Trading Vehicles
The best Trading Vehicles have two characteristics that are paramount: Price and Liquidity. If you're trading stocks, look for good liquid trading markets that are tight and fluid. Bid and Ask quotes are narrow and close to the last trade. The quotes have depth to them and can accommodate large orders without disturbing the price. All this results because of the competition between large numbers of market participants. The opposite situation is present in thinly traded markets. Lack of large numbers of market participants means quotes are wider and smaller in size, resulting in huge "slippage", choppy markets, and disappointing order executions. If you can't get in or out of a given market with ease, you're in the wrong market. If the trading crowd is not interested in a particular market neither should you. Go where the action is. For instance, Exchange Traded Funds (ETF) are the closest you can get, in a single security, to being able to trade "the market". In appearance they resemble an index fund, but they trade exactly like any other stock. Index funds don't encourage short term in-and-out trading. They call such activity "disruptive". And, truthfully, they're right. It is disruptive, distracting, and annoying to the fund portfolio manager. The ingenious way ETFs are put together, all the in-and-out trading in the world will not disrupt anything inside the unit portfolio. In fact, they were designed to accommodate and encourage such activity. Why? Because the public wanted it, that's why. Traders and investors wanted a vehicle that they could buy-and-hold, collect dividends, trade, buy on margin, sell short (without that outdated "up tick" rule), options trade, and whatever else they wanted to do with it, and did Wall Street ever deliver the goods! Broad based indexed exchange traded funds hit the ground running and never looked back. They have had a profound effect on the way investors and the entire investment management industry think about investing. In fact, they have proved so popular they spawned a universe of sector ETFs on industry groups. All the requisites of an excellent trading vehicle are present. Also, as a trading vehicle, Single Stock Futures (SSF) are a traders' dream come true. In legal terms, an agreement between two parties where one party commits to buy a stock and one party to sell a stock at a given price and on a specified date. The contract is completed at expiration or, in most cases, by offset prior to the expiration date. The many advantages are: (1) Greater leverage: Lower margins (20% vs 50% for stocks) and no interest to pay. (2) Greater cash flow opportunity: Treasury Bills can be used as collateral. (3) Easier and cheaper to sell short: No need to borrow stock, no uptick rule, no dividends to make up. SHORTS even earn the "basis" premium that the LONGS pay. (4) An almost perfect hedging device, SSFs are more efficient than options. No strike prices involved. The only difference in price, between the futures contract and the underlying stock, being the basis which zeros out by expiration. (5) Foreign investors can reduce currency risk. (6) Additional sophisticated trading strategies not otherwise available. (7) Broad liquid markets make these ideal trading vehicles. If you like ETFs, you'll love SSFs.
Other Online Trading Articles
FOREX Online System Trading- For Bigger Profits The rise of the Internet and cheap powerful computers has made FOREX online system trading a reality for any trader, novice or pro.Now its possible for individual traders to manage their funds and target 30 – 50% annual compound growth.The advantages of FOREX online system and how to choose a good one are outlined in this article. ...Aerobics At Home Staying fit and working out is something we all want to do but it normally stops there. We may have the desire but there are always excuses to not workout. Time and money are the big two but even if those are not issues, we can normally find some. Aerobics is a great workout to increase your heartbeat and burn calories. You are not lifting h ...Forex Beginners Guide - Learn How to Trade in Forex Market from the Basics Today’s Forex trading is well known as a lucrative way to make money online. It became an essential part for investor’s portfolio as you can simply gain thousands in minutes by trading currencies at home. For those who are new to the trade, Forex means Foreign Exchange Market where it involves buying and selling the different currencies of the w ...Why Buy-and-Hold is a Good Investment Strategy Investment analysts say that buy-and-hold is the best investment strategy for the average consumer. But do you really understand why?After all, the idea of a fast dollar on a stock is appealing. Buy low and sell high. Do this enough and you should come out on top, right?Well, not exactly. Timing the market is almost impossible to s ...Defining Municipal Bonds One of the main problems with traditional investing is that you seem to have to either settle for a lower yield on local business investments or give up the