Insider Stock Tips and Their Role on General Trade

Posted by Deb | Guest Post | Friday 15 June 2012 12:35 am

Insider trading is a term that includes both illegal and legal stock trading conduct. Legal stock trading happens when corporate personnel like directors, officers, and employees sell and buy stock in the companies that they work. All trades done by corporate insiders, in their own companies, must be reported to the SEC (Securities and Exchange Commission). On the other hand, illegal insider trading deals with the selling or buying of securities that breaches the relationship of confidence and trust while in possession of non public and specific information about own companies stocks. Violations for insider trading include tips used by employees themselves or by anyone else that misappropriates this information for trades. Since illegal insider stock tips affect general trades by diminishing the overall investors’ trust in the integrity and fairness of the U.S. security market, the U.S SEC prioritizes the prosecution and detection of illegal insider trades.

Civil Enforcement of Trades

The U.S. SEC’s civil enforcement against illegal inside trading is a very powerful tool. The U.S SEC has ample authority to research violations of security regulations, including insider trades. Informal investigations, done under Commission authorization, usually request information on trades to be provided voluntarily. However, formal investigations have subpoena power for witnesses to give records, books, and related evidence or even testify.

Illegal Insider Trades

The SEC has brought cases against the following types of insider trades:

  1. Corporate employees, directors, and officers who traded corporate stocks after confidential and significant information was known.
  2. Any person who received tips by such corporate employees that traded stocks with the confidential information given.
  3. Employees of brokerage, banking, and law institutions who obtained confidential information by providing corporate services in order to personally trade stocks based on such information.
  4. Government workers that trade stocks based on confidential information learned through their government position.
  5. Any other person that takes misappropriates and advantages of confidential information from an employer to perform security trades.

Legal Insider Trades

Legal insider trades are done on a daily basis by corporate insiders like employees, directors, and officers by selling and buying stocks from their own businesses within the limits of company regulations and policies that rule this type of trading. Insider stock tips that result in trades must follow SEC’s regulations. SEC imposes limits on how insider trades can be performed based on pre-existing contracts and the specific information material of these insider tips.

Fairness

One of the main reasons for capital to be available in high quantities in the U.S. security market is achieved from the investors’ confidence of the market’s fairness. Fairness is a critical factor on stock market trading which rules all insider trading. For example, there is a common belief in Europe that only some investors can constantly profit from having access to confidential material. This belief has caused Europeans to hold less stock on average in their respective markets in comparison to the more active U.S market. This is one of the reasons for the U.S. SEC to actively enforce insider trading to boost investors confidence in a security market as equal as possible.

Insider trading policies take into consideration the importance of attracting both national and international investment capital in the U.S market by increasing investors’ confidence. Many laws have been created to limit how insider trades are done since investors should have equal opportunities to profit from the market. These laws are meant to provide a security market where individuals can invest without the need to possess confidential corporate information.

This article is provided courtesy of Auto Loan Experts, a consumer finance website providing information and tools on auto loans for bad credit and other personal credit services.

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The Five Golden Rules of Day Trading

Posted by Deb | Guest Post | Monday 28 May 2012 12:37 pm

Before you start day trading, you have to make sure you’ve got your account set up properly, and that you have taken several steps to simplify the trading process. Day trading should be thought of as a job, not a hobby. If you approach it with a very lackadaisical attitude, you’re going to get very mediocre results. The worst-case scenario is that you’ll just lose a bunch of money. To avoid wasting your time and resources, always obey these five simple rules:

1) Trade Only With Current Intra-Day Trends

The trend is your friend. Trading on it will reduce the risk inherent in day trading. Trading with the trend allows for low-risk entries and a high profit potential. While intra-day trends don’t continue indefinitely, you should be able to get a couple of good trades per day in before the trend reverses.

2) Trade Strong Stocks in an Uptrend, Weak Stocks in a Downtrend

A lot of traders find it useful and beneficial to trade stocks or ETFs that have a moderate or high correlation with the S&P500. Some like the Dow and the NASDAQ. Some like all three. If you stick to trading stocks or ETFs with a high correlation to the major indices, you can isolate strong and weak stocks.

When market futures are moving higher, you should buy stocks that are moving up more aggressively than futures. When futures pull back, a strong stock won’t pull back as hard. It might not pull back at all. The stronger stocks are the ones you want to trade. The smaller pullbacks mean lower risk for you.

