Sunday, September 30, 2007

Do What The Hell I Tell You-Guide To Portfolio Building

The First Step In Portfolio Building

Greetings everyone and welcome to the most complete business program on radio. Thats how I begin every program as I attempt to provide education to the masses. Hosting a radio program that discusses income tax, estate tax planning, and a whole host of other financial issues, is a definite challenge. Trying to be entertaining and holding the attention of a public that desires a get rich quick strategy that will bring fame and fortune with little effort or knowledge proves to be a never-ending challenge. The truth of the matter is, building a portfolio requires understanding of at least some basic principals and it requires discipline as well as diligence. With a world of financial products and strategies being marched in front of our faces every minute of every day, it becomes necessary to decide which products will best suit a given set of financial goals. This of course assumes that there are goals established in the first place. I would like to make one serious warning at his time before we get started. Those offering a variety of products and strategies for investing are not all knowing and do not always have the best interest of their patrons at heart.

Lets begin by introducing the two fundamental elements of building any portfolio. These fundamental elements are really a basic strategy broken down into two parts: inside of a retirement plan and outside of a retirement plan. That really all there is to it in the big scheme of things. Understanding the nature of each strategy and the investments that should be under the umbrella of each is really the true foundation of the entire portfolio building process. When we are thinking of an inside the retirement plan strategy, we are considering investments that should be a little safer in nature and we should be realizing that any income generated by this strategy is protected from income tax by its very nature. This means that capital gains, interest income, dividend income, and the like are all exempt from income tax by nature of being inside a qualified retirement plan. This promotes a balanced approach in building a retirement portfolio in the sense of having income producing investments along with growth-oriented investments made up of small and large cap stocks (1). On the outside of the retirement plan (or taxable accounts), we form a different strategy for handling our investments.

Here, it makes sense for us to have in our portfolios tax-exempt bonds (typically municipal bonds), along with growth-oriented securities made up of a mixture of small and large cap companies. It is important to point out here that it makes more sense to sell and take gains off of the table more frequently on the retirement side of the portfolio as gains will escape income tax consequences. Conversely, it makes sense to hold positions for a longer period outside of the retirement plan side of our portfolio in order to take advantage of long-term capital gain rates and reduced taxes on dividends received (2). I hope that you are getting the picture of the point I am trying to make. If not, please re-read the above information and feel free to contact me for help (3).

The college tuition funding vehicles, or 529 plans, are important mentions in this first step toward portfolio building. As we have been told, the 529 plan is a tax-exempt trust or vehicle for our investments as long as we use the funds for the educating of our children. The claim that I will make to you here is that the 529 plan will be duplicating the same investment strategy that is maintained in the retirement part of ones portfolio. My belief is that the average American cant afford to duplicate investment strategies. Why not build a portfolio outside of the retirement plan with the thought that help can be given to a child on an as need basis. If the child gets a scholarship or is able to obtain a loan, there will be no need for the plan in the first place and we are able to move on with our investments intact. There are other ways to provide for the education of our children and I would recommend the reading of my article Educating Your Children (4). In addition, I will submit to you that it is possible to sell part of our taxable portfolio with limited or no income tax consequences. Please read my article on Capital Gains and Losses (5). We can accomplish the goals of a 529 plan without being subject to duplicating investment strategies.

The final discussion for this first step in portfolio building should include the following points. Believe it or not, there can be too much money built-up in qualified retirement plans and traditional IRAs. Funds that are in qualified retirement plans and traditional IRAs are ordinary income and will be taxed at ordinary rates upon taking retirement distributions. In addition, these retirement funds are what as know as income in respect of a decedent (IRD). This is an estate planning term that essentially means that there will two tiers of tax to pay by heirs upon inheriting a qualified plan or traditional IRA. They will be subject to estate taxes and income taxes as the qualified plan or traditional IRA must be distributed over time to beneficiaries. Careful planning from the beginning can prevent or lesson the affects of IRD such as contributing to Roth IRAs or making sure that IRD has at least one tier of tax removed from the equation. This is done by making certain that IRD income does not exceed the estate tax exemption of $2,000,000 and that the estate in general is not over this limit. In addition, the beneficiaries can take distributions over their life expectancies and can even pass the IRA ownership to another generation thus lowering exposure to income tax.

