In the not too distant past, if you wanted to trade stocks you had to pay huge fees to use a full service broker. It was so expensive the average investor could barely afford it and many couldn’t at all. However, today there are many great discount online brokers to choose from and most offer free accounts that take just minutes to sign up for. And trading fees are low, way low. As low as $3-$5 a trade.

Choosing the “best” online stock broker is important since the broker will be carrying out your investment trades and maintaining your accounts. However, finding a good online stock broker can be unnerving due to sheer amount of investment firms and banks vying for your business. Everyone claims to offer the “best trades” and the “lowest prices.” So how do you decide which online stock broker best meets your needs?

EVALUATING ONLINE BROKERS

While choosing an online stock broker, the first thing to take into consideration is whether you need a full service or a discount broker. While full service brokers offer a comprehensive range of services, discount brokers generally only execute trades on behalf of the clients. As a result, discount brokers generally charge lower commissions. Some other parameters to compare online stock brokers on are:

Trading platform: Online trading can become quite confusing and cumbersome, if the software provided by the online broker lacks ease-of-use. If the broker’s website takes too long to load or is too confusing, your trade result can be grossly affected.

Products offered: When choosing an online broker, people generally only think of stocks. However, some online brokers deal in other investment vehicles as well, such as futures, options and gold contracts. If you seek diversity in your investment portfolio, find online brokers who manage multiple investments. 

Minimum deposit: Most online brokers charge a minimum deposit to execute, which may be as high as $10,000. Evaluate your financial capacity and choose a broker accordingly. Note that some online stock brokers do not charge any minimum deposit, although this might mean compromising on some additional services.

Customer service: Since online trading may become boggling at times, it is important that the online broker maintains appropriate real-time over-the-phone and online customer service. Lack of proper customer service may leave you confused and frustrated. Also, ensure that the online broker’s customer service provides regularly account statements, for you to track your progress.

Finally, note that the right online stock broker can make or break your progress on the stock market. Good brokers undertake research activities to keep their clients abreast of the best strategies to optimize returns from stock trading.

I’ve used Fidelity, Sharebuilder, Scottrade and a number of other online brokers.  But I found a broker with a mix of all the right qualities: great customer service, an easy to use website, no minimum deposit, great security, fast trade execution and, most importantly, LOW, LOW trading fees. Tradeking takes the prize in my book. They offer . Sign up today. You’ll be glad you did.  It’s free to sign up and it literally only takes minutes.

WHAT IS THE VIX?

 We strive to introduce new trading strategies at companyinvest.com.  Today we talk about a contrarian indicator, the VIX index.

 The VIX is the symbol for the Chicago Board Options Exchange’s volatility index. It measures implied volatility (not historical or statistical volatility) of a wide range of S&P 500 options. It is often called the “investor fear gauge” because it reflects investor’s best prediction of near-term market volatility, or risk. In general, VIX starts to rise during times of financial stress and lessens as investors become complacent. It is the market’s best prediction of near-term market volatility.  The good news is we can use the VIX to forecast the future direction of the market.

 HOW CAN YOU VIEW THE VIX?

 You can access the VIX index using your stock software or any major online trading platform software such as www.stockcharts.com or Yahoo Finance.  Enter the symbol “$VIX”. 

 USING THE VIX TO TRADE

 There is an old clichéd saying about the VIX index that goes:

 ”When the VIX is high, you buy… When it’s low, you GO!”

Looking at today’s chart of the VIX, “A” is the 3-day relative strength index (RSI).  Look at the past 3 times the levels were this oversold (green circles).  They all led to rallies in the VIX, while at the same time corrections in the S&P 500.  Here’s how they played out:

• June 21-Jun 30 VIX rally =     10.67% Correction in S&P 500
• July 12-July 18 VIX rally =     3.93% Correction in S&P 500
• October 19-20 VIX rally =       2.6% Correction in S& P 500
• November 5 to ? =                  3 to 10% S&P Correction on the HORIZON!

 ”B” is the price chart.  Right now the VIX is approaching a several month low, so if the saying rings true, you should sell some of your long positions or consider going short for the impending correction.  Also, today’s candlestick is a doji, indicating a probable change in trend.