When indexes and futures are dropping, you sell short stocks that drop more than the market. The same rules apply here as with strong stocks. It’s almost like a mirror image. You’re selling short the weakest of the bunch. Weak stocks don’t recover before the stronger ones, Again, when you’re selling short, this means more profit and less risk.

3) Wait for the Pullback

Trendlines in your trading software will show you how the market moves. Usually, it moves in “waves.” Trendlines are an approximate visual guide to where the prices will go. When you enter a long position (i.e. when you’re buying stocks or ETFs), buy after the price moves down toward the trendline. It’s not going to give you a perfect vision of the future, but it will hopefully keep you from losing too much money. As long as you’re following the trend, you’ll be reducing your risk.

4) Take Profits

A lot of traders forget to take profits. They want to “ride the trend” permanently. Don’t be one of those traders. Since the market moves in waves, exit your position before a correction occurs. You have a limited window of time to capture any profit you’ve made.

There are two ways you can go about capturing profits. First, in an uptrend, take profits at or slightly above the former price high in the current trend. When you’re going short on a stock or ETF, take profits at or slightly low the former price low.

5) Get Out When The Market Reverses

Markets don’t always follow a trend. If there is no trend, it’s time to step aside and sit on the sidelines. There’s money to be made outside of following the trend, but it’s largely a gamble. Intra-day trends can also reverse so often that no concrete direction is established. This makes it almost impossible to trade on a trend since you can’t be sure of where the market is moving. Patience is key, and it’s also the only way you’re going to make money over the long-term while day trading.

Post contributed by Liz Goldman, a freelance forex trading writer, on behalf of sunbird currency trading . All views and opinions expressed belong to the writer and do not necessarily represent Sunbird FX.

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The pros and cons of debt trading that you should know

Posted by Deb | Guest Post | Sunday 20 May 2012 5:48 pm

The bonds that are issued by the US government, state government and the local corporations are known as the tradable debt securities. This form of trading is becoming increasingly common nowadays as a large number of people are changing the form of investment in order to make money. Debt security trading usually comes with huge amount of profit, if done in the proper way. You can earn a lot of amount from the changes in the interest rates and by taking a position in the distressed companies and in their distressed stocks. Debt trading proves to be a worthy alternative to commodity trading or stock market trading and if you’re not aware of the pros and cons, here are some of them.

Low margin requirements is an advantage of debt trading

Bills, notes and bonds, that are known as the treasury securities are traded in order to take advantage of the fluctuating interest rates. When the interest rates drop down, the Treasury prices rise and when the rates increase, the prices fall. Even with a low margin deposit, the traders can take a secured position in Treasury securities. The margin brokerage accounts need margin deposits of 5-10% and this will entirely depend on the maturity of the length of the bonds.

The active futures market is another advantage of debt security trading

The extremely active futures trading market will offer you trading in contracts of a wide range of debt securities. The contracts trade against the major Treasury securities, the interest rate indexes and the Federal funds rate. Futures trading will also allow the trader to take positions for moves that are in either direction of the prices of the debt securities and the associated interest rates. Futures trading of the debt securities will involve a larger amount of risk and all those traders that pick the wrong direction for their trades can lose a larger amount than what was actually invested.

You risk a large amount for a small gain and this is a disadvantage

Traders in the corporate debt securities trade high yield or junk bonds in order to make the higher interest rates on the bonds. The trader may also be able to achieve capital gains when the issuing corporation gets an upgrade in the credit rating. Another downside of the high yield bonds is a bankruptcy and the loss of the total invested principal. When the big companies like Lehman Brothers go bankrupt, their debt securities are worth pennies on the dollar.

Therefore, when you’re wondering about boosting your monthly income by investing in some asset, you should take into account the debt security trading so that you don’t have to worry about your soaring debt obligations.

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Stock Chart Patterns

Posted by Deb | Futures Trading Tips,Guest Post | Tuesday 24 April 2012 7:52 pm

This post was written by Steve Sollheiser.

When trading futures or stocks it is important to know which patterns are worth trading, and which just waste your money and time. In this article we will describe several of the best chart patterns for maximum results.

Double Top
The Double Top is a very powerful chart pattern that reaches 73-78% win rate in most stocks and commodities, and it allows you pin-point stock reversals with ease on many charts. The idea is that price reaches a Resistance level twice, and bounces off it just to continue downwards. It shows an inability of buyers to push through the Resistance level and eventually indicates that price will fall downwards.
We usually enter these trades by selling when price breaks the neckline, or when price pulls back to the neckline after the breakout (higher accuracy trade).

