Simulated Futures - Perfect for Beginners

Are you interested in making money with futures trading? If you are, you are definitely not alone. Commodity trading is reaching an all-time high in popularity. Although many individuals are able to make a profit with futures trading, there are also those who end up losing money. To help ensure that you make money, as a beginner, not lose it, you will want to make sure that you know exactly what you are doing. You can not only do this by thoroughly researching futures trading and the futures market, but you can also do it by participating in a simulated futures programs.

As a beginner, you may be wondering exactly what a simulated futures program is. In short, a simulated futures program is a program that allows you to practice futures trading, but without risking any “real,” money. Simulate futures programs are available through many futures brokers. Many futures brokers allow their prospective clients to use their simulated futures program free for a short period of time, typically around thirty days. If, after that point, you still think that you need more practice, you should be able to continue on with your futures simulated program, but for a small fee.

Although it is nice to know how you can participate in a simulated futures program and have a generalized idea of what one is, you may be looking for more information, particularly why it is good for beginners, like you. As it was previously mentioned, a simulated futures program is a practice program that those just getting started in futures trading are advised to use. While each simulated futures program may very, often depending on the futures broker offering the program, many programs function in similar ways. For starters, you are given a test account, with “fake,” money that you can use like “real,” money to make trades.

When using a simulated futures program, you will have access to the same information and the same tools as a real, paying trader would. This is where the practice comes in. This practice and its value are immeasurable. With simulated trading, you are able to see which trades or moves of yours were good or bad. For instance, if you were to make money or a wise trade, you would likely remember your actions and keep them in mind for future use. The same can also be said for losing money or making bad trades. The information that you learn in a simulated futures program may help you become a successful futures trader.

Although many simulated futures program participates receive valuable hands-on information, which makes it easier for them to be successful when they start trading, there are others who realize that futures trading may not be for them. That is another reason why simulated futures programs are ideal for beginners. Unfortunately, many beginners learn about the ability to make money with the trading of commodities and they automatically assume that they can do the same, but futures trading isn’t right for everyone. That is why, if you are just getting started in futures trading or just learned about it, you may want to first try a simulated futures program.

Reasons to Not Invest in Crude Oil Futures Prices

Many people are of the opinion that investing in crude oil futures prices is a very sound financial decision. However, there are also a number of reasons why investing in something else may be a better fit for you and your situation. Here are some thoughts that may help you decide if oil is where you really want to invest.

One of the major points to consider when making an investment is what type of impact that investment may have on the future of your family and your community. From that perspective, you may feel that your money would be better invested in some other commodity that will have a lasting benefit to future generations. This may be something along the lines of a local business or something within the community that will generate revenue for the investors but perhaps benefit students or another sector of the community.

There is also the need to address your feelings on environmental issues. For persons who have strong feelings about the need to develop alternative fuel and energy resources, the idea of dealing with crude oil futures prices may not be all that appealing to their sense of working to make the world a better place. In this scenario, investing in some sort of biofuel development project or perhaps even a company that is developing vehicles that will run on alternate fuels may be a much better option.

Perhaps your main concern has nothing to do with the environment at all. It may be simple economics. There may not be enough extra funds on hand to allow you to take advantage of current crude oil futures prices. If that is the case, then find some safe investments that will return a modest and consistent return. With a little luck, the prices on oil stock will remain somewhat static and you will eventually be in a position to take advantage of attractive futures prices. Of course, when that day comes, you may find there are other places you would prefer to invest your money.

A + B - N (AMRO) Bank

The investment market is like the dating market; the ugly little duck can turn into a desirable prince(s) after someone has given it some attention. And what happens next, all of a sudden the former duck gets surrounded by a chain of new admirers. They all want her. Or him.

Currently on the scene is ABN AMRO. Not really small, nor exactly ugly but not “performing” according to the stock exchange standards (what ever they might be). And the bank found a buyer (Barclays) for its shares willing to pay around the 36 euros.

New admirers of the bank include a group of three European banks that are willing to offer 39 euros. “Why 39,” you may ask. Perhaps because 40 seems psychologically too much or simply that 39 divided by three is exactly 13.

The offer of this consortium (formed by the Spanish bank Santander, the Belgium bank Fortis and the Royal Bank of Scotland) will bring ABN to a demolition stage; each bank acquires a part of the whole. Santander receives the desired Italian branch – only recently acquired and Brazil, Fortis the Benelux part and RBS the American operation.

