Strategies

Advantages and Disadvantages of a Mechanical Investing Strategy

Mechanical investing is the buying and selling of stocks (or other securities) by following a pre-determined, objective set of rules that determine which stocks to buy and, under some approaches, when to sell them. Mechanical investing strategies often employ the use of stock screeners or technical indicators to take the emotional element of the [...]

Six Different Ways to Invest in the Stock Market

As new stock investors soon learn, there are many different stock investing strategies and approaches that can be employed. In most cases, people invest in the stock market by buying shares of companies they believe in with the hope and expectation that the stock’s price will rise over time. Investors may also enjoy [...]

Stock Market Capitulation and the Opportunity it Creates

Stock market capitulation refers to investors “giving up” on stocks or the market in general in favor of a move to less risky investments. Capitulation is actually a military term for surrender but is applied to stock investor behavior when a severe downturn in prices leads to high-volume panic selling. Margin calls often play [...]

What is the Stock Market Calendar Effect?

The Calendar Effect, as it applies to the stock market, is a collection of theories that seek to explain dramatic price changes in market indexes based on certain days, months, or times of the year. The term is sometimes also applied to multi-year effects, such as the U.S. Presidential cycle. While many of these [...]

The Basics of CFD (Contract for Difference) Trading

A contract for difference or “CFD” is a tradable instrument and a contract between two parties, a “buyer” and a “seller”, to document that the seller will pay the buyer the difference between an asset’s current value and the value of the asset at the time of the contract. If the difference is negative [...]

The Value Averaging Approach to Portfolio Management

Value averaging or “dollar value averaging” is an investing strategy whose popularity has increased in recent years. Under a value averaging strategy, the investor looks to invest greater amounts when share prices are lower and smaller amounts as share prices rise. The value averaging approach helps minimize the investor’s downside risk by protecting [...]

Five Things to Consider When Choosing
an Online Stock Broker

One of the main decisions a new stock investor is faced with is choosing an online stock broker. While the low commissions, powerful research tools, and account linking provided by online brokers has made online investing easy, hidden fees complicated pricing structures, and confusing offerings can create challenges for new investors. The key [...]

Minimize Portfolio Risk Through Asset Class Selection

An asset class is a group of securities that have similar characteristics and market tendencies. Most financial experts advise investors to diversify portfolio components across multiple asset classes in order to minimize risk and stabilize returns. While the three primary asst classes are stocks, bonds, and money market instruments, some investment professional add [...]

How and When to Use a Trailing Stop Order

A trailing stop order (or “trailing stop loss order”) is a stop loss order that sets the stop price at a fixed amount below the market price for long positions. For stock investors, the appeal of a trailing stop loss is that if the market price goes up, the stop loss order price increases [...]

Stock Investors: Test a Company’s Financial Strength

Choosing the right stocks for investment is about finding good stocks at the right price in order to enjoy capital appreciation and (in some cases) the income provided through dividend payments. In addition to proper valuation analysis, the investor also needs to confirm through the due diligence process that the company is financially [...]