I get numerous emails everyday asking which online stock broker is best for penny stocks.  There are many but the following are ones I recommend for their price and ease of use.

Ameritrade

Scottrade

Etrade

Think or Swim

Zecco

Ameritrade is by far the easiest and allows trading in most stocks.  Their online trading system is also easy for novice traders but can integrate into more complicated systems.

After hours trading is not for everyone and I don’t recommend it unless you’re a savvy investor or you desperately need to get into or out of a stock.

The reason is that most market makers will widen the spread after the market closes. This means you’re going to get a higher ask price if you want to buy and a lower bid price if you want to sell. Market makers do this to milk the desperate investor.

There are cases where trading after hours could benefit or save you from further losses. If significant news comes out after the close and then buying or selling after hours may be required. For most cases waiting for the next day to put your order is the best choice.

The thin volume of most stocks after the market closes will not give you an advantage.

Over The Counter Stocks and NYSE stocks don’t trade after hours either.

I came across a funny version of stock market terminology. Thought I’d share.

STOCK – magical piece of paper that is worth Rs 1000 until the moment you buy it. It will be worth Rs 200.
BOND – What you had with your spouse until you invested in the stock market.
BROKER – The person you trust to help you make major financial decisions. Please note the first five letters of this word spell BROKE.
BEAR – What your trade account and wallet will be when you take a flyer on that hot stock tip your friend gave you.
BULL – What your broker uses to explain why your mutual funds tanked during the last quarter.
MARGIN – Where you scribble the latest quotes when you’re supposed to be listening to your manager’s presentation. Read the rest of this entry »

This video is actually very entertaining, and gives a very clear description on the credit crisis.

Three tips I use when buying dips:

1. You need to have a plan. Having a plan for each stock you enter is always wise. Find trades that can give you atleast triple what you’re planning to risk. Know when you want to sell your shares if the dip turns into a downturn. Once you reach your level, sell! Sell your entire position immediately.

2. Support. Seek support. You can see this on a chart when a stock pulls back to a price before trading range or its previous low, or a pullback to a key moving average within an uptrend. If in an area of recent support you see higher lows are in place, it means people are watching and the stock should stay afloat.

3. Enter and exit in pieces. You don’t need to go all the way in on a dip. Partial buys as a stock returns to support zone are best. This way if the pull back continues you won’t be ripping your hair out. If you see the stock with buying interest after a partial buy, you can start buying more. Once you see others have invested with you, take a chunk and sell off a little. Get out in pieces just the way you got in.

If you are to succeed in trading, you need to find out which trading strategy best suits you. This means taking into account your needs and resources, your expectations for return, and your risk tolerance. Even things like your age must be considered when you are choosing a trading strategy.

Becoming a day trader – The term “day trader” refers to the fact that stock traders who use this approach to buying and selling stocks within a single day, not holding a stocks overnight. They make money by exploiting short-term fluctuations in the stock market, and avoid the risk of being exposed to changes in the market overnight.

You can reduce the risks involved with day trading by sticking to fast, small profits instead of waiting for a stock to hit its peak. As with all other forms of trade, there are always drawbacks. Day trading is hard work, we must remain vigilant throughout the trading day of the population. Moreover, since brokers charge a commission for each trade has its benefits outweigh the costs of frequent trading. Read the rest of this entry »

We all know what cash is, the stuff we have in our wallets and pockets.

But there is a different way to look at cash in the market.

This is when you invest in things like money market funds, treasury bills, and overnight government repurchase agreements.

Usually found in 401(k) plans there are stable value funds that can be a shorter term investment.

Here are three reasons to make a cash investment position a part of your plan:

One reason is flexibility.

You are able to benefit from opportunities if you have a percentage of your portfolio in cash. Read the rest of this entry »