The alpha rim will end our discussion of the first step in portfolio building. What is the alpha rim? It is a group of investments that have no relationship to investments associated with the stock market. Two classic examples would include real estate and commodities trading. Where should these investments be in our portfolios? I like real estate on the outside. This is because it has limited exposure to income taxes and the growth potential is already tax deferred until the property is sold. When it is sold, it will likely be subject to long-term capital gains rates and any losses from real estate can be used to help build a tax efficient portfolio on the outside of the retirement plan side of the ledger. See my article on real estate transactions (6). Those who want their real estate owned by their IRA accounts should be careful as they could be converting long-term capital gain property into ordinary income property. In addition, they could be subject to the application of unrelated business taxes or UBT causing their real estate transaction to be subject to much higher tax rates.

The commodities might be better served inside the retirement plan but should be done on a limited basis due to risk factors. If the commodities are done through a fund their will be more chance for success. Commodities trading usually carry with it a mark to market accounting method that will create gains and losses with out selling positions. This is why it might be best positioned on the retirement plan side of the portfolio. Typically, the alpha rim should not be more than 20% of the total portfolio and its characteristics should be examined to determine whether it belongs inside the retirement plan or outside.

Please take whatever time you need to understand what has been told to you through this article. It is very important that you understand this most basic concept. Stay tuned for information regarding portfolio building including a discussion regarding time horizons and how this will impact asset allocation over time.

1.Small cap stocks are companies with market capitalization of $500 million or less. They are less well established and are more volatile in nature but provide a larger potential for growth. Large cap stocks are companies with market capitalization exceeding $500 million and are more established and normally volatile by nature.
2.Long-term capital gains and qualified dividends are taxed at a maximum of 15% as tax law stands today. It is possible that the rates could be a low as 5% if a given taxpayer is in a 10% to 15% marginal income tax bracket.

Ron Piner, CPA
Tune in Saturday mornings at 10
To WBIS am 1190

The MWIB Series
My Way Is Better
Ron Piner, CPA
Better Business
Saturday mornings at 10
WBIS am 1190

Day Trading Futures Contracts - How To Win

The successful futures day trader knows that trading is a form of betting. It is a numbers game based on probabilities. The traders task is to adopt a strategy with favourable odds and execute the strategy as perfectly as possible.

To be successful, the trader identifies one or more setups which signal high expectancy trades. The setups are most often related to some kind of chart pattern, or a signal given by one or more technical indicators. I look at some ideas for setups in other articles. For now it is sufficient to understand that a setup should be measurable. It is a clear, unambiguous signal to enter a trade, and each trade should be managed in exactly the same way so that the results of the trade can be accurately determined in a theoretical test situation.

The expectancy of a trade cannot be estimated without testing the strategy. You test by either trying out the strategy on historical data (back-testing), or paper trading the strategy for a period of time. In either case you are unlikely to get a decent estimate unless the sample includes a minimum of 20 trades, preferably more.

You should observe the results for the trades in your test sample and calculate the Probability of Winning - P(W), the Probability of Losing - P(L), the Average Win in dollars - A(W), and the Average Loss in dollars - A(L). Use the following formula to estimate the Expectancy for your strategy:

E = P(W) x A(W) - P(L) x A(L)

For example, you test 50 trades resulting in 30 wins (60%) and 20 losses (40%), with an average win of $300 and average loss of $200.

E = (60% x 300) - (40% x 200) = 180 - 80 = $100

This means that in the long run you expect to make $100 per trade using this strategy.

Many people examine historical data to determine a good trading strategy. After this, you cannot use the same data to estimate Expectancy, because the strategy is optimised for this particular set of data. To estimate Expectancy, back-test data from a different period or run an independent paper trading trial. Ignoring this principle results in curve fitting and you delude yourself into thinking your strategy is better than it really is.

No strategy can be profitable unless it has a positive expectation, but higher expectation does not necessarily lead to higher profit. You must also consider the opportunities to trade generated by your strategy. A strategy averaging 10 trades per day with an Expectancy of $50/trade is better than a strategy providing 2 trades per year with an Expectancy of $1,000/trade.

You can see from the formula that Expectancy is a function of both the Probability of Winning and the Average Win to Average Loss ratio. If you only win 1 in 4 trades, but the average win is $400 versus an average loss of $80.

E = (1/4 x 400) - (3/4 x 80) = 100 - 60 = 40

This is a situation where a strategy with a low probability of winning has a positive Expectancy because wins are much bigger than losses. In contrast, suppose you win 8 out of 10 trades with an average win of $80 and an average loss of $300:

E = (0.8 x 80) - (0.2 x 300) = 56 - 60 = -4

This strategy wins much more often than it loses, but has a negative Expectancy because losses are substantially bigger than wins.

