Stock Markets


131_0.jpgThe term “risk” describes the probability of an undesirable event happening as a result of a present decision or of some future event. In life, we face multitudes of these risks. Financial risk is something you can never eliminate, you can however minimize risk, diversification is one way.

The worlds of business and finance are not much different from our lives when it comes to risk-taking. In any business venture, owners or shareholders are bound to face risks. Like the risks we face in everyday life, some of these business risks can be easily handled and some cannot, and the process of deciding which is which belongs to the practice of risk management.

Risk management refers to the entire process of identifying, analyzing, evaluating, and treating risks. But since businesses are faced with many different types of risks, risk management specializations have also been created to deal with them.

And then there’s financial risk management, which is very similar to general risk management with a specialization in a business’s finances. Financial risk management also follows the processes of risk identification, analysis, evaluation, and treatment. Financial risk management, however, is more focused on finances and makes use of financial instruments to manage a business’s exposure to risks.

Instead of leaving businessmen with a variety of choices for risk treatment, financial risk marketing is focused primarily on hedging, which is the use of two counter-balancing investment strategies to offset the negative effects of price fluctuations. Aside from these differences, everything else is essentially the same.

Business men don’t have much choice but to face risks.It is for this reason that knowledge about financial risk management is very important in the business world. The practice won’t help businessmen avoid risks, but it gives them a chance to counterbalance the negative effects of risks whenever they have to take one.

main_our_products.jpgAt some point you will need to make changes to your investment portfolio. Often, investors and their advisors make wholesale changes all at once.

But that’s not really in your best interest. Read on to find out how to successfully adjust your portfolio. Using the wrong strategy at the wrong time can be devastating.

P
erhaps you’ve decided to make changes to your portfolio. It may be to take advantage of some strategies or it could be because your life situation and needs have changed. Or it might be that you’ve neglected your portfolio garden and there are as many weeds as vegetables.

Regardless of the reason, keep these steps in mind. They’re the ones I follow when transitioning a client’s portfolio.

You need to analyze your existing portfolio. Take a close inventory of your investments and research their performance. The last thing you want to do is to cut down the wrong plants while you are weeding your garden!

I
t takes more work but it’s better to calculate your actual return. Subtract what you invested into a particular holding from what it’s worth now. Look at that return in relation to the length of time you’ve held it to determine whether or not it needs to go.

Read (more…)

pr80915.jpgYou have heard it often buy dips in bull markets and wait for the market to rise but buying dips is not as easy as it first seems and most traders lose. Let’s look at how to buy them correctly, avoid losing trades and pile up some good profits.

Ask yourself this question. If you see a level of support and prices are moving down towards it – price momentum and the trend is against you. So why do you want to buy? Most traders will say support “should” hold, so get in just above at support and you’re in with good risk reward.

No your not – The markets are not as easy as that. The fact is that levels of support that “should” hold more often than not don’t hold. Trader gets stopped out as support is taken out. Doing this in leveraged markets will soon see your equity wiped out.
The better alternative. Is to look at price momentum and get confirmation that the support level HAS held and prices are moving up again after TESTING support. You’re not predicting – you’re acting on CONFIRMATION and trading with the trend. The way do this is top use an indicator that measures price momentum and near term strength.

Read (more…)

800px-bb_at_fwb.jpg

Bull Market

Firstly the bull is a buyer and the bear is “always” a seller. The bull buys because he wants to make money, (don’t we all?). In a “bull market” novice traders rush into every reasonable opportunity they can afford. These trades are not based on good management or risk control.
Please try not to get caught up in this market hype. If you start to chase prices upwards there is a very good chance you will pay too much for them, only to watch the share price start to recede when the buying panic is over.

A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of further capital gains. In describing financial market behaviour, the largest group of market participants is often referred to, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also described as a bull run.

Bear market

The bear is more complicated and can sell for different reasons. This can be just to lock in a profit because he thinks the share price is about to go down. The most fearful of the bears sets the lowest price for the day. This is done by offering to sell his shares at this level.

A bear market tends to be accompanied by widespread pessimism. Investors anticipating further losses are motivated to sell, with negative sentiment feeding on itself in a vicious circle. Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. By one common definition, a bear market is marked by a price decline of 20% or more in a key stock market index from a recent peak over at least a two-month period. However, no consensual definition of a bear market exists to clearly differentiate a primary market trend from a secondary market trend.

hourglass.jpgMore than any other factor, it is the primary, or underlying, direction of the stock market that will determine the success or failure of a trading position. A stock can have a fabulous story, great fundamentals, a good technical position, strong sponsorship and yet turn into a bad trade if you are going long and the market is headed down. The same is true of an undistinguished stock that just goes up because it is being carried along in a strong up market. Stock Market Timing is a Stock Market direction system that forecasts the future short term direction of the market.

Isn’t it a smart play to cash in your stocks and ride out a down market? You can preserve your capital and jump back in when stocks begin moving up again. As logical as that strategy sounds, it is fraught with peril for most investors. There are several problems with “playing it safe” by cashing out and you may, in fact, create additional risks in doing so.

The first problem is knowing for sure that the market is turning bearish and not just in a temporary bad mood. A prolonged downturn doesn’t announce itself with great clarity. If you are wrong and the market shakes the blues and rebounds, you’ll be stuck on the sidelines buying back in to rising prices. You sold because prices were dropping and now you’re buying back in to rising prices.

Read (more…)

« Previous Page