interactivity of knowing and influencing the factors that affect your investment by purchasing shares in worldwide companies or bonds created on a national level.Luckily, there is an ...More Window Dressing Two weeks ago I wrote about what the Securities and Exchange Commission was doing to regulate the mutual fund industry to help the small investor, the “poor folks”. It really added up to zero.Now the SEC is going to make new regulations for hedge funds to protect the rich folks. And it is more window dressing. In fact, it looks downright ...How to Add Shares to a Profitable Position Say you have a stock in your portfolio that is up 30% and it forms a base or consolidates to a moving average, and you want to add to this position. How would you go about doing this?There are a few ways that I have approached this situation. Some of you may agree and some of you may disagree with the way I pyramid or scale my positions w ...The Monster Traffic Way Of Currency Exchange In the advent of globalization, “the name of the game” is not money alone. Can we include currency exchange? In historical times, the mode of exchange is by bartering a valuable object with the desired other object. Currently, this may exist informally but vaguely, an item for sale would more or less be worth a sum of money.But as the ...Defining "Safety Stocks" With so many stock market scandals and the daily fluctuations of various securities, it might seem as though there is no simple method of investment that allows you to avoid the major risks of the market. Luckily, things are not always as they seem… some stocks, dubbed “safety stocks” by some investors, are stable enough that they tend to hold t ...Finally, An Asian Domain Good news for Asia! Asia top level domain is now here to cover the world's largest continent and the rest of the Pacific region. Thanks to the efforts of Instra Corporation, Asia can now level up with Europe's .eu and claim their indispensable spot in the world wide web.As most people already know by now, top level domains are very import ...Online Forex Trading Strategies Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.Forex trading is very different from trading in stocks ...Should You Join an Online Stock Trading Forum? If you're involved in online stock trading then you know how important it is to have timely and quality information. From experience the best way to get this information is to become a member of a good online stock trading forum.Benefits:In any business it's good to be able to discuss things with others in the same field, and if no ...How to select a good quality forex broker How to choose a good quality forex brokerAfter you are confident in the way you will go about trading the forex market, along with the money management rules you will implement, it might be time to find a good forex broker.There are many brokers out there to choose from so, it is worth while doing some initial rese ...Day Trading Basics A means to survive, an avenue to progress and vista to exchange thoughts, ideas and feelings… ‘Trading’ is perhaps as old as human existence on earth. It all began when the primeval man began swapping small useful items with each other in order to live and fulfill many of his needs. The time that followed saw a persistence and enhancement of thi ...Stock Trading For A Living – Don't Quit Your Day Job There comes a time in almost every stock trader’s life when they entertain the idea of stock trading for a living.Many of us look upon the life of a stock trader as one of great flexibility and freedom. We may see ourselves trading from some remote location or even our own private yacht.Before we embrace the fantasy too much let’s ...Option Stock Trading A highly successful financial product nowadays, stock options offer the investor flexibility, diversification and control to protect his/her stock portfolio or generate more investment income. Options are advantageous because they can be used under almost every market condition and for almost every investment objective. Options also help the inv ...Day Trading Forex Currency, Hype, Lies and TANSTAAFL Day trading Forex currency is all about making big money. Some investors have found it quite easy to make a large amount of money by day trading the Forex currency markets as they change hour by hour. But, you see that "some" in the previous sentence? What that means is that a lot of people don't make a dime and even lose a lot of money.U ...Should You Use a Pareto Chart Unless you are familiar with manufacturing management principles, you probably have not heard of a pareto chart. It is a very effective tool managers use, to manage and effect outcomes in manufacturing environments. You're saying, How in the heck will this help my trading? Well it can, if you use it right.Another name for using pareto cha ...Learn Online Forex Currency Trading Online Forex currency trading is a fast business, and if you do not have the proper training, it can be very easy to lose your money in it. Make sure you have all the right information and skills before