Bulletin Board Stocks
The Over the Counter Bulletin Board stocks (OTCBB) is a regulated quotation service that gives people a chance to see last-sale prices and real-time quotes for OTC equity securities. These securities are not usually listed or traded on
any national securities exchange or the NASDAQ.
The Penny Stock Reform Act of 1990 gave rise to the OTCBB. It was set up so a wide range of people would have access to quote and last-sale information. Starting in 1993, firms were required to report domestic OTC equity securities trades to an automatic transaction service within 90 seconds. This has made it possible for day traders and others to get information as quickly as those who trade through professional firms. This has helped to change the entire trading landscape. People have found that if they are willing to take the time to do the research, they can do very well trading on their own.
Getting Information on Bulletin Board Stocks
The OTCBB has information on over 3,000 securities. On top of that, the bulletin board stocks also includes over 200 market makers. The amount of access the bulletin board provides gives people an opportunity to look into non-traditional trades, and it allows them to truly diversify their portfolios.
One of the keys to making informed trades is having up-to-date, accurate information. The real-time quotes one can get on bulletin board stocks are extremely important. However, the OTCBB also includes information on the prior day of trading and points out items of interest and indicators, making it easier for a person to gather a full picture of what is happening with specific bulletin board stocks.
Internet Stock Trading
Internet stock trading has introduced thousands of people to the stock market over the past decade. The tech boom gave rise to a number of online services that make it cheap and easy for people to trade. Those who cannot afford a broker or those who want more control over all of their trades have found a home on the Internet.
As with most services on the Internet, stock trading sites vary in quality. There are some sites that do not really give traders all the information they need. These sites tell people that if they follow a few simple rules they will come out on top. Statements like that give people the false perception that there is a single method to make money on the stock market, overlooking the risk that is involved with every investment and trade. It is important to find a site that offers strong research and gives a person the opportunity to get a professional prospective on what is going on in all of the major markets.
Benefits of Internet Stock Trading
Most people who trade on the Internet do so because it is affordable. There are a number of sites that charge under $10 per stock trade. They will even allow a person to make broker assisted trades for under $30. When all is said and done, a person can save thousands of dollars by handling his trading online.
A number of internet stock trading sites do not have a minimum requirement to open an account. This is not true for most brokers. Even firms that cater to lower-income customers still often require an initial investment of over $500. There are high-end brokers that require upfront investments of at least $400,000. A person who wants to trade over the Internet simply needs enough money to purchase the shares of stock he wants to trade and the relatively low trading fees.
The Downside of Internet Stock Trading
It was once suggested that a broker is needed to help a person make educated trading decisions. This is a legitimate concern. However, information and research is much easier to come by now than it was in the past. A day trader has access to quotes, performance histories, expert predictions, and much more.
There are still sites that do not provide real-time quotes. This can be extremely detrimental to a trader. Large sums of money can be lost or huge gains can be missed if a person is not working with up-to-the-second quotes. When choosing a bulletin board stock trading website, it is crucial to find one that it is constantly updated throughout market hours.
Internet Stock Trading Services
As more people turn to the Internet to handle their
trades, companies continue to add services. Originally, a person could basically buy and sell stocks. Often, there was even a several-minute lag time between a request and the execution of it. Now, a person can do almost as much online as with a regular broker.
It is possible to invest in mutual funds through several websites. Most companies have also expanded beyond the NYSE and NASDAQ to include foreign markets, including those that trade currencies and commodities. A person who signs on with an Internet trader site can also look into bond trading and the futures market.
Call Options
Call options give a person the right to purchase shares (usually in 100 increments) of a company's stock at a certain price (strike price) for a certain amount of time. This means that if a person has a call option for 100 shares of a stock at $15.00 per share, he can buy those shares at that price from the date of purchase to the option expiration date even if the stock price rises during that time. If a person believes a stock is going to rise quickly, a call option can allow him to save quite a bit of money on his purchase.
A put option functions in much the same way as a call option. However, it gives a person the right to sell shares at the strike price for a certain period of time. People who think a stock is going to drop will often go with put options, because they will be able to sell at a price higher than that of the market price. Both call and put options grant people the right to trade, but a person is not obligated to follow through on the transaction.
Call Options on the Web
When stock trading first came to the Internet, most sites were very basic. People could buy and sell stocks, but that was usually all they could do. Sites have become far more complex, and now there are many services that day traders and amateur investors can use. Call options are now available from a number of online stock trading companies.
Call options will not always pay off. A person needs to recognize when he should or shouldn't exercise an option. The best websites will allow a person to contact a professional before getting involved with call options for the first time.
Covered Calls
Covered calls are considered to be one of the safest option positions a person can have. A covered call means that a person combines a long position and a short call option position on the same asset. In essence, a person is selling a call against shares he already has.
