Here are two strategies for higher consistent returns and less risk. These are also opportunities for index beating returns. And high absolute returns which can reach 30% and above if you use margin and have or gain experience.

You can have high absolute returns with a lot of stability by buying bond and stock closed end funds with discount.

Closed end fund is like mutual fund. The difference is that closed end fund have limited number of shares. And they can sell for less or more than sum of underlying securities. Buy fixed income closed end funds with discount. You can go to etfconnect.com and search by discount. The more advanced strategy is to frequently trade the closed end funds and hedge them with options on Treasuries ETFs. This government bond exchange traded funds have ticker symbols TLT, IEF and SHY. Frequent trading can capture short-term fluctuations and significantly improve overall results. If you trade, you might pay attention to shorter duration funds – not just to discount. Closed end funds with average maturates up to 5 years are more predictable from my experience and therefore easier to trade.

Second opportunity is about selling stock puts. You act as mini insurance company by selling insurance (puts) that stock will not be 20-30% lower 0.5 – 2.5 years from the initial transaction. Select the put expiration date as far as possible. Stocks with LEAPS – options expiring up to 2.5 years in the future are preferable.

Approach picking stocks for selling puts like you buy a business or invest for very long term. I consider this strategy as investing – not trading. At least from underlying stock selection perspective. Pick companies you, independent financial publications and/or trusted advisors made a lot of research. Look for cash, real estate on balance sheet. Very important is long-term predictable growth (growth even better then hypergrowth, because it is hard to predict when hypergrowth phase stops). One of the most important factors is management. Best picks may and should include companies run or owned by best managers or money managers. I mean Sears Holdings (SHLD) which is run by billionaire hedge fund manager Eddie Lampert. Eddie Lampert is one of the best and highly respected money mangers in USA. Some people call him modern Warren Buffett. He took about 5 managerial responsibilities at Sears Holdings. And besides being one of the very best money managers he is famous for successful retail turnaround stories.

Second example for stock selection is Hewlett Packard with Mark Hurd as CEO. Look at the outstanding job Mark Hurd did at his previous company – NCR Corp.

Of course one of the most important things is to buy companies with good valuation. Don’t chase good stories, good products, good prospects and even brilliant managers without regard for stock valuation.

With experience you can add turnaround stories to you portfolio, but make sure to thoroughly researching this opportunities. You can sell much more expensive insurance (expensive puts) in this situations.

By employing this two strategies outlined above you can create balanced portfolio with exposure to stocks and fixed income. Both strategies results to buying securities with discount. With selling puts you also have benefit of leverage because you need to put up in margin 10%-20% of underlying securities.

I feel that both strategies might be part of any size portfolio and might be suitable for investors with lower than average risk tolerance.

There have been a lot of comments in the media and among investors all year about how strange the stock market has been acting this year.

I don’t agree. Except for the wild day-to-day volatility (after the SEC allowed the abolishment of the up-tick rule on short-selling last year) the market has been acting quite normally.

It handled the turmoil created by the collapse of the housing bubble and the onslaught of the sub-prime mortgage mess last year quite well, reaching a new bull market high in October of last year.

Always looking ahead six to nine months, it then topped out normally in anticipation that those problems would finally have the overall economy slowing this year. As recently as the end of August, the S&P 500 was down only 18.1% from its peak of last October. That was normal, since in August Wall Street, the financial media, and even the Federal Reserve, were still assuring consumers and investors that, although the economy was slowing, it would not slow all the way into recession.

Then came recognition that we were headed into a recession. Having to factor that scenario into stock prices, the S&P 500 lost another 9% in September.

As the economic outlook then worsened further, the expectation becoming that the recession will be one of the more serious versions, perhaps as severe as that of 1973-74, the market lost another 17% in October. And the first half of November has not been any better, the S&P 500 declining another 11% in the first two weeks of this month.

I suspect not too many investors realize they have now experienced one of the worst bear markets of the last 70 years, already as bad as any the last generation suffered through.

At the close on November 12, the S&P 500 was down 46% from its peak of last October. In the bear market of 1973-74 the S&P 500 declined ‘only’ 45.1%.

You have to go back to the bear market of 1937-38, 70 years ago, to find a more severe bear market. (The S&P lost 49.1% of its value in that 1937-38 bear). Yes, the current bear market has already been the worst in 70 years, moving the dreaded bear market of 1973-74 back to second place over that period.

So is it possible the stock market has already factored in a recession like that of 1973-74? If so, can it soon look out six to nine months, and anticipate improving economic conditions? Was the October low the low from which smart money buys in anticipation of that?

Speaking of smart money, Warren Buffett’s article in the New York Times a month or so ago, saying it’s time to buy again, has been pretty much forgotten with the market’s further decline.

But here’s another interesting comparison to the market bottom in 1974. In my current book, Beat the Market the Easy Way, I wrote of how Buffett had pulled off one of the most exquisite market-timing moves of all time.

