STOCK TRADING TIPS

This article was picked-up from Millionaire Acts. For more interesting reads please go to that site. I posted it here for so that I can go back to the article easily.
By Tyron Solee

I have been involved in stock trading for quite some time now. Due to the question of one of my avid readers named dlanor from Saudi Arabia, here I am now sharing some stock trading tips that readers can use to trade stocks.

But before anything else, for the beginners in the stock market, you might want to read my article onhow stock market works to familiarize yourself on the stock market.

 

Once you already got familiarized with the stock market and started doing stock trading, here are some of the useful tips that I learned from my stock trading experience:

Stock Trading Tip No. 1: First of all, I’ve seen a study conducted by ATR-Kim Eng Securities comparing the monthly stock returns on election years as against any other “normal” year. As seen from the graph, the month of August, historically is considered as the “ghost month” in stock trading since it is in this month that registered the lowest yield as against other months whether election year or not. You can also see from the graph that historically, the month of December gives the most yield and so it “may” be good to buy stocks on the month of August when stocks are low and later sell it on December when stocks prices are picking up.

Stock Trading Tip No. 2: Don’t buy in smaller volumes. If you have enough capital to spend in stocks, then try to buy huge volumes of your favorite stocks because if you buy in smaller volumes, then chances are you will incur higher stock trading fees such as broker’s commission, VAT, etc.

Stock Trading Tip No. 3: Transaction costs in buying vs. selling stocks. Each time you make a transaction, whether buying or selling stocks, you will incur transaction fees. Based on the transaction costs that I learned, it is “more expensive” for you to sell stocks than to buying it because selling stocks incurs a much higher transaction costs.

Here in the Philippines, the following transaction costs are associated with buying and selling of stocks.

Transaction Costs in Buying Stocks:

Commission - 0.25% of Gross Amount or Php 20, whichever is higher
VAT (Value Added Tax) - 12% of Commission
SCCP Fee - 0.012% of Gross Amount
Philippine Stock Exchange (PSE) Fee - 0.011% of Gross Amount

Transaction Costs in Selling Stocks:

Commission - 0.25% of Gross Amount or Php 20, whichever is higher
VAT (Value Added Tax) - 12% of Commission
SCCP Fee - 0.012% of Gross Amount
Philippine Stock Exchange (PSE) Fee - 0.011% of Gross Amount
Sales Tax - 0.5% of Gross Amount

In applying these fees, let’s use the following sample: Suppose Tyrone bought 100 shares of Ayala Corp. (AC) at 290 per share. He then sold it at 295 per share. How much did he gain NET?

Computing for the following transaction costs written above:

In buying 100 shares of Ayala Corp. stock at 290 per share, you will pay a total of 29,087.87 broken down as follows:
Gross Amount: 29,000
Commission: 72.50
VAT: 8.70
SCCP Fee: 3.48
PSE Fee: 3.19

Suppose, the stock went up by 5 and the price now became 295 and you intend to sell it, you will just collect your NET GAIN of 29,263.12 broken down as follows:
Gross Amount: 29,500
Commission: 73.75
VAT: 8.85
SCCP Fee: 3.54
PSE Fee: 3.25
Sales Tax: 147.50

In effect, the total gain that you had from buying 100 shares of Ayala Corp. at 290 per share and selling the same 100 shares at 295 is:

Total Net Income from Selling less Total Net Cost in Buying = 29,263.12 - 29,087.87 = 175.25

For the convenience of my readers, I prepared an excel sheet of transaction costs in buying and selling stocks. Just input your gross amount and it will automatically compute its net income from selling and net costs in buying stocks. You can download it here.

Stock Trading Tip No. 4: Don’t post too many orders at the start of the trading. If you have time to monitor your stock trading, then you should not post too many orders at the start of the trading. You should watch the trend of the trading day. Buy when you see a trend that the stock price is going down and sell when you see a trend that the stock is going up. Generally, you should post orders in the middle of the trading like around 10am to 11:30am to have a good view of the stock price that you intend to buy or sell. Stock trading is from 9:30 to 12:10 noon.

Stock Trading Tip No. 5: Look for the P/E ratio. Price-Earnings Ratio of the stock ‘may’ tell the profitability of the said company. This is the ratio between the stock price over its earnings. The higher the P/E Ratio, the higher the profitability of the company. BUT do not solely rely on this ratio. It may indicate that a high P/E ratio means that the stock is overpriced because of some manipulations.