The question whether this split-up would be worse than the original offer from Barclays remains unanswered. Many believe so, I doubt it from a cultural point of view.

In fact the situation in which ABN stranded is one of incomplete acquisition. In the financial world it is to eat or get eaten and ABN ate only half its way. It left the company with a well established market in Europe but insignificant in nearly any other continent. For Santander it makes much more sense to acquire Brazil and an Italian part (something its rival – BBVA - could manage so far) and the acquisition of Fortis will make perfectly sense – although a larger cultural mismatch. And the oversees (US) activities of RBS seems neither illogical.

Cultural speaking the break up would make more sense, because each three banks would expand with similar cultures. Santander would provide a better fit for the Brazilian branch, although you could question whether this fits also the Italian case.

On the other hand, the consortium’ offer would also mean a bigger change, because the name ABN AMRO would cease to exist.

Fundamentals V's Technical Analysis

Investing as a fundamentalist or as a technician or both???

The fundamentalist concentrates on economics and the health of the economy. The technician relies on charts to determine price changes.

Money moves the markets and big money is always right no matter what the reason or cause. The skilled technical analyzer will always see the price movement before any other.

The fact that 'cycles' exist and recur again and again, evident through historical price data which can be analyzed to make future predictions and hence the argument for technical analysis.

Only by having a price history of a particular entity or a particular market can one truly expect to forecast the potential of an investment and the nature of its personality, the extremes it has reached over time as well as where it has deviated from past patterns indicating the possibility of as a new significant development in its 'life' cycle.

Only in the general sense do the fundamentals concern the traders or investors who are looking for capital gains on a regular basis. Day trading fundamentals in stock trading, futures trading or even currency trading and forex trading would certainly send the day trader bankrupt from short term corrections against the fundamental bias.

However for the long term investor, 'buy and hold' is a fundamental strategy, it assumes the price will in the long run continue on an upward bias.

The modern version of buy and hold has been perverted 'somewhat' by the big brokerage firms, hedge funds and mutual funds. Holding on to an investment that is in decline certainly does not make sense.

Thus, charts clearly illustrates the major and minor trend whether up or down allowing one to formulate a strategy to limit losses, let profits run and ensure an exist plan is in place, depending on the fundamentals of the day.

It is true to say to some extent that chartist sell too soon out of fear and on occasions missing the bigger move that often make a fundamentalist however technical analysis if used with discipline will limit ones risk and allows you to live to trade another day.

Ultimately for success one needs to combine both strategies to suit the market you are trading. The use of both strategies can pay off keeping the trader/investor active to avoid becoming comatose or fearful of riding a huge wave.

Selling during times of strength and buying during times of weakness as the run unfolds relying on technical analysis but keeping within the overall fundamental trend allows you the best of both worlds.

The speculative markets are the largest arena in the world that exhibits greed and fear. If your attraction to the 'blood and sweat' is motivated by the emotions of greed to make money you will surely fail. This is a truth many have learnt the 'hard' way.

Many are deluded into thinking they are intellectually and rationally sound in their thinking but in reality we all succumb at some stage to emotional greed.

Thus, in an emotional market one must use their "BRAIN" not to make money but to control ones "EMOTIONS".

Ten Things the Average Person Does Not Know About Annuities

Deferred annuities possess characteristics found nowhere else. They play an important part in seniors' portfolios.

Seniors hold billions of dollars in deferred annuities. However, my experience is that the average person knows little about the unique advantages of deferred annuities, much less the options they have during the holding period.

When you mention the term, "annuity", it typically conjures up thoughts of getting a small check in the mail every month from some insurance company. It is viewed as an income.

The vast majority, however, of annuities are of the "deferred annuity" variety. They are accounts designed to grow money over a period of time in a safe environment. Over 90% of deferred annuities are never "annuitized", that is, converted to that monthly check in the mail.

So let's take a look at some of the attributes of annuities and, in the process, clear up many misunderstandings about this vehicle.

Tax Deferred Earnings

Deferred annuities provide "triple compound interest." There is interest on principal, interest on interest and interest on the taxes you would have paid on an investment in a non-tax deferred environment.

For example, 6% which is taxable is equivalent to an 8% non-taxed return assuming a combined federal and state tax bracket of 25%.

Safety

While deferred annuities are not FDIC insured, like a CD with a bank, they are backed by the generally billions of dollars of the insurance company's assets. No big risks here.

