that you will be able to get into the stock for the best price overall. You can also be sure that you are teaming up with a company the moment before it is about to see some fairly substantial recognition within the marketplace.

There are a few factors you may want to consider before you purchase an IPO stock though. You should certainly consider the quality of the business you are looking at, the financials of the company, as well as the amount of promise the company holds for the future, if you want to be certain the investment will actually increase in value over time.

When you are just getting started in IPO investing, you should remember that this can be one of the most difficult kinds of shares to assess. When a stock has just come to the market, it can be practically impossible to gauge how much demand and interest the company will generate in the open marketplace. It can also be difficult to ascertain whether or not the value will even be maintained at its current value.

For this reason, when you are investing into stocks of this nature, you should certainly make sure you do quite a bit of research to make sure you know everything there is to know about the company you are purchasing.

When you are investing into IPO stocks, you should remember that the primary reason why most companies are listed as an IPO on the open market is for capital raising. When a company is placed on the open market, they are in a very good position to create a large amount of capital for their business ventures. There really isn’t any other method available in the marketplace that is more lucrative than selling shares to the public. When a company sells shares to the public, they can generate millions of dollars for their business activities.

Even though the fact that the company is making plans for expansion, you should still keep in mind that these stocks are not guaranteed to rise over time. You should remember that there is simply a plan in place for the company to increase the value of its operation over time through many channels of business activity, no guarantees that it will increase in value as a result.

If you want to estimate how profitable the initial public offering / IPO will be for the company, you should certainly make sure you understand where the extra capital will be going from the IPO offering. If you find that the capital will be going into store expansions and other production expanding areas of the business like this, you can take that into account and weigh it into your decision on whether or not you should purchase the stock being listed on the market.

There are many things to consider on how to IPO properly and legally. For more information about the IPO process, be sure to consult with the professionals.