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A Personal Finance Blog

Forex Trading Schedule

Forex is an interesting market because it is open 24 hours a day, from 5 pm EST on Sunday until 4 pm EST on Friday. This makes it an ideal market to trade for those of us who have jobs during the day.

  • New York opens 8:00 am to 5:00 pm EST
  • Tokyo opens 7:00 pm to 4:00 am EST
  • Sydney opens 5:00 pm to 2:00 am EST
  • London opens 3:00 am to 12:00 noon EST

It is easy to see that the most active periods will be areas of overlap between the different markets. These are the sessions that overlap:

  • New York / London from 8:00 am — 12:00 pm EST
  • Sydney / Tokyo — 7:00 pm — 2:00 am EST
  • London / Tokyo — 3:00 am — 4:00am EST

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NASDAQ Trading Schedule

The NASDAQ Trading Schedule is available from their web site. It is as follows:

  • Pre-Market Trading Hours from 7:00 a.m. to 9:30 a.m.
  • Market Hours from 9:30 a.m. to 4:00 p.m.
  • After-Market Hours from 4:00 p.m. to 8:00 p.m.
  • Quote and order-entry from 7:00 a.m. to 8:00 p.m.
  • Quotes are open and firm from 7:00 a.m. to 8:00 p.m.

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Why DCA for Stocks is a Bad Idea

A popular investing technique for those who don’t have the time or energy to research the day to day market is dollar cost averaging, or DCA. The idea behind dollar cost averaging is a simple one: always invest a fixed dollar amount in at a fixed frequency, regardless of the stock price. Thus, when the stock price is high you purchase less shares, and when the stock price is low, you purchase more shares. I think DCA is a great idea for no load mutual funds, but a terrible idea for individual stocks. Let’s look at why:

  • Most mutual fund providers like Vanguard

    don’t charge transaction fees or commissions to buy mutual funds. But almost all stock brokerage firms do.

  • Let’s say you invest in a company at $100 per week. Even a modest commission of $4 a transaction results in an immediate 4% loss on your investment, before the stock has even done anything!
  • Even if you’re willing to take the commissions hit, do you really want to put all your eggs in one basket? Even traditional, stable companies like Wachovia have catastrophically collapsed on itself. American staples like GM and Ford are no longer sure bets as well.

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Since the transaction fee is fixed, dollar-cost averaging can only work with a large dollar amount. Unfortunately, the whole reason people invest small amounts at a time is because they don’t have money in the first place! Thus, my suggestion is avoid companies that promote automatic investment in the stock market, such as MyStockFund — you’re far better off in the long run with a good set of mutual funds.

Stocks and Dividends

When examining stocks, we are all too quick to focus on the price itself, and overlook the underlying value of the stock, which presents itself to the equity holder in terms of dividends. For this example, let’s examine two stocks: Google (GOOG) and Microsoft (MSFT

).

At the time of this writing, we find that Microsoft offers a dividend of 0.13, generally every quarter. Put another way, this means that for every 1000 shares you own in the company, you would receive 130 dollars in distributions. You can then take this money and use it as additional income, or reinvest the dividends back into the company to buy additional shares.

Google on the other hand, offers no dividends. It’s value is entirely reflected in the price of the stock itself — if the price of the stock goes up and you sell it, you make money. On the other hand, if the price of the stock drops, you may lose significant value. But until you actually sell the stock, you can’t realize the value.

In my opinion, stock in a company isn’t worth holding unless there exists some way for shareholders to share in the company’s profits. As a long-term strategy, always buy stocks that pay dividends.

Zecco Isn't Free, Well Not Really

I always wondered how Zecco

would sustain their business model of free stock trades during this economic climate. Turns out that they couldn’t:

I’m writing to tell you that as of March 1st, 2009, we’re increasing the minimum level of assets needed to earn 10 free trades per month to $25,000. We’re also adding a new way to get free trades: customers who make at least 25 total trades per month will also qualify for 10 free stock trades per month.

Their explanation:

Why was this necessary now? Anyone who’s read a newspaper lately knows that the US and world economies have been hit hard over the past 4 months. As a result, some of the largest corporations in the world have had to cut costs and adjust to new business realities. With reduced retail trading volumes and lower interest rates, we at Zecco Trading simply could no longer provide free trades to as many people as we would like.

Welcome!

I'm Titus Barik, a professional computer engineer by trade. This blog catalogs my efforts towards the path to financial freedom, one day at a time. Feel free to contact me at titus@barik.net for articles suggestions or anything else.