How To Do Stock Screening Right?

The process of stock screening can be broken down into clear and efficient steps that lead you to new trading and investing opportunities quickly. Here’s how it works:


First, you need to capture all the relevant data in the stock screening software. If you’re a fundamental guy obviously you’re going to need the last 5 years of annual financial statements, plus the most recent quarterlies. If you’re a price-oriented trader, you are probably interested in price patterns, candlesticks, or technical indicator studies on a shorter term data population. So you need to pick the data set on which the filter rule will be applied.


Second, you need to devise the filtering rules you want to use in your stock screening tool. If you’re a fundamental investor, your rule might look something like this: Tell me all stocks on the Toronto Exchange which have market cap less than 100 million, debt-to-equity ratio less than 2, and average quarterly cash flow growth rate over the last 3 quarters of at least 10%. This screen will select small cap stocks with low leverage and increasing cash flows — a good indicator of financial health. If you’re a technical trader, your rule might be: Tell me all stocks on the Toronto Exchange with closing price less than 50 and greater than 5, which have RSI greater than 50, a rising 50 period moving average, and a 3 day pullback in price. This screen will select all stocks that are in an uptrend, with relatively strong internal strength, but which have had a short term pullback that might be a buying opportunity.


Third, you need to be able to drill down and further analyze the stocks that the stock screening application discovered among the entire universe of stocks. As a fundamental investor, you want immediate access to the other financial data for each stock selected by the screen. As a technical trader you want to see the price and volume on a time series chart, with perhaps several additional indicator overlays.


Once you’ve done your further drill down and analysis, you can select stocks to trade or invest in. This process should be constantly done to ensure you are always considering the best available opportunities that match your method or strategy. In a nutshell, this is how you do stock screening correctly.


For more information you can consult with our experts at Paradigm Capital Management. Paradigm Capital Management employs a disciplined, bottom-up approach when it comes to small cap investing and micro cap funds, with an emphasis on fundamental analysis and extensive management contact.


We have the expertise when it comes to small cap investment to achieve your financial goal, contact us at (518) 431-3500
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What Makes Mutual Funds an Ideal Investment?

A mutual fund is a collection of stocks and/or bonds similar to a company that, along with a group of people, invests money in stocks. It is an investment pool where many investors for the purpose of investing in stocks, bonds, money market instruments and similar assets. In a mutual fund, the investor gets a proportional share of the fund’s gains, losses, income, and expenses. It is similar to buying a small slice of a big pizza.


To many people, investing in mutual funds is like buying it since the investor has the choice to invest in a product according to his/her choice and comfort. Investments are often mistaken with keeping your money in a saving account and especially mutual funds has still not got much understanding amongst youngsters. Having said that, if you can get proper information and knowledge about mutual funds, you will realize that it is one of the best ways to earn the profit.


For clear picture about this product, you must understand the objectives. So, here are the objective of mutual funds in a simple and easy way.


Objectives of Mutual Funds:


  • Equity (Growth) – In this product, the investment is done only in stocks.
  • Debt (Income) – Here the investment is done only in fixed-income securities.
  • Money Market (Including Gilt) – Under this fund, the investment is done in short-term market instruments including government securities.
  • Balanced – As the name suggests, the balance is maintained and hence the fund is put partially in stocks and partly in fixed-income securities.


How can you make money?


Once the functioning of mutual funds is clear, a new player of this game would be looking for the direct and simple ways with the help of which he/she can make money. So, here are the three ways to make money:


  • The earning comes from dividends on stocks and interest on bonds. A fund pays out all the earnings or income over the year to fund owners in the form of a distribution.
  • If the fund sells securities that have earned profits, its capital increases. Most funds also pass on these gains to investors in a distribution.
  • If fund holdings increase in price but are not sold by the manager, the fund’s shares increase in price and at this moment you can sell your mutual fund shares to enjoy more profits.


Benefits of Mutual Funds:


One of the most important a person looks for before investing his/her hard earned money is its advantages. A smart investor would always be interested in understanding the uniqueness of a particular product. So, here it is:


  • Professional Management – The foremost advantage of funds is that here the funds are managed professionally.
  • Diversification – The term diversification means that you invest in a large number of assets and hence the risk is spread out. So, the more stocks and bonds you own, the less are the chances of loss.
  • Liquidity – A mutual fund allows you get your shares converted into cash at any time.
  • Simplicity – Buying a mutual fund is one of the easiest investment as it can be started with a small amount on a monthly basis.
  • Economies of Scale – Since, a mutual fund buys and sells large amounts of securities at a time, the transaction cost is lower as compared to what an individual would pay for securities transactions.