Stock Trading Tip No. 6: Buy back of shares or major acquisition. Companies also disclose to the stock exchange when will they buy-back their shares. Usually, this happens towards the end of their fiscal year because they want their ‘books’ to look good. This is called window dressing. Look for companies that disclose a buy-back of their shares. As the date of the buy-back approaches, there’s a high probability that their stock price will climb. Also, some companies buy-back their shares to take advantage of its depreciated value in the market especially if they think that the current price of their stock in a bearish market does not reflect the true value of the company’s shares.

Additionally, there are also disclosures about a company acquiring a significant percentage of stocks of another company. These instances will probably increase the stock price of the company being acquired as the date of the acquisition approaches.

Stock Trading Tip No. 7: Look for the 52-week range. I’m not good in technical analysis with in stock trading. But one way of gauging to know if the current stock price is high or low is to look for their 52-week high and 52-week low. The 52-week range is the highest and the lowest the stock price of the company closed in any given trading day in one year. It’s a gauge of how much the stock price has appreciated over a one-year period time frame. For example, the 52-week low is 250 and 52-week high is 400. Definitely, to increase probability of profits in stock trading, don’t buy at a price too close at 400.

Stock Trading Tip No. 8: Look for stocks that declare dividends. Dividends are passive income that companies give to their stockholders. Look for the companies that declare these dividends whether a cash dividend or stock dividend. Generally, when the ex-date of the dividend declaration approaches, the higher the price of stock will be.

Stock Trading Tip No. 9: Look for actively traded stocks. These are stocks that are in the “hot seat” where there are a lot of buyers and sellers. Surely, the law of supply and demand will apply here. If there are a lot of buyers than sellers, then stock price will tend to go up. However, if there are a lot of sellers than buyers, then stock price will tend to go down.

Stock Trading Tip No. 10: Watch the Federal Rate (FED) Rate Cuts. Generally, if the FED declared a rate cut on its Federal Open Market Commitee Meetings, stock prices will tend to go up and rally. To know why, you can view my article on how federal rate affects investors.

Stock Trading Tip No. 11: Watch for economic indicators such as consumer confidence index, inflation rates, unemployment rates, gross domestic product, gross national product, etc.

Watch for any inflation news. There’s an inverse relationship between inflation rate and stock prices. Definitely, the tamer or the lower the inflation, the higher the probability that the stock market will rise. In contrast, a high inflation rate will give the possibility of stock prices to go down. This is evident when the oil reached its peak of almost $150 per barrel last July 2008 when investors dumped their stocks! Why? Because a high inflation rate causes the raw materials costs of companies to go up. And with higher costs and less revenues, definitely companies will post losses. Added to this, a high inflation encourages consumers to reduce spending on non-basic items. In turn, corporate profits either drop or post slower growth, leading to lower valuation of stocks.

Watch for indices such as consumer confidence index, housing prices and housing sales, employment rate, Gross Domestic Product or GDP, Gross National Product or GNP, etc. The higher the value of these indices show that the economy is doing well. And when the economy is doing well, then companies may post huge profits and therefore stock prices will tend to go up.

Watch for writedowns or net losses of companies. This is no doubt. If there’s any news of big writedowns from any of the largest banks caused by the credit crunch which stemmed from the subprime mortgage crisis, then definitely investors will dump their stocks. Why? Because writedowns mean huge losses to these companies hence stock prices will go down.

Watch for Credit Ratings. Credit rating agencies such as Fitch Ratings, Moody’s Investors, and Standard & Poor’s are some credit rating agencies that rate company’s credit. They either rate the company’s bonds, credit default swaps or CDS, and credit facilities. Any downgrade will push the stock prices of these companies to go down.

So there you are my stock trading tips that I learned in my stock trading experience. I don’t claim I’m a good stock analyst but I’m trying to learn these things as part of my financial education.

With these stock trading tips, definitely you can trade stocks even you’re not an expert in technical analysis like me.

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Why Do New Year's Resolutions Fail?