 ”C” is the MACD histogram, a wonderful forecaster of trend change.  It looks like a bullish divergence is forming, meaning the VIX price made a LOWER low, while at the same time the MACD is forming a HIGHER low.

 Bottom Line: Position yourself for a 3 to 10% market correction.

 RECENT COMPANY INVEST PICKS

 We found some hot stocks recently!

 US Steel (X).  We said to buy shares at the $40 level on October 28, and since then the stock has rallied over 21%!  Many investors don’t get that kind of return in a whole year.  What to do:  Take 3/4 to all of your position off and put the profits in your pocket.

 Double Bull Gold (DGP).  We said to buy shares at the $39 level.  The trade is currently up 6.5% and still rising.  What to do:  HOLD or put a 5% trailing stop in.

Today’s Company Invest pick is Bank of America (BAC) — another selection from the financial sector.  At CompanyInvest.com, we will only select stocks for trades that are not overbought, but right now most of the market is terribly overbought so it becomes a challenge to find stocks to trade.  Think of buying at wholesale and selling at retail.  We’re always looking to buy stocks when they are on sale.  In just two weeks time, BAC has pulled back 11%.  Now could possibly be a great time to enter a BAC position to the long side.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at the daily chart, “A” is the slow stochastic indicator which measures buying/selling momentum.  A reading of 80 is considered overbought, while 20 is considered oversold. Today’s reading is at 7.30, way oversold.  Also, BAC has moved into oversold territory and out twice prior to now.  You should always buy when the stochastic indicator is on the bottom, so the extreme oversold status here is bullish.

“B” is the daily price chart of BAC going back 6 months or so.  The first thing to look at are the red and gray volume bars below the pricing candlesticks.  Look at the selling volume (red bars) that occurred last week. Those high volume bars could suggest “capitulation,” which occurs when panic selling happens and everyone is selling the stock.  A shakeout of sorts. Since then the red bars have been shorter indicating the selling is slowing down.

Next. we drew parallel red trend lines illustrating the downtrend that has occurred in BAC since last April. From these trendlines it looks like we have a low target of just below $11/share, and a high target somewhere between $13.30-$13.40.  So if you buy BAC near $11 and it runs to $13.40, there is a possible 21.81% gain to be made on the upside here.  We like that number!

Finally, “C” is the 3-day Relative Strength Indicator (RSI).  The 3-day RSI gives great swing trading (2-3 days to 2-3 week hold) signals.  Right now the RSI is way oversold (note the brown areas).  If you look at the last 8 times the RSI was this oversold, there was a rally of some magnitude ALL 8 times (The green arrows in the price charts indicate the trade entry points based on the RSI buy signals).

Company Invest Bottom Line:  Buy BAC here and put a stop loss order in at $10.47.  That way your risk is very low, while the potential reward is quite high.

Today’s Company Invest pick is student loan giant, Sallie Mae Corporation (SLM). Most stocks are WAY overbought right now in this market that keeps going up despite horrid fundamentals and one bad economic report after another. So we need to choose stocks that have had a sizeable pullback for the best possible trade target.

SLM is part of the financial sector, which, up until today has been battered recently.  At a share price under $11.50 it’s also affordable for the averageinvestor.

COMPANY INVEST TECHNICAL ANALYSIS

1st thing on the chart “A” the slow stochastic is quite bullish and has moved to oversold, out andback, now it’s trending back up again at over 29. Odds are, this time it goes back to 80 again, and the stock will move up with it.

“B” is a 3/10 exponential moving average crossover I like to use sometimes. Notice how good the signals are when the blue line (3) crosses up or down through the red line (10). And tomorrow will likely bring another bullish cross.

“C” the MACD D histogram (blue bars) are definitely showing a reversal and the signal line (black is about to cross above the MACD D line (red).

Company Invest Bottom line: Grab it tomorrow with a stop at 10.89 (right below Tuesday’s low).  It could go to $13 on this quick little run (see green parallel trend lines).

