The world stock market is currently in a state of massive selloff. Not just the US market, but all of the major markets across the entire world have shifted for a huge downturn.  The downturn was ironically jump started with the government raising the debt ceiling to increase their ability to borrow more money. Whether we’re in the brink of another recession or not, it really doesn’t matter for our investments. Just as long as our investments are protected, we should be OK. But how do we protect ourselves from another Great Depression? I remember back in 2008 when I lost 50% of my 401k portfolio. I was too naive and financially uneducated to do anything about it. I just let it sit there during the market crash. That year, the S&P500 went from 1350 to 900 while bottoming at 750. Early 2009 saw even more losses as it went as low as 675. Eventually, everything came back up and I recouped my losses, but the damage caused was not forgotten. I decided not to make the same mistake this time around.

The market dropped as much as 45% in 2008.  So far in 2011, S&P500 has lost about 8%.  My 401k is currently sitting at 0.1% gain for the year. It’s not much of anything, but it’s much better than 8% loss. What I did was to move all my funds into the money market fund, which is essentially 100% cash. I plan out to ride out the downturn by sitting out of the market. When the downtrend appear to be over, then I will reinvest my funds accordingly. I will not lose 50% this year.

Two weeks ago, I mentioned that Netflix stock was in the verge of completing one of the most sought out stock trending patterns by investors in the “cup and handle” pattern. It took about 7 weeks to form the “cup” portion of the pattern and was half way there in forming the “handle” part. When a typical “cup and handle” pattern is fully developed, it’s usually a very strong indication that the stock is about to break out in the near short term. In Netflix’s case, that’s a jump of 20-25% in the stock price. In the options trading world, that’s equivalent to about 100-500%, depending on the option expiration date.

Today, the “cup and handle” pattern was confirmed when the stock price propelled beyond the previous all-time high of just over $249. It closed today above $252. Because of this bullish pattern, I fully anticipate the stock price reaching $300 within one month, barring any unusual bad news from the company. The quarterly earnings report is due out on Monday, but unless it’s a bad report, the stock price should continue to rise. If the report is excellent way beyond anyone’s expectations, it should reach $300 even quicker.

Supplemental Disclaimer: I currently have long positions on NFLX via call options. If you are to invest in NFLX any time soon, please perform your own due diligence and make your decisions wisely. Remember, the “cup and handle” pattern is simply an indicator and does not guarantee a bullish behavior. I am not a professional trader. I just do this as a hobby and risk only the amount of money I can afford to lose. If you have never traded options before, you can sign up for optionshouse and use their free virtual account to practice with fake money. It’s a fun way to get real experience before investing a single dollar.

I love Netflix for their streaming service. It’s very affordable at only $8 per month and I receive unlimited streaming of all kinds of content. I can watch it on my laptop at home or computer at work, or through my blu-ray player. I can even watch content on my iPhone 4. While subscribers have been enjoying Netflix service over the past few years, investors have fallen in love with the stock as it is currently on a nice run up.

I have been tracking Netflix stock for years now and its stock price has risen from $40 to near $250 in less than 2 years. Unfortunately for me, I was not able to capitalize too much profits from the runup. Although the stock has double-topped out at around $247 or so and is currently in a bearish pattern, I believe a super bullish pattern, “cup and handle” is in the works.

Cup and Handle pattern involves two behaviors, the cup and the handle of the cup. The rule is simple. As the stock price moves, it must come down to a certain level, bottom out, and the  move back up to where it was prior to the downward movement, completing a cup or a bowl shaped pattern. This doesn’t happen in one day but over a few weeks or even months to develop and complete. The next behavior would be for the stock to develop a smaller cup that looks like a handle of the cup. The bottom of the handle would be about the midpoint between the top and bottom levels of the cup.

