Why Penny Stocks Are the Best Way to Profit in the Stock Market

With the economy looking so bad right now, lots of people are looking for ways to make extra money. One way that people have been trying for years is investing in the stock market. While most people consider stocks to be long-term investments and are meant to pay off over the course of a life time, there is a second group of people who are looking to make short-term profits from stock trading.

One of the best ways you can extract short-term profits from the stock market is through the trading of penny stocks. A penny stock is defined as any stock which is currently trading for less than five dollars per share. How can penny stocks be profitable, you ask? The answer is that they can be extremely profitable because of a principle called leverage.

When you price of a stock is low, you are able to buy many share of that stock. Also, a stock which is priced at 50 cents can easily double literally overnight. This can result in huge profits if you pick the right stocks to invest in.

Unfortunately, it is very difficult to know which stocks are going to increase in value in the near future. Just as the value of a penny stock can double overnight, it can just as easily fall in half overnight as well.

I have found that the best way to pick which penny stocks to invest in is to let a piece of software or a stock trading robot analyze the stocks for me and choose the ones most likely to increase in value. A stock trading robot is able to perform complex mathematical calculations and trend analysis, as well as examine hundreds of stocks in a short amount of time. A human could never analyze stocks as quickly or accurately as a human, and this is why you will be able to see much bigger profits if you decide to invest in some stock analysis software.

If you are interested in taking your stock market trading to the next level and really increasing your profits quickly, then I would recommend that you check out a resource called Doubling Stocks

These guys have developed the most sophisticated and accurate stock analyzing robot I've ever come across in my 13 year of trading, and they deliver the results of what their robot picks to you in a handy little report which tell you exactly what stocks to buy and sell.

=> http://www.doubling-stock-robot.com <=

Seriously, I couldn't recommend this resource and more highly. It will change the way you trade stocks forever.

How to Use Inverse ETFs to Profit in a Bear Market

When asked how to make money in the markets most brokers reply with the famous Wall Street saying, "Buy low and sell high." This is always easier said than done. Anyone can make money when the markets are moving up and up and up. But, what if the market starts falling?

The 200 day moving average on the S&P 500 turned negative for the first time in years. So the question is, "Why is this important?"

As an investor you should be watching this indicator closely. The indicator simply takes all of the closing prices over the last 200 days and calculates an average. The next day you add the new closing price and drop off the oldest price. The result is a smooth line showing the general trend in the market.

The blue line is the 200 day moving average. Notice how it has just started to turn negative? The last time this happened was October of 2000, a time that the index was trading around 1400. Just 2 years later, the market had fallen to around 800, a drop of 42%.

This indicator is watched closely by many professional investors, so it's not to be dismissed. Oftentimes professional investors will see this change in trend and profit by shorting the market. For individual investors shorting can be difficult to do.

To short stocks you need to be approved for margin trading by your brokerage firm. This often requires large amounts of cash and securities in your account. Some firms also require previous trading experience. At the very least you'll need to fill out a great deal of paperwork.

To short you need to borrow stock from someone who owns it. Sometimes the stock just isn't available to borrow. If you are able to borrow the stock, you immediately sell it in the market. This short position is what allows you to profit as the price falls.

Shorting stocks is considered risky, as your potential loss is unlimited. You might even lose more money than you originally invested. With all of these challenges and risks it's not surprising that most individual investors don't short stocks.

So how can we profit from a falling market?

Recently a new type of fund has been established called inverse ETFs. These funds are designed to move inversely to specific market indexes. In other words, if the market index moves down, the fund moves up. These funds also eliminate the risk of losing more than your original investment. Your total risk is limited to the amount of money you invest.

A number of them are available on different indexes. One of the largest is the Proshares Short S&P 500 (SH). It allows you to "short" the entire S&P 500 index by buying a single ETF. You buy it just like a stock. By eliminating paperwork, margin issues, some risk, and improving tradability, these funds make shorting the markets easy for the individual investor.

I keep looking at the 200 day moving average turning negative. It makes me think that now might be a good time to hedge parts of your portfolio with these inverse ETFs.

Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can't get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today. In addition to short selling stock trade ideas, you'll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit. Click here to start your free subscription today: http://www.DynamicWealthReport.com/new.htm

Covered Call Options - How to Profit in a Down Market

How can you make money in a down or sideways market, with minimal risk? Covered call option writing may be the perfect strategy for the conservative investor. Here's how it works:

A call option gives the holder the right, but not the obligation, to buy a stock at a set price by a certain date. For example, I could purchase one contract of the August $22 call options on Kinross Gold Corp., which gives me the right to buy 100 shares of Kinross for $22 each on the third Friday in August (North American stock option contracts expire after the close of trade on the third Friday of the month). If Kinross is trading at $20 today, and I buy the option for $1, and the stock closes at $25 in August, I can exercise my call option and buy the stock for $22, and then immediately resell it for $25, for a profit of $3, less the $1 I paid for the option, for a profit of $2 before commissions.

