Investing Information Center

How to Invest in the New York Stock Exchange?

2011-06-10T08:50:00.000-07:00

"Don't put all your eggs in one basket" says a famous proverb but the question arises - how and where to disperse and diversify the eggs which you have spent all the golden years of your life collecting?

Saving money is simply not enough unless you wisely invest these savings. Safety and security is what we spend all our life looking for but it is the risky plunge that brings in profits most of the time.

We have psyched ourselves into believing that Investment in stock market is risky but with research and planning it could be the ideal investment that you have always been looking for.

The thriving economy of USA makes New York Stock Exchange also known as NYSE Euronext one of the largest stock markets in the world with a gigantic inflow of capital and equities.

This article is aimed at the beginners endeavoring to make their way into the New York stock exchange.

Stop shadowboxing. There are so many myths to break and a glut of information to filter through. Instead of relying on random information in fluxed by the brokers and media you should take up the task of educating yourself. Get first hand information by doing the research on how the stocks actually work. Visit NYSE website to check market activity, company listings, bonds overview, investor relations and finally regulations. Do benefit from their investors education and outreach programs. It provides the information for individual investor and for market professionals as well. So, developing the basic understanding through reliable sources should be your first step.

Open your account. Once done with the basic research, now it's time to open a brokerage account matching your investment needs. It could be done via bank, brokerage firms or you can also open an online account as well. The brokers would also facilitate you with investment advises and transaction facilities but online account would save their fees and give you the freedom of choice. So with a little hard work you can save their dues and get firsthand experience about the market.

Make your portfolio. Make your portfolio at NYSE Euronext site. You can store up to 20 stocks here and they will keep you updated about their performance.

Swim with the flow. Since you are no more a novice, now you are prepared to take the advantage of the media frenzy of information. Watch business channels displaying market situation 24/7, follow expert reviews and grab business newspapers. It is better to choose NYSE publications, books, magazines and fact sheets as they are easily accessible, upbeat and reliable.

Make a check list. Now it's the ripe time to look for your prospective business partner/s. Go for the companies with consistent history and current status instead of venturing for the emerging or evolving ones. Hopefully they will provide a strong threshold for your new venture.

Finally go for it.Having researched the companies you want to work with now you are ready to buy the stocks. Next is the easy step of asking your broker to buy the required stocks or placing an online order. Keep yourself updated about the performance of your shares and the market. The risk can be controlled to some extent by adopting stop loss strategy. You can fix a boundary point where the shares must be sold.

These easy steps will definitely strike a chord with people who believe in not only saving but investing as well.

Free Forex Training Sources

2011-06-10T08:48:00.000-07:00

London is one of the central players in the Foreign Exchange Currency Market (Forex). That's because London Forex trading hours overlap with two out of the three other trading zones. The start of the London trading day encompasses the last three hours of the Tokyo trading zone session and the first of four of the North American session. The advantage to this fact for British traders is that they can conveniently participate in the markets when trading volume, hence liquidity, is greatest. Given that Forex trading transactions amount to over 2.4 trillion per day, this is seldom a critical issue, but Forex trading can be challenging, and anything that tilts the odds in one's favor is welcome.

Forex trading education is another factor that can increase the odds of success. Forex education and Forex training are essential as some of the preliminary, as well as ongoing steps that every Forex trader needs to plan on incorporating into their overall trading strategy. Being a child of the Internet age, retail Forex trading is conducted entirely by electronic methods, mainly desk and laptop computers.The same applies to Forex trading education. While traditional classroom and textbook Forex education is still available, most people find that they truly appreciate the convenience, thoroughness and wide selection available online. It is important while learning about the Forex market, to employ a variety of sources in order to achieve a proper level of objectivity.

Many brokers offer online training that is geared toward gaining new customers. There is nothing inherently wrong with this; however, it should be kept in mind when the time to choose a broker arrives. In order to strike a balance with broker provided Forex instruction, it's a valid idea to examine the offerings of the third party vendors that have no vested interest in the choice of the broker.

One good source for this is trading platform developers whose training programs supply a good opportunity to learn the nuts and bolts of Forex trading without exposing trading capital to risk. Part of this training will attempt to convince one that trading results will be superior if the provider's platform is chosen, but is still valuable for the fact that it can make one aware of elements of trading that a broker may possibly choose to ignore.