Ag equipment giant John Deere is today’s Company Invest focus.  Like Apple, Deere is another one of those excellent companies that always seem to find a way to be profitable, even in tough times.  Deere has a diversified product line and, when it needed to, cut costs to help streamline and strengthen the company.  It’s hard to believe that just only a year and a half ago, at the height of the financial collapse, this stock could be had at the generational low price of $25 a share.  I remember telling colleagues that DE @ $25 was the deal of the century.  Ironically, that same evening, Jim Cramer of CNBC said, “Don’t think about touching this stock until it goes down to at least $20.”  Well, those folks are still waiting for that $20 price and they may never get it.

COMPANY INVEST TECHNICAL ANALYSIS

DE is being featured today because the charts favor a short term rally and a great trading opportunity. Look at the 3 day RSI (“A” above), and look at what happened to the stock price the last 5-6 times it was this oversold.

“B” is the 50 day price moving average (@ $67.30).  This is a major area of support and this support will more than likely hold again.

“C” is the slow stochastic momentum indicator.  It has pulled all the way back to oversold territory (<20) yet the last time the stochastic hit 20, the stock was trading at around $62.  This is a higher low, which is a healthy occurrence during a stock’s uptrend.

Company Invest Bottom Line: Grab this stock at this level for a nice little swing trade using a stop somewhere below that 50 day moving average ($66 or so).  Start small with 50-100 shares so your loss is minimal if your stop is taken out, however, add on as many shares as you like if when is starts moving in your favor for a possible run to the $76 level or better.

This site will feature daily analysis of a company’s stock chart to assist you in making sound investment decisions and enable you to trade successfully. We will feature a different company from the Dow Jones Industrial Average each day, providing a visual chart along with text analysis and also a brief analysis of the broader market (S&P 500). Why are we concerned with the broader market? Because 3/4 of all stocks move with the S&P 500, so it is important to understand the direction of the S&P. Why the S&P? The S&P 500 is the most representative sample we have of the entire market and is made up of 500 companies. The Dow Jones Industrial Average, on the other hand, is made up of only 30 stocks, so it’s not the best index for forecasting. However, since there are only 30 stocks in the DOW, it is ideal to use those companies to analyze in this blog. However, this is an open forum. Please post your requests for analysis (by stock symbol) and we will do our best to analyze your stock.

The analysis on this blog uses the technical analysis methodology. Technical analysis is a security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume.

Technical analysts seek to identify price patterns and trends in financial markets and attempt to exploit those patterns. While technicians use various methods and tools, the study of price charts is primary.

Technical analysts also extensively use indicators, which are typically mathematical transformations of price or volume. These indicators are used to help determine whether an asset is trending, and if it is, its price direction.

Technicians seek to forecast price movements such that large gains from successful trades exceed more numerous but smaller losing trades, producing positive returns in the long run through proper risk control and money management.

Daily nugget: The average professional stock trader loses on 3 out of every 5 trades. However, using the buy/sell signals we will discuss coupled with a disciplined trading strategy will allow you to make great profits even when you only win on 2 out of 5 trades. That is the power of trading. Stay tuned!

Simulating the stock market can be a lucrative and educational way to learn the fluctuations and risks before actually doing the investment at the first place. With this way, you can get accustomed with the stock market and foresee the upcoming development before it happens.

Simulating stock market can usually be played on the internet and you can invest virtually by not risking your money without any cost if you make bad investment choices. This practice is actually recommended in the schools and financial institutions to learn the real environment of stock before actually “entering” in it. The simulation games comes with subscription fees as a starting cost or you can play it for free in most websites. Most of them doesn’t need to have a prior knowledge of stock market. In these website, after you register to the website, you are given some virtual money to invest any company you want in the stock market. You can build a portfolio with the companies that you think they will be most successful. Time to time, you get real time data on your investment to learn whether you earn or lose money.

To use the simulation games, you need to check the closest university or financial institutions to learn which simulation website they are recommending. And then, register the website and choose your investment on which class will be assessed. The investment classes can be either in finance, economics or investment class. You can get information about how to trade stocks, options, futures, mutual funds from US or other countries’ stock markets. The simulation game also should be easy to use, reliable and flexible to use different strategies if something goes wrong.

Overall, simulating the stock market is a great way to get accustomed to stock market and learn how to earn most money on the stock market.