Profit from online stock trading

It is common now for people to undertake stock trading online. Historically there have been American stock markets from the 1700s. In Philadelphia an exchange for trading currency was established to enable business owners to support their business and to grow the economy.

In the early 1800s, the New York Stock Exchange (NYSE) replaced the Philadelphia exchange. Initially New York Stock Exchange was a group of business people who met on a daily basis on Wall St to trade their stocks or bonds. This initial trading was all done outside until the Exchange moved indoors in the early 1900s. Whilst this traditional formuala served its purpose admirably, trading is no longer the bricks and mortar industry it once was. Trading no longer requires you to be in Wall St.

The way the New York Stock Exchange works could be compared to an auction. If a company is listed on the stock exchange, they have a post in Wall St whereby trades are listed and a specialist is employed as an "auctioneer" to oversee the bidding on each trade. This form of trading keeps an accurate balance between supply and demand in the stock market so the price of the shares is kept in check.

These days, it is far easier to get involved in investing in stocks. In traditional stock trading, you engage a stock broker to take and place your order for you. You phone your broker to take the order and then there can be a delay in the order being executed. Now you no longer need to worry about using a stock broker to act on your behalf. If buying or selling stocks online you can place your order with the click of a mouse. Conveniently, trading this way is also a time saver. Setting up an account with a reputable, online brokerage company is easy. These online companies provide access to a wide range of services that were previously only available via a traditional bricks and mortar stock broking service. Setting up an online account gives you access to a variety of services including: up to the minute stock quotes, detailed historic performances of individual stocks, as well as detailed information about company fundamentals.

One of the most common reasons investors like buying and selling stocks online compared with traditional brokerage is price. There are much lower brokerage fees for buying and selling stocks online than there are through buying and selling stocks at a traditional brokerage house.An important advantage of using an online brokerage service to trade stocks online is the significant price saving in brokerage fees. This is combined with the immediacy at which you can gather information required in making your stock purchasing decisions when trading online. Many investors also like the independence associated with trading shares online. Many traditional brokerage houses would try to influence your decisions when trading shares, but an online account means all the decisions you make are fully your own.

Online brokerage sites are not just about trading shares online. By giving you access to a wealth of information, online trading sites provide an important resource in formulating trading decisions. Many online brokerage sites will also provide courses designed to help you learn the tips and tricks of trading online. You can also get immediate access to your portfolio, instead of having to find all your stock certificates or calling your brokerage house.

Keeping pace with increases in technology has allowed the global economy to grow. The ability to buy and sell stocks online becomes a reflection of the economy adapting to meet the abilities of new technology head on. The ability of an investor to log in to their portfolio, no matter where they are in the world at that particular time, to trade shares online gives them the chance to take a greater role in securing their own financial future.

Trades less to make more in stocks

No ordinary company can turn a $10,000 investment into $6 million in just over a decade. But that is exactly what Microsoft stock did between 1986 and 2000. Never in U.S. history has a single company been responsible for creating so much wealth and so many multi-millionaires so quickly.

HANS: What a great stocks going from $5 to over $200 SPLIT twice in five years. So had you have bought 2,000 shares in 2001 sat back and not even looked at again until 2006 when it was $200 (and you now had 8,000 shares) that little $10,000 investment was no worth: $1,6M

TASR: Again this went from $3 to $250 (one split) in 18 months. This was FAST..just like the 1997-2000 bubble. So had you bought 2,000 shares at $3 and sold a $250 one split is was worth: $1M.

Sure take 30% off these gains as no-one can nail tops and bottoms. But you get my point? The big profits..the life changing stock investments are actually stocks where you can grow your money 5X, 10X over a couple of years….not short-term trading for a few dollars here and there.

What are these stocks in technical terms? What is it you are looking for as they are not your average companies. You’ll find stocks with astounding growth rates in earnings, revenues and cash flow. If they continue to execute their business plans their future is golden. These stocks aren’t for your mortgage money, but if you’re looking for red-hot growth stocks, here’s where you should turn first. You’ll find these biggest gainers, juggernauts that are up as much as +605%.

The rules of day trading...

