Interesting Portfolio Update from FreeTradePicks

professionaltradertips — Mon, 22 Feb 2010 20:30:07 +0000

Just noticed this post over at FreeTradePicks.com. They are closing out of a trade they entered back in November in SII. SII is getting acquired by Schlumberger and the stock has bounced with the announcement, giving them a 35% gain!

Great trade guys!

View the post here: http://freetradepicks.com/02-2010/portfolio-update-lock-in-gain-on-smith-intl-sii-exit-at-market/

Tip #1: Be Careful of the Bid/Ask Spread!

professionaltradertips — Sat, 20 Feb 2010 19:35:49 +0000

A really important factor that is commonly overlooked in trading is the Bid/Ask Spread. This can have a huge impact on your trading. Doesn’t matter if you trade stocks, futures, options, forex or anything else, this will eat away at your profits.

Remember that the bid price is the top price someone is currently willing to pay for shares of the asset. The ask is the minimum someone is willing to sell for at the moment. Think of it like a huge, quickly updating eBay auction with thousands of buyers and sellers for a single type of item. The buyers are trying to buy for the lowest price and the sellers are trying to sell for the highest price.

The spread is that price difference between the current highest big and the current lowest ask. So the more people who are trying to buy and sell, the faster everything moves and the smaller the spread gets. On stocks, for example, the spread could be anywhere from a few cents to a few dollars.

As soon as you buy a stock you “lose” the spread price, making your stock instantly worth less than you bought it for. So be sure to factor this into your trades.

Professional Trader Tips

Interesting Portfolio Update from FreeTradePicks

Tip #1: Be Careful of the Bid/Ask Spread!