A friend of mine recently asked my how it is possible that some stock prices still fluctuate although the stock exchange has been closed already. The answer lies in extended trading hours.

Extended trading hours are much different than the normal trading hours. There are other rules and if you want to participate you must know them. First of all, just because the regular trading hours are over it does not mean that there can be no other trades.

But where do these trades take place? Extended trading hours are usually for institutional traders but you can place an order as well as long as your broker supports it. Most modern online brokers do nowadays.

You can often place trades and get executed until 7pm or 8pm EST. But it all depends on the volume and liquidity at this point. One thing is important. There are other rules and the liquidity is usually much lower than during regular trading hours.

If your broker takes orders you will have to place limit orders. Chances are high that you only get a partial fill or not filled at all. Or you get an odd lot. This means higher risk that you probably can not exit the trade when you want.

Another problem with after hours trading is the wider spreads. Because of the lower liquidity the spreads begin to widen. This means higher costs and higher risks for you.

Since private investors are rarely participating, you will compete with professional traders. This can also mean a higher risk to you.

Why would someone want to trade after-hours? There are good opportunities after hours as long as you know what you do. Companies do report earnings or important news after hours for example. This gives you a chance to react on the news and get in or out of a stock while other investors are still waiting for the next trading day to begin. Many traders enter after hours and exit the next day before the market opens. They made a profit before others even start trading.

This stock trading tutorial will provide you with the most basic information about stock trading. Of course, you can always go online and look for free online tutorial courses or buy software programs that can teach you the basics of trading, but if you’re already on this page, get on and read these simple steps and learn what to do and what not to do in stock trading.

How does stock trading work?

Stocks are traded – or sold and bought – in exchanges like the New York Stock Exchange, NASDAQ and American Stock Exchange. Trading can also occur online, where buyers and sellers make deals using computers and the Internet. There are two main types of stock markets, one is the primary market and the other is the secondary market.

The primary market is the place where stocks or securities are created by means of an initial public offering. This means that a company offers shares of its business that the public can purchase to give them a stake or an ownership claim on that particular company, depending on the size of shares purchased. Secondary market, on the other hand, is where previously-issued securities are traded with the direct involvement of the companies that initially issued the securities.

Stock-buying tips

How do you purchase stocks? There are several ways and the most common is through a broker or a brokerage house. Brokerages can be either full-service or discount brokerages. The former provides advice and can manage the account for the buyer, while the latter merely buys the stock for you but usually does not offer personal help or management services. Another method is by buying the stocks directly from the company through dividend reinvestment plans and direct investment plans.

Learn how to protect your investments

There are a number of software programs and online courses that you can explore to learn the basics of trading. If you’re a beginner, it is important to study every resource that you can get your hands on about security trading. Playing in the stock market is not a get-lucky type of business, no matter what some people say. It requires study, research and patience and a lot of help from professionals and technology. The most important thing that a beginner trader or investor should remember is to have a plan and a system of trading. You get to formulate these by educating yourself on the ins and outs of the financial markets. Also, don’t start by overdiversifying or buying too many stocks at once. For a beginner, it is advisable to get into the market one small step at a time. You can consider bigger deals when you’ve gained enough experience of how trading works.

This stock trading tutorial might seem very basic, but sometimes, traders are blinded by promises of instant wealth that they forget even the simplest steps. Make sure that you don’t commit the same mistake.

Maybe you have wondered exactly what is forex trading and how people make money with it. It may sound difficult or complex. But in fact it is quite simple.

The word forex is just a short way of saying foreign exchange – taking the first two syllables of each word. So it means foreign currency exchange. It is also sometimes written as FX.

You probably already know that the value of the dollar, pound or euro goes up and down in relation to other world currencies. That is what people mean when they talk about the dollar rising or falling against the euro, for example.

If you change dollars into euros for a vacation in Europe, the number of euros you receive for $100 will change depending on the relative values of the two currencies. If the dollar is strong you will get more euros. If it is weak you will get less.

These values are constantly changing. So it is possible for traders to make money by investing in a currency that they think will rise, waiting until it does rise, and then selling it. Often, they only have to wait a few minutes to make a profit on the difference. Of course if it falls, they can make a loss. So currency exchange trading is a risky business.

Trading Margins On The Currency Exchange Markets

Most foreign exchange traders work on margins. This means that when they invest in a currency, instead of putting up the money for the whole of the purchase, they can just fund a percentage and their broker covers the rest. This is like trading on stock exchange margins. It allows you to control large sums with just a small deposit, and means that ordinary people can get started in foreign currency exchange with only a few hundred dollars.

The units of currency exchange are called pips (price interest point system). Talking in terms of pips makes it much easier to evaluate the profit and loss of a trade when the currency values themselves are constantly changing.

How To Make Money With Forex Trading

You will have realized by now that to make money with foreign currency exchange trading you need to have some idea of the likely movements of the different currencies. Most people use charts which show the direction that the currencies are moving in. Then they apply a system that has worked on similar patterns in the past, figured out by experienced traders.

One of the best ways of starting out in FX trading is to use an automated forex system, also known as an expert advisor or robot. This is software that runs on your computer. It will make trades on your behalf according to the system that you program into it.