Short-term, or day trading, is mostly played out by reading price and volume. Understanding this price/volume relationship is critical if you're to survive the fast pace of short-term, leveraged trading. Being able to read the course of sales and the market's depth is imperative, like a musician reading a score; understanding the layered, intricate rhythms and where the next note or bar is coming. The same goes for trading, which is a digital mind game.

You need to understand how the numbers flow from the market. All the indicators traders have created will only confuse the issue. They are derived from price and volume anyway, but they are walking sticks. When trading derivatives you'll need to sprint. Indicators only interpret the market action, so don't take your eye off their foundation; price and volume.

Investing capital long term is fairly easy compared to short-term trading. Many research companies offer reasonable advice and most is easy to access, but if you're looking to maximise your capital return, or just fancy a flutter, look into short-term trading.

Choose your "trading time frame" and understand it: who's in control of your frame, where is the momentum, where's your entry and exit within that time frame? Then, trading the small, friendly trend until it ends takes discipline, courage and patience.

Trading shorter time frames also brings a whole host of complications; emotional trading is the number one complication, as price, in technical trading, is psychological.

I say this because new traders think they are trading money, and that's true, but the numbers come much later. In the beginning it's their belief about money they're trading; the primary emotional obstacle that needs mastering. Our relationship to our money is deep; it's our security, safety and happiness. When our money goes into the market, a part of us, our psyche, has also entered the market. Our thoughts have connected us to the market; we are the market.

When the market goes on the roller coaster along with our trading capital, we're at the emotional mercy of ourselves and the markets and the markets reflect that. The most common comments I hear from new traders are "shoulda, woulda, coulda". Total responsibility for all your own actions is an absolute in trading professionally. Until a new trader can become detached from the emotional — fear/greed/money/thingy — they are doomed.

My motto while learning to trade is less is more, meaning using less capital per trade so that at least one can think more clearly. But the irony here is that new traders find using small amounts of capital boring, so they tend to use an amount that gives them an emotional experience, ultimately leading them into deep waters. Defensive trading and capital preservation are number one on the learner's list.

Once a trader's mind becomes detached from the fear of loss and starts to focus on the game at hand, the natural flow of numbers coming from the markets becomes clearer.

See destiny unfold and then without reacting, clearly choose clean entries and exits, based on a knowing faith about the market, such as volume, price, action and its momentum, supported by a little money management. You'll be on your merry way as a budding new trader. Now you begin to realise the importance of trading methodologies and having systems in place.

An expensive pitfall for the new trader are trading software programs promising to solve all your problems. You finally realise that if these programs actually worked they wouldn't be selling them.

You realise this trading-shorter-time-frames business is going to take some real work and understanding, so after some hard thinking you seek out a mentor, someone who is actually out there trading. Now you're on the right track. All you need in software is a reasonable charting program with a good data feed that shows you the bars and the volume. Next is getting alongside someone in your local area who has been trading for at least five years. This is one of the best first moves you can make. They are probably happy to help for free because they have been along the same path.

Or you could join a local trading club. Trading has multidimensional benefits, but it takes time. Becoming familiar with the markets is a relationship that requires respect, not ego.

Downturn drives great sharemarket value

With share prices down around 60% from all-time highs, it’s actually a good time to plan to invest.

If you know what shares you want to invest in then online trading is definitely the way to go particularly for the budget-conscious. You’ll pay as little as $20 per online trade as opposed to upwards of $100 for a traditional stockbroker. And let’s face it in the current environment who doesn’t want to save a bit of cash.

When shopping around for a broker one of the first considerations should be the brokerage fee which will depend on the size of the trade. Smaller trades tend to have a flat fee; for larger trades you’ll pay a percentage of the amount you are trading. Shop around online to compare fees.

Next, look at the services offered. It pays to “test drive” a bunch of websites to compare their features and functionality. Have a look at Infochoice to see who’s got what.

As you’re not getting the support of a full-service broker, you’ll want access to as much research as you can get your hands on, to help you make informed investment decisions. Most online brokers have access to news services and ASX announcements and some even offer buy/sell recommendations.