There is no right answer for the balance of these parameters, other than that the Expectancy for your trading strategy must be positive. Often, improving your average win to average loss ratio will decrease the probability of winning, and vice-versa.

However, for a small trader there is an advantage in gaining positive Expectancy by having a high probability of winning. Sticking to a strategy that generates a lot of winners is less strain on the trader!

A positive Expectancy is no guarantee against a run of losses. Indeed, with most strategies it is almost certain that there will be significant strings of losses at some time. However, a positive Expectancy should lead to profits in the long run, providing the trader uses proper money management and can survive losing sequences.

In summary, the trader needs to specify clearly defined strategies which can be traded in a mechanical manner whenever their setup occurs. The strategy should be tested (avoiding the trap of curve fitting) to ensure that it has a positive Expectancy. Thereafter, the trader should execute the strategy at every possible opportunity.

That is how to win.

David Bennett trades US commodity futures from his home on the Gold Coast in Australia. He provides coaching and mentoring services for people wanting to start trading for themselves. Visit to read more futures trading articles.

Forex Trading Tool - Which Calendar?

A calendar of economic reports is an indispensable Forex trading tool!

Experienced traders begin preparation for each trading session by consulting an economic calendar so they can avoid trading at times when the market is likely to be volatile and unpredictable.

At the same time, if an intra-day trade is in progress with a potentially volatile economic report soon to be announced, a decision can be made as to whether to take the trade out, or at least move the stop to protect profits or minimize losses.

Seeing this is such an important Forex trading tool, it pays to look around and select the best from the free resources available online.

Listed below are three good calendars you may wish to add to your Forex trading tool collection. (For links to each of these calendars go to the resource box at the end of this article and click on the link for free resources.)


The FXCM web site has an associated web site called which provides a comprehensive daily calendar of fundamental announcements which can either be viewed online or downloaded as a PDF file.

Economic reports likely to have a major impact on the market are displayed in bold to make them stand out.

This downloadable report is useful if you wish to print out the daily calendar and have it on your desk or displayed beside your computer.


This web site is very popular with thousands of visitors to the Forums each day. However, in my opinion, the best Forex trading tool it offers is the calendar.

You can customize the time to your own time zone so the calendar displays in local time when the fundamental announcements will be made. This is a great help in avoiding confusion from having to add or subtract from GMT or having to take into account daylight saving time.

The main benefit of this calendar is the color coding feature. Economic reports likely to have a major impact on the market are shown in red, medium impact reports in orange, and minor impact reports in yellow.

At a glance you can identify the times during the day when you need to exercise caution.


The paid subscription version of the Econoday calendar is an essential Forex trading tool for many professional Forex traders and fund managers.

For the average day trader the free version available from Barrons will no doubt suffice. One very helpful feature of this web site is the link to why the economic report matters. A detailed explanation is given on all the major economic reports as to why the market cares and the effect it can have.

Economic Reports - Market Movers

Not all economic reports are market movers. However, there are about 15 economic reports that have a medium to high impact on the US Dollar and up to 10 or 11 economic reports that have a medium to high impact on the British Pound, Euro, Swiss Franc, Australian Dollar and Canadian Dollar.

Navigating your way through a trading day without using a calendar would be like attempting to cross a minefield without a mine detector!

Be sure you take advantage of this major Forex trading tool - the economic report calendar. Use the online resources available for free and make them part of your daily Forex trading session preparation routine.

For a free pivot point calculator, Fibonacci calculator and the best free economic calendars click here:

For a free candle & chart pattern recognition reference tool click here:

The powerful 200 EMA strategy - easy for newer traders:

Turtles Trading System Really Works If You Have The Courage!

In Mid 1983 the Famous speculator Richard Dennis argues with his buddy Bill Eckhardt about whether great traders can be trained, or whether it is an innate ability. To settle the argument of nature versus nurture, they decided to teach 13 beginners to trade, and if they can master the rules, fund them with trading accounts. These beginners are known as the 'Turtles'. Over the next four years, the Turtles earned a collective compound rate of return of over 80%. Argument settled and Turtles trading system started.

'N', the 20 day exponential moving average of the ATR, is used by turtles. It is used under the name'Volatility normalisation'. It is nothing but stating an hypotheses that smaller the trade, every instrument will carry the same monetary risk in times of volatility.

