Category: How to Start Trading – Beginners

Invest in Stocks with Little Money
Why do you think you must have a lot of money to start investing in stocks? It is completely opposite.

By Guy Avtalyon

Many think that can’t invest in the stock market with little money. Honestly, you don’t need thousands of dollars to start investing. Yes, we know a lot of people who believed it’s impossible to invest in stocks with little money.

Think you don’t have enough money to invest?

Frankly, you can start with as little as $4. So, the money isn’t the reason why shouldn’t you start earning now. Truth is the opposite, not investing in stocks may be risky. Even a few dollars can go far. It’s understandable why many think that can’t invest in the stock market with little money. That’s because investing can be confusing. Also, there is a belief that only wealthy people can make money in the stock market.

You don’t have to be a master to invest in the stock market. Also, you don’t need to have thousands of dollars to start.
There are many tools that can help the new investors do pretty well, especially with limited resources.

There are a lot of schemes to invest in stocks with little money.

Many online and app-based platforms making it easier than ever. All you have to do is start somewhere.
Once you do, it will get easier as time goes on. In the future, you will love what you did in the past.

Here are some ways to start:
- Use a robo advisor to automatically invest.
- Buy individual stocks through a discount brokerage firm.
- Purchase securities.
- Find low minimum mutual funds.
Use robo advisor to invest in stocks with little money

Thanks to the rise in the popularity of robo advisors, investing is now more available than ever. You don’t have to go it individual, be rich, have a lot of investment experience. You don’t need to hire an expensive financial advisor.

Why?

Because robo advisors can do all of this for you and at a low annual fee. Robo advisors, also known as automated online advisors, are technology-based investment platforms that offer fully automated online investing. These fintech firms are developing fast and mostly target new and younger investors, such as Millennials, for example.

But which ones are the best choice for your investment?

Robo advisors have a big advantage. They have lower minimums than financial advisors have. By having minimums as low as $0, robo advisors dispense previously unaffordable retirement planning and portfolio balancing advice to a broader selection of people. Robo advisors generally cost 0.25%-0.5% of the portfolio. They are algorithms that ordinarily look for the lowest cost solution to fit a client’s needs.

It will always be available as long as you have access to the internet.

Robo advisors also will offer you an advanced feature, tax-loss harvesting, to balance gains in a portfolio. The divested security is then replaced by similar security, helping you to maintain the optimal asset allocation by keeping a portfolio’s diversification. Due to their value proposition, robo advisors are growing very fast.

Trading apps allow investments as low as $5 for a list of funds.

Buy individual stocks through a discount brokerage firm

Opening a brokerage account is so easy. Just fill the account application, present proof of identification, and decide how you want to fund the account. You may fund your account by mailing a check or transferring funds electronically.

At most brokers suitable for new investors, stock trading commissions run between $5 and $10. Low commission costs are important to active traders, those who place 10 or more trades per month.

Having a lot of individual stocks inside a single investment gives you prompt diversification. Also, it minimizes risk over time. The stocks owned within a fund may go down, that’s the truth. But they can be compensated by others that rise. You should look for terms like large-cap, mid-cap, and small-cap in the names of stock funds.

What is the cap?

Cap is short for market capitalization. That is the value of a company’s stock shares. Hence, a large-cap mutual fund means that it only owns shares of big companies.

Low minimum mutual funds

Mutual funds are investment securities that allow you to invest in a portfolio of stocks with a single transaction. That is excellent for new investors.

The problem is many mutual fund companies require initial minimum investments of between $500 and $5,000. If you’re a new investor with little money to invest, those minimums can be a problem. But some mutual fund companies will ignore the account minimums if you agree to automatic monthly investments of between $50 and $100.

Purchase securities

Assume you want to invest with the lowest imaginable risk. Well, treasury securities are good for you. They have a fantastic advantage. The securities do not change as the market does. Treasury securities are predictable.

Each security has its own maturity date. They vary from 30 days to 30 years.

Make sure to only invest money you can divide with until the maturity date. If you cash the bill in earlier, you risk losing a portion of the principal.

Start to invest in stocks with little money

If you don’t have a lot of extra money at the end of the month, it’s easy to put off long-term needs like investing.

Your delusions about investing may be holding you far away from saving for your future. The myth is that you must have a fat wallet to use a brokerage account.

Contrary, there are so many online brokerage firms allowing investments lower than $1,000.

Some brokerages ignore their minimum investment demand in exchange for regular monthly deposits, as we said. All you have to do is to sign a contract to agree to a specific monthly deposit. You can easily find firms that offer minimum deposit requirements of $100 per month. And with really low initial investments.

You could invest $100 in a diversified fund. Why wouldn’t you take that chance? Diversification in your portfolio is the best way to reduce your risk. Moreover, it’s not for rich investors only. Many companies offer ETFs. So, it is possible to invest in a mixture of investments with little money. Think about the S&P 500 index.

Buying ETF shares gives you a piece of the portfolio of the complete index. Some stocks in the index may play well, but others may do unsuccessfully. They balance each other out. That lowers your risk.

You are not limited to penny stocks until you earn big money.

Of course, being a new investor, you don’t want to invest in extremely volatile penny stocks.

Yes, penny stocks are stocks trading for less than $5. But they’re priced low for a reason. The companies behind them are just starting out. Investing with little money is better with blue-chip companies. The highs and lows are normally less volatile than penny stocks. Our opinion, here in Traders Paradise, is that everyone should invest. But we will never tell when the right time is for you. Only you know when the time is right.

Don’t invest if you have a card debt. Never start without an emergency fund.

But the earlier you begin the faster you can grow your capital.
13th March 2019
One share of stock – is it worth buying

3 min read

One share of stock – Is there any benefit to buying one? Is it better to have a bunch of shares or not? A dozen? 100? 150? 200? The answer is typically less than the number of fingers on the hand. A ruling principle of stock investing is to spread your portfolio throughout several companies.
But, what if you don’t? What if something bad happens to your single investment? You will have practically no way to cushion the disaster. The misconception in managing a portfolio is that should contain numerous stocks.

Why is this opinion a mistake?

Yes, your exposure to risk in individual stocks is smaller. But, at the same time, you are also reducing the chance to make large profits in the big winners. There is a simple reason behind this: You won’t have enough shares to enjoy the gains. But there is a disadvantage of an over-diversified portfolio is that it takes a lot of commitment to watch over many companies, follow their rise, reports, and other progress.

If you have a smaller number of shares, it’s easier to follow the companies you own.