- by Tony Mase

Š Tony Mase - All Rights Reserved
http://hop.clickbank.net/?mengzhu/aplwdw
===================================

Are you making New Year's resolutions this year? If so, it
could be a huge waste of your time. If you always promise to
lose those stubborn 10 extra pounds - then gorge on candy
once Valentine's Day rolls around - you're not alone. In
fact, more than 75% of people who make New Year's
resolutions fail!

How can that be? Why can't we commit to something and stick
with it?

Psychologists say that New Year's resolutions can be a trap
for many people, because they don't really think them
through before they make them. Think about it - you've just
had your third glass of champagne on New Year's Eve, when
you decide to make quitting smoking your New Year's
resolution.

But, according to psychologists, that spontaneity is working
against you. The people who are most likely to fail at their
New Year's resolutions don't have a plan for success. They
think they can get by on sheer willpower. However, willpower
isn't enough; it can only sustain you for so long. Soon
enough, you'll give into temptation - and you'll dive right
into that pack of cigarettes.

And, once you do fail, you wind up feeling worse about
yourself than when you started. Now, in your mind, you're a
smoker and a failure.

My advice? Don't set yourself up to fail - don't make New
Year's resolutions!

Now, if you're going to go ahead and do it anyway, how do
you pick a New Year's Resolution you can stick to? Here are
4 tips that'll help:

1. Plan in advance.

If you really want to have a resolution, give it some
serious thought. If you want to start working out every day,
think about exactly when you'll go to the gym, how you'll
fit it into your schedule, and who'll watch the kids while
you're there. By planning everything out in advance, you're
eliminating the "wiggle room". You won't have any excuses if
everything's accounted for ahead of time.

2. Break things up into smaller segments.

Sure, you want to lose 10 pounds, but you're not going to
realistically lose them all in January. By breaking your
resolution into smaller parts - like trying to lose 2 pounds
a month for the next 5 months - you make your goal easier to
achieve. That way, you can still splurge every now and then
and still lose your 2 pounds for the month. By trying to
lose all 10 at once, you'll deprive yourself too much and
your willpower won't be able to take it.

3. Don't have a bunch of resolutions.

It's hard enough to succeed at one New Year's resolution.
Bad habits are hard to break and they're even tougher to
break when you're trying to break a bunch at once. Don't try
to quit smoking, lose 10 pounds, and stop drinking coffee
all at the same time. You'll never succeed.

4. Tell family and friends about your resolution.

By telling others about your goal, you're making yourself
publicly accountable. If you fail, you'll have to tell
everyone you failed. That alone can motivate you to succeed
- or not make the New Year's resolution in the first place!

-----

Tony Mase is a serious student of the works of Wallace D.
Wattles and the publisher of the "A Powerful Life: The Lost
Writings of Wallace D. Wattles" ebook by Wallace D.
Wattles...

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Since you will be faced with a flood of paperwork in your lifetime, now is the time to build in that speed. Here are five simple tricks that will do it for you automatically:

1. Don’t let yourself point out words with your finger or a pencil. This slows you up. Read with your eyes only. This means your hands must be folded till you turn to the next page.

2. Keep from moving your lips or mouth. Lip-moving slows reading speed down to speaking speed. If it’s difficult for you to stop moving your lips, bite a pencil while you read till you lose the habit.

3. Don’t move your head from side to side. This tires you out and again slows up your reading. Only your eyes should move. Only your eyes need move.

4. Read aggressively. Actively. Tearing the ideas out of the pages with the techniques we are showing you in this book.

5. Learn the habit of skimming and then concentrating as described below. Make every reading assignment a search for main thoughts through a forest of useless words. Skim through 90 per cent those words, and concentrate only on the vital 10 per cent.

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How to Become an Action Person

- by Tony Mase

Tony Mase - All Rights Reserved
http://hop.clickbank.net/?mengzhu/tppc10

There are essentially two kinds of people in the world,
doers and non-doers. Doers do and thus, get things done;
whereas non-doers never do much more than think about doing
and thus rarely, if ever, get anything done. Those who get
things done get what they want, while those who don't, well,
quite simply, don't. Here's how to become an action person,
a doer who gets things done and gets what you want.

More often than not, though it may not always look so to the
casual observer, action people are highly organized. They
appear to move almost effortlessly from one task to the next
without missing a beat and, at day's end, usually have more
energy than when they started because of the momentum they
built up over the course of the day.