There is also online training that is entirely dedicated to education. These will generally concentrate on the technical and fundamental aspects of Forex trading. One will learn how to interpret the price data that Forex market offers in the attempt to teach how to predict future price levels. These websites will frequently carry adverts for various Forex businesses.

The good thing about all these sources of knowledge is that they are free, either permanently or for some trial period of time, and can provide more than enough for Forex basics to facilitate the commencement of actual trading. Online sessions are conducted both in real-time, where participants can ask questions of the presenter and also on an archived basis, where participants can study at their own pace and on their own schedule.

Automatic Forex Trading Software - Fact or Unicorns?

2011-06-10T08:44:00.000-07:00

Are automatic forex trading software, also known as "trading robots" worth their price or are they just money in the pocket for developers and foreign exchange institutions? Opinions vary among professional forex traders, but what about your needs? The concept behind automatic trading software is a trader's dream. Imagine if we found automatic forex trading software that worked in all market conditions. Whether at the beach, on a cruise, sleeping or even working (who would be at that point,) your trading account would be growing. This dream is what keeps trading software buyers chasing every hyped forex software product released. The question remains, are trading robots a fantasy living with unicorns, a secret product only the rich/money grabbing hedge funds can afford, or a reality that is reached for the financially average or even above average trader? The first step would be to define what qualities an automatic forex trading software product would include and analyze the reality of developing it.

Make me a software integrator for a time and here is what I would do. Find the best forex traders; individually explore their strategies, techniques and how they apply them in different volatile market conditions. Next hire a few quantum physics experts to convert each strategy into multiple algorithms. Then develop and apply systematic filtering mechanisms to differentiate market volatility periods. Finally, with the aid of all the experts, crunch the data into software code that matches the right algorithms to any market condition with quantum strength filters. Bingo! A true automatic forex trading software package that literally grows money in trading accounts while we rest next to the pool, clearing our head from the cruise's previous night's activities.

Heck yeah! That is the life traders dream of and may soon get. Is it possible? Will the next forex product be the one? Be real, there are two realities known to every successful forex or stock trader. Number one, there will never be a person or software filter that selects algorithm(s) that perfectly execute every trade, but 80-85% or better is reasonable and some pro's average that regularly. Number two, "News Trumps All," even pure technical analysis experts will admit that, maybe not publicly, but they get it. And unless you are an illegal insider in every major currency's financial center it's not possible to know the news. And if one were so blessed, he or she could not execute it instantly as a computer could. A good automatic trading product could, but is it out yet or will it be coming out in the future?

Many in the trading world admit it is not too far-reaching with today's technology to develop a good filter set that selects algorithms that calculate and react to market movements. Many believe and is almost factual that an algorithm exists for every market movement. This explains why a few trading software products excel in certain conditions while others fail in the exact market, and vice versa. The truly successful automatic trading robot has filters that select algorithms from its database to apply in that period's market condition. The dream robot automatically gets you in and out of good trades, out of a bad trades, cutting losses before news spreads as technical analysis does for many traders, but quicker.

Filtering which signals to follow is the tricky part for any human or software product. Quantum physics claim a solution is available for every problem. Has it solved the mystery of automatic trading software? A product is surely in the making and might be the next to hit the forex trading software market. Wonder if traders will see it when it arrives or are we all are so jaded with past products that we miss out? I for one will keep my eyes open. And while I am ordering up the perfect automatic forex trading software like a happy meal, please add in an advanced money management system and full functional controls that let me tweak it on occasion. Hmm, have I seen a product like this or am I still asleep? Meet me in the "webosphere" and we'll see what automatic forex trading software gets delivered.

Tips To Avoid Forex Software Frauds

2011-06-10T08:42:00.000-07:00

The advent of computers and technological innovations has really fetched people the access to their needs and wants. At the single click of a mouse, we, mere mortals can have everything delivered at our doorstep. This is really incredible. Moreover, the ever increasing space of the Internet has made it possible for us to carry out normal banking transactions. With this inspiration, people made software for trading currencies in the foreign exchange. The makers of the Forex software have done so in goodwill. However, recently, some scams of software have become prominent. Therefore, I would like to advise some people on how to avoid the Forex software scams.

The first piece of advice is that you should check out the software offer. There are many software programs, which claim to be really promising in their efficiency. Certain software companies and developers would claim of offering you a good deal. However, such companies are often the root of scams. The programs and Forex trading applications may turn out to be false. They would not help you in making any good money out of the currency exchange. Therefore, before you actually decide to buy a Forex software, you should check up on its durability and its terms and conditions. Always emphasize on quality and integrity of the product.