Triangle Patterns
The triangle pattern is a family of continuation patterns that can generate very good signals, however we will only focus on one type of triangle: The Asymmetric triangle.
The symmetric triangle is not a reliable chart pattern and we will tend to ignore it.
The triangle consists of one horizontal trend line and one diagonal trend line that converge together, causing price to break the horizontal level and continue in the direction of the diagonal one:

This is one of the strongest chart patterns and we trade it by entering trades right on the diagonal trend line in the direction of the imminent breakout. We will also trade the breakout of the horizontal trendline and pull backs to this level once it is broken.

Channel Pattern
The Channel pattern is another effective set-up that can give us very good signals on many timeframes and charts: the idea is that price is bound between two parallel trend lines, and we trade when price hits the trend lines (only with the direction of the trend). This results in high win-rate trades when low risk and high reward.
We recommend also trading the breakout of the channel, when it breaks the direction opposite eto current trade, and we will also enter pullback trades as well.

In conclusion, those 3 patterns are very effective and generate profits for many trades consistently. Master them and you will see your profits rise significantly.

Steve Sollheiser is a writer and a stock trader. Visit his site www.StockChartPatterns.org for more articles about chart patterns.

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What Weak Global Economic Data Means for Futures Traders

Posted by Deb | Guest Post | Saturday 7 April 2012 10:45 pm

Your Way To Financial Freedom

Guest post contributed by Hayley Russell, a freelance forex currency trading writer, on behalf of sunbird cfd trading. All views and opinions expressed are those of the writer and do not necessarily represent Sunbird forex brokers.

It wasn’t that long ago that Europe agreed to bail out Greece. However, low interest rates, and a free-flowing monetary policy hasn’t stopped Europe from entering another financial ice age. Europe looks to be in another, new, recession, and there’s no one coming to the rescue.

America can’t save Europe. It has its own financial problems. Back in 2010, Fed Chairman Ben Bernanke set the U.S. up for its current financial woes by writing:

“Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. … And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

Surprisingly, his view hasn’t changed much since then. Benanke’s ongoing insistence that quantitative easing will lead to a “virtuous cycle” of growth and profits (and higher income) is lost on the marketplace, which is seeing the velocity of the M1 money supply fall precipitously. This means that the Federal Reserve is pushing more and more money into the banking system, but banks aren’t lending. If banks aren’t lending, none of Benanke’s predictions can come true.

What’s worse, China has started to contract and is focused on protecting domestic supplies of rare Earth minerals and other natural resources. Spain may be next in line for a bailout, since the country is about to be hit with a wave of mortgage defaults. Where does all of this leave futures traders? Right now, the markets are taking a beating. Natural gas has recently hit a 10-year low.

The Dow Jones Industrial Average futures are off by about 70 points, and S&P500 futures are down about 9 points. NASDAQ futures are down 14 points. Futures traders don’t have many options these days. Europe has to contract for the foreseeable future.

The Greek debt crisis is far from over, and other European countries are just starting to join Greece. With Italy’s high unemployment rate, Spain, Portugal, and Ireland’s financial problems, and Greece’s inability to repay its debts without being bailed out, the European union will not be a great place for investment going forward.

China has to contract too. It’s been growing at an unprecedented rate for the last 10 years. However, none of that growth has been accompanied by long-term earnings. Back in 2009, China urged its citizens to buy gold. Perhaps it suspected its reign was coming to an end. By buying gold, the Chinese markets would deflate. Perhaps the real estate market would also contract. Buying into precious metals would help stabilize the economy since money would be moved out of the yuan and into an asset that is not backed by debt.

It seems like a Chinese commitment to buy gold would help gold futures, but it’s not. Gold futures are down and the precious metals market, in general, has been taking a beating lately. India has recently placed a higher tax on gold bullion purchases, helping to depress the price of gold while gold futures have dropped to their lowest levels since mid-January.

Gold futures are expected to find support at $1,612 per oz, which might help investors. However, the precious yellow metal has been under pressure recently due to hedge funds and other institutional investors selling off long gold positions.

Oil, another favorite of the futures market, is also down. Copper, grains, soybeans, and even coffee futures all slid this week. It may be time to for investors to give up the futures market for now and retreat to higher ground. Until or unless global economies recover from their financial problems, there’s not going to be much of a future to invest in.