Yes, truth is, investing all of your money in the stock of only one company is very risky. You can suddenly lose most of your money. But it also has the potential for huge returns. There are numberless stories about investors getting into a company that went onto great things.

For example, if someone was able to buy Apple in its early days, such has made a lot of money nowadays. Moreover, one share of stock was good enough.

But, there are a lot of risks here.

Very often, those stories don’t include the fact that the investor made a lot of investments that failed before the big success happened. If you make 25 investments and they’re all average and suddenly make one that earns a big return, your overall return is not that big. The stocks can sometimes increase value, but companies can often totally fail. In that case, their stock is worthless.

In fact, entire business areas can become insignificant over time. Some companies were probably good investments several decades ago.

For example, producers of VHS cassettes or floppy disks. What we want to say is, you can invest in a big company to reduce the risk of losing, but that also drastically reduces the chance of big success, too. Some companies can be as steady as a rock, but still, it’s not likely to quickly double your money, either.

Is buying one share of stock worth It?

It is not about how many shares of a stock you buy or sell in one transaction.

Stock brokerage firms usually charge the same commission. For smaller transactions, the fees represent a higher percentage of what you’re paying for the stock itself.

Buying under 100 shares can still be worthwhile if you think you’re going to make sufficient money on the investment to cover the fees. To decide for yourself if a small trade is worth it, you’ll want to look at your brokerage’s commission and the actual stock price.
Buying 50 shares of Berkshire Hathaway could cost $15 million since one class of stock in the company has traded above $300,000 a share, for example. But, other companies’ stock trades for as little as a penny, so buying 50 shares would cost you 50 cents. A commission of $5 dollars on a 50-cent purchase has a much different effect on the total cost than a $5 commission on a $15 million purchase. Don’t you think? It is important to evaluate whether or not the commission fees charged to you will still make the investment profitable.

One share of stock – Fewer is better

For a beginner portfolio of about $3,000, just two stocks are enough. But for a portfolio of $5,000 to $20,000, three stocks can be an easy load. Hence, for portfolios up to $200,000, four or five stocks are enough. Also, those who have more than a million dollars to invest should restrict themselves to six or seven stocks. To have success with some of the stocks, you have to make the right selection. This doesn’t mean you have to make excellent choices.

All you need is a careful process of selecting companies with superior profit and sales growth. Deduct the stocks lacking good chart profiles, and you end up with a shorter list of potential investments.

How to evaluate

Watch at the current share price, calculate the price at which you would sell that stock, and determine the difference. Now, calculate that price by the number of shares you plan to trade to see how much your profit would be. It is without commissions. Then, deduct the commissions you’d pay to both buy and sell the stock. And you will find if the transactions seem worth it.

Remember, you have to consider the risk involved. The stock might not play as well as you suppose.

Lower share price means less expensive

That’s where most people start. But it is wrong. The price per share of any company you want to buy should be almost trivial to you. You should think in terms of your overall money invested. That’s how you should allocate. Don’t even think of what a stock’s price is, or how many shares you get.

You have to be sure that you are buying solid companies that you feel it is good for you. Your portfolio should reflect your idea of the company’s future. The share price is meaningless. For example, Google is $700 per share, Apple is $100 per share, that doesn’t say anything about either company or whether or not one is a better investment over the other.

Why the price of a share doesn’t matter?

You should not make an investment decision based on the price of a share. Look at the books to decide if the company is worth owning, then decide if it’s worth owning at its current price. The price of the stock is made by how many shares were issued and how much people think the company is worth and will be worth it. The first factor can change in a stock split and without the others changing.

What you really need to look at is what you think the future of that company looks like. But as most important, what that might do to the stock price and to the dividends it pays to stock owners.

One share of stock can be good

Honestly, there is no difference between more shares of a cheaper stock and fewer shares of more expensive stock. When you invest in a stock, the increase in the share price results in gains. This is a major concept of investing.
Trading real money can be difficult without a sharp understanding of the principles involved. Investing your money without good knowledge will be stressful. It could have a discouraging effect if it doesn’t go properly.

The bottom line

There is no minimum order limit on the purchase of a publicly-traded company’s stock. It’s prudent to buy portions of stock with a minimum value of $500 to $1,000. As you already know, there are commissions on the trade. Whether you own 10 shares at $200 or 200 shares at $10, you still own $2,000 of a company. If that company’s market value grows by 10%, you earn $200 in any case.
It is easy to find online discount brokers that allow you to buy fractions of shares of higher-priced stocks. So, if you don’t have enough to buy a full share it shouldn’t stop you. Also, if a company you want to own but you don’t have enough saved to buy a share, keep saving. Simple as that. It doesn’t matter if you buy now or a few months from now.

You might find these interesting too:

>>> The best stocks to invest during the inflation

>>> Trading With Signals – Full Guide on How To Trade with Signals

>>> Day Trading the Best Methods – Day Trading for Beginners

>>> Trading Options – Understand the World of Options

>>> How to invest in a mutual fund

13th March 2019
Stock screeners – Why and how to use

3 min read

Stock screeners are tools which display the stocks a user chooses to seek out.

Stock screening is a tool that investors use to filter a large database of stocks. They can help you cut through the market noise and figure out the best stocks to buy based on your investment objective and goals.

Stock screening tools can be web-based tools or downloadable software.

You can find some free screeners, as well as more advanced programs that can be quite costly.

We will use finance.yahoo.com/screener to show you how they can be helpful.

This is discipline at its best!

When you design the stock screen model, by using an inexpensive stock screening software or free tools on the internet, you can determine which stocks meet the criteria with a single click. This is far more efficient than digesting every piece of available information. Not to mention that most stock screeners can analyze thousands of stocks in seconds. It would be difficult for even a large team of researchers to accomplish the same task in weeks.

Let’s go into more detail into each of these benefits.

How stock screeners save you time

The data set could include hundreds to thousands of stocks. And thoroughly analyzing all of them would be impossible for most investors. Delving into each company’s financial statements, ratios, multiples, and historical and future growth prospects would take entirely too long.

Once you determine which metrics will go into your stock screen, the screener filters out stocks that don’t meet your criteria and produces a list of stocks that do.

The stricter the screening criteria, the fewer stocks will pass the screen.

For example, if you’re looking for undervalued stocks, you may search for stocks with a price-to-earnings (P/E) ratio below a specific level. If you’re less concerned with valuation and more concerned with growth, you may look for stocks with a high level of year-over-year earnings growth.

