Is Discount Brokers Going to Win Your Business?

By Trading Mechanic

Want to know which stock broker is the best? Find out in the following article where I talk about the more popular options out there. Hopefully, you can find the one you are looking for below.

Etrade Financial really messed up with its mortgage division. During the past 2 years, the brokerage have been posting consecutive quarters of losses and it doesn't even have anything to do with its brokerage firm. It's really letting Charles Schwab and TD Ameritrade take its share and it's just going downhill slowly.

TD Waterhouse acquired Ameritrade to make TD Ameritrade. They also changed it to green but that's about all the changes they made. The online user interface still looks like it's from the 1990s when everything was based on command lines. I would recommend other options over this one any day.

Charles Schwab has been taking share ever since Etrade blew up with its mortgage business. It's sad to see Etrade doing so bad but at least they came up with the Etrade baby. Charles Schwab also has a neat 2% reward credit card which is great if you use them as your brokerage.

TradeKing is a smaller player in the space but it's solid. In fact, it's won many awards from the likes of Barons and Smart Money for its interface, customer support and fast execution.

Zecco has the worst marketing ever but it is one of the few broker that offers free stock trades. If you have over $25,000 or trade 25 times or more, the trades are free. Otherwise, it's $4.50 per trade.

SogoTrade is a nice option because it's $3 per trade. However, it nickel and dimes you on other things like a SEC fee (what is a SEC fee you ask? Exactly!). You may just need to run the numbers to see whether it's going to be cheaper. SogoTrade does seem to do many trades though but it doesn't seem to offer options trading.

Wells Fargo offers a trading platform in its WellsTrade as well. It's free for people with over $25,000 of combined assets with them so it's worth a look (if you have the money). My personal experience is that the platform is lacking but for retirement accounts and/or investors who don't trade often, free trades are a good alternative.

Bank of America came to the self trading platform a few years ago when it offered free stock trades for its clients who have more than $25,000 in assets with them (it could be savings, checking among others). A few years later, you don't hear much about them but I'm sure some of their customers are using them since it's free.

OptionsXpress is less known in the retail investor realm but it's very popular for frequent traders who love options. They have the best tools for options trading and they also charge three different prices for options commissions (as opposed to pricing based on the exact number of contracts). - 23212

About the Author:

Trading stocks is easy if you find the right discount broker. Stock Trading Brokers help you find the best firm out there so you don't have to.

Option Trading, Risk Management, and The Global Macro Trader

By Jim Kovner

One of the best things about being a global macro trader is that of being able to profit when things go crazy. Put another way global macro traders live for events that are covered in risk. If there is no risk then there is likely no reward. Of course blindly taking risks is a road to guaranteed ruin.

One of the first and most important risk management tools available to the macro trader is the practice of positions sizing. Position sizing is when you determine an optimal amount to risk on a trade. Obviously several factors can go into your position sizing algorithm. You can look at the probability of the trade working out. You can look at the over all risk versus reward ratio. And you can look at how much of your portfolio you want to risk. Obviously there are hundreds of potential variables that you can input into your position sizing model.

Now that you have your position sizing algorithm it is time to focus on eliminating or at least minimizing tail risk events. Tail risks are for very improbable events that most investors never even look at or consider. Any stock can go to zero. Your CEO might be committing fraud. Your town could experience a huge earthquake. These and countless other events are considered tail risk events.

Probably the simplest and most effective ways to cut off tail risk is to use options. If you are long volatility then you can profit from it whether you are using puts or calls. If on the other hand you are net shot of volatility then you are at the mercy of the markets and their wild and crazy fluctuations.

Options are very useful to cut off tail risk because they totally limit your risk while allowing for plenty of upside. In fact sometimes they provide a lot more bang for the buck then an outright stock position as they can have a lot of inherent leverage.

As with any trading strategy however there is still some risks that you must be aware of. Two of the most common are one that you may be overpaying for the options. Just like when you buy a stock you don't want to pay too much.

Another risk is that you need to ensure that you know your trading timeframe. If you are hoping to hold the position for several years then you will likely want to reconsider options. If on the other hand you are hoping to hold it for a few day up to a year or so then options may very well be your holy grail.

Ensure that when you are trading that you look at al the available ways to express your market view. By doing this you will often use options and in so doing improve your global macro trading results. - 23212

About the Author:

If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investing advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.

How Much A Forex Broker Can Make From A Single Trader?

By Hass67

When you open a forex trading account, you will be told by your forex broker that there are no commissions involved in currency trading. Most of the new traders take their broker words as true. They think that the cost of trading is minimal.

Forex brokers are also called FCMs (Futures Commission Merchants) sometimes. They make profits through the bid/offer spread they charge their clients for each currency pair. This bid/offer spread is your trading cost and profit for your broker.

Lets take a practical example. Bid/ask spreads are usually overlooked by the individual traders as the price they have to pay for trading. So lets calculate what your cost of trading can be in a year.

Suppose, you are day trading the currency markets, 5 times every day. Take away the weekends, when you cant trade, there are 250 trading days for you.

As a day trader, you will open and close your position before the end of each trading day. That means each position is traded 2 times by you.