A Competitive Interest Rate

Insurance companies normally set the interest rate for a deferred annuity contract annually. You will find that it is usually one to two points above CD rates. So not only do you get a higher rate but the interest is tax-deferred, unlike a CD where you pay taxes on the interest each year.

Some deferred annuities offer a rate that is guaranteed for a number of years, such as five. If you think interest rates will fall, you can lock in today's rate.

Minimum Interest Guarantee

When you get to the end of your annuity time frame, if your annuity has not given you at least a minimum of (generally) 3% interest per year, then the insurance company will apply their minimum guaranteed rate. Nothing to get excited about, but at least you know that you can't lose money and there is a minimum interest rate that is guaranteed no matter what.

No Sales Charges

When you move money into a deferred annuity, 100% of the money goes to work for you from day one. There are no sales charges subtracted from your initial deposit.

No Annual Administration Fees

Some places to park money, like mutual funds, may have fees attached to the administration of the fund. Not so with deferred annuities.

Withdrawal Privileges

This is a source of major misunderstanding. Many people do not realize that their money is not as tied up as they think; there are a number of ways to access funds without surrender charge penalties.

1. First, there is the 10% annual free withdrawal privilege. Each year you can take out up to 10% of your account value free of any penalties.

2. If you ever need to go into a nursing home, most insurance companies will allow you to take out whatever you need with no penalty.

3. If your doctor diagnoses you with a terminal illness, you typically can take out any amount penalty free.

4. You can convert all, or a portion, to a guaranteed income. This can be for your life, your life plus another (i.e. husband and wife) or for a set number of years.

5. There are a handful of new products on the market which will set you up with a pay out at a guaranteed interest rate for the rest of your life, but also allow you to retain control of the principal. In other words, the annuity is never "annuitized."

The interest rate is typically a function of your age. For example, if you are 65, the interest rate is 5%; 70 would be 6%; 75 pays 7%.

Free of Probate

This feature will vary by state, but in those states in which this feature is applied, an annuity is not included as a probate asset. Hence it is free of any probate fees or any delays in passing the funds to your beneficiaries. The normal requirement, however, is that the annuity must have a named beneficiary.

Free From Creditors

Again, this will vary from state to state. If you live in a state where this applies, this is added peace of mind that the money in your deferred annuity is safe in the event of a financial reversal.

Surrender Charges

Folks who object to deferred annuities usually bring up the fact that there are surrender charges that make getting their hands on the money costly. To a certain degree this is true. In order for the insurance company to go on the hook for the guarantees in the contract, they need to put some strings on accessing the funds.

However, these surrender charges decrease over time. Eventually they disappear altogether. In addition, after you have held your contract for a certain number of years (five is typical), you can take all or some of the money out over a five (sometimes ten) year period with no surrender charges.

The bottom line is that the surrender charge issue can be circumvented in a number of instances. Remember, deferred annuities are longer term scenarios. You certainly wouldn't want to put emergency fund money or money you are going to use to buy a new car in two years into a deferred annuity contract to begin with.

So there you have it. Ten features of a deferred annuity, which will add to your understanding of this product.

How To Become A Stock Broker

If you are interested in the stock market, you may be thinking to yourself, “How can I become a stockbroker?”

There is no educational background needed to get in this industry. The basic qualification you need is an interest in the market. But if the reason for your interest is to simply gain more money, you may end up frustrated. The stock market is a fast-paced, tedious industry, where you have to invest hours and hours to get yourself ahead and to understand the market. You must invest your time to collect a firm set of clientele. But even after having a good understanding of the market and having a set of loyal clients, there can still be curve balls you need to prepare yourself for. This preparation can only be acquired through time and experience. That is what you’ll have to face when you get into the industry.

Before you actually get in the industry, you have to understand that normally, stockbrokers do not become stockbrokers right after graduation. To start off in the industry, you need to prepare yourself to acquire a license. To acquire your license, you have to find a brokerage firm. You need to be with this firm for at least four months to take the General Securities Registered Representative Examination. After passing that test, many states require you to also take the Uniform Securities Agents State Law Examination.

When you acquire your license, the conservative advice is for you to concentrate first on the industry that you are familiar with. If your background is in the computer industry, it is better if you start analyzing stocks from that industry. This will help you get a quick understanding on the behavior of the market.