Turtles had 'notional' sized accounts - although an account might notionally start the year at $1,000,000, in the case of a loss of 10%, the size of this account would be reduced by 20%. In other words the trader would have to trade as if he only had $800K, not $900, until such time as the account had got back to the starting figure.

Turtles entered trades based on two different systems,one being a 20 day breakout system, and one a 55 day breakout system. To use the first system, if the market traded during the day or opened thru the 20 day high or low, that would be a signal to enter.One Unit would be bought/sold to initiate the position.If the previous signal would have resulted in a successful trade, this signal would be ignored, in an attempt to avoid 'whipsawing'.

The Turtles trading system would add a single Unit for every 1/2'N' advance once in position. This would be incremented up to the maximum permitted number of units. That is; 4 in a single instrument, 6 in 'Closely Correlated' markets (such as oil and crude), 10 units in 'Loosely Correlated markets and 12 units overall in one direction - CONSISTENCY being the prime directive in all of this. Since most of the trades failed, it was very important to be in ALL of them, otherwise you would miss those few winners which made a huge profit!

Though it requires iron willpower to follow the rules, and not mere try and bend the mechanics of the strategy, the Turtle trading system undoubtedly works. Most people are mentally not equipped to deal with constant losses, though they are handsomely offset by the occasional huge winner.

The source of the turtles trading system is a disagreement between Richard Dennis and Bill Eckhardt. Dennis's theory that people could be taught to trade won out, and this system was born. The system is based on the volatility of trades and risk management. There are also 20 day breakout and 50 day breakout systems. The number of days refers to the high or low over that number of days, and signals a time to trade. The goal of this system is to win consistently. By following the Turtles system exactly, one is almost assured to win.

A Financial Analysis Of ValueClick Inc

Advertising is a large industry found in the equity Service sector with market-cap giants such as Yahoo! and Omnicom. These companies, through the advances of new technology continuously poor money into capital expenditures to gain market share against industry competitors. As advertising will continue to be a profitable service, even mid-cap companies like Catalina, R H Donnelley and aQuantive will generate business among other industries to market a variety of goods and services. While the aforementioned companies each have respective strengths and weaknesses, one mid-size company, ValueClick (VCLK), not only constructs and carries on a tremendous business model, but engenders financial figures, transcending into capital gains for investor portfolios.

Before trying to analyze these fundamental figures, it is vital to understand what ValueClick's business model encompasses. According to Reuters, ValueClick "is an online marketing services company, selling targeted and measurable online advertising campaigns and programs for advertisers and advertising agency customers, generating qualified customer leads, online sales and increased brand recognition on their behalf with large numbers of online consumers." Separating its business into four distinct segments, Media, Affiliate Media, Comparison Shopping, and Technology, the company has tremendous control on advertising across the Internet, reaching nearly "132 million Internet users in the United States in December 2006."

Because Internet users are continuously expanding and because ValueClick is entering the global market, shown by its recent purchase of a European consumer-informative database,, there will be tremendous opportunity for further growth as more consumers spend more time on the Internet everyday. In addition, during times of economic growth, when more merchants can afford more advertising, using a cost-per-click method at such a large scale will continue to provide ValueClick with a steady stream of sales and profit.

Some investors may question the effectiveness of utilizing only online advertising. However, with the use of e-mail, consumer-provided information, and general viewing, there is a vast array of websites to reach all demographics. And since ValueClick controls its entire business, including providing technology to merchants, this company has a quite a conglomerate in Internet advertising. Moreover, because ValueClick can reach so many consumers and provides business for so many companies willing to advertise, there is no reason to doubt the growth the company has seen relative to its share price. Up 13% in 2007 and up 25% in 2006, ValueClick has not seen a negative calendar year since the recession-driven year of 2001. And as long as new consumers continue to begin using the Internet and as long as old consumers will spend even more time on the Internet, ValueClick will be able to provide merchants with copious information and egregious advertisements, picking up abundant amounts of revenue.

As the above business plan looks excellent for an investor to be situated in, other companies in this industry, such as Yahoo!, have similar methods of obtaining sales. Nevertheless, what separates ValueClick from these industry competitors is its recent and predicted fundamental growth. According to Reuters, last year ValueClick saw $545 million in revenue. Compared to similar capitalization industry competitors such as Catalina, R H Donnelley and aQuantive, this number is reasonable. However, what the real separation is between ValueClick and the aforementioned companies is its margins. For the past trailing twelve months, ValueClick saw gross margins rise from its five year average of 69.23% to 69.98% and also saw its operating margins grow from its respective five year average of 17.07% to 19.68%.

