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Welcome to Traders Cove Resource and Education page
Traders Cove was created by Investors/Day Traders as a Safe Haven for people who are new to the market. We at Traders Cove were once also new to investing/Day Trading and our goal is to cut out all the obstacles many new traders face by sharing all the education we have learned over the years without having to search the entire web for different pieces of information. Please at any time you have a question or need help stop by our message board at The Lion.com and we will try our hardest to help you.
Also, we are hosting Moderated Discussions in the evenings in out chat Trading Room. Please go there and view our the schedule of dates and times for our discussions as well as to review the outlines generated for them.
Day trading isn't something that one will succeed nor become wealthy at overnight. It takes time, discipline, dedication and many hours of studying in order to become a successful trader. One thing traders need to always remember is Greed kills. Small profits at the end of the day add up better than looking for that one get rich overnight stock. The biggest obstacle traders have to overcome is when to hit the sell button. Our advice to all new traders is first off paper trade. Many brokers supply a virtual trading platform which allows you to trade with play money using the actual real platform. Scottrade offers a wonderful platform called The Elite Platform, but you have to pay a fee monthly in order to use it unless you carry a minimum of $25,000 in your account. For more help on selecting a broker and a platform please stop by our board at The Lion.com. Again we want to stress the importance of paper trading at first. Our next advice is to set goals for yourself and stick with them. Once your stock hits your percentage goal, sell and don't look back. Never say I should have held longer because the stock went higher than your goal. Learn to be happy that you made a profit for that very stock could have turned on you and went into the negative direction leaving you in the red for the day. Emotions in the trading room will 90% of the time leave you with a loss at the end of the day. Put your emotions away while you are trading.
Day Traders must have a trading platform in order to day trade otherwise you should just take your money and put in a slot machine at some casino in Vegas.
Below are some educational and resource links in order to help you learn the many aspect of the market and trading.
We at The Trader's Cove wish you much success on your journey through Trading and Investing.
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*Note* All underlined text are links to the relevant data.
What is Short Selling:
In finance, short selling or "shorting" is the practice of selling a financial instrument that the seller does not own at the time of the sale. Short selling is done with the intent of later purchasing the financial instrument at a lower price. Short-sellers attempt to profit from an expected decline in the price of a financial instrument. Short selling or "going short" is contrasted with the more conventional practice of "going long", which typically occurs when a financial instrument is purchased with the expectation that its price will rise. Thus, being "long" is just a way of saying that you own a positive number of the securities; being "short" is just a way of saying that you own a negative number of the securities.
Intro to Short Selling
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In finance, short selling or "shorting" is the practice of selling a financial instrument that the seller does not own at the time of the sale. Short selling is done with the intent of later purchasing the financial instrument at a lower price. Short-sellers attempt to profit from an expected decline in the price of a financial instrument. Short selling or "going short" is contrasted with the more conventional practice of "going long", which typically occurs when a financial instrument is purchased with the expectation that its price will rise. Thus, being "long" is just a way of saying that you own a positive number of the securities; being "short" is just a way of saying that you own a negative number of the securities.
Intro to Short Selling
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What is Technical Analysis
What Does Technical Analysis Mean?
A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Chart School
What is Support and Resistance
Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. These terms are used interchangeably throughout this and other articles. As demand increases, prices advance and as supply increases, prices decline. When supply and demand are equal, prices move sideways as bulls and bears slug it out for control.
Introduction to Level II Quotes
What Is Level II?
Level II is essentially the order book for Nasdaq stocks. When orders are placed, they are placed through many different market makers and other market participants. Level II will show you a ranked list of the best bid and ask prices from each of these participants, giving you detailed insight into the price action. Knowing exactly who has an interest in a stock can be extremely useful, especially if you are day trading. (For further reading, see our Electronic Trading tutorial.)
Free Level II quotes
What is a Market Maker
Resource Sites for Technical Analysis:
Stock Consultant.com
StockTA.com
Short Squeeze
Stock Scores
Stock Screener
Premarket and After hours trading
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What Does Technical Analysis Mean?
A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Chart School
What is Support and Resistance
Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. These terms are used interchangeably throughout this and other articles. As demand increases, prices advance and as supply increases, prices decline. When supply and demand are equal, prices move sideways as bulls and bears slug it out for control.
Introduction to Level II Quotes
What Is Level II?
Level II is essentially the order book for Nasdaq stocks. When orders are placed, they are placed through many different market makers and other market participants. Level II will show you a ranked list of the best bid and ask prices from each of these participants, giving you detailed insight into the price action. Knowing exactly who has an interest in a stock can be extremely useful, especially if you are day trading. (For further reading, see our Electronic Trading tutorial.)
Free Level II quotes
What is a Market Maker
Resource Sites for Technical Analysis:
Stock Consultant.com
StockTA.com
Short Squeeze
Stock Scores
Stock Screener
Premarket and After hours trading
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What is Fundamental Analysis
What Does Fundamental Analysis Mean?
A method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies).
The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price in hopes of figuring out what sort of position to take with that security (under priced = buy, overpriced = sell or short).
This method of security analysis is considered to be the opposite of technical analysis.
Intro to Fundamental Analysis
Tools of Fundamental Analysis
Resource Links for Fundamental Analysis:
Financial Visualizations
Insider Buying
Knobias
Markets at a Glance
Insider Trades/Form 4s
Buys and Sells
Institutions Buys and Sells
Fundamental Valuation
Upgrades and Downgrades
Earnings Calendar
Sector Break downs
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What is a Mutual Fund
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.
