There is a lot of money circulating on Wall Street. Knowing what equities are on the rise takes careful analysis of company financial statements plus many other aspects such as government news, reports, trends and earnings. Having intimate knowledge of a company’s financial position would greatly assist in buying or shorting plans. You must have a trading account at a trading firm to execute trades. Some of the top brokerage houses include: Ameritrade, Zecco, Optionshouse, Betterment, and Scottrade. The restrictions are different for each broker, however many are moving away with minimum deposits and balances.
Money can be made in both bear and bull markets. Carefully examining the market conditions and key financial statistics such as price to earnings ratios, earnings per share, balance sheet, income statement and cash flow data can facilitate a buy or short decision. Share price history should be displayed in chart form and compared to other companies in the same sector. FAS and FAZ are great stocks to buy if you believe the market is headed bear or bull respectively. Many brokerage firms have excellent software to assist your due dillengence efforts and are available for a nominal price.
Recent events will greatly affect the price of equities. Knowing when important reports are scheduled to be released is key if you plan on a short hold. The period of time to hold an equity is a matter of debate. Some believe that multiple trades with a small percentage gain is better while others will leave their investments in a chosen equity for years and years hoping for a high average return. Day trading is quickly loosing popularity due to the high volatility of the market as of late. A buy and hold or short and hold is a good strategy. Trading options is another avenue to explore and is less risky. However, there are certain restrictions to trading options such as the length of time you can hold them. Many books have been written that describe options trading.
There are several different order types available to choose from when placing an order to buy an equity: market, limit, stop limit, and trailing stop. A market order executes at the current market price at the time the order was sent. A limit order executes at a specified certain price. Some may be bought at a slightly lower price. However, these may not get executed at all or may be partially filled. A stop limit order will only be activated once the price has reached a specified amount. However, if the price moves too fast, it may not get filled or partially filled. A trailing stop order is basically attaching a trailing amount to a limit order in which an investor specifies a particular figure that they determine the maximum buy price. If the market price falls below the specified price, the stop price decreases by the trail amount.
All investments include a degree of risk. Analyzing charts and financial reports are used as indicators and should be your best tool for asset decisions. The market is tough to predict and many experts don’t get it right all the time. The number one thing to remember though is that if you really believe in a company, its mission and product, then investing with them is the best way to go.