My next suggestion would be to check out for a money back guarantee. Many offers of software and Forex trading programs claim to have the real deal. They may promise to pay you back the whole money, if the software turns out to be unsatisfactory. However, only a handful of software programs actually fetch you the whole payment in refund. This is something, which should be checked out in every offer of Forex trading software. It can benefit you even if you are not pleased with the quality of the product.

You can search the Internet for suggestions and advice on the choice of currency trading programs and software. There are many sites and blogs, which provide such advice. They contain actual testimonial and descriptions of the various products and computer programs in the market. You can learn from such testimonials the good products, which are reliable and effective in their functions.

Always trust the good and reputed brands. They may charge you high for the programs and software. However, the costs are worth, since you will have little chance to complain. Go for quality.

News From the Forex Market

2011-06-10T08:40:00.000-07:00

The Forex market is the place where you can win money based on currency exchange. But this field of activity, just like any other jobs, requires a lot of expertise and knowledge. This is why beginner traders should work both with a broker and with specialised software in order to make sure that he will manage to trade as they should in order to have gains.

One of the most important things a trader needs is information. Any trader has to have permanent access to the latest Forex trading news in order to understand how the trading market is evolving. For example, the previous trading week really has been affected by the changes which occurred to some of the major currencies around the world. The USD managed to recover some of its strength last week based on trading sentiment, providing the signs of a major reversal which is expected to take place soon. This is related to the fact that CIA finally managed to kill Osama Bin Laden and to the fact that there are some signs according to which the US economy is recovering. It is true that there are still a lot of issues to be taken care of, but the expected major reversal of the USD is approaching.

On the other hand, Europe is now faced with problems based on the fact that there are rumors according to which Greece is likely to quit the European Union. Moreover, Portugal also has problems with the bailout and demands the European Union's help. These facts have had a major impact on the Euro, causing it to lose ground against most of its major counterparts. In order to deal with this problem, the European Union's finance ministers met on the 16th of May in Brussels for an economical summit, trying to find reasonable solutions for the sovereign debt problem. The summit managed to raise the Euro and the Swiss Franc, but experts believe that this growth will only be temporary.

The trading value of the Euro and the Swiss Franc is expected to change in the near future, especially against the USD. The need for safe currencies now becomes more and more powerful and this advantages the Swiss Franc. These are some of the most important trading Forex news from the last period which have had a major impact on the Forex trading market. In order to trade in order to win on this market, one should permanently be up-to-date with this type of economical news.

Learn Forex Trading: Basic Terms and Definitions

2011-06-10T08:32:00.000-07:00

If you have never tried FX trading, or even heard of it, then the first thing to learn is the basic forex trading terms and definitions. Each day, nearly $4 trillion worth of currency (in US dollars) is traded through forex brokers, meaning that Forex trading provides savvy investors with the potential for substantial profits. With these forex basics, you will begin the path toward successful FX trading.

Forex Trading Dictionary

Currency: Any form of money that is endorsed by a government and used for forex trading.

Broker: The intermediary body that handles buyers' and sellers' orders. A forex broker needs to be licensed by the US Commodities Future Trading Commission (CFTC).

Support: The price level below which a currency has difficulty falling.

Support Levels: The specific high and low prices at which an exchange rate will correct itself.

Resistance: The price level at which people are estimated to sell.

Breakout: A price's movement through a selected support or resistance. Breakouts are usually followed by heavy volume and increased volatility.

Volatility: The amount by which an asset price is expected to fluctuate over a period of time. Volatility is normally measured by annual standard deviation of daily historic price changes. Implied volatility can also be estimated from futures/options pricing.

Tick: A minimum up or down change in price.

Down Tick: When a currency is sold at a lower price than the previous sale.

Parity: When two currencies are of equal value in the forex trading market. The exchange rate would be 1:1.

Range: The difference between the highest and lowest prices during a trading period.

Cover: Any action that involves the closing of a position.

Position: A given currency's netted total exposure.

Short Position: A position at which base currency is sold. More currency is sold than bought, and price declines are favorable for FX trading.

Flat/Square Positions: A position at which there is no exposure.

Long Position: A position at which base currency is bought. More currency is bought than sold, and price increases are favorable for FX trading.

Cover on a Bounce: When a trader covers a short position after it has arrived at and "bounced" off a support level.