You can make money from a mutual fund in three ways:
1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.
Intro to Mutual Funds
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What Does Fundamental Analysis Mean?
A method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies).
The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price in hopes of figuring out what sort of position to take with that security (under priced = buy, overpriced = sell or short).
This method of security analysis is considered to be the opposite of technical analysis.
Intro to Fundamental Analysis
Tools of Fundamental Analysis
Resource Links for Fundamental Analysis:
Financial Visualizations
Insider Buying
Knobias
Markets at a Glance
Insider Trades/Form 4s
Buys and Sells
Institutions Buys and Sells
Fundamental Valuation
Upgrades and Downgrades
Earnings Calendar
Sector Break downs
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What is a Mutual Fund
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.
You can make money from a mutual fund in three ways:
1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.
Intro to Mutual Funds
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What is an ETF:
An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. In a survey of investment professionals conducted in March 2008, 67% called ETFs the most innovative investment vehicle of the last two decades and 60% reported that ETFs have fundamentally changed the way they construct investment portfolios.[1][2]
Intro To ETF's
ETF Center
A few examples of ETF's
Please refer to the Cove Sector pages for Cove
favorite ETF's
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An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. In a survey of investment professionals conducted in March 2008, 67% called ETFs the most innovative investment vehicle of the last two decades and 60% reported that ETFs have fundamentally changed the way they construct investment portfolios.[1][2]
Intro To ETF's
ETF Center
A few examples of ETF's
Please refer to the Cove Sector pages for Cove
favorite ETF's
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What is an Option Contract
Options Basics: Introduction
Learning to Trade Options
Scottrade Option Trading Platform
Optionsexpress.com
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An option is an instrument that gives the owner the right -- but not the obligation -- to buy (a call option) or sell (a put option) an underlying stock, index or futures contract at a set price for a particular period of time, usually a few months. An investor buys a call option if he thinks the underlying investment will rise in value. He buys a put option when he thinks the underlying investment will fall.
For example, you might purchase the right to buy 100 shares of IBM at $130 for one month from now. The initial seller of the option, known as the option writer, receives a nonrefundable payment called a premium. In this case the premium might be $5.50 a share, or $550 total, because options are traded in minimums of 100 shares. If IBM was trading at $130 when you bought the option and it rises to $140 in one month, you can sell your option at a profit (probably at $10 per share or $1,000 total). Or, you can exercise your option and buy 100 shares of IBM from the option writer at $130 a share, then sell your shares in the open market for $140 a share.Options Basics: Introduction
Learning to Trade Options
Scottrade Option Trading Platform
Optionsexpress.com
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What is Margin Trading
Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you'd be able to normally. To trade on margin, you need a margin account. This is different from a regular cash account, in which you trade using the money in the account. By law, your broker is required to obtain your signature to open a margin account. The margin account may be part of your standard account opening agreement or may be a completely separate agreement. An initial investment of at least $2,000 is required for a margin account, though some brokerages require more. This deposit is known as the minimum margin. Once the account is opened and operational, you can borrow up to 50% of the purchase price of a stock. This portion of the purchase price that you deposit is known as the initial margin. It's essential to know that you don't have to margin all the way up to 50%. You can borrow less, say 10% or 25%. Be aware that some brokerages require you to deposit more than 50% of the purchase price.
Intro to Margin Trading
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Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you'd be able to normally. To trade on margin, you need a margin account. This is different from a regular cash account, in which you trade using the money in the account. By law, your broker is required to obtain your signature to open a margin account. The margin account may be part of your standard account opening agreement or may be a completely separate agreement. An initial investment of at least $2,000 is required for a margin account, though some brokerages require more. This deposit is known as the minimum margin. Once the account is opened and operational, you can borrow up to 50% of the purchase price of a stock. This portion of the purchase price that you deposit is known as the initial margin. It's essential to know that you don't have to margin all the way up to 50%. You can borrow less, say 10% or 25%. Be aware that some brokerages require you to deposit more than 50% of the purchase price.
Intro to Margin Trading
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Placing Buy and Sell Orders
What is a market Order
A market order guarantees execution, and it often has low commissions due to the minimal work brokers need to do. Be wary of using market orders on stocks with a low average daily volume: in such market conditions the ask price can be a lot higher than the current market price (resulting in a large spread). In other words, you may end up paying a whole lot more than you originally anticipated! It is much safer to use a market order on high-volume stocks.
What is a Limit Order
An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
Depending on the direction of the position, limit orders are sometimes referred to more specifically as a buy limit order, or a sell limit order.
What is a Stop
An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.
Also referred to as a "stop" and/or "stop-loss order".
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What is a market Order
A market order guarantees execution, and it often has low commissions due to the minimal work brokers need to do. Be wary of using market orders on stocks with a low average daily volume: in such market conditions the ask price can be a lot higher than the current market price (resulting in a large spread). In other words, you may end up paying a whole lot more than you originally anticipated! It is much safer to use a market order on high-volume stocks.
What is a Limit Order
An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
Depending on the direction of the position, limit orders are sometimes referred to more specifically as a buy limit order, or a sell limit order.
What is a Stop
An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.
Also referred to as a "stop" and/or "stop-loss order".
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