When the cup and handle pattern is complete, the usual behavior of the stock is to move up a full cup, which can be a substantial amount, especially when you purchase call options. In the case with Netflix stock price, the cup pattern was complete couple days ago when it double topped at $247-248 range with the bottom at around $190. Currently, the handle part of the pattern is in the development stage. If the handle pattern is to be fully developed, you can anticipate the price to come down from $248 to about $220 and then run back up to $248. $220 is significant because it represents about the midpoint range between the top and bottom range of the cup. It also happens to be the current 50 day moving average.

I would advise to wait until this pattern is complete before making any investment choices. I recently opened a new account at Optionshouse for their ease of use and affordable trading fees. You can discover more details in my previous Optionshouse review post.

What do you think? Do you think a cup and handle will completely form or will it fail?

Supplemental Disclaimer: I currently have long positions on NFLX via call options. If you are to invest in NFLX any time soon, please perform your own due diligence and make your decisions wisely. Remember, the “cup and handle” pattern is simply an indicator and does not guarantee a bullish behavior. I am not a professional trader. I just do this as a hobby and risk only the amount of money I can afford to lose. If you have never traded options before, you can sign up for optionshouse and use their free virtual account to practice with fake money. It’s a fun way to get real experience before investing a single dollar.

Investing can be tricky to navigate, and working within a budget while upholding the standards of sustainability can be even more difficult. For people investing in their future financial security, stability is a top priority, especially given the uncertainty of social security and other retirement benefits. Many are afraid that, when they reach retirement, they’re likely to be financially on their own. This makes investing, and investing smartly, paramount towards the average consumers. Additionally, increased knowledge of environmental crisis has brought about an air of social consciousness, since the public is now seeing the effect of our collective carbon footprint. For many, green living is also a major priority to preserve our environment for future generations. For investors wanting to satisfy both desires, there is the option of green investing. Investing green isn’t just a morally responsible choice, it’s a financially sustainable one.

Green investments are just like traditional investment vehicles, such as stocks, mutual funds, and others, except they have an overarching goal to only invest in companies with a green policy or impact. The options can range from the development of alternative energy sources and technology innovation or organizations that prove to have safe and effective environmental practices.

For stock savvy investors, there are many high profile green companies that are trading on the major stock exchange. These companies are mostly start-ups that are currently developing new methods for creating biofuels or solar energy. Wind power is also coming to the forefront of green technology, but many of these stocks can prove costly towards initial investments.

Investing green on a budget can be difficult, but not impossible. It just takes a certain amount of patience and research. There are green penny stocks, like Carbon Sciences Inc. or CABN that trades for a few dollars. The goal of this company is to convert carbon dioxide towards energy in the manufacturing of various products. Consider investing the help of professionals that will assist you in these penny stock picks.

If you’re potentially looking towards green investments, be a smart consumer and conduct in-depth research. Consult resources, like Investopedia, which offers advice and tips on these types of investments. Just because a company markets themselves as a green organization doesn’t necessarily mean that their practices are green. You don’t want to get involved in a speculative venture that you’ll later regret.

AT&T announced that they will provide free 1000 rollover minutes to all of their existing customers, as long as you text them that you want the free minutes. This news comes one day after Verizon started selling iPhones on their network. This may be a marketing ploy for AT&T to keep their customers from switching to Verizon. There is no catch and their reasons are that they just want to thank their customers for their loyalty.

To claim your 1000 free rollover minutes, simply Text “Yes” to 11113020. It may take 4-6 weeks for the free minutes to appear in your account.

Personally, I already have over 4,000 rollover minutes accumulated in my account. I don’t think I’ll ever use it up as I only use about 100 of my 450 anytime minutes every month. But for those who have a family plan with multiple lines, this freebie might become useful.

I think Apple is the big winner in all of this. While AT&T fight over customers, Apple will retain, if not gain additional customers as more iPhones are sold to Verizon customers. Apple stock recently hit its all time high and will probably go even higher. I’m glad I bought into the rumor a few months back. You can still buy Apple stock by signing up for one of the budget online trading platforms.

