I am a new investor in the stock market, and I have considered using leveraged products such as CFD’s, spread betting, options etc. But, realistically, I don’t think I’d be willing to risk any money using leverage, at least not for several years or so anyway.

I like to invest into smaller companies with growth prospects, and I was just wondering if by just investing in the actual underlying stocks, and trend trading them, doing it again and finally compounding my returns several times a year, could I score several hundred percent on the stock market and become a millionaire? Also, if there is a better strategy, do you have one?

Well you could if you are in a growth market and then investing successfully for a decade or so. These days, growth markets are hard to find. The great Bull Run of the 80s – 90s (which created the Warren Buffett legend) is over and never coming back. This is also why so many derivative products are being created over the last twenty years.

These days, I trade using LEAPS options which gives me leverage and yet be safe enough for long term investing. That might work for you. Some leverage but not too much. Read about LEAPS options in the link below.

i am new to options trading and want to know which low priced options are favorites among investors.. i like APPLE but the Share is pretty high and involves $ 22.000 involvement ( even if contract price is low) . i want a share which is optionable , pretty sensitive to DOW , NASDAQ trend of the day.. like DELL which is about 14.. are there other stock options you would like to share/ recommend with me.. thanks in advance.. any other tip suggestion advice will also be gratefully taken.. many thanks in advance!

Most liquid stocks or ETFs have options you can trade. If you just to want to follow the indices, then the ETFs tracking them, ie. SPY, QQQQ, IWM and DIA are the favorites amongst day traders and instutional investors and traders, especially SPY and QQQQ. Their options are also widely traded everyday.

Other than the indices, the big financials, are of course extremely popular and are consistantly daily volume leaders on the NYSE. GS, MS, BAC, JPM, C, etc. Unlike other large caps such as WMT, MCD or GE, large cap financials are A LOT more volatile, and therefore more suitable for implementing option strategies and attract a lot of traders as opposed to investors. Financials are of course also the most talked sector of the market, especially since the 2008 crisis.

Other than those memtioned above, individual names like F, AAPL, GOOG, AA and others. Leveraged ETFs such as FAS and FAZ, tracking volatile sectors like financials are also very widely traded, and of course EXTREMELY volatile, which is what traders look for.

I am 18 years old and I have an interest in investing into the stock market into blue chip stocks using various investing techniques such as following the trends and buying into what I call "sure things" after conducting research. I have thought about trading stocks using things like CFDs, spread betting and options, but I believe that this is gambling not investing – I’m being more realistic with my investing possibilities.

What I would like to know is if it is possible to gain several hundred percent return each year compounded by investing into individual blue chip stocks, and holding onto them while the trend is going up by following the trend and selling them when it has went up several percent within a month or 2? Could this strategy gain several hundred percent a year? Is it realistic and if not, whats a better strategy in your opinion?

I always believe there are 3 things that help in varying degrees to make money in investment/trading …etc. These are Inside information, knowledge (experience) and luck. As you can’t possibly get all these three consistently you cannot guarantee success. However you can endeavour to get as much of each one as you can to be successful.

Don’t forget spread betting / CFDs are no different from other forms of speculative investing/trading. You have to get one thing right: You have to correctly forecast the right direction of movement in your selected market within a restricted timeframe. The shorter the time frame the less opportunity there is of getting the direction right. I would say; Never think you have cracked it, employ both caution and bravery and read, read, read (maybe that should be read and interpret!).

Currently at the time of writing I am 18 years of age and I have been practicing stock, commodity and currency trading in several different practice accounts. What I have discovered is that I am best at currency trading and I make the most money out of trading that way. With stocks and commodities I have had moderate successes but I’m better at FX trading than anything else and I’ve learned a lot too.

I also know that currency tends to trend long term such as a few months to a few years which is where currency options are best suited. Spot-forex trading on the other hand is traded on margin and is best suited to short term trading of the FX markets.

I have only had practice trading FX in spot-forex and spread betting, both of which had a return of several hundred percent. What I would like to know is what is the best way to trade forex out of currency options, spread betting or spot FX, and which is best suited to a UK resident to gain wealth? Please help/advise. Thanks.

P.S. Sorry its so long.

The answer is really very simple. if you are in the UK you should go through the spread betting route because all gains are tax free. All the instruments you have mentioned are traded on margin so are equally risky but the difference is that if you trade spot forex or currency options you will have to pay tax on your gains!

I posted this before and got alot of negative answers saying not a good idea. I opened a DEMO VIRTUAL TRADE ACCOUNT with CBOE-bought Nortel Networks PUTS (various dates) and most have gone up in value in a few days. It seems this would be good to buy PUTS on companies TRENDING DOWN over 1-5 years? Any Input?

I’ve found that buying puts is a better idea than shorting a stock in most cases. Usually you can achieve similar or better gains with a put spread (buying a put option and selling one with a lower strike price).

Shorting stocks puts a limit on your gains, but you have unlimited loss potential. More importantly, if the stock moves higher, you may face margin calls and be forced to liquidate your position. Even if the stock goes down later, you’re already out.

One thing to remember about demo accounts: don’t forget about commisions. Many don’t include commission, so your gain will be artificially higher than if you made the real trade. Also, if you are trading larger amounts in the virtual world than you would be in the real world ($100k vs $1k), then your percentage gain would be lower for the same commission rate ($10 = 1% of $1000, 0.01% of $100k)

Also, I don’t know how long you can hold a short position.