Stock Brokers provides detailed information on Stock Brokers, How To Become A Stock Broker, Stock Broker Career, Stock Broker Jobs and more. Stock Brokers is affiliated with Employee Stock Options.

12 Basic Stock Investing Rules Every Successful Investor Should Follow

There are many important things you need to know to trade and invest successfully in the stock market or any other market. 12 of the most important things that I can share with you based on many years of trading experience are enumerated below.

1. Buy low-sell high. As simple as this concept appears to be, the vast majority of investors do the exact opposite. Your ability to consistently buy low and sell high, will determine the success, or failure, of your investments. Your rate of return is determined 100% by when you enter the stock market.

2. The stock market is always right and price is the only reality in trading. If you want to make money in any market, you need to mirror what the market is doing. If the market is going down and you are long, the market is right and you are wrong. If the stock market is going up and you are short, the market is right and you are wrong.

Other things being equal, the longer you stay right with the stock market, the more money you will make. The longer you stay wrong with the stock market, the more money you will lose.

3. Every market or stock that goes up will go down and most markets or stocks that have gone down, will go up. The more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes. This is also known as "the trend always changes rule."

4. If you are looking for "reasons" that stocks or markets make large directional moves, you will probably never know for certain. Since we are dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move.

A huge mistake most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only necessary to know that markets are moving - not why they are moving. Stock market winners only care about direction and duration, while market losers are obsessed with the whys.

5. Stock markets generally move in advance of news or supportive fundamentals - sometimes months in advance. If you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late.

You need to get positioned before the largest directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative more often than not.

6. The trend is your friend. Since the trend is the basis of all profit, we need long term trends to make sizeable money. The key is to know when to get aboard a trend and stick with it for a long period of time to maximize profits. Contrary to the short term perspective of most investors today, all the big money is made by catching large market moves - not by day trading or short term stock investing.

7. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. This is a stock trading “system” in itself.

8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition model of capitalism. The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist.

The perfect competition model is not based on anything that exists on this earth. Consistently profitable professional traders simply have better information - and they act on it. Most non-professionals trade strictly on emotion, and lose much more money than they earn.

The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others, creates inefficient markets.

9. Traditional technical and fundamental analysis alone may not enable you to consistently make money in the markets. Successful market timing is possible but not with the tools of analysis that most people employ.

If you eliminate optimization, data mining, subjectivism, and other such statistical tricks and data manipulation, most trading ideas are losers.

10. Never trust the advice and/or ideas of trading software vendors, stock trading system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years.

Note those that have traded successfully over very long periods of time are very few in number. Keep in mind that Wall Street and other financial firms make money by selling you something - not instilling wisdom in you. You should make your own trading decisions based on a rational analysis of all the facts.

11. The worst thing an investor can do is take a large loss on their position or portfolio. Market timing can help avert this much too common experience.

You can avoid making that huge mistake by avoiding buying things when they are high. It should be obvious that you should only buy when stocks are low and only sell when stocks are high.

Since your starting point is critical in determining your total return, if you buy low, your long term investment results are irrefutably better than someone that bought high.

12. The most successful investing methods should take most individuals no more than four or five hours per week and, for the majority of us, only one or two hours per week with little to no stress involved.

Exchange Traded Funds Looking Good

In recent years exchange traded funds (ETF's) have become the talk of the town. I have recently ventured into the world of ETF's and have been quite impressed with them.

An ETF is similar to a mutual fund with the exception that it is traded like a stock. The nice thing about ETF's compared to mutual funds is the initial cost. Most quality mutual funds will require a $3,000.00 initial deposit; while ETF's can be started for as little as $500.00. ETF's usually track a specific sector or index, and new ones are being created all the time.

The advantages of ETF's are their cost, liquidity, and the ability to give investors instant diversification. It is much easier to buy an ETF than to buy a basket of stocks on your own.

Some argue that the disadvantage of ETF's is that they are relatively new and do not have a long enough track record. However, I think ETF's have been around long enough now that investors who take their time can build a very solid portfolio consisting of ETF's.

If I was given the chance to start over again, I would definitely purchase ETF's before I started to invest in individual stocks. Investing in individual stocks for a person that is completely new to the market is simply not the way to go in my opinion. There is so much to know and learn about investing in individual stocks that make it almost impossible for a new investor to be successful. Therefore, I think the best advice for a person new to the markets is definitely to start with ETF's or at least a mutual fund.