Comparing these numbers to the industry, not only does ValueClick have higher numbers over the past year, but this company has also seen margins grow in twelve months when the industry's last-year gross margins of 49.72% were below the five year average of 50.33%. Competitor R H Donnelley saw a similar drop in terms of operating margins of 32.29% last year from 35.60% as its five year average. And another rival, aQuantive, which has lower yearly revenue than ValueClick saw gross margins (40.11%) and operating margins (17.99%) below that of ValueClick. Therefore, there is a lot of growth for this company when compared to rivals, and the company should continue to prosper, given its business plan.

Moreover, what is also enticing about ValueClick is its sales and EPS growth in the past yeartwo of the bigger indicators when looking at purchasing stocks. Growth at 58.23% for revenue is nearly 2.5 times higher than the trailing revenue growth of 21.43% of the industry, and EPS growth of 60.16% in the past year is also 1100% greater than the respective industry average. Only R H Donnelley was the market-cap industry competitor that saw higher numbers for the respective time frame. Nevertheless, what also makes ValueClick stand out is its capital spending five year growth number of 39.85%a number higher than the industry average 31.80% and also higher than competitor Catalina. While technology related companies like ValueClick typically spend quite a bit on CAPX, spending more on capital now will allow companies like ValueClick to have more cash later to help with stock buybacks or initiate a dividend plan to please investors. Nevertheless, even with high current capital spending, both operating and free cash flow remain positive and have been growing quite substantially over the past two fiscal years.

While growth is very important for any company when deciding to purchase stock, valuation is also another key metric used to see the potential of share price appreciation for that equity in the future. Using the most common metric of forward P/E ratio, ValueClick's 2007 estimate at 34.02, according to Reuters, is below the trailing multiple of the industry at 45.32. Since ValueClick has met or exceeded EPS and revenue expectations the past five quarters, there is potential for an even lower figure. Comparing this number to industry competitors, R H Donnelley only has an estimate of 45.45 and aQuantive is looking at a forward multiple near 85.38statistics which make ValueClick look reasonably undervalued.

In addition, with strong sales figures, ValueClick is also looking at a price to sales ratio of 4.18 which is also below aQuantive's 9.50 estimate. Probably the most reassuring figure to examine however is ValueClick's PEG five year growth expected multiple of 1.65. Looking at the three aforementioned companies and the respective PEG figure (R H Donnelley: 4.47, aQuantive: 3.44 and Catalina: 1.75), there is strong evidence that ValueClick is not only a growing company, but is undervalued in its industry, especially among its market-cap rivals. This figure confirms the benefits of owning shares of ValueClick in both the long and short term.

In addition, other financial figures factor into the decision of ValueClick's overweight status. CEO James R. Zarley and his 853 employees have performed marvelously over the past year as ROA (9.10%), ROI (10.09%), and ROE (10.93%) are not only all above the company's five year average, but are all above the industry's averages as well. Not to mention these numbers are also greater than both R H Donnelley's and aQuantive's. In addition, the company is very solvent with a most recent quarter current ratio of 4.47 and no debt to worry about either. Receivable (6.67), Inventory (64.35), and Asset Turnover (0.75), underrated but important efficiency indicators, are all high respective to the industry, and other valuation multiples such as price to book (4.10) and price to free cash flow (20.30) remain low as well.

Overall, ValueClick has the business model and fundamental support to be a great purchase for any investor. Technical analysis also seems to support purchasing shares of ValueClick as well. Scholastic (22%) and RSI figures (37) point to an undersold stock, as the parabolic SAR, above the current share price, indicates a good time to purchase shares as well. While the economy may be a bit uncertain with the given information in the past couple of months, there are still great opportunities to make capital gains in the equity markets, and ValueClick has the potential to do just that.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at or to view other articles written by him visit

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 investor to purchase stock at a lower price and to benefit from a stock prices rise or fall without owing the stock or selling it outright.

As options have a unique risk/reward structure, they can be used in combination with other option contracts and/or other financial tools to seek profits or protection.

Using stock options, investors can fix the price for a specific period of time, at which an investor can buy or dispose of 100 shares of stock for a premium that is only a percentage of what one would pay to own the stock outright. This helps investors to leverage their investment power while increasing their potential reward from a stock's price fluctuations.

