Investing in the stock market Archives

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Stock Market Investing: How to Conduct a Chart Analysis

July 22, 2019 Wise Dollar Investing No comments

Before I get into the how-tos of conducting a chart analysis, I want to clear a few misconceptions about stock market investing.

A lot of wannabe stock traders still maintain the belief that investing in stocks is a major risk and you have no control over the process. But this is furthest from the truth. You can get started right now with just a $100. You don’t need to put your life’s savings at risk; as you have to in real estate investment.

How to read a basic line chart?

This is a sample line chart of the Dow Jones industrial average. The Y-axis(vertical line) represents the price of the stocks and the X-axis(horizontal line) is the timeline from 1900 to 2020. Over the course of 100 years, the stocks have advanced steadily from $0 to $26,000. It’s basically a J-curve; nothing much is going on until 1980 and there is a sudden rise in demand for products manufactured by the top 30 publicly owned companies based in the United States.

Due to a swift rise in the demand for the products, the price escalates dramatically between the year 1980 and 2020. As you can see there is a dip in the stock prices around the year 2008. This is due to inflation during that period. During this period, prices of products increased but the purchasing power was weak. Hence, the stock prices crumbled from $14,000 to $7000. This was a calamitous situation for the stock owners at that time.

Candlestick chart

To conduct a chart analysis, understanding a candlestick chart is equally important. So, the X and Y-axis of the candlestick chart represents the same things as that of a line chart. The only difference is, instead of a plain curve there are red and green candles. Each candle represents a single day in the timeframe. This chart is a zoomed-in version of the previous chart and provides in-depth information about how the stock prices are changing day after day.

You must be wondering why some candles are green and others are red. Well, the green candle indicates that the stock prices closed higher from the day before. In the chart, if you look at July 16, there is a steep increase in the stock price(from 19 to 22). A day before(that is on 15th of July), the stock prices were lower than 20 and hence it is represented by a red candle. I am hoping you are understanding how candlestick representation works. It’s not that complicated actually.

When do people buy and sell stocks?

As you would already know, stock prices of a company increase with the increased demand for its products. And they fall when the demand is low. The lowest point at which the stock price fall is known as “support“. Usually, stock prices reach this level and stay there until the demand for the products increase. In some cases, they do fall beyond the support level and reach the next support level.

Likewise, “resistance” is the point at which the value of stock reaches its peak and bounces off after a while. You should look to sell your stocks when the price is near the resistance level and buy them when the price is near the support level.

Motif Investing Review: Get Up To $150 Cash Back!

February 5, 2016 Wise Dollar Investing 10 comments

I opened an account with Motif Investing?about two years ago, so I thought a Motif Investing Review would be in order to go over how they can help you reach your investing goals. Motif Investing is?a rapidly growing player in the online brokerage scene. They?ve been around for five years and bring a new twist to the traditional online investing model ? which I?ll get into a little more below.

What I really like about Motif Investing is they make it easy to start investing in the stock market. That?s especially the case if you?re investing on a limited budget as they allow you to start investing with as little as $250.

Motif was started by former Microsoft Executive, Hardeep Walia, who decided to move into the brokerage industry and from there the brokerage has grown significantly. His vision was to offer a low-cost investment model for those held back due to the high fee nature of the industry. With that bit of background out of the way, let?s move on to the Motif Investing review.

What Makes Motif Investing Unique?

There are a number of factors which make Motif Investing unique to the traditional online broker. Some of those things are:

With Motif Investing you create your own bucket, or motif, of up to 30 stocks or ETFs. Each motif can be traded for $9.95. You should realize that you’ll likely end up with fractional shares but that will be fine for most.
What if you don?t want to create your own motif? Motif Investing offers roughly 150 pre-made motifs covering pretty much anything you can think of from equities to fixed income options.
Motif Investing also allows?the ability to trade individual stocks. True to their low-cost philosophy, Motif charges $4.95 per stock trade which puts them at the same level as TradeKing as the low-cost leaders.
The real value with Motif Investing comes from, in my opinion, the ability to take on a specialized focus with your investing. There are thousands of mutual funds?and ETFs out there, but that doesn?t guarantee there?ll be a focus you want. The possibilities really are endless if you?re interested in having a specialized focus for a certain part of your portfolio.
Motif Investing offers active rebalancing with their pre-made motifs. Since you?ll essentially trade in and out of certain holdings the charge for this is $9.95.
Motif allows you to invest in IPOs. IPOs can be incredibly risky, though is something not typically available to many retail investors. Motif has access to any IPOs available through J.P. Morgan. You can invest in IPOs with as little as $250 through Motif Investing. Many other brokers require account values of?at least?$50,000 to have the same access. That’s not the case with Motif.
Motif has recently added a “Trading Alerts” feature as a part of the platform. This really isn’t unique, as many other brokers offer it, though they allow you to set alerts for specific holdings as well as entire motifs – it’s a pretty slick feature that makes Motif a little more robust.