The Mantra to get more returns:


Many of us are not aware of the fact that mutual fund investments need patience. As per the data, those who have invested money for a longer tenure irrespective of the profits they were earning, they have got higher returns. Also, a genuine fund advisor would always suggest you to continue the investment for a longer tenure and start with little.


Young investors can start early and can go for growth plans in mutual funds whereas it is ideal for the people looking for retirement these funds have retirement plans. For risk-averse investors, liquid plans and fixed maturity plans prove to be healthy when the FD rates are not so favorable.


For more details you can consult with the experts at Paradigm Capital Management – a trusted leader in small cap investing. Call at (518) 431-3500 to learn more about how our capabilities align with your long-term goals.

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Understanding Hedge Fund Management Styles

While performing due diligence on a potential hedge fund, you should take the time to get to know the management style favored by those who will be managing your investment. Most hedge fund managers have a specialty, and this expertise is often directly related to the types of decisions that will be made and which markets will be explored for profit potential. Because these types of investments need active and insightful decision-making in order to obtain the best result, the style of management will have a substantial impact on the level of returns you can expect from two similar hedge funds. Understanding the performance style will also allow you to track the general returns for similar styles in the past, providing a more thorough evaluation of the hedge fund overall.


Common Styles for Hedge Fund Management


No one investment discipline is superior to the others, and most are tailored to maximize returns on a specific type of investment. A successful hedge fund may employ any or all of these styles to some extent, depending upon the types of opportunities that comprise the fund. Keep in mind that when performing due diligence on the fund, you will need to keep in mind not on the style, but the intended market when making your evaluations.


  • Fixed-Income Arbitrage – uses the price anomalies between related securities to obtain profit. This style can be used domestically or abroad to generate positive returns. These returns tend to be steady, and fixed-income arbitrage is generally focused on minimizing volatility.
  • Managed Futures – utilizes commodity and financial futures markets, as well as currency markets globally. This style of management relies on accurate and timely information regarding pricing and other technical knowledge to maximize returns.
  • Global Macro – this type of style focuses on long and short positions in both capital and derivative markets throughout the world. Tied closely to global economic events, they can be invested in emerging markets and economies as well as developed countries.
  • Event-Driven – just as the name suggests, this style focuses on pricing movements that are linked to events that happen in businesses, either locally or globally. Mergers and acquisitions are two of the most prevalent events that this type of style may follow.

There are other hedge fund management styles as well, each with its own advantages and drawbacks. How these styles are implemented by the fund manager will vary based upon the unique circumstances and investments surrounding each individual hedge fund. By fine-tuning these styles to closely follow the data and expected trends, exceptional returns may be possible.


Evaluating the type of hedge fund management style that your hedge fund manager prefers cannot be done in isolation. You must consider not only the style, but the current market conditions, the companies and other institutions that may be part of the investment, and the potential of those companies, stocks, or other ventures. It is only after gaining an educated overview of the entire situation that a management style can be properly evaluated for potential effectiveness.


Whether you’re a seasoned financial investor, or a novice just starting out in the world of international investment, the professionals of Paradigm Capital Management have the experience, skill, and dedication to help you attain your financial goals.


Paradigm Capital Management is an employee owned hedge fund manager. The firm also launches and manages equity mutual funds and hedge funds for its clients. Paradigm Capital Management, Inc. was founded in 1972 and is based in Albany, New York with an additional office in New York City. Call at (518) 431-3500.


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Paradigm Capital Management Stock Advice – Poor Stock Buying Decisions

There have been many times when investors lose in the stock market. There are several factors resulting to the losing scenario. Apart from unexpected twists of the market and financial disorders, the main reason is the poor stock buying decision.


Some tips are to be followed while buying a stock, as this is the decision that decides on the further steps of stock investing including the time they should be retained for and then sold. There are many stock advises that any investor comes across, however, enlisted are some poor stock buying decisions that prove disastrous for expected profits.


1) Buying In Weak Stock Market: if you feel that you are smart enough to get profits out of a bad stock market, then it is a high-risk decision. Weak markets do not care about anyone; hence, buying stocks at that time may give losses. Being patient and wait for the bull is the right thing to do. It should be noted that a weak market generally tends to be a loss giver because most of the day traders tend to sell their shares for profit liquidation.