Your Way To Financial Freedom

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Trading in Futures – the Origins of Speculative Investment

Posted by Deb | Guest Post | Sunday 26 February 2012 1:39 pm

by Anna Lipton

Futures are seen by more conservative investors as a wild and speculative way to invest money. Subject to wild fluctuations in potential profit or loss they are difficult to understand at first and nearly impossible to master. Those who do master them, however, enjoy superstar status. Those who fail are the rogue traders of the future. In the current maelstrom of opportunity that is the future market there is still a traceable path to history. The early futures contracts enabled greater productivity and stability boosting the economy whilst allowing some the opportunity to make huge profits on their trades.

Financial Markets Are Born To Serve A Purpose

The early railroads would not have been easily funded with debt alone. Calculating the return on a new line was tough enough in England where the distances were short and the population density high let alone when trying to calculate the possible future profit of the almost impossible to construct Canadian Western Railroad routes through the Rocky Mountains.

Train companies issued stock to speculators. Those who had cash and were looking for the extraordinary returns only possible through taking a chance on the huge potential future profits of the railroads. Thanks to the financial markets and the huge sums of money unleashed people, goods and cargo were moved swiftly across previously impossible distances.

A Tale Of The Price Of Grain

By the mid 1800’s, American farming had progressed beyond subsistence farming and basic plantations to developments that could produce significant amounts of grain. This came with significant planting, harvesting and labour costs. Add to that the cost of transporting the grain to market and farmers suddenly were developing complex business issues which could be seriously derailed by price fluctuations.

Some of their problems were solved by local commodities exchanges. These provided systems for the grading, classification and trading of commodities such as grain. There was a need for stocks in storage to be fungible – any part of an equal size would be equally suitable to use in discharging an obligation. This led to homogeneous units of grain which could be accurately priced and traded.

On top of the complex costs farmers were starting to endure they often would not have sufficient capital to develop their land. Unlike the stock investing railroad speculators we discussed earlier, the banks were keen to see that upon development on the land the resultant crops would repay the loan (much as modern credit card companies making balance transfer offers look to calculate their likelihood of repayment and future profit from interest after the initial period).

A forward contact for the delivery of that grain would significantly enhance a farmer’s chance of securing finance. On top of that, a forward contract would significantly aid the planning of a farmers business. No longer would it be mere guesswork as to what price the grain would be sold in the future – he would know exactly how much he could expend on stock, labour, finance and transport in order to return a profit at a known future price.

From Forwards To Futures

Even in these early times there developed a secondary market for forward contracts – speculators hoped to make a greater profit by taking on an obligation. There were a number of issues with these early arrangements – not least the settlement of obligations on the contract completion date. It is easy to find gamblers willing to take a bet, it’s sometimes not so easy to find a losing gambler to pay up and take delivery of the grain.

The other issue for speculation is the physical transportation or obligation to provide an amount of grain on a future date. I may feel that the market has priced forward delivery contracts on grain incorrectly but if I have no use for the tonnes of super cheap grain I obtain by making that guess it’s not ideal. Futures contracts enabled the sophisticated settling of these transactions in cash without the need for actual delivery of the underlying asset.

If grain had moved above the price specified the farmer would owe money – thus ensuring he would receive the specified price for the grain. If the grain price fell, the farmer would receive a lower price for grain but a profit on the futures contract leading again to the receipt of the specified price for the grain. This cash settlement of futures contracts offered a huge advantage over actual settlement of forward contracts when it came to speculation. By 1891 the Minneapolis Grain Exchange had put in place the kind of formal clearing and offset arrangements we see in modern futures clearing houses.

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Cheap Online Shopping

Posted by Deb | Guest Post | Saturday 5 November 2011 9:14 pm

Cheap Online Shopping - A Beginners' GuideHi there,

My name is Carol Spykes, and I am thankful to Deb who let me write a quick note here. I wanted to invite you to read my newly written Kindle eBook: Cheap Online Shopping – A Beginner’s Guide. This eBook, as indicated by its name, is a guide for anyone who wants to learn more about internet shopping. I explain there how to find deals on eBay and Amazon, how to find other good bargain online stores, how to get bargains by finding coupons and promotion codes. I also explain there how to be careful and avoid scams, which is the number 1 obstacle making many people afraid of buying online.

You also get there an introduction to using PayPal, which is probably the safest way to buy things online, and is getting to be a popular way to buy on many online stores.

In short, if you want to learn how do your first moves on internet shopping, or if you have already made some purchases but do not yet feel sure of yourself, or if you want how to find good and safe deals in eBay, this eBook would be a good starting point. And it’s cheap too! It sells now in the Amazon Kindle store for only $5.22.

Get this book now! Click here to get the Cheap Online Shopping Guide on Amazon.

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