0 Webinar Q&A Part 1of 3
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
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