I also have no plans two change my carrier to Verizon either. Although AT&T could improve their dropped call frequency, I’m OK with the service. What about you? Will you be switching anytime soon?

Optionshouse is famously known for their ridiculously low stock trade commission fees. They only charge $2.95 for each trade, which is by far the lowest I’ve seen in the market. There are others that offer free trades as an introductory and promotional price, but their normal prices are often 2-6x more than Optionshouse. Although they are raising their price by 34%, it’s still only $3.95 per trade. The next lowest reputable online trading platform is TradeKing which charges only $4.95 per trade. Currently, TradeKing is offering a $50 signup bonus if you sign up by January 31, 2011. Optionshouse is also offering a promotion where if you sign up and fund $1000 into your new account, you will receive a free 1-year subscription to Barron’s.com or The Wall Street Journal Online. You can also opt to receive free 100 trades with FREE100 promo code and by depositing $3,000 or more. The free 100 trades can only be used within 60 days of account opening.

The new price will be in effect January 13, 2011. If you sign up prior to this date, you will still be honored the current price of $2.95 per trade. Existing customers will also be grandfathered in at the current price of $2.95 per trade. You can refer to my previous post on the review of Optionshouse trading platform for more detailed information.

The best feature about Optionshouse online trading platform is its price. It’s only $2.95 to trade. This is by far the most cost effective trading fees I’ve encountered so far. TradeKing comes close with $4.95 per trade, but it’s still over 67% more expensive than Optionshouse. They even offer 100 free trades for new members when if they sign up today, with promo code FREE100.

**Update** For a limited time, use code IRAFREE for 100 free trades and $125 back in transfer fee when you open an IRA account. If you already have an IRA account somwhere else, simply open an IRA account with OptionsHouse and receive $125 back in trasnfer fees, in addition to 100 free trades.

Application Process

Application process is fairly straight forward. Simply fill out all of your relevant information including social security number, indicate what kind of account you want to open (individual, ira, etc.) and you’re practically done. You do however need to fund your account with a minimum of $1,000 to start trading or $3,000 to qualify for 100 free trades. Simply print out the forms and either fax it in or mail it in. You can fund your account electronically for convenience or you can choose to pay with paper check if you so desire.

Funding

OptionsHouse offers a few different ways to fund your account. Although you can still open your account without funding, you must at least deposit $1000 to start trading. But I would recommend funding $3,000 to take advantage of the 100 free trades. The free trades must be used within 60 days of funding the account. The easiest way to fund is through ACH electronic transfer from your bank account. When you apply and fill out the necessary bank information, two small deposits will be made into your bank account for account verification. Once your account is confirmed, you can make electronic transfers for free. You can also use wire transfers to fund your account for $15 per transfer.

Navigation

Browsing through the website platform is pretty straighforward as well. All of the major menu items are listed across the top panel of the screen. There are also submenu categories such as News, Charts, Watchlists, and Hotlists. Please note that only properly funded accounts have access to Real Time quotes. If the account has not been funded, the quotes will be in 15-20 minute delay.

Trading

Again, OptionsHouse differentiates itself with other competition with their super low trading fees. With only $2.95 per trade, you will probably barely even notice the fee. To trade, you can click on the bottom left hand corner labeled “Order Ticket”. Choose Stock Ticket to trade stocks and type in the ticker symbol of your stock. Enter all of your parameters and choose how you want to execute. You will have choices from common methods including Market, Limit, Stop, Stop Limit, LOC, LOO, MOC, MOO, among others. You will also be allowed to choose Trailing Stop to sell if the conditions are met. LOC stands for Limit Order at Closing. I haven’t seen this at other online trading platforms, but basically, the trade execution is delayed until the end of the day. If the target price is met at the end of the day, then the trade executes. If it doesn’t, then the order is canceled. MOC is similar but behaves like a market order at the end of the day.