Once you have a collection of stocks that have passed your screen, you have to determine which stocks qualify for further analysis. This may be based on fundamental analysis, additional market research, or your current portfolio’s allocation to specific sectors or industries.

Based on your filter applied you will find what you want. Like this:

A stock screener is a powerful tool that helps to filter stocks according to a wide range of criteria. You can find a wide range of criteria, such as Price, 1-Year change, Market Cap, P/E Ratio and more. The criteria are separated into categories like price, ratios, fundamental, etc.

Stock screeners remove behavioral prejudice

Investors have natural tendencies to make foolish investing decisions. These are generally called “behavioral biases.” They can be difficult to detect and avoid. These biases can lead investors to make irrational investment decisions which may hurt returns.
For example, investors will often change their strategy so that certain stocks will fit into it. Say you really liked some company. You might convince yourself that you should buy the stock even if it had too high of a price-to-earnings (P/E) ratio or too little revenue growth.

Stock screening helps to remove these types of biases and helps investors to remain objective.

But, a stock screener won’t save you from behavioral biases entirely. For example, if you wanted that company to pass your screen, you could change your screening criteria until it passed. In other words, you can cheat yourself.

Stock screeners are just one of the many tools in the investor’s toolbox.

They can help you narrow down your potential investments. It’s important to do your own research into companies’ businesses and decide whether or not you believe in their long-term prospects. Just because a stock passes your screen doesn’t mean it’s a good investment.

Don’t waste your money.

Think you know where are the markets gonna go?

risk disclosure

12th March 2019
Short Call Option Strategy Explained
3 min read

What is the short call option? The simplest way to classify “short” trade is any trade short of that from which you will profit if it falls in relative value.

A short call option is one of the trading strategies in which the trader is speculating the price of the asset on which option is placed is going to drop.

In short, a call option is the right to buy the underlying futures contract at a certain price.

That means, also, that the writer does not own an equivalent position in the underlying security represented by their options contracts.

Would you like to make a healthy return from a stock that drops in value in a short frame time?

If your answer is YES, you should think about the short call strategy.

Short Call Option in Practice

When you short a call you’re selling it up-front. That means that you get a credit to your account right away. But also, you will earn a positive return when the call option price drops.

Shorting, or selling, a call has many benefits, but the risks too.

In addition to the benefit of decreasing time, a short call option position is flexible.

This characteristic allows you to set the call’s strike price and your trade’s breakeven points above resistance levels you can see in your technical analysis.

This will boost the chances of a prosperous trade outcome.

Selling a call is a bearish trade.

Why? Because you are selling the call first, for a high price. And you hope to buy it back later for a lower price when the underlying stock declines. Sometimes, it means you let it expire worthlessly.

You should note that most traders believe that selling calls is a bigger risk strategy than selling puts. Most stocks and market indexes have a long term tendency to trend up.

That tendency to trend up cause most bearish trades less likely to end profitably. This grows the importance of evaluating

trends and finding the weakest stocks to trade.

Let’s see this graph.

Call option

Selling the call obligates you to sell stock at strike price A (take a look at letter A) if the option is assigned.
When driving this strategy, you want the call you sell to expire worthlessly. That’s why most investors sell out-of-the-money options.

This strategy has a low-profit potential if the stock remains below strike A at expiration. Hence, the unlimited potential risk if the stock goes up.

The reason some traders operate this strategy is that there is a high possibility for success when selling very out-of-the-money options.

If the market moves against you, then you must have a stop-loss plan in place.

You have to keep an eye on this strategy as it is open out.

And, you have to consider ensuring that strike A is around one standard deviation out-of-the-money at the beginning. That will boost your chance of success.

Yet, the higher the strike price, the lower the premium collected from this strategy.

Some investors run short call option strategy using index options rather than options on individual stocks.

Historically, indexes have not been as volatile as individual stocks. Variations in an index component stock prices tend to cancel one another out. Hence, lessening the volatility of the index as a whole is on the scene.

There are two ways that a call option price will decrease in value:
- The price of the underlying stock drops
- Or the price of the underlying stock stays approximately the same as you get closer to contract expiration
Short Call Option – Strategy Characteristics

As we already say, the sale of a call option is a bearish options strategy that consists of selling a call option on a stock that a trader believes will decrease in price.

Let’s go over the strategy’s general characteristics:

Profit Potential: Credit received x 100
Loss Potential: Unlimited
Expiration breakeven price: Call Strike Price + Credit Received
The probability of profit: Higher than 50%
The position after expiration: If the trader holds an in-the-money short call through expiration, the trader will take an assignment of -100 shares per contract.

Are there some assignment risks?

When the short call is in-the-money before expiration, the trader is at risk of being assigned -100 shares of stock per call contract.

The risk of a short stock assignment is highest when the in-the-money call has small extrinsic value. Especially when the underlying stock is close to being paid out a dividend that exceeds the extrinsic value of the call.

Expiration profits and losses for a short call option position

Take a look at a short call position from the following option chain:

Call option chain

You will, for example, sell the 100 call for $10. Let’s, therefore, assume that the stock price is trading for $100 when you sell the call option.

Initial Stock Price: $100
Call Strike Price: $100
Call Sale Price: $10

If you sell this call option, your potential profits and losses at expiration are illustrated by the following graph:

Selling a call option

So, this table describes different scenarios of this short call position at expiration:

Stock Price Below the Short Call Strike (Below $100):

The call expires worthless, and the maximum profit potential is $1,000.

Stock price between $100 and $110: The call expires with intrinsic value, but not more than the initial $10 sale price of the call.

The result is partial profits at expiration.

If the call is held through expiration, the trader will be assigned -100 shares of stock per call contract.

The stock price at the breakeven price is at $110:

The call expires with $10 of intrinsic value. Because the call was initially sold for $10, the short call trader breaks even.

If the call is held through expiration, the trader will be assigned -100 shares of stock per call contract.

Stock price above $110:

The call expires with more than $10 of intrinsic value, and therefore the short call trader gains losses.

The exact loss is equal to: (Short Call Breakeven Price – Stock Price) x 100.

If the trader holds the call through expiration, they will be assigned -100 shares of stock per call contract.

Advantages and Risks of Short Call Options

Advantages

Immediate return – You get your maximum profit right away. Of course, you could lose that profit if the underlying stock price drops, so don’t get too excited.

Significant returns in the short term – Options operate with leverage. That means you can see significant returns over just a few months.

