If you have any questions pertaining to the alert that went out on March 7th, 2009, please post them to this section so I will be able to help you.

Thanks,

AJ Monte CMT

Chief Market Strategist

The Market Guys, Inc.

Q: When I want to purchase stock on etrade the cost is 5.69 a share, but the ask price is 5.70, what is the ask price?

A: There are three prices that are posted on your trading window that traders look at the most. The Bid Price, the Ask Price and the Last Price. The last price is simply the most recent price that the stock was traded at. The bid price is the highest price the buyers are willing to pay for the stock at that moment in time and the ask price is the lowest price the sellers are willing to sell at. Therefore If you are a buyer who wants to buy a stock at the market, you would have to make a trade with a seller who is willing to sell you their stock at their offering price. If you decided to sell stock, you would in turn make a trade with someone who is willing to buy your stock at their highest bid price. Remember it takes two sides to make a trade and just like real estate there is a price the seller is asking and many times the buyer of a property will submit a lower price than what the seller is asking in hopes that the seller will move to them in order to complete the transaction. The same principle applies to the stock market.

Ronald C. asks:

Q: How solid are the energy stocks in this new market in your opinion?

A: Energy stocks are, in our opinion, a great place to be if you are a trader, especially if you are a swing trader who is looking to capture profits within a 3 week to 3 month window. There is enough volatility there to exploit the technical signals and as a result of this volatility many opportunities open up for the option traders. There is a good book out now entitled, ‘Game Over’ written by Dr. Stephan Leeb. This book may give you a completely different outlook with regard to the energy sector whether you are a trader or investor. According to Dr. Leeb, our world is running out of energy and it’s the perfect time to create great wealth once you understand how to position yourself in the energy stocks.

Link to ‘Game Over” by Stephan Leeb

Susan D. asks:

Q: What factors should you consider when buying a stock: price, history, dividend? Other factors?

A: There are many factors we would consider before buy a stock but price history is the most important factor for sure. The other thing we would have to consider is the length of time we plan on holding on to the stock. If you are a long term investor, than dividends would be something to consider but don’t be fooled by a high dividend paying stock because many stocks have dropped far below what the dividend is paying as a percentage. It all comes back to price. If you are not sure about how to determine what the price trend of the stock is then you are more than welcome to come back to another one of our webinars so you can learn more about technical analysis.

Brad K. asks:

Q: What would you suggest a 25 year old with decent income invest in who is ok with high risk/reward?

A: Just because you have a high risk tolerance doesn’t mean you have to expose yourself to high risk transactions. In fact, some of our most profitable trades have come to us as a result of conservative “lower risk” strategies. I would suggest you take time to learn about our four most profitable option strategies. Our ‘ 5 Points for Trading Success’ book has been a best seller since it was published in January 2008 and it’s a great place to get started.

Click link below to review book:

https://www.themarketguys.com/store/products/The-Market-Guys%27-Five-Points-for-Trading-Success%3A-Identify%2C-Pinpoint%2C-Strike%2C-Protect-and-Act!-(Hardcover).html

John L. asks:

Q: How often are trailing stops moved?…Daily or minute by minute?

A: If you are using the trailing stop feature on the Power Etrade Pro Trading Platform then the stop can be set to automatically track the price or a percentage of price which means the stop price would be dynamically adjusted as the price of the stock moves up. Many times we will manually adjust the price as we see the stock move up as it establishes higher role reversal support levels. This would take more skill to accomplish but with a little practice it becomes much easier to do.

Karen S. asks:

Q: Can one company’s shares be traded on more than one exchange?

A: There are many exchanges and yes, stocks can be traded on multiple exchanges. You may also be referring to the difference between listed shares and shares traded over the counter. Listed companies are generally the large cap stocks identified by a three letter identifier while over the counter stocks are traded on the NASDAQ and usually have a ticker symbol that is four letters. There are also some stocks that are dually listed both on the NYSE and NASDAQ and from time to time you will see stocks move from one exchange to the other as their financial requirements for such listing change over time.

Baleke K. asks:

Q: If this is not a good time for beginners to buy and hold, then what would be the best strategies to consider?

A: Don’t misunderstand what we meant when we say, “this is not a buy and hold market”. This does not mean investors should stay out of the market it just means you should not buy and hold and hope that your stock is going to go up in price. Buy and protect would be a more optimistic way of describing the type of market we are in right now. There are many opportunities for investors and traders alike, but the conventional buy/hold strategy is not the best strategy to put your money into now. The “Golden Buy/Write is a great strategy to learn right now and it wouldn’t take more than an hour to learn. If you would like more information about our modified version of a covered call which we have labeled the Golden Buywrite then just send an email to info@themarketguys.com and we will get you’re the information you need to get started.

Q&A from The Market Guys Webinar dated 021209

Joanne B. asks:

Q: Do I always want to issue a stop order when i purchase a stock?

A: The Market Guys philosophy for trading is to protect, protect and then potect again. The decision to get out of a bad position should be made even before the trade is entered into the market. We strongly suggest that traders use sell stops for any equity position held, especially in today’s highly volatile conditions.

Debie M. asks

Q: How do you make “trading” work including commissions and taxes, i.e., always having short-term transactions?

A: We make money in the market by putting our money in the direction of the money flow. In other words, money moving into a stock generally pushes the price of that stock up. We can easily see this in a price chart, so when we put our money in a stock that is going up in price there is a greater chance for us to profit in such a stock. After the stock has gone up in price we then look for signs of money moving out of the stock. This would be displayed on a price chart that displays a “pivot point” to the downside. Once we see weakness in the price we sell out of our positions and move to cash. Of course there is more to it than what I have just explained but the basics are simple. Buy when others are buying then sell when the sellers begin to push the price down.

David W. asks:

Q: What does a new trader do to analyze stocks and what does he need to know to figure out what it all means.

A: This question comes together with the question Debbie just asked. Our primary tools for analyzing stocks are price charts. Think of them as weather vanes of the financial markets that give us the direction of the money flow. The biggest mistake people make is when they try to buy low and sell high. The better way to look at the market is to look for stocks that are strong and buy them as they are going up with the intention of selling them higher. The “buy low sell high” can get you into real trouble in a bear market because when you buy in a falling market you increase your chance of losing on your trade or investment. Learn what support and resistance means to a trader and use these concepts to increase your odds for profiting. This is what The Market Guys talk about most in our seminars, webinars and radio programs. It’s essential that you learn these concepts before getting into the market otherwise you could be putting yourself at risk while trying to profit in the market.

Melissa N. asks:

Q: what are options?

A: Equity Options are contracts that are traded on most exchanges allowing the buyers of the option contracts to control a stock at a certain price. There are two types of option contracts, which are calls and puts. Buyers of call options lock in a buy price for a limited amount of time for a particular stock and buyers of puts lock in a sell price for a limited time. If you were to buy a call or a put you would have to pay what’s called a “Premium” to the person selling the call or put to you. It would be best to approach the world of options the same way you would approach learning a new language. Learn a word or a phase at a time and as you digest these concepts you will become more fluent in the” language” and over time you will understand many of the strategies used to trade options. We have produced a video for you through E*Trade Financial entitled Options for Beginners. Click on the link below and you will have a better idea of how options work.

https://us.etrade.com/e/t/jumppage/viewjumppage?PageName=trading_education_videos&SC=JGTMWEB