Remember there are sharks out there on Wall Street looking to take the money out of the hands of the small individual investor. However, if you keep your investment portfolio well-diversified it is harder for them to manipulate the markets as a whole as opposed to one individual stock.

Play another Day

Money management starts with protecting your capital, realizing profits and cutting losses. As I have stated in the past, without cash, you can't invest. Cash is king and learning to manage your money is the most important aspect to investing in stocks. The game is won by lowering your risk by properly turning the numbers in your favor. Cutting losses is the best insurance to keeping your cash.

Emotions fuel the decisions of many investors; leading the pack is hope, fear and greed. In order to control these emotions, proper money management skills must be developed through a defined set of rules. How do you know if an investment is working and moving in the right direction? If it shows a profit, you are correct, if it shows a loss, something is wrong and it may be time to protect your capital.

Most investors develop the emotion of hope after a stock has declined from the initial purchase price. They hope that it will rebound and make promises to themselves that they will sell at breakeven. If and when the stock rebounds, they break the promise and become greedy and decide to hold on for a profit instead of selling. Typically, the stock will start to decline and the investor will start to accumulate losses. Investors are full of pride and will not admit that their judgment is wrong, so instead, they decide to hold on and accumulate additional losses.

When a stock is purchased and starts to decline, especially on heavy volume, it is time to admit that you may be wrong and sell before the loss is too steep. If the stock rebounds after you sell, you can always re-enter your position. Cutting losses is the best insurance an investor can have in their portfolio. By developing rules and eliminating emotion, investors can start selecting high quality stocks and buying them at their proper purchase points. This will lower your risk and help prevent you from using insurance. In my previous post, I explained how to develop a watch list of high quality stocks using fundamental and technical analysis.

About the Author

Chris Perruna

http://www.marketstockwatch.com

Chris is the founder and CEO of MarketStockWatch.com, an internet community that teaches you how to invest your money with solid rules. We don’t stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.

Article Source: http://EzineArticles.com/?expert=Chris_Perruna

Stock Picks 101- The Difference Between Trading and Gambling

Many people have the impression that trading is like gambling. Obviously, non-traders have no way of knowing how much dedication goes into a proper risk and reward evaluation of stock picks. On the other hand, traders themselves are well aware that, unlike gambling, they should never be in a trade unless they have a clear and obvious edge (at least, obvious to them.)

It’s well known that in almost every case in gambling, the house has the edge. In those few cases in which it doesn’t, the edge the gambler might have is slight at best, and is usually strongly discouraged by the casino. I have heard of a few successful professional gamblers, but they treat gambling just like a business and have incredible discipline.

Let’s dig a little deeper and see what it is that gives a trader an edge over the “house.” Although a good trader and a good gambler both have systems, a trader’s system is usually much more robust and puts the odds more clearly in his favor than a gambler’s system. Traders also have more clearly defined risk management because any trader with experience knows that a stop loss is essential for improving the balance in his or her trading account. Also, a good trader usually evaluates the worst case scenario and the worst case risk in a situation before deciding to take the trade.

In fact, good traders always make sure they understand the worst case scenario before considering a trade. It’s not the winners who destroy your account. Instead, it’s the unexpected (and often) large losses that do!

Most gamblers seem to be far more focused on the reward and totally ignore the risk that they might go bust. A good trader is ever vigilant about the fact that it’s far easier to lose money than to make money. He leaves nothing to chance, thereby minimizing his losses.

Traders can develop an edge through their system by having, for example, better screening techniques than most market participants. They can also develop this edge by having carefully studied and refined techniques for entering and exiting trades. Of course, as previously mentioned, traders pay specific attention to managing losses.

So are you a trader or gambler? It really depends on how clearly defined a system you have and how disciplined you are about adhering to that system. So the next time you’re tempted to deviate from your written trading plan just remember this: once you do that, you stop being a trader, and you’re just another gambler.

Doug Newberry, of Investing Systems Inc., is one of the Directors of this software company which develops and markets software and systems for every kind of trader and long-term investor. You can learn more about the difference between Trading and Gambling at Stock Picks.

Understanding Stock Market Movement

Given enough time investing in the stock market, a trader will tell you that the research and analysis require the most time. In order to be successful, an investor needs to understand how the markets move and how to interpret differences in the various market indexes and what they mean. This kind of evaluation becomes an important part of an investor’s technical analysis of the stock market. It can add further clarity to various stock market movements and help an investor to find potential trades.