Risk Capital: The amount of money that a trader is willing to lose. This is important for individuals involved in FX trading to determine so that they can implement stop-loss orders to their forex trading platforms.

Fundamentals: The macroeconomic factors affecting currency markets.

Exotic Currency: A currency that is not popularly traded.

Discretionary Account: A type of account with which the account holder gives a company or trading body power over all buying and selling transactions. The company or trading body is also given power to choose which currencies are to be bought and sold. This type of account is also called a managed or controlled account.

Commission: The transaction fee that brokers charge. Most forex brokers collect a commission.

Limit Order: An order that includes specific boundaries meant to control how much profit and loss that a trader is willing to handle.

Fundamental Analyst: Market analysts who look mainly at the fundamental aspects of an economy when forming their opinions. Fundamental analysts often read and analyze economic data about current market conditions in order to determine what is fundamentally driving the market and where the market is headed.

Technical Analyst: Market analysts who rely primary on chart indicators and patterns in order to predict where prices will be moving. Technical analysts often use Fibonacci retracement, candlesticks, and momentum indicators.

Daily Cut-Off: The time at which trading is over for the day.

Ask Price: The price at which the market is currently selling a currency. Traders buy their base currency at this price.

Bid Price: The price at which the market is currently buying a currency. Traders sell their base currency at this price.

Bid/Ask Spread: The difference between the bid price and the ask price.

Free Forex Trading Practice

If you are still interested in the potentially lucrative world of FX trading, but are afraid of making costly mistakes, try opening a free forex demo account. This device allows users to practice forex trading without having to risk any money. You can learn how to place orders, read forex resources, and interpret forex news. Then, when you are ready, open a real account and begin investing.

Is Now a Good Time to Invest?

2009-02-21T07:49:00.000-08:00

The right time to get back in the market may be just around the corner. With global economies sinking, sometimes dramatically, it can be a scary thought to put your hard-earned money on the line. However, a smart investor will realize that golden opportunities are appearing if proper research is done.

If you look at a long-term chart of the Dow Jones average, you will see that it is currently at some of the 2002-2003 levels. It has dropped dramatically since the financial collapse of 2008-2009, but it is still in familiar territory. It may take another two years or more for a large upswing in the markets, but at least we hope that the Dow will not drop below 7,000 points. That may bring hope and some peace of mind about starting to invest again.

Dollar Cost Averaging

The concept of Dollar Cost Averaging comes to mind in the current market situation. It is the process of buying stocks or similar investments on a regular basis, such as once a month, using a fixed amount of money. When prices are low, you are able to buy more shares. When prices are high, you buy fewer. In this way, you are able to take advantage of temporary low prices. This is especially helpful for long-term investments, such as retirement accounts. It may go against human nature to buy stocks when everything is falling and red but in fact it can lead to a bigger payoff if done correctly.

Don't Wait Too Long

As soon as you believe the markets will not drop much more, that is the time to start investing. When an upswing begins, it may happen so fast that you will miss a good portion of it. There are literally billions of dollars of cash on the sidelines, just waiting to go back into the market when the time is right. You can imagine what impact that might have on prices because of a surging demand but limited supply of stocks and mutual funds. Don't wait too long!

Which Companies to Buy

There are a lot of low-priced stocks right now. Don't jump into any old stock just because the price is low. There may be good reasons for it, such as the company being dangerously close to bankruptcy. One popular example is GM. Their stock price has dropped incredibly far. Is it a good deal? The government will probably not allow them to go into bankruptcy because that could have catastrophic affects on the country. Even if they survive, though, they may not thrive, and the stock price might hold its value or drop even more. Nobody can predict the future of GM. This is just an example of how difficult it can be to make a trading decision at the present time.

You also need to consider how the company is adapting to the economy. Are they offering low-price items to their customers? Are they reducing expenses significantly, such as layoffs, to stay in business? Do they have access to enough credit to stay operational? These are very important questions to consider before making a trade.

Will the Economy Get Worse?

This is probably the single most important factor that traders are considering right now. Why put your money into investments if they are just going to drop again? The government is trying hard to stabilize the economy, but there are many experts who believe there is more doom and gloom in the future, with more foreclosures, bank failures, and lost jobs on the way. A lot of this depends on how the government handles the situation and how the public perceives their actions. If the public believes things are stabilized, they will begin to spend and invest again, businesses will have more money and they can hire more people, and the economy can begin to thrive again. When this will happen, nobody knows for sure. Hopefully in 2009 it will, but it may be 2010 or later.