Risks

Unlimited loss – There’s nothing to prevent a stock price from skyrocketing once you’ve sold the call option. In that case, you’ll take a huge loss.

Margin wipe-out – If the trade goes south, you could end up spending a lot of cash out of your account to cover the short call. With less cash in your account, your margin funds will decrease accordingly.

Don’t waste your money.

Don’t start before you test your skills on virtual money and read this risk disclosure
10th March 2019
Forex market – The differences with other markets
3 min read

Forex market and other markets have more differences that you can imagine. The difference may appear to be great between the forex market and other markets. But this is not to suggest that they are similar. Not many of the experienced traders have dared to crossover the boundaries of their trusted market domains unless they made sufficient preparations and studied the new market.

Can someone who profitably trades shares also make money with forex?

The answer is yes. But with some hints on trading style. Also, with a recognition of the differences between the two types of market.

The forex aims to favor short-term trades.

Unlike stocks, futures or options, currency trading does not take place on a regulated exchange. It is not controlled by any central governing body. There are no clearing houses to guarantee the trades. Also, there is no arbitration panel to decide disputes. All members trade with each other based on credit agreements.

Let’s see how the forex market differs from stock markets.

So here are the differences between the Forex market and others.
1. The forex market is 24 hours opened, unlike the stock market. It is not a country or geographically particular specified. Major markets open in Tokyo. When it closes, London takes over and then the New York market goes live till the next day when the Tokyo market opens again. This kind of continuity isn’t available in case of stock trading.
2. Forex market is the global largest exchange market. Not even the transactions of the entire world’s equity markets’ put together can meet this. The liquidity is never questionable, for example.
3. The equity market is ruled by a number of technical and microeconomic parameters and indices. In the forex market, there is no such thing.
4. The above point also characterizes that the concept of single exchange trading as nullified and what takes its position is over-the-counter trading.
5. There are no commissions to be paid to the brokers. The reason is simple. Traders are directly dealing with currency.
6. Currencies can decrease over long periods but can never be zero. This is an extremely incredible situation in the forex market. The traders can hold their short positions for as long as they possibly can without the danger of getting their capital wiped out.
More differences

Concentration

On various stock exchanges around the world, there are hundreds of large companies with shares that are very liquid. On the other hand, for example, the S&P 500 or FTSE 100, there are only three major currency pairs: EUR/USD, USD/JPY and GBP/USD. But, USD/CAD, AUD/USD and USD/CHY are also very prominent pairs and they take place in the forex market.

Spreads on these main pairs are the closest. Hence, they are the most suitable for day traders and scalpers because the transaction costs are lowest. However, for longer-term traders, attractive possibilities can occur nearby more exotic currencies such as NOK, SEK, SGD, and NZD. But, spreads will be wider on pairs involving ‘exotics’ as liquidity is much lower.

This concentration gives traders the possibility to specialize. For example, some will only trade EUR/USD or GBP/USD and become skilled on just one of those pairs.

Stock market traders can decide to specialize just in a few very liquid stocks.

However, those strategies also typically involve having to monitor the major equity indexes. There are software programs that can locate those fast-moving shares, but a lack of specialization in those stocks can leave traders open to making losses.

Trading in the Forex market is cheaper

The spreads on the major currency pairs tend to be wedge thin and closer than on stocks. This makes for cheaper transaction costs, which is important. Moreover, there is no commission to pay on forex trades. Maybe that’s the reason why the forex market is many times bigger than the world’s equity markets.

Also, competition between forex platforms is powerful.

Shorting stocks through stockbrokers can be difficult and very costly.

However, shorting stocks can be very dangerous and far more so than for currencies. Consider shorting the stocks of a company where a takeover bid is announced after trading hours. That means a trader can’t cover their short position until the market opens again.

Takeovers regularly happen at a premium to the day’s share price. It’s not unusual for shares to rally 40% even 100% under such conditions. That can destroy a trader’s capital, especially if leverage is involved.

Higher leverage and lower transaction costs provide the possibility to trade successfully with less capital than required for stocks.

The Forex market is different from other markets in some other key ways too.

Think that the EUR/USD is going to go downward? Short the pair!

There is no uptick rule in Forex as there is in stocks. There are no limits on the size of your position.

For example, if you have enough capital, you could sell $200 billion worth of currency.

More benefits, if you get information that the Bank of England is planning to raise rates at its next meeting, you could go right ahead and buy as many pounds as you like.

No one will ever sue you for insider trading should your bet pay off. There is no such thing as insider trading in Forex.

In fact, some countries economic data, are often known days before they are officially released.

But remember that Forex is a leveraged product. Hence, there is a great chance that you will incur more losses because you can control a large amount of currency with a small margin.

For example, a 1:200 leverage means you will receive $200 in your account for every $1 you invested. If you invest $1000, you would be able to control $200,000 worth of currency trade. Money management is important to profit in Forex trading. You need to plan your risks, learn how to apply stop, losses and practice diversification in your trading practices.

The bottom line

Forex traders are closely watching the price changes, the volume of trades over time. It is important to take note of the price patterns to determine buying opportunities and risks. It is also important for a trader to understand the intrinsic risks, read the disclosures before making a trade.

risk disclosure
6th March 2019
Day Trading the Best Methods – Day Trading for Beginners

3 min read

The methods of day trading contrast with the long-term trades underlying buy and hold and value investing strategies.

Some of the day-traded financial instruments are stocks, options, currencies, and a host of futures contracts, interest rate futures, currency futures, and commodity futures.

This method was an activity that was exclusive to financial firms and professional speculators. Many day traders are bank or investment company employees. They are working as specialists in equity investment and fund management. With the appearance of electronic trading and margin trading, day trading has become available to individuals.

What is Day trading

Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day.

Surely, day trading is trading only within a day. That means all positions are closed before the market closes for the trading day. Many traders may have day trading as one component of an overall strategy. Traders who engage in day trading are called day traders. They are therefore speculators.

For beginner traders, it can be both exciting and confusing. Many new traders are found in the market because they see the possible rewards when becoming a successful trader.

Of course, there is unlimited earning potential. You can work from home, and you can be your own chief. The rewards are obvious. The hard part of this game is figuring out what path you need to take to achieve your goal.

Day trading is when a trader buys and sells a futures contract within the same session.

Traders manage open positions within the limitations of an intraday methodology. There are no open positions held at the daily closing bell.

The discipline of day trading is questionable. Some traders argue that it relates to gambling it’s workable and potentially very profitable.