If a person has a stock he wants to sell, he can write a call against it. He can then get the amount of the option premium from the person who buys the option contract. For instance, a person who writes a call on shares with a premium of $2 would be paid $2 for selling each share. Calls are generally in terms of 100 shares, so he would basically (there are fees involved) pick up an extra $200.
When Do Covered Calls Work
When first learning about covered calls, they can seem like a no-brainer. However, it is not always a good idea to write a call. Covered calls are most beneficial for stocks that do not experience large shifts either up or down. If a stock stays relatively consistent, a covered call will allow a person to collect premiums.
If a person expects a stock price to soar, he should not write a call, because he would be missing out on the option to sell at a much higher price. Many people jump into covered calls without looking at the long-term. It is important to have a good grasp on the stock involved in the call. Of course, there will always be surprises on the stock market, but some "surprises" can be avoided with solid research.
Day trading is often a bad word in the world of brokerage and investment firms. Day traders are those who have eschewed the assistance of traditional trading houses and struck out on their own. When day trading began to rise in popularity, many simply viewed it as a fad. They were under the impression that independent traders with no background in finance would be swallowed up by the market. However, this has proven to be a mistake, because many people have been very successful at day trading.
The most common form of day trading takes place on the Internet. There are countless sites that offer people stock trading services. Some sites are far better than others, so it is important to look into the services each provides before signing on. Some charge fees or require minimums, while others simply charge by the transaction.
Day Trading Services
The amount of information available to day traders is far greater than it was in the past. Most sites provide real-time price quotes and last-trade prices. While individuals might not have the insight that professional traders have, they can obtain very good information. It is possible to research companies and their stocks in depth on many trading sites. Performance history, recent activity, and predictions are all available to the day trader.
Getting started with day trading is generally very simple. A person will usually have to set up an account on a specific site. This, however, is a simple task, and usually can be done in just a few minutes.
Investment clubs have sprung up all over the country. They serve as a way for people to get together to discuss investment opportunities, stock market trends, and issues they are having with their own portfolios. Whether talk stays strictly on investments depends on the club, as many group meetings are as much social as they are informative.
Many clubs are set up for specific groups of people. There are clubs for those who are over 60 or under 30. There are also clubs that are specifically for women and others that are just for men. Some investment clubs cater to people with specific jobs such as teachers or small business owners. The majority of investment clubs do not have any direct connection to professional traders or brokers, but many do bring in professional guest speakers from time to time.
Investment Clubs on the Internet
The Internet has proven to be a great place for amateur investors to meet and discuss a number of issues. Most clubs are set up as chat rooms where people can simply speak about trading or get information about certain services or options from others who have already used them. While this can be beneficial, it is good to keep in mind that most people in investment clubs do not have extensive backgrounds in investing.
A person who invests in a mutual fund is putting his money in with the money of other fund investors. The fund then functions as an investment company. Everyone's money is used to make purchases of stocks, securities, or other assets that will hopefully make money for everyone involved.
Mutual Funds
Regardless of the amount of money people invest in mutual funds, they generally do not have any say in what course the funds will take. A fund manager establishes the fund, getting people interested in it and setting goals with investors. Once things are up and running, a portfolio manager handles the investment choices. Prior to investing in a mutual fund, a person should look into the fund's performance history, fees (some mutual funds require payment upfront), share prices (which change daily), and the risk involved with the particular fund.
Mutual Funds on the Internet
Internet stock trading has become fairly common over the past decade. Most people know at least one person who trades online. However, many people are not aware of the fact that there are sites that offer services that go far beyond basic stock trading.
It is possible to invest in mutual funds online. In many ways, the process is similar to traditional fund investing. Funds will have portfolio managers, there will be established goals for different funds, and risk will vary with each. A person can research the fund online, and he can usually contact the fund or portfolio manager to learn more about what type of investments have been and will be made on the fund's behalf. There are a number of sites that do not require fees for getting involved with their mutual funds.
NASDAQ stocks are extremely tech heavy. Not all items traded on the NASDAQ are from technology companies, but those are the companies that definitely put the NASDAQ on the map. The tech boom actually led other industries to seek out the market. Each year, more people are discovering the NASDAQ, and companies are realizing that it is as viable a market as the major securities exchanges. There are now over 600 securities dealers trading over 15,000 issues on the NASDAQ.
Originally, the NASDAQ started as an electronic quotation system for the OTC. However, it now functions as both a stock quote service and stock market. Its electronic nature has held strong, though. People can trade easily on the NASDAQ via computer from pretty much anywhere in the world.
Differences between the NASDAQ and the NYSE
The fact that different types of companies are generally listed on the NASDAQ is not the only thing that separates it from the NYSE. The NYSE functions as an auction market. People generally try to buy shares for as little as possible and sell shares for as much as possible. NASDAQ dealers actually compete to post the best quotes.
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