If you want a little more help you might look out for a “share pack” offered by online brokers such as Commsec and E*Trade.

Not only do experts pick the shares for you because there are a number of different shares in the portfolio you’ll achieve some diversification. Commsec, for example has four different share packs investors can choose from – capital growth, income, tax-effective income and market leaders. You’ll need $4000 to get started. Each share pack contains a portfolio of six leading Australian company shares.

E*Trade has just the one share pack consisting of eight shares which currently includes Crown Limited, Coca-Cola Amatil, Origin Energy, Westfield, CSL, Toll Holdings, Newcrest Mining and Singapore Telecommunications. To start you’ll need at least $5500.

No matter which broker you choose, you’ll need a bank account to settle your trades. Some brokers ask you to set up an account with a particular institution; others let you use your normal account. Keep your eye out for “linked” accounts that allow clients to view their banking accounts as well as their share portfolio in one location.

Market Movers

Top 10 Gains

ASX Code	Value	Change
SHL	13.900	08.59%� or 1.100
MQG	48.950	01.89%� or 0.910
WPL	49.700	01.84%� or 0.900
QBE	23.100	04.05%� or 0.900
BKL	19.940	03.85%� or 0.740
FWD	7.270	10.49%� or 0.690
WESN	25.640	02.60%� or 0.650
AQA	7.150	09.16%� or 0.600
AJL	4.280	15.68%� or 0.580
WES	25.500	02.33%� or 0.580

Top 10 Losses

ASX Code	Value	Change
IVV	123.600	-00.97%� or -1.210
IJH	79.120	-01.22%� or -0.980
COH	57.800	-01.53%� or -0.900
IKO	50.380	-01.60%� or -0.820
IRU	70.000	-01.16%� or -0.820
CTX	12.800	-05.88%� or -0.800
NUF	11.340	-06.05%� or -0.730
IAA	42.600	-01.37%� or -0.590
IZZ	48.020	-01.19%� or -0.580
SGM	23.050	-02.33%� or -0.550

Stock of the Week: Origin Energy Limited (ORG)

Investment Rating:

ORG is positioned in the competitive rather than regulated energy segment. Integration of exploration, production, generation and retail of gas and electricity lifts the range of development opportunities and reduces risk. Strategy is to explore and develop gas where easy to market. The country's largest coal seam gas reserve holder is leveraged to potential export parity pricing. Financial objectives are steady and predictable cash flows and EPS growth of 10-15% pa. In the five years to FY09, average annual EPS growth was 16.6%. A number of new projects will produce over the next few years. In future expect a 60% payout thanks to ConocoPhillip's US$5bn up-front cash injection for 50% of CSG. Suitable for investors seeking a medium risk energy exposure with growth potential.

Recent Analysis:

ORG reported a 25% increase in underlying FY09 earnings to $531m, 4% below our $552m forecast, but in line with consensus. Headline profit increased 12-fold to $6.94bn including a $6.72bn gain on the Australia Pacific LNG transaction with ConocoPhillips, less $114m on hedges and $219m in asset impairments. No surprises with the final dividend of 25cps bringing the full year to 50cps in line with expectations. It will be paid on September 23 with shares trading ex-entitlement on August 25. Of the four divisions, the Retail EBITDA result was below our expectations, but this was made up for by higher Exploration & Production and in particular Generation contributions. The Contact Energy result, down 20% and the worst of the four, was in line with expectations. Record annual production meant E&P enjoyed a steady result despite the APLNG sell-down and lower commodity prices. The Retail business softened chiefly due to an incorrect tariff decision. Initial contributions from Uranquinty power station and the expanded Quarantine power station resulted in a near doubling in Generation EBITDA. Poor weather and transmission constraints exacerbated by the NZ recession led to a woeful Contact Energy result.

Recommendation: You should buy this stock.