Frankly, there are no traders who take part in the markets only over day trading strategies.

However, beginners should take a few basic actions in the first days.

It is a good idea to ask yourself some questions. The current market is a fast-moving, and contemplation before entering is useful in mastering challenges.

Having knowledge about personal goals and abilities is an essential start in developing into a competent day trader.

So, what you have to examine before start day trading?

First, what kind of personality type you are.

Whether you are a risk taker or you like unpredictable action. That can impact the execution of trading dramatically.

What are your goals?

You have to find out a sustainable trading niche. So, you have to understand what your goals are before the start

What are your personal characteristics?

You must know the key personal strengths and weaknesses. Find the areas that need improvement. For example, you are not technologically savvy, then you have to improve this area. That can help boost your market system.

Honestly, day trading is not for everyone.

Think if it is for you.

If you are not familiar with the trading environment as a whole, maybe you should think twice. It is better to save time and money before placing your first trade.

Obtain the essential elements

The number of active traders has grown dramatically over the past several decades. Developing online technologies have reduced many of the common barriers to entry. It brings the markets to the crowds.

The modern market is a completely digital place. If you want to take part, there are some essential elements:

The basic computing power is a necessity. No matter if you are using a desktop or mobile phone.

Further, you must have a secure and functional internet connection.

It is essential for accessing brokerage and exchange platforms.

The platform is the trader’s portal to the market. Examining streaming data and placing market orders in real-time is best executed via robust software.

It’s never been easier to take part in the financial markets. Nothing will stop you. Your time zone, capital sources, or experience, mean nothing.

Attempting your market goals is possible all over the globe.

Have your plan and stick to it

A complete day trading plan must have:

Entry/exit point: It isn’t a piece of cake to identify good opportunity in a few seconds. The crucial part of any trading strategy is to know WHEN and WHERE. You have to be fast thinking trader if you want to exercise a day trading.

A rules-based approach can streamline the process. That can ensure optimal market entry and exit.

Position management: A strong plan can define the location of stop losses and profit targets on a per-trade basis. Good systems should include scaling, break-even, and trailing stop functions.

Risk management: Well, you want to get the most out of your risk capital when you are a day trader.

Knowing your exposure in the meaning of a viable risk vs reward is the key to not be overextended.

A complete strategy guarantees that trade-related actions are carried out in a logical and disciplined style.

Without a strategy, the profit or loss often is followed by a lack of luck.

Who wants to bet on luck?

The bottom line

Day trading can be financially rewarding. But the challenge, too. Nevertheless, given the proper due diligence, joining the markets successfully is possible.

Hope we helped you a bit in your endeavor.

Don’t waste your money!

risk disclosure

5th March 2019
What is the Forex Market?

2 min read

What is the Forex market? Actually simply. It’s the global market that provides the exchange of one currency for another.

Also known as foreign exchange, FX or currency trading is a decentralized global market where all the world’s currencies trade.

The forex market is the biggest, most liquid global market with an average daily trading volume exceeding $5 trillion. All the world’s stock markets together can’t even come close to this. But what does that really mean?

Forex has no centralized market. Instead, an Forex market exists wherever the trade of two foreign currencies are taking place.
Do you know it is open 24 hours a day, five days a week? Forex exists to handle investment and trade. The main trading centers are London, Paris, New York, Tokyo, Zurich, Frankfurt, Sydney, and Singapore.

All levels of traders, from central banks to speculators, trade currencies with one another.

The Foreign Exchange market, also called FOREX or FX, is the most exciting financial market in the world.

Whether you sell $100 to buy YEN or a bank exchange $200 million for EURO with another bank, we are speaking about Forex deals. The participants on the FOREX market range from huge financial organizations trading billions, to people trading a few hundred dollars.

Without this tool in place, foreign trade and investment would be obstructed. The major players on this field are the U.S. dollar, the British pound, and the euro. This machinery provides a clearinghouse to trade those major currencies.

Thanks to the internet, you can trade on the FOREX market the way traders from the largest banks and investment funds do.
All you need to get started is a computer with internet access and a trading account with a Forex broker.

If you’ve ever traveled to some foreign country, you’ve made a forex transaction. Take a trip to Germany and you convert your dollars or some other currency into euros. When you do so, the forex exchange rate between the two currencies determines how many euros you get for your dollars. And the exchange rate fluctuates continuously because, this market, like many others, is based on supply and demand.

How does Forex market work?

On the Forex market, one currency is exchanged for another. The single most important thing with respect to the Forex market is the exchange rate between two currencies (a currency pair).

You’ve probably seen it on the news or somewhere on the internet:

And you noticed the small changes if you paid attention. This small change may not seem like a big deal.

But think of it on a larger scale.

A giant international company may need to pay abroad employees. Imagine what that could do if simply exchanging one currency for another cost you more depending on when you do it? These few coins add up quickly. In both cases, you may want to hold your money until the forex exchange rate is more favorable.

An exchange rate can experience prompt changes. Sometimes several times a second. So there’s a lot of activity going on 24 hours a day, 5 days a week.

In overall, the currency exchange rate reflects the health of an economy in comparison to others. If the economies of the Eurozone are doing better than the US economy, the euro will go up compared to the dollar and vice-versa.

You can trade currency based on what you think its value is. Just like stocks. But the difference with forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it.

If you think it will decrease, you can sell it.

Honestly, finding a buyer when you’re selling and a seller when you’re buying is much easier than in other markets. Maybe you hear on the news that Australia (this is just an example, don’t worry) is devaluing its currency to attract more foreign interest into its country. If you think that trend will continue, you could make a forex trade by selling the Australian dollar currency against, say, the US dollar. The more the Australian dollar devalues against the US dollar, the higher your profits. If the Australian dollar increases in value while you have a sell position open, then your losses increase. Hence, you will like to get out of the trade.

In the moment of writing this post the chart looks like this:

When people talk about the “market”, they usually mean the stock market. So the NYSE, for example, sounds big.
But if you compare it to the forex market, it would look like this:

The currency market is over 200 times bigger!

The tremendous number of $5 trillion covers the complete global foreign exchange market. But daily trading volume from retail traders makes up between 5-6% of overall volume, or between $300-400 billion. So, you see. It isn’t so big.

The forex market is unmistakably huge, but not as huge as the others would like you to believe.

Just to be honest.

And remember’!

Don’t waste your money!

risk disclosure

4th March 2019
The types of stocks and stock trading

What are the main types of stocks, what are the main types of stock trading? Here is all about them you ever wanted to know.

