The Series 7 and other securities, adviser and principal exams will ask questions on 401k plans and retirement accounts.
401k Accounts
401 k accounts are a type of defined contribution account.
A corporate retirement plan where the employee contributes a defined amount based on earnings or other factors. It is a tax qualified retirement plan. Eventual investment and retirement value of the account may be transferred or rolled over into another corporate plan.
These are different from defined benefit set ups where the amount put in by and for the employee is packaged with years of service, salary and other factors to calculate a monthly benefit. Contribution retirement accounts are taken out, transferred or people can do a rollover.
The years of service and amount of contributions will effect the account balance and asset allocations are a factor in the performance of the investments and rate of return. This is also true in defined benefit corporate retirement plans.
Contribution plans like 401k's and group IRA accounts are much more popular than benefit arrangements nowadays. With much of the workforce employed with small business or non union type companies, the need for providing a fixed monthly benefit at retirement and calculating that benefit over time is less appealing to a company when a 401k or other employee controlled plan is easier for the company.
Many people feel it is because of the growing aspects of defined contribution plans that less people are saving enough money in their retirement accounts.
Retirement Planning Help or Questions
401 k Rollovers
401k plans have some specific rollover and transfer rules and procedures. A rollover is when money is taken out of a 401k or other qualified retirement plan and "rolled over" into another type of qualified plan. These other plans include IRA's. Each time a rollover is done out of a 401k plan, it must be completed within 60 days and the money may not be cashed or placed in another account during that time. Rollovers can only take place once a year. An account transfer does not have to follow the 401k rules and guidelines. An account transfer is when a 401k plan is moved from one brokerage firm to another. Loans may be also taken on 401k balances. Cash withdrawals are subject to the pre 59 1/2 years old IRS standard penalty of 10% on the amount withdrawn and the total amount is taxed as ordinary income for tax purposes.
Vesting
The vesting period in a 401k investment account is the time the employee must fulfill their years to ne 100% vested. This means all contributions made by the company under the plan are 100% available to the person should they leave their job. The vesting period under these accounts can vary. Usually this period runs 5 years.
Investments
The securities account or investments within the 401k are varied with each plan or company. Usually, the employee will have a wide array of mutual fund or other fund choices to dedicate investment money to. The investor can change the allocation and choices in the 401k as they see fit. Rates of return and retirement value will vary with the performance of the securities in the investment account.
For employees and employers in a company contribution plan, the vesting period is an important period of time. A retirement account, like a 401k that is provided by a company (employer) is largely done as an incentive or loyalty benefit.
Being vested or 100% vested is on the part of the employee. If the employee remains with the company for a set number of years - as stated when they signed onto the plan, then the contributions made by the employer are now 100% the employee's. This vesting period can be set up a number of ways but is usually 5 years.
When the employee makes a 401k contribution, that money in the account is always 100% for the employee and would be available to the person for any rollover or job switch - as long as it is permissible for tax reasons. The amounts matched by the employer in the retirement account may only be partially under the worker's benefit to rollover or move. This depends on the vesting schedule and how long the person has remained with the company.
This vested part of the account is no all or none. An employee can be 40% vested, 70% vested etc. They do not have to be 100% to gain some of the company contributions made into the retirement account.
The period is not a long time for most employees and it is only fair for a company to have a set period of stay before the money the business has contributed to you is 100% yours. Filling this period of time is a normal part of 401k retirement account planning.
Monday, February 15, 2016
Wednesday, February 10, 2016
Covered Call Writing, Examples and Call Option Strategy
Writing covered calls is the process of shorting a call option - usually to generate income, while owning the stock that is the same as the stock on the call option. The term "covered" means that if the Option is exercised, the investor engaged in this strategy has the stock to meet the obligation - which is the delivery of shares of stock that the short call requires.
That is a mouthful! It is best - and easier to understand covered call strategies by using examples.
If we set up a position, we can examine the thought process behind it and thus be able to understand and figure the gain. loss and break-even figures.
First, there are terms that mean the same thing. This will make it easier when you are reading or listening to covered call strategies or any option strategy.