As far as stock options are concerned, there are only limited risks for buyers. In no way can an option buyer lose more than the price of the option, the premium. With the right to purchase or sell the underlying security at a specific price expiring on a given date, the option will expire worthless if the conditions for profitable exercise or sale of the contract are not met by the expiry date.

Even as options offer many investment benefits, they are not meant for everyone. Just as ones returns can be large, so too can the losses leverage. Moreover, the means for realizing the potential for financial success in option trading may be difficult to create or identify. A large amount of information must be processed before an informed trading decision can be arrived at. Option trading is more complicated than stock trading because traders must choose from many variables besides the direction they believe the market will move. Careful consideration and sound money management techniques are a must for successful option trading.

Stock Trading provides detailed information on Stock Trading, Online Stock Trading, Option Stock Trading, Stock Trading Systems and more. Stock Trading is affiliated with Swing Stock Trading.

Futures and Future Index Stock Trading Information

The one thing that a person looking to get into this business will not lack is a choice of where to start. A person might even go so far as attempting sports trading if they were so inclined. It is ultimately this variety of choice that keeps people coming back to the markets time and again in an attempt to succeed.

While this kind of enthusiasm in trading is definitely good to have, it is also good to maintain a healthy amount of skepticism. For every person that is able to make a very good living from trading some kind of commodity, there are many others who get into trading and eventually fail. To be in the successful minority, you need to have some understanding of how trading works before you take the plunge and start dealing. By the time you get to the end of this article you will learn about futures trading, stock indexes and future index stock trading.

Futures Trading

One particular type of trading that has become really popular of late is futures trading. This type of trading does not actually involve any kind of physical stocks, bonds, currencies or anything of that nature, but rather involves the state of a proposition at a certain date and time. The date and time in question are referred to as the expiration date and the expiration time. A contract is then drawn stating whether or not the specific proposition will be over or under a certain value by the time the expiration date rolls around. An example of this would be the price of crude oil on January 28, 2007. Contracts circulate with different price predictions and as the price changes and the date gets closer to the actual date, the value of each contract goes up or down.

This is a very challenging type of trading to get involved in. However, for people that are good at predicting short-term fluctuations, it can end up being much more lucrative than just straight stock trading. Examples of futures trading include future stock trading, future index stock trading and future forex trading.

Stock Indexes

Another type of trading that is growing in popularity nowadays, is the trading of futures in stock indexes. Before you can understand exactly what this type of trading involves, you need to understand what a stock index is. Stock indexes are basically groups of stocks that are all related in some way to each other. The strength of the stock index is based on the combined strength of all of the different stocks that make up the stock index. The DOW, for example, is a stock index that is well known to seasoned traders as well as novices in the world of trading.

Now that you are reasonably familiar with what a stock index is, we can move onto the next section, which lists a relatively new and very exciting type of trading that many people are able to make a very nice living from. This kind of trading is referred to as future index stock trading.

Future Index Stock Trading

The concept of this type of trading has evolved due the fact that values of stock indexes are published at the end of each day and, therefore, it is possible to try and predict the future values of the stock indexes. As with other futures trading, there are contracts in existence with a specific figure and date and the values of these contracts fluctuate up or down depending on what a specific stock index does at the end of a particular day. You can buy and sell these futures just like you would any other futures and because of the ease of information available about stock indexes, many novice traders find this type of trading easier to get into.

If you are a novice looking to get into trading a bit more seriously, dealing in future index stock trading options is probably the way to go. You can read up more on the basic strategy involved and then using readily available information on fluctuations in a specific stock index, you can go ahead and buy or sell to your hearts content.


Hopefully this article gave you a good glimpse into the world of futures and future index stock trading. Now that you know the basics of both of these potentially lucrative trading options, it is time to take things a step forward and accelerate your learning curve a bit more. One of the biggest factors that novice traders fail to take into account is the fact that they are not going to be able to make continuous expert predictions and a high percentage of good deals right off the bat. It takes time and experience to learn any market and because of that, it is important to make sure that you use proper money management techniques in your stock trading.

Do not ever use money that you cannot afford to lose. Divide your full bankroll into portions (i.e. into 25% chunks) and only use a portion of the bankroll at any specific time. Following both these steps will help ensure that your education and initiation into the world of stock trading will be as painless as possible. Following both these plans will also help ensure that you are not affected financially by any blunders made during your educational phase.

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