This way you do not have to watch the markets 24 hours a day to make your trades. Of course, just like everything, the more knowledge and experience you have the more successful you are likely to be. But if you use an FX trading robot you can get started with a demo account with just a little understanding of what is forex trading.

Most people who are interested in Forex trading are ordinary folks with no prior training or experience in short-term trading, that unfortunately are being sold a bill of goods. Late night infomercials irresponsibly tote Forex trading itself as the Holy Grail, and show clips of testimonials from a few lucky people who made some atypical trades. “I made $800 this morning before going to work,” “I cleared $3,000 my first week, part-time,” that kind of junk.

These infomercials employ a two-step process to jam an expensive product of questionable worth down your throat. Usually it’s a piece of software that has arrows which light up red or green, and when all four of them light up green you enter your position. Simple, huh? The software costs about $3,000. But they don’t tell you that up front – the television bit just invites you to a free seminar full of happy, excited people. At the seminar they fill your head full of dreams and make the price tag seem like a fraction of your first month’s profits. You feel like you are really missing out if you don’t join the crowd and get in line to buy.

While there is some merit to the four arrows all lighting green, which indicates that the price trend is all in one direction over several different time-frames, blindly following it is a horrible system. You cannot rightly call yourself a trader if this is your approach. You are just a monkey pushing buttons. Don’t plan on making any long-run profits as a monkey – maybe a banana here and there, but you WILL slip on the peels. Think about it – if this software could really make money like they claim (virtually on autopilot), no way do they sell it. They would get much richer simply using it themselves trading large positions.

I’m not saying that daytrading Forex cannot be beaten. Much to the contrary, I trade the EUR/USD successfully intraday. You probably can too. But avoid purchasing an expensive system. In fact, I recommend avoiding mechanical systems altogether. All you need is some basic trader training in the way of technical analysis, some idea of a solid approach, and a little experience watching the markets to get a feel for them.

It’s probably best to concentrate on one pair. That’s what I do, just the EUR/USD. Sometimes if it really starts moving I will cross check other currencies to try and figure out what is happening, but I don’t trade them. By only watching one pair at regular hours you develop a feel for the trading action and can tell when conditions are strange.

There are really only two ways to day trade: Continuation or Reversal. Continuation includes breakouts and trends, while Reversal concentrates on trading ranges at the edges, betting against a breakout. Which hours you trade should dictate which style is best suited for you. If you want to trade during the most active hours you probably want to look for breakouts and try to ride trends. If you are working the quieter hours then fading the edge of the range is a higher-probability setup. Either way, success comes from employing proper risk vs. reward analysis, which means setting your stops and profit targets in the right places.

Personally I trade the after-hours EUR/USD market. It’s what I like. Also, it’s what’s practical for me because I live on the west coast of the USA. So I am only watching the market during the Asia trading period, no other markets are open. And I am looking for trading ranges, particularly double-tops and double-bottoms at prior support and resistance levels. I usually get off 5 good trades per week and win 3 of them, with a win of about 1.5 times my average loss. So it’s a good methodology because 1.5+1.5+1.5-1-1 = 2.5. That’s a positive number and it’s a good one.

Now, if I wanted to play breakouts and trend continuations I would only trade during the New York / London overlap period, which is between 8:00 am and 12:00 noon EST (or very early my time; I would rather not miss out on those early morning dreams). This is the time where those types of trades have the best odds of working out for this pair.

The most important part of any trading system is to have a methodology, stick to it, get good at it, and make it work for you. If you aren’t disciplined enough to stick to your trading ideals, then you would be better off being a monkey pushing buttons when the lights all turn green, as your losses will probably be smaller.

What Are the Different Stock Trading Strategies?

When it comes to stock trading strategies, there is no one strategy which would suit all investors. There are various different kinds of strategies which different kind of investors use in the stock market. The strategy used by them usually depends upon their risk appetite and the amount of money they want to invest in the stock market. Let us discuss about the most commonly used strategies in the following paragraphs.

The first and the most commonly used strategy is the buy and hold strategy. In this strategy, the investor picks up the stocks in which he believes in and these companies would give good return on investment in the long term. This is also known as long term investments and it is usually safer way to invest since investors usually pick up blue chip companies which are well established and drive the industry. This type of strategy is ideal for beginners in stock market since they are not aware of stock market complications. Therefore, they can just pick a few blue chip companies and invest in them.

The other type of investment strategy is known as top down strategy. As the name suggests, in this strategy the investor first chooses the market, then the strongest sector in that market, then the best stocks within the sector. Lastly, he waits for the best time to invest in that stock. As easy as it sounds, this strategy is not for beginners or less informed investors. This strategy is suitable only for the expert level investors since they have the knowledge and information about the global markets.

Apart from the above mentioned strategies, one more strategy which is common is the bottoms up strategy. This is exactly opposite to the top down investing strategy. This strategy is also known as cherry picking strategy since this has nothing to do with analyzing the markets or sectors. The decision to buy or sell that particular stock depends solely on the performance of that stock irrespective of the industry or market.

In addition to the buy and hold strategy, top down strategy and bottoms up strategy, there are a few other strategies which investors use. These include defensive investing, dollar cost investing, contrarian investing strategy etc. No one investment strategy in the stock market can be suitable for all types of investors, therefore it is advisable for beginners in the stock market to talk to their financial advisors and decide which strategy fits in best depending upon their risk appetite.