Let’s start this review by looking at each of the big three market indexes:

• S&P 500 – This market index is most commonly used by professionals in the financial world because it includes such a large sector of the market. It includes 500 of the most widely traded stocks and because it is a market cap weighted index, changes in larger companies tend to reflect more strongly than small cap stocks. The S&P 500 tends to be a more accurate indicator of market movements than the Dow.

• The NASDAQ Stock Market Composite – Even though this market index includes all of the stocks that are listed on the NASDAQ market, it is historically weighted toward technology stocks. This condition is the result of the fact that it is a market cap weighted index and thus the large cap stocks of technology companies strongly influence this index.

• The Dow Jones Industrial Average – This is the old-timer of the bunch. The Dow is the oldest, most widely known and most quoted of all the market indexes. The Dow tracks 30 of the most influential companies in the US and because it represents only large companies, it misses out on the small and mid-size companies completely. Unlike the S&P 500 and the NASDAQ, the Dow is a price weighted market index which means that if a stock price changes by $1, the effect on the market index is the same no matter the price of the stock. The Dow reflects only about 25% of the total market but changes in the Dow tend to reflect consumer confidence in the stock market as a whole.

What perspective does each index take?

Because each of the indexes takes a different approach, the stock market movement for each is different. For example, the NASDAQ structured so that technology stocks enjoy greater prominence that those in other stock sectors. This was evident in the late 1990’s when the technology boom was taking place. As events unfold that effect the technology sector, the NASDAQ will tend to see the most dramatic stock market movement, although the Dow will also be significantly affected.

The S&P 500, on the other hand, is not as severely impacted by tech stocks but tends to have a stock market movement that more accurately reflects the market in its entirety. Because it is weighted to the larger stocks it does not have the violent reaction to Wall Street news that its small-cap stocks might cause. The overall balance of the S&P 500 causes a more accurate representation of market movement than the Dow. This is the reason that most financial professionals use it as their barometer for stock market movement.

The Dow is the interesting one of the bunch; the granddaddy of the market indexes, it looks only to the 30 most influential stocks for its analysis of market movements. These are all large-cap stocks so they do not accurately evaluate the entire market, yet the Dow has proven to be the best market index for indicating consumer confidence.

Conclusion

No one index gives you the entire picture of stock market movements. The combination of the three can help you draw better conclusions about the market movements and what is motivating them. Activity by the tech sector will appear with strong reactions by the NASDAQ. Strong movements by the Dow can indicate whether the consumers are feeling good about the market in general. The Dow, though weighted to the top, will be a better indication of the overall stock market movement. By considering all three, successful traders can locate where highs and lows in stock market movement can be found and invest accordingly.

List of Stock Brokers - Top 5 Secrets Of Selecting A Stock Broker, From List Of Brokers

a)What are the functions of a stock broker?

A stock broker is an individual or an organization, who is licensed by the government to trade in stocks/shares and has the right to access the share market. On payment of a small fee, he acts on your behalf in the stock market and carries out your transactions of buying and selling of shares. Besides these, he also provides professional advice in debentures sale/purchase of government bonds, and listed property trusts etc.

b)Full Service Broker (Advisory):

Stock brokers are generally divided in two categories:

• Full Service Brokers
• Discount Brokers

As the name would indicate comprehensive services from trading to financial planning of the clients are provided by a full service broker. Based on your financial aims and objectives, he provides advice on the client’s investment portfolio and additions/alterations required in the some from time to time. Since he provides comprehensive services, his charges are a little higher than discount brokers.

c)Selection of a full service broker:

As full service broker will be your vital link for making financial deals, the selection of the same has to be undertaken with great caution and circumspection. You need to assess some of his capabilities in the following fields:

• How much he charges for the services he provides and how they compare with others in the market?
• Is his advice and data backed by adequate equity research?
• Does he have access to floats?
• What is the style and pattern of his investment?
• Is his communication system reliable? Does he communicate with his clients on a monthly, weekly or daily basis? Is he printing any newsletter etc?
• What is the frequency of review of your investment portfolio? Will he review it often though, to increase your returns?

d)Discount brokers (Non Advisory):

Discount brokers generally provide limited services of buying and selling your stocks/shares; based on the orders given by you, via telephone and/or internet. Since their services are of a non-advisory nature, their fee is also less vis-à-vis full service brokers.

e)Selecting a good discount broker:

You need to review the following guidelines before selecting a good discount broker.