you even begin buying and selling currencies. Where and how do you get the right education? Here are some ideas.Learn OnlineTakin ...Online Stock Trading Ask the wealthiest of Americans what their secrets are to financial success, and they will most likely say that one of them is stock trading.The 1980’s were particularly helpful to big-time stock investors – those who could afford to invest thousands upon thousands of dollars were able to double, even triple their incomes. Luckily, for th ...Swiss Bank Accounts Most people think that a Swiss bank account is for a millionaire, crook, dishonest government official, or member of the mafia, but the truth is somewhat more savory. There is nothing illegal or fishy about having a Swiss bank account. Swiss banks welcome clients from all over the world. They are renowned because they have tightest regulation in ...Online Forex Trading Strategies Forex trading is one of the money-earning activities that anyone can get into. Many people, some not even full-time or heavily experienced brokers, have gained a lot of profit from trading foreign currencies. And with the intensive use of information technology, more and more people are finding it easier to try their hands at forex trading. ...Forex Trading Strategy - Finding the Right One For You The first thing someone needs when beginning in the Forex market is a well thought out Forex trading strategy. This is because those who do not have a good foreign exchange trading strategy usually end up failing miserably. Of course those who are also in it just for a quick buck, will invariably end up losing in the long run. Those without a cl ...Online Bond Trading Online bond trading is a far less risky venture than online stock trading. It is because bonds are usually long-term investments and have maturity date. If you invest in bonds, you get a steady stream of interest because unlike other assets, bonds are not subject to shifts in interest rates.In the past, online bond trading is lagging behi ...Simulated Forex Trading Uses Simulators As A Guide For Traders (Part I) There are plenty of people trading in the forex, and why not, there are so many reasons to do it. By trading in the forex demo you are able to start by using a free demo on real time, you have a leverage of 400:1, or another simple reason is just getting into the action and trading with international currency. However, even when you pra ...Prevent Your Adsense Account From Getting Terminated Google, being the leader in search engines till now, is placing a high importance on the quality and relevancy of its search engines. Most especially now that the company is public property, Google has became seriously quality conscious regarding the results it displays.For this same reason, doing the wrong things in the Adsense and other ...Understanding Futures Trading Many people have the notion that commodity futures trading is very difficult to understand. It may only seem difficult when you are new to futures trading, but once you understand the inner workings and get a hang of it, you will be well on your way to success.People have a common misconception that commodity exchanges determine or establ ...Online Trading Online trading has gained popularity over the years because people from all backgrounds find it to be a more convenient way to trade stocks and bonds. In the past, online traders only made small deals or purchasers in order to pick up a little extra money. There are still people who go for this method of trading online, however, a lot of people ...Bad News is Good News For weeks, no, months we have been bombarded with nothing but negative news about the economy in general and thousands of individual companies. The stock market has dropped thousands of points and more than $8 trillion in paper assets have disappeared.Note I said paper assets because until you turn it into spendable money these numbers ar ...Online FX Trading In online FX trading, traders look for a currency that offers the highest return with the lowest risk. For example, if a nation’s financial instruments, such as stocks and bonds, offer high rates of return with relatively low risk, then traders who are foreign to that nation want to buy that currency, thus increasing the demand. Currency is also ...Don't Get Caught By This Stock Tips Spam Scam Spam emails have been the scourge of the Internet for a number of years now and the problem is still growing despite legislation, zealous spam filters and all sorts of clever techniques to prevent it.I'm sure that most of us have been subject to unsolicited email messages (spam) promoting medications, virility enhancers, impotence cures, ...FUTURE SHOCK: What's In Store For Online Trading Remember the days when HTML was the craze and the race to online fame was reduced to a game of who could come up with the coolest scripts? Back then, we used to meet girls via telnet or MiRC, and we’d entertain amorous possibilities with them, though we knew not what they looked like. Online transactions were also avoided like the plague in thos ...
|
