Online Stock Trading Tips

Contrary to popular belief that stock trading is complex and unpredictable that it needs sophisticated mathematical tools; this is not entirely true. Mathematics for stock trading should be as simple as possible using no more than algebra! These mathematical tools are very important during the stock selection process, money management and managing your trades. Bookmark, share this article and link to this tutorial so that other beginning traders will know. If something is missing in those formulas, feel free to contact me and I will add that. Let’s start summarizing what are these important mathematical principles that you need to know:

1.) Computing the total amount of investment required:

Total investment = Price per share X Total number of Shares

This is really simple. If the price per share is $10 and you would like to buy 100 shares. So the total investment required (excluding commission):

Total investment = $10 x 100 = $1000

2.) PEG Ratio – valuing the stocks whether it is good or not.

PEG Ratio – (P/E ratio)/(Growth Rate)

It is simply equal to P/E ratio divided by the growth rate. Growth rate is equal to:

Growth rate = (Earnings per share(current) – Earnings per share(one year ago))/Earnings per year(one year ago)
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Here is one big question: Which one you should prioritize in life: Insurance or Investment? I meet some of my friends that either inclined to both of them. Some of them are so eager about any types of financial investments that could give him good reward and security in the long run. Example of these investments is stocks, gold, etc; while some of my contacts are so concerned about having insurance in life. They asked me about what could be the best life insurance, medical insurance, etc. Some people claim insurance is an investment. Yes in some cases like for example a life insurance. But does insurance really considered a good investment to everyone? Technically investment means:

1.) Putting money into an asset and then grabbing the rewards later. A good example is when you buy a certain piece of real estate for a certain amount; when the price increase in the long run, if you sell it; you can reap profits or rewards. Remember that you have control when to liquidate or sell your investments.

2.) Putting money into an asset while you grab money in periodic intervals, such as monthly, etc. A good example is stocks. If you invest some money in stocks, the companies can be paying you dividends monthly, quarterly, it depends. Another case is putting money in bonds; you can withdraw some profits in a quarterly basis for example. There are many types of investments that fall into this category.

3.) Investment is a by-product of wise money management where you have control over its costs, fees and taxes. On the other hand, insurance means:
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