LONG = BUY = HOLDER/BUYER
SHORT = SELL = SHORTER/SELLER
COVERED CALL OPTION STRATEGY EXAMPLE 1
LONG 100 Shares DFG @ 68
SHORT 1 DFG APR 75 Call @ 3.50
This is a covered call strategy. The investor bought 100 shares of the stock at $68. The purpose of the call option contract is to support the stock. The option is not the main focus or investment liability. "APR" means April and is the expiration month. This contract will expire worthless if it is not bought back or exercised before April.
Selling or shorting calls with stock is mainly done to generate income. The $350 received by the trader is immediate income. It also lowers total cost on this combined position. Before an option was established, the stock's cost and break-even (disregarding unknown commissions and ticket charges etc) was 68. However, the option lowers that cost and break-even to 64.50. This investor has a net outlay of $6,450 or a break-even of 64 1/2.
The call allows for the stock to drop 3 1/2 points and the investor is still OK. Any drop below that and the position is losing money. Writing calls is not a strategy for protecting the stock. You cannot protect a stock by shorting options. That is not the purpose here. If the person bought a PUT - then it is protected, but it would not produce income. Only "selling" gives income and only "buying" protects. Never both.
Important to remember: If a call is exercised before the expiration it means the shorter must sell or deliver 100 shares of the stock (per contract) at the strike price to satisfy the obligation. In this case, the price that must be met is 75.
Since the stock can theoretically drop to 0, the entire value of the net position is at risk. So the maximum loss here is the full value of $6450.
The maximum gain is "limited" while the option is hanging out there. An option can be exercised at any point, but it is most likely going to happen in a rising market. The Call holder is the boss and decision maker. Owning a call gives that person the right to own the stock at the strike price of 75. Obviously if the price falls to 65, 60 or any price that is well below the market vs. the strike price, the trader owning the option will not be interested in buying the stock at 75 as it says on the contract. Buy Low, Sell High always applies. Thus, ALL CALL OPTIONS are most likely to get exercised when the market rises.
Given that fact, the maximum gain in the example above is "capped". Normally a person owning shares would have an unlimited gain potential, but since this option carries an obligation to sell it at 75, the gain starts with the difference between stock cost (68) and strike price (75), which is $700 PLUS the $350 premium received. The Maximum gain is $1050.
If the option expires, and the stock then rises substantially, the trader wins all around. He keeps the premium and the stock now has an unimpeded rise potential indefinitely for as long as he holds the stock.
Covered call writing is usually initiated when an investor feels the stock will hover within a trading range, or even drop some and writing a call gives him income during that period.
I hope that helps your understanding of Covered Calls.
Feel free to post questions, and visit American Investment Training for more resources including Broker Exam Training Courses
American Investment Training (AIT)
That is a mouthful! It is best - and easier to understand covered call strategies by using examples.
If we set up a position, we can examine the thought process behind it and thus be able to understand and figure the gain. loss and break-even figures.
First, there are terms that mean the same thing. This will make it easier when you are reading or listening to covered call strategies or any option strategy.
LONG = BUY = HOLDER/BUYER
SHORT = SELL = SHORTER/SELLER
COVERED CALL OPTION STRATEGY EXAMPLE 1
An Investor (trader) has set up the following position. *These positions do not have to be set up simultaneously. The stock position can be established before or after the option contract.
SHORT 1 DFG APR 75 Call @ 3.50
This is a covered call strategy. The investor bought 100 shares of the stock at $68. The purpose of the call option contract is to support the stock. The option is not the main focus or investment liability. "APR" means April and is the expiration month. This contract will expire worthless if it is not bought back or exercised before April.
Selling or shorting calls with stock is mainly done to generate income. The $350 received by the trader is immediate income. It also lowers total cost on this combined position. Before an option was established, the stock's cost and break-even (disregarding unknown commissions and ticket charges etc) was 68. However, the option lowers that cost and break-even to 64.50. This investor has a net outlay of $6,450 or a break-even of 64 1/2.