Buffett was not well known in the 1960s when he was running a very successful private investment firm, similar to the hedge funds of today. But after making huge gains in the mid-sixties bull market, he surprised everyone. He cashed out entirely in early 1969 and completely turned his back on the stock market. He liquidated his investment partnership and dispersed the assets back to his investors, telling them they would be better off in government bonds for the next several years.

Then five years later, in 1974, after the severe 1973-74 bear market, in a famous interview in Forbe’s magazine, he said, “This is the time to start investing again.” And he did, using Berkshire Hathaway, which he had taken control of and was running while on hiatus from the stock market, as the holding company for his new investing venture. And the rest is history.

And after another 46% bear market, Buffett is once again saying it’s time to buy? So far he has been early, and has paper losses on his latest known purchases, Goldman Sachs, and General Electric. But he apparently thinks a 46% bear market is sufficient to factor in the possibility of a recession as severe as that of 1973-74.

Food for thought anyway.

Sy Harding publishes the financial website http://www.streetsmartreport.com/ and a free daily Internet blog at http://www.syhardingblog.com/. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

Another reason for the demand to have a good stock trading system in place is the rise in global stock markets. As a matter of fact, traders/brokers as well as investors/shareholders are finding that the task of trading in equities or shares or stocks is proving to be extremely complicated, considering that newer companies and institutions are being launched all the time. And the Internet has not helped by bringing the world closer to home!

What are the features of a stock trading system?

(1) What is meant by a stock trading system? It is a tool to enhance the success of investments, especially if it works effectively and efficiently. It includes strategies related to investments, market guides and trading schemes.

There are experienced analysts and professionals to guide the trader or investor as needed. This is achieved by providing a constant flow of information and analysis regarding market trends and movements in the stock market arena. Without this in place, it would be difficult for smooth functioning of the stock market.

Lastly, there is a timing system included in the package. Thus, every investor is aware of the time limits for investing in a particular stock.

(2) A stock trading system is not something that can be just bought at any marketplace! There are special individual distributors or operators available–they can be found locally too. These dealers offer a customer much more than just a system. They are truly worth it because they can lessen your headaches! All the more better to go to them if you have linked up with other business partners.

(3) Another option is to check out those special companies offering to sell systems that are dependable and have already been well promoted.

(4) Traditional or conventional methods of transactions are giving way to more modern methods. So there is the automatic/electronic stock trading system which is faster and more interactive in nature.

Since trading in stocks has become a global activity, it is difficult for investors to be present physically at all locations. He/she need not attend auction venues or trading places for the express purpose of buying or selling shares or trading stocks. Hence, the launch of electronic transactions.

This sort of a stock trading system is quick and convenient since it is supported by wireless Internet and wireless telephone. More advanced technology is sure to evolve in future.

If you talk about financial matters, everyone knows the importance of money. To meet your needs and demands, financial backup is a must. Even if you are earning a handsome salary, you might not be able to save some part of it. Therefore, investment is must in order to build financial backup. However, if you talk about investment, the most reliable option you can have today is online trading. And this could only be possible with the invention of the Internet.

However, stock trading is not as easy as it seems. Planning in must for such kind of investment and involves the strategies that are practiced in order to mitigate the volatile nature of the market. Trading strategies are important and therefore a comprehensive marketing analysis is must. The analysis part is very important, and with the advancement of the technology, the analysis process has become easier than ever before. There are advanced analysis tools available online – simply feed some required data and find the analysis results in no time.

In addition, there are various stocks related terms that are often used in the trading process. It is therefore, important for all investors to learn all the terms and the different aspects of trading. First of all, investors need to educate themselves and then learn the market and the processes that are involved in Internet based stock trading. There are several things like charts, and stock quotes that are very essential to learn. Once you learn all these fundaments – trading would definitely be simple and hassle free.

For first time investors, it is important for them to find the answers to their innumerable questions. Some investors might ask: do I need an online account, how to buy and sell stocks, how to choose the stock company website, who can help them in case they have some doubts to clear? There are several other related questions that might strike in one’s mind. And you can find all the answers on the web. And in any case, you don’t – you can consult with online financial experts.

So, educate yourself, clear all your doubts and then invest your hard earned money in stocks. Those who are successful in the stock market are those who always take things positively. Therefore, whether you are a new or an experienced trader – you need to have that positive attitude towards the volatile market. Moreover, if you have done all the ground works before trading stocks – you are bound to make substantial profits from your trading. So, invest your money and enjoy your life in a better way without thinking about financial constraints.

One good strategy to assess the potential of stock markets in today’s economy is to evaluate the daily performance of NASDAQ and Dow Jones. The decline of the stock markets is expected given the negative climate of global economy and therefore, the NASDAQ and Dow Jones demonstrate a negative performance, often over a series of trading sessions. However, the index performance alone is not enough to assess the overall performance of the stock market. Investors should also evaluate the performance of the individual stocks. For instance, there are companies that perform really well within the financial crisis such as copper and gold companies that expose positive increases. Therefore, investors can read accurate stock reports on Yahoo Finance or Bloomberg in order to get an idea of the market performance as a whole and be able to evaluate the overall performance of the economy.