What’s?Needed to Open an Account With Motif Investing?

If you want to open an account with Motif Investing?they make it relatively simple. The application process, much like with other brokers, takes maybe?10-15 minutes and is pretty straightforward. I selected the “Taking Flight” motif and am interested to see where it goes. As I mentioned prior, all you need to get started with Motif Investing is $250. Once you fund your account you?re ready to choose a motif.

Things to Look For With Motif Investing

With the uniqueness Motif Investing offers there are a number of things you?ll want to look for if you choose to open an account with them. Some of those things are:

Motif Investing does not offer dividend reinvestment. I know this may be an issue for some. With the amount I started with it really isn?t an issue. Motif does offer a specialized motif that?s focused on high dividend paying stocks that have not cut their dividends in the?past ten years. Honestly, it wouldn’t surprise me to see this feature added in the near future especially now that they offer individual stock trades.
Motif Investing does not have any hidden or maintenance fees which is great to see. There does come the question of what happens with the pre-made motifs if there is a stock you don?t want in it. You can trade out of that holding, but costs $4.95 per trade out to do so. That?ll be something to look out for in order to make sure you?re not racking up fees. One thing to keep in mind is if you choose a pre-made motif that has several stocks in it you do not want, it’ll be much cheaper to simply create your own motif so as to avoid paying $4.95 to get rid of each stock.
If you open a non-IRA account like I did you will want to watch out for tax issues. That goes directly back to the active rebalancing. When you rebalance you will be creating a taxable event. Speaking from my online brokerage days, far too many investors do not take taxes into consideration with their investing. As you really should only rebalance semi-annually or annually the event will happen then, but you?ll want to make sure and speak with your tax advisor if you have any questions.
The other thing to look out for with Motif Investing is they do offer access to low cost ETFs. If you?re particularly interested in those, Motif offers their no fee Horizon motifs which groups together best in class low cost ETFs. The Horizon motifs are fully customizable based on your risk tolerance as well as the amount you?re starting with.

Motif Investing Review ? My Take

I think for the right individual Motif Investing can be a great brokerage option to consider. We do the bulk of our investing with Vanguard?but I like to have a play account that I can do a little secondary investing in. If you?re looking for a way to invest a small portion of your portfolio, say 5-10 percent, Motif can be a great option to consider. The other group that might do well with Motif Investing are those relatively new to investing as they offer a straightforward and low barrier way of getting started investing.

I honestly would like to see some sort of dividend reinvestment option, though that is obviously not holding me back from investing with them. However, I know they?re aware of the desire so would not be surprised to see that in the near future. That being said, if you?re looking for a way to invest in a specific niche or a way to supplement investing you?re already doing then Motif Investing is?a solid option to consider. If you do choose to open an account with Motif, keep in mind they do also offer several promotions ? including up to $150 cash back for opening a new account.

What are your thoughts on this type of investing? Is there a specific niche you?d like to invest in but haven?t had the ability to?

E*TRADE Review: Get Up To $600 Cash Back Now!

December 14, 2015 Wise Dollar Investing 5 comments

E*TRADE?is a well-known player in the online broker space and has been for decades. If you want a new online brokerage, or are just getting ready to start investing this?E*TRADE?review will help you see if E*TRADE is a good option for you.

As a disclaimer, I do want to be transparent in that I do not have an E*TRADE account. I dealt with them extensively during my days in the online brokerage industry and have used the E*TRADE platform quite a bit.

I do also want to add that there are many online brokerages?to consider, each with something unique that sets them apart. Before you sign on with an online broker make sure they’ll meet your investing needs. If you’d like to check out some of my other online brokerage reviews, I’ve listed them below:

With all that out of the way, let?s get on with the E*TRADE Review.