The call allows for the stock to drop 3 1/2 points and the investor is still OK. Any drop below that and the position is losing money. Writing calls is not a strategy for protecting the stock. You cannot protect a stock by shorting options. That is not the purpose here. If the person bought a PUT - then it is protected, but it would not produce income. Only "selling" gives income and only "buying" protects. Never both.
Important to remember: If a call is exercised before the expiration it means the shorter must sell or deliver 100 shares of the stock (per contract) at the strike price to satisfy the obligation. In this case, the price that must be met is 75.
Since the stock can theoretically drop to 0, the entire value of the net position is at risk. So the maximum loss here is the full value of $6450.
The maximum gain is "limited" while the option is hanging out there. An option can be exercised at any point, but it is most likely going to happen in a rising market. The Call holder is the boss and decision maker. Owning a call gives that person the right to own the stock at the strike price of 75. Obviously if the price falls to 65, 60 or any price that is well below the market vs. the strike price, the trader owning the option will not be interested in buying the stock at 75 as it says on the contract. Buy Low, Sell High always applies. Thus, ALL CALL OPTIONS are most likely to get exercised when the market rises.
Given that fact, the maximum gain in the example above is "capped". Normally a person owning shares would have an unlimited gain potential, but since this option carries an obligation to sell it at 75, the gain starts with the difference between stock cost (68) and strike price (75), which is $700 PLUS the $350 premium received. The Maximum gain is $1050.
If the option expires, and the stock then rises substantially, the trader wins all around. He keeps the premium and the stock now has an unimpeded rise potential indefinitely for as long as he holds the stock.
Covered call writing is usually initiated when an investor feels the stock will hover within a trading range, or even drop some and writing a call gives him income during that period.
I hope that helps your understanding of Covered Calls.
Feel free to post questions, and visit American Investment Training for more resources including Broker Exam Training Courses
American Investment Training (AIT)
Thursday, February 4, 2016
Understanding Mutual Funds - Open End Funds, Series 6, Series 7
Mutual Funds are also called Open End Funds. Open Ended funds trading hours are open once the trading exchange is but when shares are bought, the price you pay will be decided at the end of the trading day. Stock trades are completed at any time during the day.
This subject is tested on the Series 6 and Series 7 exam. For those taking these licensing tests, you need to study this section. Percentage wise, there are more questions on the Series 6 than the Series 7.
Mutual Funds trade like this because you are basically buying new shares. The exception would be Exchange Traded Funds or ETF's and closed end funds which do trade during the day.
Stock Market Hours and Funds
Once the stock market opens, shares are traded and the investor will pay a commission on the trade, whether it is a buy or a sell.
Mutual funds that have blue chip stocks, penny stocks, bonds or a mix in their portfolio is still considered an open end fund and the price will not be set until all the securities have settled their value at the end of the day. There are also other price consideration issues such as:
Sales Charge - what the fund charges to buy or perhaps when sold. There are also no-load funds where a sales fee is not charged.
Redemption Fee - Some open end mutual funds will charge a fee to redeem the shares of the fund. Many times this fee is in place when the buying sales charge is low or there is no sales charge going in.
Expenses and the fact that the prices are set at the end of the trading hour day make open ended funds poor choices for active or day trading. Exchange traded - ETF's or closed end funds trade as the day goes and completed with "at the market" prices at the time of buying and selling. There are many choices of mutual funds in all sectors but they do not trade like a stock.
For the Series 6 exam and Series 7 Exam - those looking to become brokers and advisers
You will get a percentage of questions on mutual funds, Net Asset Value (the value per share), the Public Offering Price, Calculating sales charge and more. The Series 6 will have the greater percentage because you cannot sell stocks with a Series 6. You need a Series 7 License.
Other terms related to mutual funds:
Trading
Day Trader Fund
Mutual Funds Penny Stocks
When Do Funds Trade
Fractional Shares
Stock Market Funds
TAKE A SERIES 7 VIRTUAL CLASS
This subject is tested on the Series 6 and Series 7 exam. For those taking these licensing tests, you need to study this section. Percentage wise, there are more questions on the Series 6 than the Series 7.
Mutual Funds trade like this because you are basically buying new shares. The exception would be Exchange Traded Funds or ETF's and closed end funds which do trade during the day.