6 Tips on How You Can Cope With a Market Decline

2009-02-21T07:46:00.000-08:00

Many people believe we are in the midst of a bear market that conjures up fear of the Great Depression. Markets go up and they go down. You can't control the market but you can control your reaction to market declines. Here are 6 tips on how to cope with a market decline:

1. Make sure that your portfolio was designed for your investment goals -not for how it reacts in up and down markets because that is an unknown.

2. How much time you have to meet your goals will help you consider what to put in your portfolio. The longer the time horizon; the more risk you can take.

3. Your risk tolerance should be assessed. If you panic when you lose 10% of your investments, then a portfolio of more risk adverse vehicles would be more appropriate. Keep in mind though that you may need to invest for a longer time if you take less risk.

4. If your financial circumstances haven't changed, then stick with your long term plan no matter what the economy is doing. Studies show that long term investing always gives a better return than darting in and out of the markets. Taxes and fees magnify your losses every time you trade.

5. Don't look for short term fixes like selling everything and waiting till things get better. Things may get worse before it gets better but you will be guessing as to when it is the right time to get back in. You could miss out on the recovery.

6. For long term investors, it's a great time to be buying. You can start by dollar cost averaging which is buying shares consistently over time so that your average purchase price is lower.

Three years after the bear market of the 1970s, a $10,000 investment in the S&P 500 Index would have grown to $45,098. In five years after the bear market of the same period, a $10,000 investment in the S&P 500 Index would have been worth $85,605.

Don't let emotions let you stray from the facts. Your investment goals, time horizon and risk tolerance should drive your investment decisions, not the daily news or financial television networks. Cope with a market decline by having an investment plan that you are comfortable with and stick with it. Your financial future depends on it.

Investing and Teenagers

2009-02-21T07:42:00.000-08:00

Investing and teenagers sounds odd but where do children learn about money? From their parents, so the teen years are a great time to learn not only about money but investing that money.

Investing for long term and short term goals - most teens know they want a new car or a college education or even a business of their own. In order to meet any of these goals they will need money. Let them be aware that most of the time their income will not be enough for them to meet their financial goals and they will have to learn how to invest.

Of course you will have to be in charge of their accounts, since they legally can't have one until they are 18 years old. The alternative would be a trust that invests for them. This is not what most teens really want when learning about investments. They want to be a bit more hands on, so set up the account and let them learn to make the decisions. Teach them about buying stocks and how to reinvest their earnings.

Teach them about 401k accounts and IRAs that will be part of their future as they look towards retirement. Explain how your account works for you including how much you hope to have when you retire. This will help them understand that today's value of a dollar isn't necessarily tomorrows. This will get them to realize lots of things when it comes to money.

Together decide how much of a return on their investment they are going to need to meet their goals. Do the math with them and make sure they understand how much of their weekly wages from a job they are going to part with. They have to understand that in order to meet their goals they will give up something now to have more later on. This isn't a savings account that they can withdraw from if they need something next week.

Once your teen has their account set up watch the difference it makes in their approach to spending. They will begin to track their investments and will eagerly calculate how much money they are earning each day or week. This will teach them about being responsible as well as how to plan for their future. When their goals are not met they will figure out new strategies with you.

Explaining the Ponzi Scheme

2009-02-21T07:40:00.000-08:00

Every time I hear about Bernard Madoff and his arrest, this term is always attached to his name: the Ponzi scheme. Who or what in the world is that? But before that who is Bernard Madoff?

Bernard Lawrence Madoff is an American businessman and former chairman of the NASDAQ stock exchange. He founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960. His firm was one of the top market maker businesses on Wall Street. In fact, it is the sixth-largest in 2008. Madoff was also a prominent philanthropist serving in several non-profit organizations and funding research studies specifically about lymphoma (his youngest son was diagnosed with lymphoma).

Madoff was arrested after investigators said he confessed to his sons that he had swindled investors of a mammoth Ponzi scheme in which early investors are paid with money raised from new investors. The scheme collapses when there is no money to repay the last investors. Madoff allegedly took $50 billion dollars of his investors' money.

So now, back to my first question, what is a Ponzi scheme?

According to the US Securities and Exchange Commission, a Ponzi scheme is a type of illegal pyramid scheme that pays returns to investors from their own money or money paid by subsequent investors rather than from profit. It usually offers abnormally high short-term returns in order to entice new investors. A Ponzi scheme usually has this "rob-Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.

