Trading Indicator

The unemployment rate is another widely followed indicator. The Bureau
of Labor Statistics conducts a nationwide random survey to determine the
unemployment rate. High unemployment is negative for the stock market.
A five to seven percent rate is considered to be good for the markets.

Let's move on to another topic. That's volatility. This is nothing more than
the movement in the price of a stock. A volatile stock is usually thought of
as one that trades erratically with big swings from high to low prices. Gold
stocks with a high following of traders is a good example.

The volatility can be the result of good or bad news. News moves the
markets. You can't make money if you buy a stock and it just sits there.
You need movement (hopefully upward) to get out with a profit. Volatility
is not something to be scared of.

If a good company experiences some panic selling due to a little bit of 
bad news that's greatly overblown, you'll be able to jump in and buy some
good stock at rock-bottom prices. As always, you should already know
the fundamentals of the company before you buy.

I also want to take a few seconds to mention what's known as the January
Effect. Many people sell their stocks that are trading at lower prices than
what they initially paid. They sell-off these stocks for what's known as a
tax loss, usually in December. This makes the price fall and people panic.

This increased selling drives the price of many good stocks downward.
You can purchase some really good stocks at the end of the year for fire
sale prices. These same stocks that took a nose dive in December will
usually do a reversal and run back up to or exceed the old high.

And finally, I need to mention two other items. First, always play-trade or
practice trade before you put any of your money at risk. Simply keep a log
sheet of what you buy, when you did it, how many shares you purchased,
what you paid, the target price, and the date of the sale and profit if any.

And second, don't buy or sell any stock based on a hot-tip. Never buy a
stock that's offered with a high pressure phone call. Always review the
company fundamentals. Be suspicious of anything that sounds too good
to be true. It usually is. And remember! It's your money. Invest it wisely.