Stock Market Hours and Funds
Once the stock market opens, shares are traded and the investor will pay a commission on the trade, whether it is a buy or a sell.
Mutual funds that have blue chip stocks, penny stocks, bonds or a mix in their portfolio is still considered an open end fund and the price will not be set until all the securities have settled their value at the end of the day. There are also other price consideration issues such as:
Sales Charge - what the fund charges to buy or perhaps when sold. There are also no-load funds where a sales fee is not charged.
Redemption Fee - Some open end mutual funds will charge a fee to redeem the shares of the fund. Many times this fee is in place when the buying sales charge is low or there is no sales charge going in.
Expenses and the fact that the prices are set at the end of the trading hour day make open ended funds poor choices for active or day trading. Exchange traded - ETF's or closed end funds trade as the day goes and completed with "at the market" prices at the time of buying and selling. There are many choices of mutual funds in all sectors but they do not trade like a stock.
For the Series 6 exam and Series 7 Exam - those looking to become brokers and advisers
You will get a percentage of questions on mutual funds, Net Asset Value (the value per share), the Public Offering Price, Calculating sales charge and more. The Series 6 will have the greater percentage because you cannot sell stocks with a Series 6. You need a Series 7 License.
Other terms related to mutual funds:
Trading
Day Trader Fund
Mutual Funds Penny Stocks
When Do Funds Trade
Fractional Shares
Stock Market Funds
TAKE A SERIES 7 VIRTUAL CLASS
Wednesday, February 3, 2016
Series 66 Investment Adviser with your Series 7
For people who are already licensed Series 7 but need to get their Investment Adviser license and need the Series 63 (Uniformed State Law), should take the Series 66 vs. the Series 65 and 63 separately.
The reason is the combined license (66) is a simpler exam than the 65 and it dual-covers you. This option is only available to those who are already Series 7 Licensed. The North American Securities Administrators Association (NASAA) is the governing body that overseas the 66. Though the test is taken at exam centers through FINRA.
IMPORTANT NOTE: The SERIES 7 is NOT required to take the SERIES 66. So, you can begin studying and sit for the 66. But, the 7 is ultimately required to have your 66 active.
The combined Investment Adviser exam contains 100 questions and like all FINRA - NASAA exams, it is multiple choice delivered at hundreds of test centers throughout the world.
Once you begin studying, you can open a test window for 120 days. This means you have 120 days to take the exam under your registration. An exam fee is required. For the Series 66 it is $155 (as of January 2016). The "window" period is the same for all Series Exams, including the Series 7.
FEE BASED and COMMISSION
The Series 65 or 66 allows a person to charge clients for fees or assets under management. This is not the same as charging a client a commission or mark up on transactions. It is serious violation to charge a customer for fees and commission on transactions. However, a Series 7 broker who is also licensed as a registered investment adviser CAN have a book of clients that include FEE BASED management and COMMISSION BASED for other clients.
TO PASS THE SERIES 66 you should begin a consistent study program. American Investment Training recommends 2-4 weeks of study time - roughly 2 hours daily. Accurate practice exams are HUGELY important when preparing for this test. The Series 66 contains mostly rules, regulations and customer accounts. Since these areas do change periodically, you want to make sure the study material is current.
We have provided the best options to pass this exam FAST. All material is up to date and carry "exam tough" practice questions. We don't want you to be surprised or under-prepared.
TIME IS MONEY! Learn your way to FEE based income. PASS the Series 66 now.
Recommended Study Material and Methods
Books and Software Full Package Course
Includes: Books, Handbook, Software. All you need!
Online "PASS GUARANTEE" Training Course
100% online. Online tutors and monitored progress.
The reason is the combined license (66) is a simpler exam than the 65 and it dual-covers you. This option is only available to those who are already Series 7 Licensed. The North American Securities Administrators Association (NASAA) is the governing body that overseas the 66. Though the test is taken at exam centers through FINRA.
IMPORTANT NOTE: The SERIES 7 is NOT required to take the SERIES 66. So, you can begin studying and sit for the 66. But, the 7 is ultimately required to have your 66 active.