Virtual Trading

This is another feature that OptionsHouse offers which other online trading platforms do not. You can use play money and trade as if they were real money. This is a good way to get a handle of how the system works before you start investing with real money. So, if you’re a newbie, it might be a good way to practice to get your feet whet.

Bottom Line

I like OptionsHouse, mainly for their pricing. You really can’t beat $2.95 per trade. If you’re a high volume trader, you can really save quite a few bucks throughout the year with lower commission fees. So go ahead and take advantage of free 100 trades. Just deposit $3,000 and use promo code FREE100. Even if you don’t have $3,000, it really doesn’t matter since the fees are only $2.95 per trade.

Consider using trailing stop orders to sell your next stock. I recently discovered this new way to trade stocks. It’s always been around but I’ve never taken any time and effort to learn about it. Everyone knows about limit and market methods to buy and sell stocks. Using limit helps you buy and sell at a very specific price you desire so you have more control of your transactions. But when you use trailing stops, you ride the momentum of the stock and maximize your profit.

Basically, you set a limit value, either dollar value or percentage below the current price. If the price continues to go up, your activation limit price that you set will go up as well at the same rate. If the price all of sudden goes down, your activation limit price remains the same and will trigger if the price hits that target activation price. It’s a smart way to design and implement your exit strategy.

Consider the following example:

Stock Company: ABC
Stock Price: $307
Trailing Stop Sell Order: $15

It’s at 307 right now. You set a trailing stop sell order at $15. This means your activation price is now at $292. If the price goes down to $292, it will trigger and it will execute at that price or very close to that price. If the price goes up to $325, your new activation price will be $310. The activation price will ride the momentum of the stock upward, but not downward. As soon as the stock price starts going down, the activation price will remain at its highest. Say the price went up to $347. Then it retraced back to $336 before going back up to $375. During this time, nothing happened because the price never went below your activation price of $332 (347-15). When it went back up from $336 and to $375, the new activation price is now at $360. Now, if the price retraced again to $350, you would have sold your stock at $360.

You can do this for percentage as well. Instead of $15, you can set it to 5% with the same philosophy.

All of the budget online stock brokers offer trailing stop orders along with market and limit orders. So, if you have a stock that has been doing well and don’t want to be in the middle of tanking price all of a sudden, consider setting a trailing stop order now to maximize your profit. As long as your stock keeps going up, you’ll never have to sell.

]]> http://www.moneygreenlife.com/how-to-use-trailing-stop-orders-for-maximum-profit/feed/ 1 http://www.moneygreenlife.com/follow-sp-500-next-two-weeks/ http://www.moneygreenlife.com/follow-sp-500-next-two-weeks/#comments Thu, 14 Oct 2010 15:12:25 +0000 Charles http://www.moneygreenlife.com/?p=1790

Today, spot gold prices rose to their brand new highest high at over $1,290/oz. Analysts are still speculating on how much higher it could go. Some say $1,500, while still others say over $5,000 within the next couple years. I am currently a stock holder of Rubicon Minerals Corporation, a gold exploration company in Canada (ticker symbol: RBY). I’m not advocating this stock, but I am advocating investing in gold-related companies. There are many other reputable stocks that have done quite well over the past few years, AUY, GG, UXG, and GDX to name a few. If you haven’t invested in gold yet, there is still time and room  for upward movement.If you’re not registered with a stock broker, there are many online platforms that you can choose from.

Scottrade ($7/trade)

Options House ($2.95/trade + 100 free trades with promo code FREE100)

OptionsXpress ($14.95/trade)

Trade Monster ($7.50/trade)

eTrade ($9.99/trade + free trades for 60 days)

Zecco ($4.95/trade)

You can also sell your gold pieces and cash for them. You could get peak dollar for your gold jewelry if you sold them at cash4gold.com. You can read my full review on cash4gold and decide for yourself if this is the route you want to take.