Non-action people, on the other hand, are usually highly
disorganized. They spend their entire day stumbling around
from one thing to another, without purpose, and, as a
result, come day's end, are totally exhausted and clueless
as to where their day went. Equating busyness with
accomplishment, they often think they're getting things
done, when, in truth, they're not, at least not anything of
significant importance.

The essential key to becoming an action person is
organization and the quickest and easiest way to get
yourself organized for action, whether it's at home or work,
is to make yourself a short, simple, prioritized to-do list
on a daily basis for the following day. The operative key
words here being short, simple, and prioritized.

Keep it short by limiting yourself to just a couple of tasks
you'll feel good about having accomplished. Keep it simple
by choosing tasks that can be done in a relatively brief
period of time. Prioritize it by asking yourself which of
the items on your list you'll feel best about having
accomplished and making that the first item on your list.

Personally, as a general rule, I limit my daily to-do lists
to two (max!), "vision-critical" tasks, things that are
absolutely vital to getting what I want, and I prefer tasks
on my daily to-do lists to be things I can accomplish in
just a matter of minutes.

When your allotted time to take action comes, whether it be
home or work, start with the first item on your to-do list,
your highest priority task for the day, and stay on it, to
the exclusion of all else, until it's done and done well.
After it is, cross it off your list and take a moment to
savor the feelings of accomplishment, power, and
satisfaction that come from doing so.

Then, if there is one, move on to the next item on your list
and do the same. If, after finishing it, you have more time
left, either give yourself some time off and go do something
you like as a reward, or add another high-priority task to
your list for the day.

I've often started the day with just one or two high-
priority, "vision critical" tasks on my daily to-do list,
yet accomplished twenty or thirty of them during my allotted
time with energy to spare, because of the built-up
momentum... and so will you!

Follow these simple instructions every day and you'll soon
find yourself becoming an action person, a doer who gets
things done and gets what you want.

-----

Tony Mase is a serious student of the works of Wallace D.
Wattles and the publisher of the "The Personal Power Course:
Ten Lessons in Constructive Science, Teaching You How to Use
Your Own Subconscious Energies for Health, Prosperity and
Personal Achievement" ebook by Wallace D. Wattles...

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FOR 2009:

HEALTH

• Drink plenty of water.
• Eat breakfast like a king, lunch like a prince and dinner like a beggar.
  
• Eat more foods that grow on trees and plants and eat less food that is manufactured in plants
• Live with the 3 E's -- Energy, Enthusiasm, and Empathy.
  
• Make time to practice meditation, yoga, and prayer.
  
• Play more games.
• Read more books than you did in 2008.
• Sit in silence for at least 10 minutes each day.
• Sleep for 7 hours.
• Take a 10-30 minutes walk every day. And while you walk, smile.
  

PERSONALITY

• Don't compare your life to others'. You have no idea what their journey is all about.
  
• Don't have negative thoughts or things you cannot control. Instead invest your energy in the positive present moment.
• Don't over do. Keep your limits.
• Don't take yourself so seriously. No one else does.
  
• Don't waste your precious energy on gossip.
• Dream more while you are awake.
• Envy is a waste of time. You already have all you need.
  
• Forget issues of the past. Don't remind your partner of his/her mistakes of the past. That will ruin your present happiness.
• Life is too short to waste time hating anyone. Don't hate others.
  
• Make peace with your past so it won't spoil the present.
  
• No one is in charge of your happiness except you.
• Realize that life is a school and you are here to learn. Problems are simply part of the curriculum that appear and fade away like algebra class but the lessons you learn will last a lifetime.
• Smile and laugh more.
• You don't have to win every argument. Agree to disagree.
  

SOCIETY

• Call your family often.
• Each day give something good to others.
• Forgive everyone for everything.
• Spend time with people over the age of 70 & under the age of 6.
  
• Try to make at least three people smile each day.
• What other people think of you is none of your business.
  
• Your job won't take care of you when you are sick. Your friends will. Stay in touch.

LIFE

• Do the right thing!
• Get rid of anything that isn't useful, beautiful or joyful.
• GOD heals everything.
• However good or bad a situation is, it will change.
• No matter how you feel, get up, dress up and show up.
  
• The best is yet to come.
• When you awake alive in the morning, thank GOD for it.
  
• Your Inner most is always happy. So, be happy.