The combined Investment Adviser exam contains 100 questions and like all FINRA - NASAA exams, it is multiple choice delivered at hundreds of test centers throughout the world.
Once you begin studying, you can open a test window for 120 days. This means you have 120 days to take the exam under your registration. An exam fee is required. For the Series 66 it is $155 (as of January 2016). The "window" period is the same for all Series Exams, including the Series 7.
FEE BASED and COMMISSION
The Series 65 or 66 allows a person to charge clients for fees or assets under management. This is not the same as charging a client a commission or mark up on transactions. It is serious violation to charge a customer for fees and commission on transactions. However, a Series 7 broker who is also licensed as a registered investment adviser CAN have a book of clients that include FEE BASED management and COMMISSION BASED for other clients.
TO PASS THE SERIES 66 you should begin a consistent study program. American Investment Training recommends 2-4 weeks of study time - roughly 2 hours daily. Accurate practice exams are HUGELY important when preparing for this test. The Series 66 contains mostly rules, regulations and customer accounts. Since these areas do change periodically, you want to make sure the study material is current.
We have provided the best options to pass this exam FAST. All material is up to date and carry "exam tough" practice questions. We don't want you to be surprised or under-prepared.
TIME IS MONEY! Learn your way to FEE based income. PASS the Series 66 now.
Recommended Study Material and Methods
Books and Software Full Package Course
Includes: Books, Handbook, Software. All you need!
Online "PASS GUARANTEE" Training Course
100% online. Online tutors and monitored progress.
Saturday, January 30, 2016
How to Pass The Series 7 Licensing Test
How to pass the Series 7 exam? A question we get very often as trainers and study material developers.
The Series 7 is not an easy exam but it is very pass-able if you use the right material and use correct study techniques. A huge key to passing the series 7 is working with enough practice questions and tough test questions. Most people fail the test because they did not really challenge themselves in working with hard enough exam questions when preparing.
Enough Practice Tests to Pass
You don't want the actual exam to be much harder or any harder than the study questions you were practicing. To pass the series 7, you simply need to be battle hardened with accurate and plentiful series 7 test questions.
The real test is 250 questions. Is using a study program with 500 practice questions enough? 1000 questions? In my opinion - NO. You want 5 or 10 times that. More scenarios the better.
As you study for the Series 7, Series 6 or almost any securities licensing test - it is crucial to work with MORE than enough exams. Memorizing repetitive test questions may give you good final exam practice scores, but it will not give you the readiness or confidence to
pass the Series 7.
Software Test Exams
Working Series 7 questions from your computer will prepare you well as long as the amount of questions is there and the degree of difficulty is strong. The actual Series 7 is given on computer so drilling yourself with computer based training questions is a great way to prepare.
American Investment Training has a regularly updated 7000 question hard drill CD for the Series 7.
Series 7 Answer Explanations
Accurate and detailed answer explanations to your practice questions is a VERY important aspect of studying and passing the series 7. When you get a question wrong (or even if you guessed it right), you want to see the correct answer explanation clearly written out.
Study Tip To Passing
A great study tip and technique is to write out the answer explanations on exam questions you got wrong. This reinforces the concept and will limit you from getting that question wrong again or even a similar question.
Series 7 Subjects
The Series 7 is weighted heavier on certain topics so you want to prepare for the exam with strong emphasis on these more important areas. These areas include debt (bonds), Options, Rules and Customer Accounts. You will definitely want a large software program that will have more than enough practice questions on these important topics to pass the Series 7.
PASS GUARANTEE SERIES 7 TRAINING COURSE - FAIL THE TEST, WE REFUND 100% OF THE COURSE COST!
Good Luck on your test and your career!
The Series 7 is not an easy exam but it is very pass-able if you use the right material and use correct study techniques. A huge key to passing the series 7 is working with enough practice questions and tough test questions. Most people fail the test because they did not really challenge themselves in working with hard enough exam questions when preparing.
Enough Practice Tests to Pass
You don't want the actual exam to be much harder or any harder than the study questions you were practicing. To pass the series 7, you simply need to be battle hardened with accurate and plentiful series 7 test questions.