2) Bottom Fishing: greed always kills and over-smartness accompanied by greed is a total disaster. Some stock investors end-up buying falling stocks at discounted prices in the expectation of them to rise. These stocks tend to give them huge losses. Each thing available at discounted prices does not always get you sheer returns. Hence, bottom fishing is an absolute no as per stock investing even if the company you are investing in posses a strong historic stock data.


3) Late Buying of Stock or Missing the Train: the company out with its stock in the market may be good and the stocks are rising vigorously, but you may miss its buying at the right time. Buying late may not get you the profits as the price climbing of any share is not assured and it may fall as soon as you get it in your profile. On the other hand, very often, many traders do not buy the stock late in fear of its breaking down. But, the situations being fluctuating the stocks go up and you loose on the opportunity to earn. Hence, better to keep your eyes wide opened for investments.


4) Do Not Bet On Other’s Tongue: being a stock trader you come across various mouths every day. Each investor carries his own calculations and estimates of market moves. It’s important to listen to all to get the wholesome idea but investing on other’s words is sheer carelessness. Have faith on your calculations and invest according to what you and your stockbroker estimates.


5) Calculate and not guess: investing on gut feelings and guesses always pays losses. The guess works are not only reckless and illogical but also stupid to risk the hard earned money. Always have logical calculations and enough data to support your investments.


Consider small cap stocks if you want to earn better on your investments. Small cap shares is a better approach to make an entry and establish yourself as an investor of the stock market as it does not require a large sum to initiate. In addition, one can gain additional knowledge once you enter not it and start trading.


Paradigm Capital Management a small cap company employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact. We can help you to meet your investment goals. Call us at (518) 431-3500 to align our capabilities with your long-term goals.

Also read: Searching For No Load Mutual Fund Companies

OTC Penny Stock Investment Strategy For Successful Trading and Big Fortune

Nothing could be as lucrative than to trade in penny stocks over the counter or OTC for short. To begin with they are priced ridiculously very low costing just few cents or pennies each. In fact such micro stocks that are traded over the counter can never exceed $5 as per the strict SEC guidelines, if it is at all to qualify as penny stocks. Because they are priced exceedingly low, investors who look forward to make huge fortune by trading in stocks, buy penny stocks in large volumes hoping to trade them for big profits at the right opportune.


So for the same price at which you may be able to buy one or two stocks of a high priced blue chip stock you can buy quite a large number of these penny stocks of two or more small companies. Over and above one can even expect to see the price doubling up in a day or two, which is simply not possible for mid cap or large cap stocks traded on national stock exchanges such as the NYSE, NASDAQ or AMEX. Undoubtedly anyone wanting to build a huge fortune say by earning millions in a year or two can only hope to do so by staking their money in penny stocks of various small companies having a capital thats less than $200 million.


Why Penny Stocks are both Risky as well as Lucrative for Trading

Moreover a slight swing in the positive direction may raise the value of OTC stocks also called micro stocks few hundred times more in a day or two, which is simply unthinkable for large cap stocks.This happens because of their high volatility in their value that may climb either very high or very low than what its priced currently. Its because of this great volatile nature that what provides the requisite momentum to penny stock pricing as trading progresses by the hour. Such volatility can be so unpredictable many a time that it even becomes difficult for a highly seasoned trader to comprehend in which direction would the price actually follow. Its very much like the wind that can be a breeze or suddenly blow up into a storm at times or there could be total lull with no movement at all. The same is true for penny stocks too. There could be times when there is no trading at all and the penny stock has no takers for months if not years although when you brought them at a great price, there was tremendous interest and momentum in trading at that time. This alone makes trading in penny stocks so risky from an investment point of view. In fact penny stocks follow no scientific principles that would help you to guess its value at some point of time, like you might do so regarding the position of stars or comets in the heavens.


However as I have already mentioned if things work out in your favor then perhaps you have a better chance to win and make a fortune as you may do so while playing pokers or maybe slot machines. As part of your planning process you can choose your own best strategy to suit your temperament and the constraints of limited resources available at your disposal. What you can adopt best is a defensive tactics to minimize losses. To do so you have to find stocks of those companies that are in business which has substantial demand in the market as well as have a great future for growth and expansion. The sectors are perhaps those of Bio stocks, energy stocks or something niche which has tremendous potential that you can foresee. You have to scout such undervalued stocks that has been missed out by others and invest in them so that you may cash them when things are ripe.