How E*TRADE Is Different

As I mentioned in the beginning, E*TRADE is one of the older online brokerages in the industry. E*TRADE opened for business a little over 30 years ago and thanks to that they can offer more than the standard brokerage. With that in mind, following are some of the things that make E*TRADE a little different from what you?ll find at other brokerages:

The commissions at E*TRADE come in at $6.95, with an additional $.75 if you trade options. This makes them competitive with other brokers, albeit on the higher end.
E*TRADE has a national branch network of a little over 30 branches. This is not as much as what you?ll find with Scottrade, but I love that they offer somewhat of a branch presence. If you?re near a local branch you can take in deposits, get help with your account or get guidance in certain circumstances.
E*TRADE offers more than 8,000 mutual funds with about 1,500 being no-transaction fee funds. In the event you have to pay a commission, they charge $19.99 to buy or sell the mutual fund. Many other brokerages charge $50 or more so this is a win for E*TRADE. If you invest in mutual funds or ETFs, then make sure you know what kind of fees you?re paying. I use the free tool at Personal Capital to help analyze the fees I?m paying.
E*TRADE?offers both Futures and Forex trading. This is becoming somewhat more common to find at online brokers, but still not commonplace. Futures pricing is $1.50, which is competitive and there is no charge for Forex trades as they?re compensated on the bid-ask spread.
E*TRADE offers over 100 commission free ETFs. There are a few brokerages that offer this feature, though not all. Very few offer as many as Etrade does.
E*TRADE offers access to certain foreign markets. This is something that really sets E*TRADE?apart as not many other online brokers offer this. You can trade in Canada, France, Germany, Hong Kong, Japan and the UK. Pricing varies by country, but is competitive from what I?ve seen.

What?s Needed To Open An E*TRADE Account?

One thing I like about E*TRADE is you need very little to open an account. You can open an account with E*TRADE for as little as $500. If you need a retirement account, E*TRADE has no minimum balance. This makes them a great option to consider if you?re looking to start investing on a limited budget. E*TRADE has a?full array of account options from the standard brokerage account, to retirement accounts, to corporate accounts and more.

Fees

I hate investment fees as they only eat away at portfolios. From that aspect, E*TRADE is a good option as they do not charge any account maintenance or inactivity fees. The thing I don?t like about E*TRADE though is their tiered commission system, which is based on the number of trades you do each quarter. Many other brokerages operate in this same way, so it?s not all that uncommon.

The other drawback, albeit not fee related, is E*TRADE has a platform available only to those they deem as active traders ? placing at least 30 trades per quarter which is known as E*TRADE Pro. Again, this is not too uncommon, but is something I?d rather not see. You can always try to negotiate commission, which I?ve seen done successfully many times. If you?re looking for a lower cost alternative which doesn?t have separate platform options then someone like Optionshouse or?would be solid options to consider.

Investment Options

One of the main benefits of E*TRADE’s maturity is they offer a variety of investment options, some of which you won?t find elsewhere. Those products are:

Bonds
CDs
Bank accounts
Treasuries
Futures/Forex
Access to International trading

This access to multiple products is what helps E*TRADE stand out from many of the other brokerages out there. With many other online brokers you may not be able to manage your entire investment portfolio due to the limitations they have. That is not something you have to deal with at E*TRADE. Again, this largely goes back to their standing in the industry as well as age. If you want?the capability to manage all your investing needs as a do it yourself investor then E*TRADE is a good option to consider.

E*TRADE Review ? My Take

I believe for many E*TRADE is be a solid alternative. Their platform is relatively straightforward to use and offers the requisite free training, resources and tools to help you build a portfolio. I love that they have a branch network and have access to a wide variety of investment options to meet your needs. They?re also open 24/7 which is surprisingly not that common to find in the industry, but means you can reach them at any time. E*TRADE has also been rated as 5 stars by Kiplinger?s for things like customer service, user experience and investment options and has been named one of their top brokers.

I?m honestly not keen on the different platforms and tiered commission. However, if you?re not an active trader or want advanced platforms then that?s really a moot issue. For the casual trader, or buy and hold investor, E*TRADE is a good option to consider for your investing needs.

If you do look at opening an account with E*TRADE they offer a variety of promotions from free trading for the first 60 days to up to $600 cash back when opening a new account.

Open an account with E*TRADE today and get up to $600 cash back!

Where do you handle your investments? Have you ever tried negotiating a lower commission price?

Photo Courtesy of: Jason Tester Guerrilla Futures

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