The real test is 250 questions. Is using a study program with 500 practice questions enough? 1000 questions? In my opinion - NO. You want 5 or 10 times that. More scenarios the better.
As you study for the Series 7, Series 6 or almost any securities licensing test - it is crucial to work with MORE than enough exams. Memorizing repetitive test questions may give you good final exam practice scores, but it will not give you the readiness or confidence to
pass the Series 7.
Software Test Exams
Working Series 7 questions from your computer will prepare you well as long as the amount of questions is there and the degree of difficulty is strong. The actual Series 7 is given on computer so drilling yourself with computer based training questions is a great way to prepare.
American Investment Training has a regularly updated 7000 question hard drill CD for the Series 7.
Series 7 Answer Explanations
Accurate and detailed answer explanations to your practice questions is a VERY important aspect of studying and passing the series 7. When you get a question wrong (or even if you guessed it right), you want to see the correct answer explanation clearly written out.
Study Tip To Passing
A great study tip and technique is to write out the answer explanations on exam questions you got wrong. This reinforces the concept and will limit you from getting that question wrong again or even a similar question.
Series 7 Subjects
The Series 7 is weighted heavier on certain topics so you want to prepare for the exam with strong emphasis on these more important areas. These areas include debt (bonds), Options, Rules and Customer Accounts. You will definitely want a large software program that will have more than enough practice questions on these important topics to pass the Series 7.
PASS GUARANTEE SERIES 7 TRAINING COURSE - FAIL THE TEST, WE REFUND 100% OF THE COURSE COST!
Good Luck on your test and your career!
Finance Career - Stockbroker, Investment Adviser Job and Financial Planner Career
Begin a career as a financial adviser, stockbroker or other investment related field. Investment or financial advisers can earn an unlimited income during their career. Start a job that can change your life and be a successful stockbroker or financial planner.
Finance Jobs available for trainees. Most firms will hire inexperienced people and train them from within. Getting some licensing done before you apply can be helpful. Stockbrokers and investment advisers can make an unlimited income. High payout, work environment and investment product available should be some of the factors to consider before joining a brokerage firm.
Independent Stockbroker
Some of you may want to work as an independent broker or in-home stockbroker. These opportunities are available and best suited for producing stockbrokers, CPA's, mortgage brokers or other financial professionals with existing clients. These jobs do not pay a salary. You are independent adviser contractors of a brokerage firm when you do this. Higher payout and freedom to run your business are the benefits.
Broker, Agent and Adviser Jobs (New York and other)
We have several key job and career openings available through the firms we represent. These jobs are for Stockbroker producers, Financial advisers, investment brokers and insurance agents and brokers. Our companies are national firms and many offer salary plus benefits. These career opportunities are national with the majority of broker offices in New York, Long Island, New Jersey, Connecticut, Massachusetts and more.
Insurance Brokers Agents
We connect you to the top 3 insurance brokerage product providers in the country. We will contact you first - confidentially. American Investment Training has been setting up independent brokers and BGA GA Insurance introductions for 10 years. There is no fee or obligation. We work for our firms.
Agents who sell annuities, life policies and other product are welcome to see how we can help.
Series 7 Sponsorship and Series 24 Sponsorship is available to qualified people with a plan for their insurance agent success as an independent or working at an office.
Current licensed brokers and groups who want to become independent broker representatives are welcome.
Payout - Independent Brokers and Agents looking for higher product payout without changing their brokerage agency can also be helped by us. We can introduce you to the top brokerage product people. Includes Fixed Annuity Payout and Variable Annuity payout and commissions.
Insurance Brokers Agents
We connect you to the top 3 insurance brokerage product providers in the country. We will contact you first - confidentially. American Investment Training has been setting up independent brokers and BGA GA Insurance introductions for 10 years. There is no fee or obligation. We work for our firms.
Agents who sell annuities, life policies and other product are welcome to see how we can help.
Series 7 Sponsorship and Series 24 Sponsorship is available to qualified people with a plan for their insurance agent success as an independent or working at an office.
Current licensed brokers and groups who want to become independent broker representatives are welcome.