What all Winning Strategy to Apply for Trading in OTC Penny Stocks

Now as per statistics 95% of investments fail hence its always best to spread your risks by diversifying as much as you can when trading in penny stocks of various OTC companies. Even if 95% of your portfolio fail and fall badly at least the rest can climb so high in value that it can pay you back several hundred times the value of your total investments. Once you recover the initial amount invested you can then play with house money i.e. with the surplus that you gained in returns. That is how it is not surprising to find many success stories where investors who dipped their toes into the stock market by investing just $200 in various penny stocks were able to make hundreds of thousand dollars in a year. This is what makes trading in OTC and pink sheet stocks so lucrative even though penny stocks are risky because of their great volatility.


But that is only one approach to a problem we have discussed.On the contrary there is no single full proof strategy for water tight solutions, in fact every single solution gives rise to yet another set of problems that has to be solved. Since it is not possible to predict what all problems might crop up eventually during trading it is best to stick to patterns. The more trading patterns you recognize from past history or experience, the better would it be for an investor. By analyzing each of these patterns you might at least recognize how a penny stock would behave provided all factors currently in tussle in the market remains as it is in the next few days without drastic change in “weather” patterns.


Importance of Fundamental and Technical Analysis

So to make your own analysis before taking any decision to invest, it is important that you learn all about Fundamental and Technical analysis. Its very much like making your choice of a pachyderm or a horse for investment. If you have to buy an elephant you have to learn all about elephants, their eating habits, their work culture, what all kinds of work it can be profitably employed, how much return it would give during its working life span after deducting the fixed costs for its upkeep such as food and health, salary to be paid to a trained mahout (the man who drives the elephant sitting atop), debts to be repaid back etc. How many babies would it be able to produce during its reproductive period, which could be further nurtured and trained for future growth and expansion of say lumber jack business, how much of the tusks would fetch as ivory cost etc. How much worthwhile is the timber business where the elephant would be employed, if it would remain stable since timber costs are unpredictable and many environment conscious countries like India is switching over to non-wood materials or importing them from Malaysia or Indonesia as wood is cheaper. Similarly if you buy horse, you have to understand what purpose is the horse is being purchased, since the horse that may be used in a traditional Indian wedding may not be suitable for a race horse. The pedigree and type of horse fit to win races etc. My idea on elephants as an example came after I just finished watching a TV Animal Planet program on “swimming elephants” of Andaman and Nicobar Islands in the Bay of Bengal in India.


So you have to find out for each stock what all are the Revenues and Earning, how competent it is vis a vis other companies in the same sector, the extent of its debt load, the current and future demand for such industry in both domestic and international market, joint ventures or partnership with other companies in similar fields, financial ratios (such as Return on Assets, Debt to Equity, Profit Margin, Return on Equity, Current Ratio etc.), market risks, press reviews and public relations, core management competitiveness and integrity, insider trading, buy back plans, institutional holdings and if its involved in any serious legal tangles, political policy and influence etc.


Other than able to understanding the health of a penny stock company, it is important that you make a technical analysis of the various chart patterns to understand the rise and fall in demand that has a strong influence over the price of any stock. For this you have to learn the different chart patterns and how best you can make a technical analysis of any penny stock so that you know what to do when the price rises and then dips to bottom out say in a cup and handle pattern, or when it breaks through resistance or a support point. How you can select your entry and exit points, setting up of stop losses, limiting losses etc.


Hedging as a Strategy to Protect your Investment

There is another way by which you can protect your investments which is by choosing hedge funds that complement each other, say you buy shares of oil and gas companies as well as those for transport companies. If the price of oil rises then it would be profitable for oil companies but not those of the transport companies, or when the oil prices goes down the transport companies would be improving their revenues. So which other way your investment remains protected. So accordingly choose your stocks very carefully for your portfolio, such that even if 3 of the 5 companies fail to deliver, you can cover up your cost from the gains made by the other two.


The Importance of Subscribing to Reliable Information and Newsletters

Now as a newcomer its quite easy to be overwhelmed with such a large number of stocks in the market particularly OTC penny stocks. To help you in your effort you would require professional help and use of software to help you with your detailed analysis of each of the penny stocks you target.

For this you will need the service of newsletters since information on OTC stocks are by and large sketchy and you need authentic insider information. Unlike stocks listed in national stock exchanges where details of each of the listed companies are easily available the same is not true for micro stock companies. Hence you have to subscribe to authentic newsletters to keep yourself up to date.


