We have lots of experienced traders on MoneyAM who would be glad to help if you have any trading questions.

Mega Bucks -- yeah, right! MM

:-)

Thanks fredbear.

I got a question for you. Why do most of the stocks on AIM have such lage spread between us the cutomer and the market makers.


Maybe we could set up our own little in house transfer agency adverttising here if we want to buy or sell......the two parties if they have the time could meet up outside fill in the transfer forms sign them them hand over da cash and hey bing no middle man any more !

good morning all, how does a company with a market cap of 4 million trade at the same price as a much larger company?

Mitch1967

Way back, when market makers (ex. jobbers) did exactly what was they were supposed to do - they made markets in securities. Widget plc might have been quoted at say 30 - 36. Six points on thirty is a large turn but it was (arguably) justified when the jobbers were actually making a market. Their profits came from the skill in matching the book over time and the turn could be warranted.

Today when so many markets are in reality matched bargains - and I am talking of fully listed and AIM stocks, not those officially designated matched bargains - there is no justification whatsoever for extravagant spreads.

These days business is simply just not transacted unless the market maker knows or believes he can match his position almost immediately. He will not "go out on a limb", be it short or long, as did the Merchant Ventures of old and that being the case there is today no case whatsoever to be made for spreads of 10, 20 or 30%. Although, at a squeeze, there could be a case that there is a lot of uncertainty involed in buying AIM listed stock, hence the spread.

danny

Its all do to with the number of shares in issue.

e.g. co. A and co. B have a share price of 200p.

If co. A has 1,000,000 shares in issue them mkt cap is 2 (share price) x 1 million (no. of shares) = 2m

If co B has 5,000,000 shares in issue then its market cap is 2 x 5 million = 10 million

So the share price is not an indicator of mkt cap

removed - Limpy beat me to it ;-)

Zoltar,

Go on one of Croc's one day L2 courses..it costs more than a book but is I believe well worth it. Croc is too shy to market his own services. Limpy and Bullie do very good one-day courses as well..check them out.

As to market direction, here's something I posted on the other traders thread this am which may be useful, bearing in mind that the US mkts "tend" to lead the uk mkts...

TomL - 16 Sep'03 - 08:30 - 37 of 140

Greenspan "talks" again today. This reminded me of my favorite American market commentator, Brian Carver of Market Clues.

Below is his take for today (including his words on Greenspan) principally vis the S&P 500. You can get a 90 day (3 months) free trial subscription and the subscription price is not demanding either!

Market Clues website for a free trial is at www.marketclues.net. Here's what Brian had to say today:-

"Stocks: Out of Gas?

The market attempted to continue rallying Monday morning, but ran into stiff resistance at about the halfway retracement of last week's range. Money Flow turned bearish in most indices (it was still positive in the Dow, but didn't translate into higher prices even so).

That turndown at the 50% retracement level is quite bearish because it leaves open the distinct possibility that last week's slide was actually wave 1 down in the second major leg down in the bear market. The implication there is that the rally into the 8th of September completed wave v. Unless the market is able to show more strength here, we're going to assume this more bearish interpretation and expect the market is in a countertrend bounce within what could be a severe move down. That puts stiff limits on the upside here and opens the doors to a strong move to the downside once this countertrend bounce is finished.

The analogy to the Japanese Nikkei chart of a decade ago continues to be eerie. During that move of the 'Nineties, the Japanese market rallied 31% off its low before rolling over and plunging to retest its lows. To date, the S&P 500 has rallied off its low you guessed it! 31%!:

("http://www.constant.com/~bcarver/n22520030915.gif")
("http://www.constant.com/~bcarver/spx20030915.gif")

The piraz.com site took their chart of Fed repo activity down, unfortunately, before some had a chance to view it. We will explore the possibility of tracking this data in the future now that it's clear that Alan Greenspan has become such a disruptive force in the stock market. There was an article published in June which discusses in more detail the close correlatiion between repo activity and rises and falls in the stock market: Repurchase Agreements and The Dow by Michael Bolser

("http://www.financialsense.com/editorials/bolser/2003/0602.htm").

For new subscribers and those who missed it, a link to our weekend comments: Detailed Comments Page . . . ."

TomL....:>)

And if you are into position or swing trading, then you all may be familiar with Jim Slater's stuff on stock selection.
PEG Factors (price:earnings ratio divided by growth in earnings)

Fair value on a PEG is 1.0; below 0.75 is regarded as especially interesting (ie definitely a stock to shortlist and subject to other constraints that MUST be passed) and >1.25 is getting expensive.

PEG factors should never be used on their own and the whole process (including all other constraints used with an array of good worked examples) is extremely well set out in Jim Slater's definitive guide, Beyond The Zulu Principle - Isbn 1 85797 552 9 Orion Books priced 19.99 (may cost less now).

Jim Slater's mandatory constraints include:-

1. Does the company have at least a 4 year pattern of growth, even if forward earnings prospects have to be combined with past to achieve the minimum requirement? You see from this if a company has been awarded a PEG that is an achievement in itself. Less that half the all-share constituents qualify. Its quite a hurdle in that sense;

2.A prospective PER of not more than 20?

3. Strong cash flow? ie are earnings being turned into cash..your Enron accounting is out the window (remember this book was first published in 1996);

4. Low gearing (ie not in excess of 50% or if so only allowed if cash flow is very strong);

5.High relative strength? When I first read this some years ago, I gave it a wry smile because it was clear that Jim Slater understood some technical indicator was needed to avoid getting into "value stocks" whose price got stuck in the same place for a long time. The constraint is the rsi in the previous 4 weeks must be positive (ie rising) and the prior 12 month rsi must be positive plus above the 1 month. As you know, he's simply making sure that he's not the only investor getting active in the stock with this constraint;

6. Competitive advantage. This requires no explanation except to say that high ROCE readings and good operating margins are usually the clues to support this constraint. Its a case of seeing whether a stock has these readings and finding out what precisely generates them or, if not, being careful about the whole package.

