Investing Articles

Independent Investor – Getting Started and Building Wealth

By Clint Chapman
Ideal Investing & Consulting, LLC

Managing your own trading accounts can be exciting and more profitable than investing in mutual funds or just buying and holding. Some research and an understanding how prices move are required to make profitable trades. Most people see the stock market as a way to meet their long term investing goals. They place their spare funds in it and hope for a decent return over time. Now there’s nothing wrong with that way of thinking, but here is a more interesting way to look at things.

What if there was a way to use the stock market as a different why, one where wealth is derived from in the first place? What if one could learn how to trade stocks to force the stock market to be a wealth creation vehicle in and of itself?

Most people don’t know how to trade stocks to create a full-time income or create wealth including the so-called professionals. Does this mean it can’t be done?

Most brokers have been taught the proper thing to do for their clients are to research and recommend good long-term investments. Buying and holding has never made anyone wealth. It is the wealthy that can invest by buying and holding.

For any individual investor to start with a small amount of money and turn it into a huge sum it takes a well developed and tested trading system. This system trains the investor how to find good stocks to research and the knowledge and the understanding of how they move.

An overall trend in the price is important to identify because it usually takes a significant event (news, earning, etc.) to reverse it. To do this I recommend looking at a one-year chart for stocks. It may require looking at even longer time frames for some individual stocks.

A good stock to trade is one that has a good technical infrastructure. To determine its technical infrastructure some research has to be done to finds the stocks PE, Book Value, ROI, Earning Estimates, Earning Growth, Income Growth, and compare it to other stocks in the same industry. Other things to consider are its Market Cap and Average Daily Volume.

The current trading price of a stock can give you an idea of how good of a company it is and the risk of owning the stock. Stocks that trade over $25 per share have much less risk than stocks that trade below $1 per share. This is because of two main reasons: 1) Higher price stocks have a better technical infrastructure and therefore be more likely to have major percentages of its outstanding shares owned by mutual funds or other companies which gives the trading price more stability. 2) A small move in the stock price of a low price stock has a much higher percentage change than of a higher price stock.

There are also many websites that will give free stock picks or have people write in there stock picks into a blog. These can be good places to get new ideas but do not relay on what they say, do your own research and come to your own conclusions. Some of these site will have free interactive charts that you can use, however the charts that you have in your personal trading account will have real time data and more options and indicator charts.

An independent investor should start with as much money in there trading account as possible so that they can afford better lower risk stocks. Also it is best to be able to hold multiple stocks so that you will be taking profits more often.

To find more information about trading including specific strategies and professional techniques, go to the home page. Here you can get all the tools needed to become a successful independent investor.

Trading Penny Stocks – High Risk Equals Big Profits

By Clint Chapman
Ideal Investing & Consulting, LLC
The definition of a penny stock is any stock that is trading under the price of $5.00 per share. These stocks are high risk to trade and usually move based on speculation. However, if you can find the right ones to trade they can be very profitable.

The best penny stocks to trade are the OTCBB (Over the Counter Big Board) and the Pinksheet stocks. This is because stocks that trade in the major markets (NYSE, NASDAQ, etc.) are most likely stocks from companies that are losing money or have little growth potential. Also, OTCBB and Pinksheet stocks are most likely newer companies developing a product and once they are established they will move to one of the major markets.

When screening for a good penny stock to trade you should look for positive single day movers with higher than average volume. Make a list of 10-20 socks you find like this and than start looking at what the company does. Look for companies that are developing new technology or a product that is innovative such that their competition will be minimal, if any, when their product is lunched or implemented.

Besides looking for good companies to trade you can also look for good charts to trade. Look at short-term (1-month to 3-month) and long-term (1-year to all data) charts to find the overall direction that the stock is trading. Do not try to fight the overall trend; a stock that is in a long-term downtrend is likely to continue down. You are looking for steady uptrends and predictable patterns. Steady uptrends are the easiest and best ones to trade. Draw two straight lines that go through most of the peaks and valleys to find the trading cannel. Buy the next time the price hits the bottom line and sell when it nears the top line. A nice predictable pattern is the “N” pattern. Trade this pattern when you find an indicator that it is about to move back up. A good indicator is a Doji candlestick, which is a trading day with a tight range and opens and closes at, if not exactly at, the same price. Another good indicator is after a big down day the price closes at or near its low and than opens there or higher the next day and close higher.

Because penny stocks are high speculation plays you should be getting in and out as soon as you realize some good profits. If you get lucky and can take a 30-40% profit in one day you should take it. After a move like this the stock is liable to comeback 15-20% the next day. If you still like the stock you can get back in and make an even bigger profit than if you were to just hold it and it moved back up.

Trading Penny stocks can be exciting and profitable. Always remember that these are high risk stocks to trade and never put all your money into just one stock. Do your research into the company after you find interesting charts to trade to save time. Search penny stock blogs and forums to find ones with a lot of chatter and never rely on someone else’s pick, do your own research.

To find more information about trading stocks including secrets to finding explosive moves before they happen, go to the home page. Here you can get all the tools needed to become a successful independent investor.

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