Suppose; your start with a deposit of $50,000. You use a leverage of 4 only, you are being cautious. So this $50,000 deposit will control (50,000) (4) = $200,000.

Annual Turnover = (5) (250) (2) (200,000) = $500 Million. You can see the annual turnover of your trading is huge! Now lets calculate how much your broker will make and what your trading cost is based on your spread cost. Spread Cost= (Annual Turnover) (spread)/2.

Suppose further, the bid/ask spread offered by the broker is 3 pips. 3 Pips Spread Cost= (500M) (0.0003)/2= $75,000.

Suppose, the spread offered by the broker is only 2 pips. 2 Pip Spread Cost= (500M) (0.0002)/2= $50,000.

You can see now, the cost of trading with a 3 pips spread versus a 2 pips is $25,000. Huge for you, this is 50% of your account equity. You see now that a 1 pip difference can result in $25,000 more as trading cost for you.

You will have to make a profit of $75,000 simply to break even. Trading costs are one of the reasons most active traders fail in the long run. - 23212

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Read about Trend Forex System. Try Netpicks Forex Signal Service.

Learning to Recognize Investment Risks

By Sara Ferguson

As an investor you face many risks, the most obvious is financial risk. Companies go bankrupt, trading decisions go bad, the best laid plans go awry, and you can end up losing your money " all or some of it, whether the economy is strong or weak. What puts your finances at risk? Here are some types of risks below.

Interest rate risk: Interest rates, set by banks and influenced by the Federal Reserve, change on a regular basis. When the Fed raises or lowers interest rates, banks raise or lower interest rates accordingly. Interest rate changes affect consumers, businesses, and, of course, investors. Whether rising or falling interest rates are good or bad depends on the type of investment.

Market risk: No matter how modern our society and economic system, you cant escape the laws of supply and demand. When masses of people want to buy a particular stock, it becomes in demand, and its value rises. That value rises higher if the supply is limited. Conversely, if no ones interested in buying a stock, its value falls. This is the nature of market risk. The value of your stock can rise and fall on a whim of market demand. Your investments are impacted on that demand or mood of the market.

Inflation risk: Inflation is the growth of the money supply without a commensurate increase in the supply of goods and services. For consumers, inflation shows up in the form of higher prices for goods and services. Inflation risk frequently is also referred to as purchasing power risk because your money doesnt buy as much as it used to.

Tax risk: Taxes dont affect your investments directly, but they do affect how much of your money you get to keep. To help minimize tax risk, be aware of the tax implications and obligations associated with the different types of investments. Because the tax rules are often very complex, differ for different investment vehicles and scenarios, and change regularly, talk to your accountant, tax advisor, or tax attorney for guidance.

Political and governmental risks: If investment vehicles were fish, politics and government policies (such as taxes, laws, and regulations) would be the pond. In the same way that fish die in a toxic or polluted pond, politics and government policies greatly influence the financial stability of companies and commodities, the value of currencies and so forth.

Emotional risk: Emotions are important risk considerations because the main decision-makers are human beings. Logic and discipline are critical factors in investment success, but even the best investor can let emotions take over the reins of money management and create loss. For any kind of investing, the main emotions that can sidetrack you are fear and greed. - 23212

About the Author:

How to Invest Today is dedicated in teaching and keeping you up to date on the information you need to invest. Investing is a always changing world with constant pitfalls. How to Invest Today trys to help you around them to avoid getting stuck and keep you informed of the latest information.

Choosing Good Stock Market Results

By Anne Vardell

clearly you may get the stock market results everywhere. They are in the morning paper and they are on line they are on the newscasts and the financial channels on wire and satellite and you are able to find them some of other methods. So why is it essential to you to be able to discover them?

I assume that you are reading this because you have more than just a passing attract in the stock market results. You are not only a few numbers person that like to know what each thing with a number is doing in the world . I I think that you are reading this for the reason that you are attracted in making cash in trading stocks.

Now while you certainly can find the information on the stock market results and on the performance of the stocks you are looking to trade or may even be trading in any of the above mentioned ways the data may well be somewhat dated by the time you view it and if it is dropping like a rock, by the time you get the news you may have already lost a significant amount of money.

Time is indeed money and when you are talking about the volatility of the markets in today's economy, the last thing you want to be is the last person to know. So what are the options that you have that will keep you up to date with the stock market results and in the know in time to actually make decisions to buy and sell at a point where you can maximize your profits and minimize your losses?

That it exactly what having the correct software for your trading business will allow you to do and why it is in your best interest to make sure that you have the best there is.

When it comes to stock market results, the numbers can unfortunately change in milliseconds and while you might look at a number one minute and be able to know you have a huge gain coming in, that same stock can less than a minute later be almost completely worthless and may totally bankrupt you.

Things can and do happen that fast so you need to make sure that the software that you are going to be using is set up to gain the access to the stock market results numbers as fast as is possible so that the decisions that are made, either automatically or manually, can be informed decisions that are going to make and not lose money.

Thank good that the majority the entire of the online programs access the data fast sufficient to make the hold up and loss a non-issue, especially with the high speed Internet available a large amount everywhere in the country these days . - 23212

About the Author:

Anne Vardell's cheap stock trading guide. Providing the best, up-to-date information on the best in online trading companies tips!