7. Directors dealings. Buying directors is highly desirable, the absence of selling is mandatory.

There are other constraints which are either highly desirable or bonus factors that he lists.

Hope the above gives you and others a small taster of what's packed into this approach. Sorry if its too long, not intended.

Wishing everyone a very good day.

TomL.

thanks limps. it all makes sense now

Tom.
I plan to do some level 2 courses, but not before I already know a fair bit about it. I can only absorb so much information at a time, and if it's all squeezed into one or two days then I need to be able to ignore the basics so I can absorb the more complex issues. I've already been on some of Limpy and Bullie's courses, and you'd be surprised what you miss if you're struggling with the basics. I went on one course where I thought I'd wasted my money as I had already learnt all that was presented from books. However, a week or so after the course I awoke in the middle of the night with one short sentance in my head that was said at the course that I'd missed; it made the difference between a wasted day and a course worth every penny.
ZOLTAR

WMY :-)

Novice trader in need of some advice. Can anyone help. I seem to have got myself into a right mess with my AVZ deal. Shorted it at 509 (thought market was coming down) and again at 520. (As pros you wouldn't get yourself into this situation in the first place - should I sell or wait for market to come back down? Double witching on Friday - what is the chance I can get out and not loose too much?) I obviously need to learn a lot but do not know quite where to start. Can anyone suggest basic fundamental info which one needs to know to trade successfully. Good charting packages etc?! What would be good to learn before going on a course?
Thanks very much in advance for any advice.

Hamsa,

It is very difficult to give an opinion on another person's position in say something such as avz which I and many others like me trade regularly. Suffice to say that you take a look at the charts below on ukx and avz.




Technically, you will see that both charts 50dma and 125dma have crossed over (not a golden cross) the 200dma with the 50dma riding above 125dma, such that the dmas' are in correct sequence to favour the long side of the mkt. However, at some point, you would expect the price to retest the 125dma particularly after the chart breakouts above recent resistance. When that happens is for you to work out, but an rsi indicator should be helpful to you on this. One thing I am wary of in the ukx is a retest of the kind just described going right through all the dmas'. That would tell me that the "vicious" bull rally in a "bear" mkt is over with a vengeance with the broad mkt tacking back to the short side. If the test (when/if it comes - not guaranteed), as described, holds then this would indicate to me that we have a fully blown broad based "bull" mkt.

Hope that helps and, fwiw, every trader (me included) I have ever known only became successful by learning from their mistakes. Name any invention (technical or otherwise) that ever came about except by the inventor's mistake or some predecessor of his down the chain.
All the best,
TomL.

ps: there is a recent spike on avz at circa 575 - you may want to use that as a useful point of reference in determining your trading strategy from here.

Hamsa
I can not tell you what to do. As you know the minute you cover them they will drop like a stone and blame me ;-)

However looking at the chart it has a very stong upward support line which is ttacking the FTSE. If the FTSE falls back it probably will to.
However this is a bull market and personally I would prefer to be long than short.
Of course discipline says you should have had a stop loss in place and never add to a losing position.
If it was me I would get out and cut my losses
Best of luck whatever you do
D.

Hamsa.
I cannot argue with the above. Your trading strategy (long term plan - long term for YOU, that is) should be to trade with the trend, not try to guess when it will change. However, your question seems to be about getting out of this trade, which is about trading tactics (shorter term ideas to maximise gains/ minimize losses), of which advice is very hard to come by. If you can, instead of closing out and spending the rest of the day p***ed off because you lost, how about putting in a close stop in the market. AVZ doesn't gap too much, and it could drop enough for you to close even and still stay in the uptrend. It means risking one or two pence a point more, and you may close worse than just closing out now, but it could also go 10 or more points down to be able to close at a better price than now. From here, risk reward would be worth it, but, frankly, you should have had your stop in from the moment you entered the trade. Also, if it goes that one or two pence against you, you MUST close and suffer the loss - and learn from the loss so you don't do the same again.
Personally, I think we're soon heading down, but you must wait until it is clear before trading, especially investment trusts that will likely follow the indices. The uptrends are intact which means, as Croc says, it's a bull market, so you should be long if trend following or flat if sceptical of the rally.
But WTFDIK, I'm just a rookie learning too. How about more on trading tactics from the experts on here. If you're in a trade that you wish you weren't, how do YOU get out of it?
ZOLTAR

Thanks very much for the advice. Will see if market pulls back a little tomorrow am after rise today - otherwise I shall be out and take losses.

Can you tell me what the best indicators to use when buying and selling - any good charting packages or books I should read?

Zoltar do you put in stop loss when you enter order? I shall have to look to see if I can do this - I trade with GNI. I think market is coming down and if it does by the end of week I will be kicking myself for not trusting myself. Nothing worse than being on the wrong side of the market - also ties up margin.

Could someome please explain the basic concept of 'trading'?
In other words is it spread betting or actually trading shares through a broker. If so which brokers' trade shares. Do you still pay the 10 - 15 cost of each buy and sell as well as stamp duty?
Sorry if this seems a basic question but it would help if someone put me out of my confused misery about this subject. I had hoped to go the NW Traders Day but my transport let me down at the last moment as I am unable to drive any more (a medical condition not drink driving!!)
Regards