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As you become more familiar with trading stocks, there are specific strategies that can help you achieve your financial goals. This article will provide a more comprehensive framework for trading stocks, complete with key steps investors can take. Determine Your Goals Before they do anything else, investors who are interested in trading the stock market should determine their goals. To figure out your plan, you must first establish where you…

For individuals new to the stock market, it is a little-known fact that there is an enormous difference between day trading and investing. Television and internet ads often promote each discipline with very similar tactics, suggesting that success is a foregone conclusion for almost anyone in the market. Elementary mantras such as "buy low and sell high" insinuate that making money is straightforward, even easy. While profit is the reason…

In comparison to other securities, implementing short-term strategies such as day trading on equities products can be capital intensive. Regulatory and broker guidelines raise margin requirements to levels in excess of many other securities. While market participants still actively day trade stocks, the barriers of entry are significantly higher than those found in the forex, futures and contract-for-difference (CFD) markets. Regardless of monetary considerations, stock day trading does offer consistent…

What Is A Convertible Bond? Convertible bonds are a hybrid security that act mainly as a bond but also give the holder the right to convert the security into common shares of the issuing company at certain times and usually at the investor's option. Unlike traditional corporate bonds, convertibles offer investors a limited opportunity to participate if the stock of the issuing company rises. If the company's stock falters, investors…

What Is Cost Accounting? Cost accounting is a process companies go through to determine how much it costs to manufacture a product or provide a service in order to decide: how much they should make, the price they should charge and how profitable the product or service is. The main goal of cost accounting is to determine the breakeven point, above which sales revenue exceeds costs and the company makes…

What Is Dow Theory? The Dow Theory is a technical analysis concept that adherents believe can signal whether the stock market is headed upward ("bullish") or downward ("bearish"). The idea was developed in the late 19th century by Charles Dow. He was the founder of the Wall Street Journal and co-founder of its then parent company, Dow Jones & Company, as well as the creator of the Dow Jones Industrial…

What Is An Income Statement? The income statement is one of the main financial statements that companies prepare regularly to measure their financial health. The income statement—also known as a profit and loss statement (P&L)—shows the company's profitability over a given period of time. Most public companies prepare income statements quarterly, and private companies may do it more frequently, such as monthly. Investors use income statements to discern the basic…

Buying and selling shares of stock is a fairly easy proposition, though it still bears trading risks. All you need is some money and a few minutes to set up an account. The easiest way is to apply online to any number of brokerage firms through which you do the buying and selling. The broker will require a few bits of personal information, such as your name and address, your…

One of the most difficult aspects of investing is to know when to sell a stock. In fact, knowing when to sell may be a more difficult decision than deciding which stocks to buy and when. For example, if a stock you bought starts losing money, should you consider selling it? Is it a temporary setback—in which case you may consider doubling down and buying more—or an indication of even…

What Is A Derivative? Derivatives are financial instruments that derive their value from an underlying asset such as a currency, a commodity like oil, gold or wheat, stocks and bonds, or interest rates. The most common types of derivatives are options and futures, credit default swaps, interest rate swaps and collateralized debt obligations (CDOs). Pros of Derivatives Derivatives were originally developed to enable companies and producers to protect themselves against…

What Is Modern Portfolio Theory? Modern portfolio theory is an investing model designed to help investors structure a portfolio that seeks to maximise returns with a minimal level of risk, largely through diversification. Who Created Modern Portfolio Theory? The theory was devised by Harry Markowitz in an article entitled "Portfolio Selection" published in the Journal of Finance in 1952. In the article, he quantified a method for constructing such a…