• Is he offering any value added services?
• What is the mode of contacting him – phone or net?
• Is he charging any amount towards monthly subscription fees?
• Is he offering any discounts for regular traders?
• Is he asking for a special cash management account for trading?
• What does he charge for buying/selling?
• What is his market reputation?
• Is he doing insider trading?

If you are trying your hand at the share market for the first time, you should avail the services of a full service broker, to avoid getting your fingers burnt. For regular traders, discount brokers will suffice.

Internet Stock Brokers - Discount in Price and Service

In addition to money, you need a broker in order to play the penny stock trading game. Your broker will be your lifeline as well as the person that you have allowed the privilege of buying and selling stocks on your behalf. He or she will create an account into which you will deposit money. This account works very much like a bank account with the added benefit of containing stocks and bonds as well. The proceeds from sales of stock will go into this account and the money to purchase new stocks will be taken from this account.

There are two types of brokers full service brokers and discount brokers. Full service brokers offer financial investment strategies, portfolio assistance, and investment advice among other things.

This level of service in the game of stock trading however comes at a great price and that price comes in the form of a sizeable commission or transaction fee. If you are trading penny stocks, the fees for a full service broker will negate any benefit you would receive from using their services.

Discount brokers on the other hand can answer specific questions you have about investing but won't provide quite the level of customer service. One thing that most people find infinitely enjoyable about discount stockbrokers and doing the research and playing with the nifty computer programs and analysis that most discount brokerages allow their clients to have access. People like being able to make buy orders from the comfort of their homes at any hour of the day. They also can much better appreciate the price of $10-$20 per trade much more than upwards of $100 that many full service brokers charge.

Once you've decided on your broker and have taken care of the basics of getting your account in order and funded you will be read to trade. This process should take no more than 3 days.

The basics of trading consist of buy orders and sell orders. The most important thing about issuing a buy order is to make sure you have the money in your account to cover not only the order but also the transaction fees. There are essentially five things that must be included in the buy order:

1) The ticker symbol.
2) The market where the stock is being traded.
3) The number of shares you wish to buy.
4) The price you are willing to pay (if you do not specify a price the purchase order will be made at the available asking price - this is not recommended).
5) The amount of time you want your offer to stand.

Sell orders are very much the opposite of buy orders. You state that you wish to sell your stock, the price you wish to receive, and the ticker symbol, the exchange, and the amount of time you'd like your offer to stand.

Investors often enter a bid price when buying stocks and an ask price when selling. If your bid price meets the ask price of another, then a transaction can be made. There are often many standing orders of multiple prices available at any given time. However, when you check the stock quotes they will only show the highest buy and the lowest sell rather than showing all points in between.

Stocks are sold with a 'best price' priority this means that stocks are sold to all with the higher buy orders first, and then trickle down to the lower buy orders. If your buy order (or sell order) was placed at the same price as other buy orders, those will be sold in the order they were received.

As a result of the ranking order, people often find that only part of their order gets filled for a certain price. If part of your buy order was filled early in a given day you may want to adjust your offer so that the remaining order may still be filled that day at a slightly higher price (while paying only one broker commission). If the order takes several days in order to be filled there will be a broker fee each day that a transaction occurs.

You will need to check with your specific broker about his or her policy on cancellations and order changing. In most cases orders can be cancelled or changed but there may be a fee involved.

Value Funds

Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation. They invest in companies that the market has overlooked, and stocks that have fallen out of favour with mainstream investors, either due to changing investor preferences, a poor quarterly earnings report, or hard times in a particular industry.


Value stocks are often mature companies that have stopped growing and that use their earnings to pay dividends. Thus value funds produce current income (from the dividends) as well as long-term growth (from capital appreciation once the stocks become popular again). They tend to have more conservative and less volatile returns than growth funds.

Exchange Traded Funds

Exchange Traded Funds (ETFs) represent a basket of securities that are traded on an exchange. An exchange traded fund is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index. The investment objective of an ETF is to achieve the same return as a particular market index.

Exchange traded funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios

No-Load Mutual Funds

Mutual funds can be classified into two types - Load mutual funds and No-Load mutual funds. Load funds are those funds that charge commission at the time of purchase or redemption. They can be further subdivided into (1) Front-end load funds and (2) Back-end load funds. Front-end load funds charge commission at the time of purchase and back-end load funds charge commission at the time of redemption.