If you are still not sure then you can have the services of the experts at Paradigm Capital Management – a trusted small cap investing company. Paradigm Capital servics are focused on a single minded purpose: to ensure that theri clients have the best information on which to base intelligent financial decisions in pursuit of superior investment performance.

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Penny Priced Stock Options – Paradigm Capital Management

Sometimes investors feel that they do not have sufficient leverage. When this happens, they find it difficult to use the opportunities that present themselves and make a profit from them. Penny options are one good way to gain leverage and build your portfolio at the same time.


A lot of stocks are priced incrementally – for example, at five or ten cent increments. Penny stock pricing methods do not use increments but vary by pennies. Traders can increase their leverage with penny stocks because they can get into trading with less capital to start with and if their stocks should fail, they have not lost too much.


With penny options, you can make a profit in a relatively short time because you are playing in a smaller field and with less money. A lot of people like the penny stock idea because you cannot lose more than your initial investment. Options, as opposed to underlying stock, do have some drawbacks though. Penny options can change massively in a short period of time. These might be positive changes for you or negative.


It is important to find out whether a penny option would suit your requirements. A penny stock might be cheap but perhaps the liquidity does not suit your needs. You have to find out what the brokerage cancellation policy is too. Also, ask what the time decay of the options is before purchasing them. Before you buy anything, ask yourself for how long you plan to be trading the options. You should buy options that expire well after when you plan to sell, so if you want to trade an option for 10 days, choose one ending in 30 or 40 days.


If you already decided that you are going to trade for one day only, there is no need to worry about expiration dates. The front month option should work fine for you in this instance. Penny options are not actually that common these days. Traders and crafty brokerage firms use the method so others should catch up soon.


You have to be patient when trading penny stocks. The options can move quite a lot in just a few minutes so if you are too nervous, you need to relax rather than panic. If you are prone to panic and stress, maybe penny options are not a good idea for you.

If you are interested in increasing leverage but do not have enough capital to begin with blue chips, penny options are a good way to start.


If you need any help then consult with the experts at Paradigm Capital Management – a trusted small cap investing company. Recognizing that small caps presented unique opportunities to capitalize on inefficiencies and valuation discrepancies, Paradigm Capital Management was established in the early 1990s.
To learn more about how company’s capabilities align with your long-term goals, please call at (518) 431-3500

Also read: Why You Should Buy No-Load Funds?

Choosing the Right Stock Market Simulation Game

A stock market simulation game is a game, usually played online, where people can experience investing in shares in the stock market without any risks or costs or any fear of losing money when they get it wrong.


Many teachers and professors of banking and finance are now using stock market simulation games to teach their students about the rudiments of investing in stocks. Most stock market simulation games come with a fee but there are some that are free of charge. One does not need have prior knowledge about the stock market to join.


This is how stock market simulation games usually works: First the player must register. After registration, he or she will be given an initial sum of virtual money with which to invest in companies. You can then build a portfolio of stocks by buying and selling shares in companies. Most stock market simulation games use real market data.


The objective of most stock market simulation games is simple: to increase the value of your portfolio of stocks greater than that of the other game players.
Below are some tips our experts at Paradigm Capital Management suggest on choosing a stock market simulation game:


  • Choose a stock market simulation game that is used and recommended by reputable colleges, high schools, middle school, investment clubs, brokers in training, corporate education courses and any other group of individuals studying markets in the U.S. and worldwide.
  • Choose a stock market simulation game that is comprehensive and easy to implement in any Finance, Economics, or Investments class. A good stock market simulation game feature trading of stocks, options, futures, mutual funds, bonds from the U.S. and many of the world’s major markets.
  • Choose a stock market simulation game that provides a valuable, reliable, and realistic trading simulation at a reasonable price to students and other individuals who are interested to learn more about the markets or test a strategy.
  • Choose a stock market simulation game that has a toll-free customer service phone number and an excellent e-mail support to their users worldwide our users worldwide to quickly answer any questions that the users may have. This customer service must allow the individuals to concentrate on concepts and leaves the customer service to answer all trivial questions e.g. about ticker symbols, dividends, splits, etc.
  • Choose a stock market simulation game that is easy to use and easy to teach even to those who have never invested in the stock market in their entire life.


Paradigm Capital Management Small caps stock pick services are one of the best and top penny stock services which are provided to succeed in your share market information. If you want to know more about The Best Penny Stocks and Penny Stocks information, then feel free to contact at our experts at (518) 431-3500
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