By Gorica Gligorijevic

The types of stocks can be different. There are 3 stocks major groups divvy up the stock market into smaller pieces.

Here are the 3 main types of stocks:

Traders-Paradise will point these three types that are most interesting to investors and traders. We want to explain all benefits and disadvantages if any for each of them

Common stocks

The term originates from the availability. These stocks are the most common among others. They make up the bulk of the buzz on Wall Street. Common stock is a part of ownership in the company. Common stockholders have a right to a company’s profits and value, as well as a vote in major decisions and board elections. You can see their prices quoted online, in newspapers, financial publications, etc. Common stocks may pay a dividend but not necessarily. They are riskier than preferred stock.

Over the long run, these stocks, from the point of capital growth, will yield higher returns than almost any other investment. But it isn’t without costs. Common stocks involve the most risk.

When people talk about types of stocks, in general, they are most likely referring to this type. Common shares represent ownership in a company and a part (dividends) on a portion of profits. Investors have one vote per share to choose the board members. They monitor the major decisions made by directors.

But this is the place where privileges stop. For example, if a company goes bankrupt, the common stockholders will not get the money before the creditors, bondholders. Only when they all are paid it’s time for stockholders to be paid.

When you buy common stocks, you become a partial owner of the business in the way. Stocks are bought in shares. The more shares you have, the bigger your share of the profits. It commonly refers to dividends. Investors usually get one vote per share. Voting is a privilege given to a shareholder and is used in situations such as as-as the election of the board members who oversee the major decisions made by management.

Preferred stocks

This is another one among the types of stocks. Preferred stock represents some level of ownership in a company but regularly doesn’t come with the same voting rights. They are issued with known dividends much higher than the common stock. An added advantage is that in the case of liquidation preferred stockholders are paid off before the common stockholder. These stocks are safer than common stocks.

Preferred stocks can be callable, which means that the issuing company can buy back issued preferred stocks at a premium on its own accord.

Stocks are also convertible, that allow a preferred stockholder to change their preferred stocks into common stock.

The owners of the preferred stock take on most of the risk. For example, if the company misses one of the dividend payments, it doesn’t result in a failure.

In most cases, a missed dividend payment accrues and the company will eventually pay it back to the investors. The dividend on the preferred stock must be paid before any dividend is paid to the common stockholder. Preferred stock is however junior to debt.

Share classes

This is considered to be one of the types of stocks for many reasons. Common and preferred are the main kinds of stock. However, it’s also possible for companies to modify different classes of stock in any way they want. The most frequent reason for this is the company wants the voting power to remain with a certain group. Hence, different classes of shares give different voting rights.

For example, one class of shares would be held by a select group who are given 10 votes per share while a second class would be issued to the majority of investors who are given 1 vote per share.

If there is more than one class of stock, the classes are traditionally characterized as Class A and Class B.

In many instances though, the company may choose to decouple the voting rights from the shareholding by creating multiple classes of stock. The most common way this is done is via the issuance of A and B classes of shares. Shares are normally sold to the public but they may carry very little voting right. Most of the voting rights may be concentrated in the B shares, which may primarily be held by the management or the founders/founding families of the company.

This is one way of enabling the public to finance and participate in the growth of the business. But, at the same time, not giving up the ability to control the direction of the company. This may be useful for the management or the founders of the company to continue to run the business in line with their original vision.

However, this also creates various conflicts or issues such as:

1) The A-shares are less desirable and will trade at a discount to the B shares due to the limited voting rights,
2) This discourages the shareholders or an activist investor to come in and make changes to the management or the business direction that may be sorely needed, and,
3) This encourages the management or the B shareholders to run the company for their own benefit and not for the benefit of the public shareholders.

Some of the well-known companies that have their shareholding organized this way are Ford Motor Company, Google Inc, and Alibaba.

For example, Berkshire Hathaway (ticker: BRK), Warren Buffett’s company, has two classes of stock.
You can notice the difference in the ticker symbol. For example, BRKa or BRKb, also, BRK.A, or BRK.B.

What are the 3 main types of stock trading?

Based on the duration of stock holding, the different types of stock trading can be classified as:

Day Trading

It is a type of stock trading where both buying and selling of a financial instrument are done on the same day. This means, all the tradings are closed before the market closes for the day. Traders who participate in day trading are described as active traders or day traders. Day trading requires a fast decision and quick action.

We don’t advise this type of stock trading to a beginner.

Short Term Trading

A trade period of more than one day to a few weeks is viewed as a short term trade. Traders buy and hold in position from one day to a few weeks. They enter the short trade when creating a sell position.
It is closed by buying after one day or in a few weeks.

For example, swing trading and pattern trading are varieties of short trading.

Long Term Trading

In this type of stock trading, the stock is held for many months to many years. The investment decision is made by a fundamental analysis of a stock. Why traders like this type of trading? Well, it is due to the profit that comes from the company’s growth, the other reason is dividends.
For example, value Investing and the buy-and-hold strategy.

All about types of stocks and stock trading

So we can say, stocks are claims of ownership in the business that is publicly distributed.

However, this ownership can come in many different ways. We presented you with different types of stocks that you may find in your investment business. Not all of these are exactly an alternative of stock ownership, but we have included these here.

A stock trader job can be very profitable.

You realize that there is plenty of benefits to stock trading. You have legitimate reasons to enter the field of stock trading. It is now time to decide what type of trader type you want to be.

All you have to do is to adopt the correct strategy in your future investment profit making!

1st March 2019
Stocks Trading Software – The Best For Beginners
5 min read

Stock trading software is a program that allows you to research potential stocks, view charts, read analyses, set up watchlists, and more.

With today’s volatile market trends, picking the right stock trading software is crucial. Honestly, there are very few stocks worth trading each day. That means you have to identify them before they make their big move. And, that separates the profitable traders and the rest. Before you enter, you have to check the trading software reviews first.

Much of the stock market uses extremely sophisticated computer programs to analyze data at unbelievable speeds.
Unfortunately, the majority don’t have access to those applications. But still, we can take advantages of technology.

The better stock trading software you use, the better trader you are.

They are easy to use, comfortable, intuitive, feature-rich, and full of useful information.

Trading software is a set of computer programs that facilitate trading in financial instruments such as stocks and currencies. It also helps develop stock-picking decisions through fundamental and technical analysis features. Some software also allows transaction processing.