What if Kinross is trading at $22 or less when the option expires? Then my option is worthless, since there is no point in me buying a stock for more than it's worth. And that's the problem with options. Most options expire worthless, so if you buy them, you can lose everything. It's high risk, and not for the conservative investor.

But here's another strategy. Let's assume I already own Kinross, and it's trading for $21 today, and I want to lock in my profits. I could sell the $22 call option for $1. I still own the stock, and now I have $1 in my pocket. If the stock goes up to $25 it will be called away, and I will have to sell if for $22. But, I keep the $1 premium, plus I made $1 on the sale of the stock, so I'm up $2. If I hadn't sold the option I could have sold the stock for $25 so I would have made $4, so I reduced my profit by selling the option, but I also reduced my risk.

If Kinross is trading at $21.99 on the option expiry date the options expire worthless, and I keep the $1 premium and my stock, so my total profit is $1.99. I increased my profit by $1 by selling the call option.

Covered call option writing works best if you expect some movement in the underlying stock, but not a hugh amount of movement. If you expect the stock to crash, sell it. If you expect it to double in value next month, buy the call options. But if you expect it to stay where it is or increase or decrease slightly in value, covering the stock by selling call options may be the best strategy for you.

John has been an active investor for many years. He learned, the hard way, that not losing is more important than always winning, and he uses a Covered call option writing strategy in his own personal investing.

How to Profit by Swing Trading in Today's Market

It's not exactly breaking news. A buy and hold strategy hasn't worked for the last decade. You probably know as much if you've opened your retirement account statement lately. The Dow, S&P 500, and NASDAQ are all flat or down over the last 10 years.

It's time to face facts, the old-time buy a few large-cap blue chips and hold them forever strategy has gone the way of the Dodo bird.

So, what's the answer for this particular market?

Personally I swing. Swing trade that is.

I like swing trading for this market because it takes advantage of momentum... or trading in and out of stocks and sectors that are seeing a temporary boost. There's no 'buy and hope' strategy at play here.

Let's take a look at how swing trading works.

In a nutshell swing trading is... buying the lows and selling the highs. Ok, I know what you're thinking... how do I consistently buy the lows and sell the highs? It seems like it is easier said than done.

Although there's a lot of different ways to approach it, my favorite is looking for technically-based short-term trends. And taking a position to profit from the trend.

Here's something you might not know; swing traders don't care why a stock is trending. If the technical's show there's a trend, it's not your job to figure out why. You just want to profit from it.

But here's the catch... the stock market isn't just flat over the last 10 years. It's flat over the last few months too. Lots of volatility but no real trends.

You may be happy to see a flat market - especially after last year. But for swing traders like me a flat market is worse.

So how do you overcome a flat US market?

By not limiting yourself to just the stock market.

Here's why. You won't always find a trend in the US stock market. So I'll trade foreign markets, bonds, commodities and even currencies. Until recently, access to these markets was difficult and often required separate trading accounts.

In the past, many individual investors found it hard to trade these markets. This helped give rise to the notion that a buy and hold strategy is the best way to invest.

Now, there's an easy way to trade US stocks, foreign stocks, bonds, commodities, and currencies using momentum. It's quick, cheap, painless and you can do it all from one trading account.

Want to know what it is?

That's right, ETFs (Exchange Traded Funds). These are the one investment that can give you exposure to all of these markets. Today's ETFs are revolutionizing the ability to trade currencies, commodities, and foreign markets. You can now really drill down and focus on specific subsectors of all these markets.

As I said... follow the trend. If you can't find it in the US stock market, you now have easy access to an entire array of markets with ETFs.

I believe that the big money over the next few months and years will be found in the 'specialty' ETFs that are popping up. The value of these ETFs can be derived from commodities like gold, currency pairs, corporate bonds, and any specific subsector you can think of. The list goes on and on.

And now you can go long or short with two or even three times leverage. Talk about spicing things up!

And remember as a swing trader you don't care why the ETF is trending. The patterns and trends you use as a swing trader hold up regardless of the asset being traded. So you can apply the same technical analysis principles that you use with stocks.

Combining technical analysis, momentum trading, and specialty ETFs isn't a bad way to trade this market right now. And it sure beats the heck out of buying a few blue chips and holding on for dear life!

Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can't get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.

In addition to swing trade ideas, you'll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit. Click here to start your free subscription today: http://www.DynamicWealthReport.com/new.htm.