Payout - Independent Brokers and Agents looking for higher product payout without changing their brokerage agency can also be helped by us. We can introduce you to the top brokerage product people. Includes Fixed Annuity Payout and Variable Annuity payout and commissions.
Wednesday, January 27, 2016
Technical Analysis - Support and Resistance Levels Study Tips
There are 2 types of Analysis to examine for the exam and in the investing world in general. These are the 2 you need to study and know.
The 2 types are:
Technical
and
Fundamental
This post will focus on the Technical Part.
Basically, examining the price trends of a stock or security is the technical side. The main part of an analyst's job is to recommend the buying or selling of a stock based on it's technical trends. The Analyst will look heavily at what are called Support and Resistance Levels. These are in effect the high and low of the price.
These levels are charted based on time and price. For instance, if we chart DFT Stock for the last 52 weeks and see that it has a low of $32 and a high of $44, then the analysis would "peg" the support level at $32 and the resistance at $44.
What is the Support Level
The rule of recommendation is normally HITTING (reaching) a SUPPORT LEVEL IS BULLISH. This follows the basic rule of "buy low - sell high". Just remember the support is the bottom - or floor. Think of it as supporting you. In this example, with DFT trading down to 32 but not falling below it would be BULLISH. However falling through a Support is considered Bearish. This is not 100% for everyone - but as a rule of thumb and certainly for the Series 7 - breaking through a support level is indeed BEARISH.
What is the Resistance Level
A resistance level is just the opposite of support. It is the high price the stock has reached - either historically or a specific time frame the technical analyst is watching. Under the Buy Low Sell High rule and the fact that the Resistance Level is the high price, HITTING A RESISTANCE LEVEL IS BEARISH. If the stock has shown that when it reaches it's high or resistance it trades back within it's trading range, it would make sense that a SELL recommendation would be made.
Breaking through a resistance price or level has the opposite effect. Going beyond a resistance is considered Bullish since going above a historical high pretty much throws the old resistance out the window and new levels will be set.
The fundamental side of analysis deals with the money end and financials of the company itself. Balance Sheets, Income Statements, Net Worth etc. Fundamental - think FUNDS $. There are some formulas to know for the Series 7. That will be laid out in a separate post.
As always, feel free to post a question.
The 2 types are:
Technical
and
Fundamental
This post will focus on the Technical Part.
Basically, examining the price trends of a stock or security is the technical side. The main part of an analyst's job is to recommend the buying or selling of a stock based on it's technical trends. The Analyst will look heavily at what are called Support and Resistance Levels. These are in effect the high and low of the price.
These levels are charted based on time and price. For instance, if we chart DFT Stock for the last 52 weeks and see that it has a low of $32 and a high of $44, then the analysis would "peg" the support level at $32 and the resistance at $44.
What is the Support Level
The rule of recommendation is normally HITTING (reaching) a SUPPORT LEVEL IS BULLISH. This follows the basic rule of "buy low - sell high". Just remember the support is the bottom - or floor. Think of it as supporting you. In this example, with DFT trading down to 32 but not falling below it would be BULLISH. However falling through a Support is considered Bearish. This is not 100% for everyone - but as a rule of thumb and certainly for the Series 7 - breaking through a support level is indeed BEARISH.
What is the Resistance Level
A resistance level is just the opposite of support. It is the high price the stock has reached - either historically or a specific time frame the technical analyst is watching. Under the Buy Low Sell High rule and the fact that the Resistance Level is the high price, HITTING A RESISTANCE LEVEL IS BEARISH. If the stock has shown that when it reaches it's high or resistance it trades back within it's trading range, it would make sense that a SELL recommendation would be made.
Breaking through a resistance price or level has the opposite effect. Going beyond a resistance is considered Bullish since going above a historical high pretty much throws the old resistance out the window and new levels will be set.
The fundamental side of analysis deals with the money end and financials of the company itself. Balance Sheets, Income Statements, Net Worth etc. Fundamental - think FUNDS $. There are some formulas to know for the Series 7. That will be laid out in a separate post.
As always, feel free to post a question.
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