Brokerages offer the trading software either for free or for discounted pricing. Sometimes they offer software as a stimulus to obtain a particular amount of trading volumes. Independent vendors also supply software to assist traders.

Importance of accurate stock market data

A stock market is a place where you may trade shares of publicly listed companies. Investors in the stock market want to gain their returns by buying and selling their investments at a fitting time.

Stock market data is highly time variant and follow a non-linear pattern.

Analyzing stock market data is very important for divining the future prices of the stock. Therefore accurate stock market data entry is important for traders, investors, and market analysts. Accurate stock market data provides them to keep abreast of market trends. Stock market companies employ data entry services to maintain all types of stock market records.

The main part of the stock market is the price of shares. But it varies very often. The price of shares is reported every minute because of people who are buying and selling shares. Any error in the entry of data can cause tremendous losses to companies and individual traders and investors.

Entering the data is a very important factor in the stock market. That financial data has to be entered perfectly. Inaccurate data can create market volatility that can cause the disorder.

Stock splits, mergers and spin-offs are common activities that take place every year.

Stock splits occur when the price and volume of shares change when two companies merge. In that situation, one of the shares stops be traded and their value gets added. When there is the spin-off, a company may separate and also, there will be a change in the price of shares. In such circumstances, the stock data must be updated to reduce market volatility.

Historical data about stock markets is also fundamental for long term investors. It is helpful for them to understand the type of shares and its price variations.

Accurate data entry is necessary for stock markets. If traders have reliable data they can identify the right time to buy and sell shares and earn the profit.

What to look for in trading software components
- Analytical methods and strategies
If you want to be an active trader, which is different from the long-term buy-and-hold, you must have the opportunity to use several strategies, including day trading and swing trading.

In day trading, the position is closed out within the same day.

Swing trading involves holding a security for one to several days in an attempt to profit on the swings or price changes.

Good trading software must offers traders the ability to control and manage open positions. Some of the order types are a market order or pending order. A pending order can be a buy limit, buy stop, sell limit or sell stop. A trader should have the opportunity to attach a stop loss or take profit order to a pending order, for example.
- Historical and real-time data
Real-time data is an indication and information promptly provided. OK, there can be a short delay because of the time of distribution of information. Many websites promise free real-time quotes, but they are regularly delayed by up to 20 minutes.

Real-time data is important for traders. Even a small variation between the quote and the actual price of the security may lead to the reducing of profits or a loss.

Historical quotes are also important. Because the price of assets moves in known patterns and trends which tend to return over time
- Stock screener
Stock screeners are tools which can separate stocks based on criteria defined by the trader.

Every good software must have a screener.
- Backtesting software
You must have the opportunity to test an opened trading strategy using historical data. Backtesting assists as a method for testing the effectiveness of the strategy. It simulates the trading strategy across a particular time frame and then analyzes the results from the perspective of return and risk.
- Live news
The market is volatile and it moves on a multitude of developments, including economics, geopolitics, and corporate news. We know that stocks are highly volatile.

If a trader wants to make a profit such has to react immediately to market news thanks to a live news reference.
- Portfolio tracking
This will help you keep a close track of all previous trades, helping you to identify mistakes and hone your strategy.

How to correctly use stock trading software

The new stock trading software programs can look scaring to the beginner, we know that. But, don’t be. The better choice is to engage yourself and get used to its features.

The charts are the most important hallmarks for the best stock trading software programs out there. Because you need charts that are easy to read, customizable, and trackable.

The top stock trading software platforms offer paper trading, which we always highly recommend. Do your paper trading like a stock simulation program. You execute trades, buy, sell, and short, without placing money. If you are new on this field and you’ve never traded before, this is a great way to enter.

When you’re familiar with paper trading, you should move on to the real account. Otherwise, you will never get a profit from the stock market.

The whole truth is that everyone uses stock trading software in a different way. Maybe you will reveal a new strategy to pick data from software programs.

Trading software providers tout their platforms’ endless features. Some are really good but some are trash. Here’s a kind of guide that can help you make smart investment decisions.

Analyze

Scanner: Scanning tools continually comb the stock market for trading possibilities. You can personalize your scanning tool to explore specific models and get a signal when they are found.

Charts: Customizable charts will help you to analyze the markets. Choose several indicators to compare new or historical data. You have to know changes in the market to recognize stock patterns.

Monitor

Streaming data: Permanent access to data gives you the information and you are able to make smart decisions about your investments. Software platforms provide access to data about stock prices, companies’ worth, quarterly reports, etc.

News: Better trading platforms can provide up-to-date news from third-party sources to keep you on course.

Research reports: Trading software gives you access to related industry studies from third parties about particular stocks or analysis of more extensive market issues.

Trade

Simulation: Yes, paper trading or simulators give you a chance to practice without real money.

Automated trading: A tool that buys and sells securities automatically based on pre-programmed criteria. It is used frequently by advanced investors who make various trades each day.

Customer service: Online trading platforms are a “do-it-yourself” mind. But most major software providers have some type of customer service, whether it’s 24/7 assistance, live-chat capabilities or a chance to speak with an advisor.

Online platforms are generally much cheaper than full-service brokers. Still, think carefully about what you spend on trading software.

It isn’t hard to find providers that give traders the option to test the stock trading software before signing up to pay for the service. Some also offer commission-free trades and cash bonuses.

Top Stock Trading Software – The Opinion of Traders Paradise

E-TRADE

Choose between E-Trade 360 for casual investors, or E-Trade Pro for active investors. A mobile version is also available for on-the-go trading.

E-trade stock trading software

It isn’t just a stock trading platform. It ranks among some of favorite stock trading brokerages for a number of reasons.

Namely, its access to real-time data, research, and analysis in its brokerage platform. Nothing is powerful as historical and real-time data that enables you to act on the best stock trades possible. E-Trade also offers a collection of educational sources: webinars, blog posts, and news.

It isn’t among the cheapest, but it’s commissions aren’t the steepest either. You can start your stocks trade at $6.95 with volume discount available, options start at $0.50 per contract. And, moreover, the brokerage even offers hundreds of commission-free ETFs.

Anyway, it is best for experienced traders.
- TD Ameritrade
TD Ameritrade stock trading software is well suited for investors of all skill levels. Traders will appreciate the wide range of tools and screeners, and its platform for practicing simulated trades is one of the best.

TD Ameritrade stock trading software

TD Ameritrade has some of the most extensive tools we tested. And, very important, it continues to add to its toolbox.