Another way to assess market performance is to evaluate the fundamentals of the listed companies. Fundamental analysis examines the economic factors, industrial factors and company variables that define the intrinsic value of an investment. Hence, investors can take into account all these parameters in order to observe how a stock performs in this kind of economy and compare its intrinsic value to its market price. In doing so, investors take well-informed investment decisions. Besides, not all companies under-perform within financial crises. Companies are different, have different products, goals, missions and organizational structures and all these diversities are reflected on their interim financial statements and, of course, on their annual reports. Therefore, by following daily trends, but also by getting to know the company fundamentals, investors acquire a general idea of the market and stick to the hot shots, while avoiding the stocks that decline sharply.

For those investors who are not so much into fundamental analysis, technical analysis may be the answer to their inquiries about the prospect of a stock and the market in general. Technical analysis observes historical data of market performance such as price and volume and identifies new trends in order to estimate the market prospects. In this context, investors can use technical analysis to base their investment decisions on historical market data and psychological factors.

Finally, investors can visit the company website in order to get information on historical data, past performance, market positioning, how well the company does in relation to competition and what are their estimates for the future. Besides, corporate websites are always a good source of information in regards to major organizational or other sort of changes and how smooth they occurred. Stability is extremely important in a company and consequently in an investment decision. Stable companies typically rise upwards. Unstable companies are volatile and fluctuate too much.

Understanding the correlation between the stock market’s downward spiral and your variable life insurance policy is important. Evaluating your current policy and making the necessary changes will salvage your investment and protect from future risk.”For those who own a variable life insurance policy, it might be time to consider one of the newer fully guaranteed universal life policies,” comments Michael Kortz, RFC, RR. “Regardless of what the stock market does, these policies are guaranteed to provide coverage as long as the level premiums are paid. People need to sleep at night. A policy that is rich in guarantees, and isolated from market ups-and-downs, could help them do that.”

Tip 1

The most fundamental thing for real time stock options trading is that you actually have some kind of real time link to the markets. There are hundreds of websites out there that claim real time reporting, but you’ll find most of them actually updated every fifteen minutes – still useful, but not exactly real time. If you are serious about trading, consider buying some pro software than can keep you plugged in all the time, and literally update you in real time.

Tip 2

Set yourself some profit goals and some stop losses. There is no point being able to track things in real time unless you have some real objectives. In real time, stock options trading can be very very profitable because it’s one of the only forms of trading where you can profit if the price rises and if it falls too, depending on which kind of option you hold. Always plan your get out price in advance, and never ever waver from it.

Tip 3

Even if you are aren’t trading with anything yet, get used to tracking the data and seeing how certain stock prices perform. Real time stock options trading can be a little trickier to learn, because of all the minute fluctuations in price from one moment to the next. The more tracking you do, and the more data you record, the easier it will be for you to tell the fluctuations from the real price changes.

Tip 4

Find a broker service with low commission. If you do get involved with real time stock options trading, you’ll find that having a broker taking a large slice of commission each trade can really cut into your profits – and sometimes make them unprofitable altogether! If you are doing real time trading, chances are you’ll make more trades than average, so it makes sense to pay less doesn’t it?

These 4 tips should at least give you a starting point with real time stock options trading. Click the links below to find out how your own automated software can boost your profit.

Option trading, in and of itself, is not inherently risky. Options are simply tools. Imagine a big dial labeled, Options. You turn the dial one way and your risk goes down (as do your potential rewards). You turn the dial the other way and your risk goes up (as do your rewards, either in the form of upfront cash, or in the form of potential profits). In short, you can use options (for the right price) to reduce your risk, and you can use options (if the price is right) to generate lucrative income or receive other compensation in exchange for taking on someone else’s risk.

Let’s look at some scenarios that show each side of the risk trade.

Using Options to Reduce Risk

There are various option trading strategies you can employ to reduce the risk to your stock holdings. The price you will have to pay may come in the form of an actual cash payout to purchase that protection, or it may involve exchanging some of your future potential profits in order to acquire that protection.

Here are two trades that will reduce your risk:

Using Options to be Compensated for Assuming Someone Else’s Risk

If you are willing to assume someone else’s risk you can be compensated–and sometimes quite handsomely–for your trouble. The compensation may take the form of sharing the capital gains on someone else’s stock, or it may simply take the form of a cash payment.

Here are two types of trades in which you are compensated to assume someone else’s risk:

Conclusion:

The option trade examples above are all relatively simple but they illustrate the true nature of stock options. Trafficking in options is essentially trafficking in risk. No matter how elaborate and complex an option trade becomes, the core equation of risk is still present.

Developing and maintaining an awareness of this reality of options is crucial to your own option trading success. Whether you’re looking to reduce your risk or to be compensated for assuming someone else’s, a conscious awareness of what’s really happening in any given options transaction is invaluable. Once you know what’s really at stake, you’re in a much better position to consciously look for ways to accomplish your objectives as efficiently as possible. The outsourcer of risk will seek to reduce risk as cheaply as possible, and the assumer of risk will seek the highest compensation for the risk assumed.