Previous close	52 week high	52 week low
$15.38	$19.99	$12.34
Sector
Energy
Market cap
$13,457 Million

Total shareholder return (avg annual rate)
1yr	3yr	5yr	10yr
0.8%	36.8%	25.2%	--

Earnings and dividends forecast (cents per share)
	2010	2011	2012
EPS (c)	60.0	71.0	84.9
PE Ratio (x)	25.6	21.7	18.1
DPS (c)	50.0	50.0	53.2
Div Yield (%)	3.2	3.2	3.5

"optionsXpress"

Barron’s, Forbes, Kiplinger’s and Smart Money have all recognized optionsXpress as one of the world leaders in online stock trading; we also distinguish this first–class broker as the best with the “TopTenREVIEWS Gold Award.” Both the seasoned investor and the young trader will find this service user–friendly, educational and containing the advanced tools needed to create profitable investment strategies.

optionsXpress offers numerous tools to help you learn the ins and outs of the stock market, whether you’re interested in trading stocks, options, mutual funds or even bonds. With low commissions and no minimum account balance requirement, this online broker offers affordable rates to everyone.

We really liked that optionsXpress offers a good balance between research/education and pricing. Often you can get low prices, but with little support, or tons of support with high prices, optionsXpress is perfectly in the middle.

optionsXpress Standout Features:

• Flat-rate fees and no minimum account balance requirement
• Virtual trading available for fun no-risk trading
• 10-day Trial account available
• Extensive education available, for trading novices and pros
• Offers numerous unique tools, including the Dragon, TradeWizard and Xspreads Spread Book

Fees/Commissions:

There is no minimum investment required to open an account with optionsXpress. The commission is $9.95 or $14.95 on all orders, including broker–assisted orders; this is excellent considering most brokers charge for assistance. optionsXpress charges $1.50 for each options contract.

Though this isn’t the cheapest commission schedule on the market, the tiered rate can work to your benefit if you make at least 9 trades each quarter. This qualifies you for the “Stock Trader Rate” of $9.95.

Investments Offered:

optionsXpress began in 2000 as a service primarily focused on options and a limited selection of equities; however, today the broker offers a wide array of investments including stocks, mutual funds, exchange–traded funds and bonds. They don’t offer CDs or some of the less popular investments like mortgage–backed securities and unit investment trusts.

Additionally, the service offers IRAs to secure your retirement and education savings plans including Coverdell ESAs and custodial accounts. These are excellent options if you want to fund your own or someone else’s higher education.

Ease of Use:

This is an easy–to–navigate website divided into sections by tabs. These tabs include “Welcome,” “Account,” “Trade,” “Quotes,” “Toolbox,” “Educate” and “Help.” Even the beginner will have no problems finding the tools, educational materials and account information he or she needs.

optionsXpress even offers webinars that will guide you through using the trading platform.

Trading/Investment Tools:

This online broker provides all the tools and educational resources you need to make wise decisions about your finances. Just some of the tools and informative materials include calculators, charts, streaming news and analyst research reports. You’ll also have instant access to level I and level II quotes.

You can organize your preferred tools and streaming reports on a customizable desktop that will best fit your trading style and needs. You can also add alerts, to alert you of major changes in stocks you are watching, and automated trading. Through automated trading, the broker will automatically buy or sell securities according to your set criteria. You don’t even have to be at your computer.

Once you are ready to trade, you can do so over the phone, through a wireless device or over the Internet. If you aren’t sure about a trade or just want to test the water before jumping in, try the virtual trading feature.

Through virtual trading, you can buy and sell securities with virtual money. The virtual market follows the real stock market so you can see what you would have made or lost had you invested real money.

They also offer a mobile traind platform. It works with cell phones that can access the internet and have Pocket Internet Explorer or the Blazer browser. This mobile service can help you check your balances and positions and place orders from anywhere your phone can access the internet.

Support/Customer Service:

Though optionsXpress only offers two offices nationwide, their online help is superb. You have access to a number of tutorials and tours that will guide you through the site and introduce you to the various tools and features.

If you have further questions about the site or about investments, contact customer support through live chat, email or the telephone. Customer support is friendly and full of good information.

Summary:

optionsXpress is one of the most technologically advanced services, but it’s still user–friendly and offers more than enough training and support, so anyone can learn how to trade online. They have an excellent reputation, competitive pricing and excellent educational resources; try them out.