On the other hand, no-load funds are those funds that can be purchased without commission. No load funds have several advantages over load funds. Firstly, funds with loads, on average, consistently underperform no-load funds when the load is taken into consideration in performance calculations. Secondly, loads understate the real commission charged because they reduce the total amount being invested. Finally, when a load fund is held over a long time period, the effect of the load, if paid up front, is not diminished because if the money paid for the load had invested, as in a no-load fund, it would have been compounding over the whole time period.

Growth Funds

Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks. They focus on those companies, which are experiencing significant earnings or revenue growth, rather than companies that pay out dividends.

Growth funds tend to look for the fastest-growing companies in the market. Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above-average earnings momentum or price appreciation.

In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets. Only aggressive investors, or those with enough time to make up for short-term market losses, should buy these funds.

Balanced Fund

Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds, to provide both income and capital appreciation while avoiding excessive risk.

Balanced funds provide investor with an option of single mutual fund that combines both growth and income objectives, by investing in both stocks (for growth) and bonds (for income). Such diversified holdings ensure that these funds will manage downturns in the stock market without too much of a loss. But on the flip side, balanced funds will usually increase less than an all-stock fund during a bull market.

Equity Mutual Funds

Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies.


Stocks represent part ownership, or equity, in companies, and the aim of stock ownership is to see the value of the companies increase over time. Stocks are often categorized by their market capitalization (or caps), and can be classified in three basic sizes: small, medium, and large. Many mutual funds invest primarily in companies of one of these sizes and are thus classified as large-cap, mid-cap or small-cap funds.

Equity fund managers employ different styles of stock picking when they make investment decisions for their portfolios. Some fund managers use a value approach to stocks, searching for stocks that are undervalued when compared to other, similar companies. Another approach to picking is to look primarily at growth, trying to find stocks that are growing faster than their competitors, or the market as a whole. Some managers buy both kinds of stocks, building a portfolio of both growth and value stocks.

Mid Cap Funds

Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies as small or medium, each mutual fund has its own classification for small and medium sized companies. Generally, companies with a market capitalization of up to Rs 500 crore are classified as small. Those companies that have a market capitalization between Rs 500 crore and Rs 1,000 crore are classified as medium sized.


Big investors like mutual funds and Foreign Institutional Investors are increasingly investing in mid caps nowadays because the price of large caps has increased substantially. Small / mid sized companies tend to be under researched thus they present an opportunity to invest in a company that is yet to be identified by the market. Such companies offer higher growth potential going forward and therefore an opportunity to benefit from higher than average valuations.

But mid cap funds are very volatile and tend to fall like a pack of cards in bad times. So, caution should be exercised while investing in mid cap mutual funds.

Large Cap Funds

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies with above-average prospects for earnings growth.

Different mutual funds have different criteria for classifying companies as large cap. Generally, companies with a market capitalisation in excess of Rs 1000 crore are known large cap companies. Investing in large caps is a lower risk-lower return proposition (vis-à-vis mid cap stocks), because such companies are usually widely researched and information is widely available.

Open End Mutual Fund

An open-end mutual fund is a fund that does not have a set number of shares. It continues to sell shares to investors and will buy back shares when investors wish to sell. Units are bought and sold at their current net asset value.

Open-end funds keep some portion of their assets in short-term and money market securities to provide available funds for redemptions. A large portion of most open mutual funds is invested in highly liquid securities, which enables the fund to raise money by selling securities at prices very close to those used for valuations.

Closed-End Mutual Funds

A closed-end mutual fund has a set number of shares issued to the public through an initial public offering. These funds have a stipulated maturity period generally ranging from 3 to 15 years.

The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed.

Once underwritten, closed-end funds trade on stock exchanges like stocks or bonds. The market price of closed-end funds is determined by supply and demand and not by net-asset value (NAV), as is the case in open-end funds. Usually closed mutual funds trade at discounts to their underlying asset value.

Mutual Funds in India

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time.


One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.

Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously.

On the basis of their structure and objective, mutual funds can be classified into following major types:

• Closed-end funds
• Open-end funds
• Large cap funds
• Mid-cap funds
• Equity funds
• Balanced funds
• Growth funds
• No load funds
• Exchange traded funds
• Value funds
• Money market funds
• International mutual funds
• Regional mutual funds
• Sector funds
• Index funds
• Fund of funds