There is the brokerage’s chatbot to execute trades and access market news on Twitter or on Facebook Messenger to perform a range of functions. It is from looking up stock quotes to placing trades and chatting with a live agent.

TD Ameritrade’s powerful trading platform, Thinkorswim, is customized for novice and advanced traders. The control center screen delivers all important information together in one place. So, you can create alerts, access research from over 400 technical studies, search for stocks and interact with real traders.

It’s also the go-to destination for practicing simulated trades with paper money.

Educational offers combine videos, webcasts, and tutorials, for both novice traders and experienced investors. Its broker-assisted trade fee is a high $44.99, but its other hallmarks can make it worthy of the high cost.

TD Ameritrade is best for simulated trades in Traders Paradise’s opinion.
- Fidelity
This trading service combines a wide range of investment choices. Along with advanced analytical research from some 20 providers, including Argus.

Argus Research is one of the newest options for research providers to Fidelity.

The main plus, Fidelity has low pricing.

Fidelity stock trading software

You can choose from over 10,000 mutual funds and 93 commission-free exchange-traded funds (ETFs). The brokerage permanently enhances its platform. So, here you can find two new screeners: one that enables you to tailor your screen with up to 140 criteria for stocks, and an ETF research tool and screener.

Also, new is Trade Armor, a tool that lets you to visually search profit and loss scenarios. All that by using charts, news, alerts, and research for potential or existing stock positions.

Fidelity’s Learning Center offers a full table of issues classified by skill level.

There is no minimum to open a brokerage account to buy stocks or shares in an ETF, but most mutual funds require an initial $2,500 investment.

The mobile app features all the tools to manage your accounts. Also, you can inspect your balances, account positions and watch lists. Moreover, you can search for information and real-time quotes for trades.

The bottom line

When you start to evaluate how easy a stock trading software is to use, you should consider several questions.

Is it easy to make watchlists? Could you set up alerts? Can you customize them? What kinds of screening tools are available?

Are the charting tools work well? What technical indicators can you use?

One of the most important things is a fast and efficiently accessible order process. Markets change instantly and being able to execute the order in a short time is an important part of your investments.

risk disclosure
24th February 2019
Bargain Hunting – The Holy Grail of Investing

If you understand the terms overvalued and undervalued you will find plenty of stocks that look cheap

By Guy Avtalyon

Stock investors are bargain hunting! From time to time, that is a title for a lot of news reports when it is a general market decline. For example, after the 2007/2008 prices have been cut by 40-60% so for sure there were some bargains out there.

People’s intuition about what is worth to buy can have dangerous side effects when it comes to investing. However, winning instincts can be very profitable. This is what the concept of value investing is all about.

People spend their money to buy expensive things in order to indicate status. But the other way is to get a good bargain. If you can combine both, it would be ideal. Having the status-symbol normally cost a lot, so we would like to get them at a good bargain. That sounds like a good deal.

The dogma that expensive things are better, forms human behavior in some unusual ways.

What is Bargain Hunting

For example in drug testing, patients mostly find they feel better if they know that the medicine that they use is more expensive. Incredible! That means that people instinctively look for bargains. They use price itself as information to estimate if something is a good bargain. That is indirect logic.

The defining value investing, hence, comes down to the simple concept of buying quality stocks that are undervalued. Not always the cheap is bad, and if something is expensive, then it isn’t always good. Bargain hunting means that a stock is worth less than it should be and is therefore undervalued. The ability to pick undervalued stocks or so-called value-investing is quite a talent. But is there really such a thing as an undervalued stock?

The stock price is a mixture of investors’ estimates for later growth. So, the opinion as to whether that stock is undervalued can be very questionable.

How the bargain hunting works

In less than 10 minutes reading about stocks you will come across the terms overvalued and undervalued. If you do a bit more examination, you will find plenty of stocks that look cheap to one financial theorist, but expensive to others.

How exactly can you calculate the value of a stock?

Well, it depends. There are a number of different metrics that may answer that question under different conditions. Here are some simple methods.

Use Price-earnings ratio (P/E)

The price-earnings ratio is one of the simplest valuation metrics. Just divide the price per share by earnings per share.

That’s the P/E. The lower the P/E, the less value it has.

Many investors like to use trailing 12-month earnings because they’re tangible results. But many like using calculations for the next period. Well, investors care most about the future, not what a stock’s already done.

EXAMPLE
Stock price = $30/share
Previous year’s earnings = $2/share
P/E = 15

Use price/earnings-growth ratio (PEG)

The utilities, for example, trade at low P/E, indicating low expectations for future growth. HiTech companies frequently trade at high P/E because investors are counting on fantastic growth. Price/earnings growth (PEG) is transforming growth expectations into the valuation. To calculate this you have to divide P/E by annual earnings per share growth. With PEG, less than 1 is rated undervalued, and anything over 1 is rated overpriced.

EXAMPLE
Stock P/E = 15
Estimated 5-year annual earnings growth: 15%
PEG = 1

Use price-sales ratio (P/S)

When some company hasn’t earned, it has revenues, after all.

A low P/S is cheap and a high P/S is expensive. For example, Twitter was flagged for having a high P/S early after its initial public offering. It was more than double of Facebook. But, that corrected thanks to disappointing results. Twitter’s P/S dropped from nearly 30 in December 2013 to about 5 as shares plunged more than 70 percent.

EXAMPLE
Stock price = $30/share
Previous year’s revenues = $5/share
P/S = 5

Use price-dividend (P/D)

Price-dividend is a less used metric, but it is quite good for measuring dividend stocks. To calculate, you have to divide the price by dividend. This ratio will tell you how much you have to pay to receive $1 in dividend payments. This is most useful in comparing a stock’s value against itself or against other dividend payers.

EXAMPLE
Stock X price = $30/share
Previous year’s dividend = $1/share
P/D = 30

Enterprise value-sales is an alternative to price-sales, just like Enterprise value-EBITDA is an alternative to P/E. But you can use them, of course.

The most important, all this is in the future, so you have no control over it.

The only thing you can control is the price at which you can buy the stock. Moreover, whether you buy it at all at a settled price. Everything that happens in the future is in the shadow of the price. The same investment can be good or bad depending on what price you paid.

How to find bargain hunting?

Let’s say, it is impossible to estimate an investment without the context of its price. There are equity investments which are bad despite the price. Still, there aren’t any investments that are good despite the price. If there is no bargain to be had, the instinct of buying only at a bargain is the most important thing in investing.

22nd February 2019