The scheme was named after Charles Ponzi who became infamous during the 1920's as one of the greatest swindlers in American history. He was able to earn money quickly by using a vagary of the postal system. In those times, it was common for letters abroad to include an international reply coupon -- a voucher that could be exchanged for minimum postage back to the country from which the letter was sent.

As explained in cnn.com, Ponzi started buying and selling postal reply coupons using agents in his native Italy. Unfortunately, he got greedy so Ponzi started to recruit investors into his system with the promise of 50 percent returns in just a few days. Investors would pay their cash in, and sure enough, Ponzi would get them the promised return.

Everyone was happy with the results, and word started to spread about this Italian financial wizard. Within two years, he had employees all over the country recruiting new takers for this foolproof investment strategy and Ponzi was pocketing millions raking in $250,000 a day. He became a celebrity investor, almost like the Warren Buffett of his day.

Soon enough when financial head Clarence Barron looked into his business and realized that the whole thing was a scam, Ponzi's business started to fall into pieces. Though many did not believe Barron's report, Ponzi eventually went to trial, pleaded guilty and served jail time. Upon his release, Ponzi was deported back to birth country Italy and spent the rest of his life in poverty. He died in Rio de Janeiro in 1949.

As to why Bernard Madoff did what he did...that's a question many people would like to hear him answer. Many lives were affected (and perhaps ruined) by his 21st century Ponzi scheme. But whatever Madoff's reason is, his victims (if proven guilty) deserve all the justice they can get.

Earn Money Online Without a Website!

2009-02-21T07:37:00.000-08:00

Statistics show that eBay auctions generate around $86 million everyday, coming from its 2 million users that visit the website in a span of 24 short hours. These eBay users either buy products from online stores because they can't find these items in local stores, or sell items that they do not need anymore.

Of these 2 million eBay users, 430,00 of them do not own real shops. Instead, they run their part time or full time eBay business right from the comfort of their own home. What's more, there are even people who actually sell huge deals on eBay, like computers, cars, and even real estate. You, too, can be this person. You can setup your own eBay business from home, and you can start by selling various items that you don't need anymore.

Success in an eBay business starts with a few basic things that you must first learn about. First of all, the products that you are going to sell should be something of interest to you and your target market. Also, you need to consider where you are going to get your supplies, and that is through finding a legitimate wholesale supplier. You also need to know how to setup your own eBay store. These three things are the basic stuff that you need to know to maximize your business profits.

Contrary to what most people believe, you don't have to have a very large capital in order to start your eBay store. You also don't need to have lots of storage space in your home. Now that there are already dropshipping companies, you don't really have to find a spot in your house where you can store your stocks. For example, you have set up an auction in your eBay store. When the auction ends and you already have your winning bidder, you can just ask the wholesaler to ship the item directly to the winning bidder. That is how dropshipping works. You save both time and effort, since the only thing that you need to think about is how to promote your store. All the other stuff is the responsibility of your dropshipper.

You must know however that not all dropshippers can be trusted. Just like any other business venture, you have to be cautious in dealing with other people in the business. Beware of unreliable dropshippers, because not only will your profits suffer, you reputation as a seller might receive a blow as well. Remember, dropshippers are not supposed to middlemen, and anyone who claims otherwise is a scam. Don't be fooled by companies saying that dropshippers should share your profits. True, they have fees, but those fees are just small ones. Examples of good wholesale directories that you can try are Salehoo and The Ultimate eBay Dropship Power Park.

Money Markets vs Certificates of Deposit - Which to Choose?

2009-02-16T00:38:00.000-08:00

Deciding between money market accounts and certificates of deposit is a matter of determining the length of time and level of security you desire when investing. Both forms of investing can be very beneficial to your assets, but they satisfy different goals. Therefore, to decide between them, it is important to determine your goals.
Let's look briefly at some goals you may have in mind:
Long-Term Savings - If you're looking for a way to invest that can guarantee the amount of funds at maturity then certificates of deposit are probably the best way to go. They are debt instruments that are issued by banks or other financial institutions in exchange for money paid by an investor. The CD is given for a predetermined amount of time with a fixed interest rate until maturity. The trade-off in this is that you may not have access to your money for a while, anywhere from weeks to years. However, if you're not interested in having access to your money (and like investment growth) the CD is a good option.
Easy Access to Funds - If you are looking for an investment tool that allows you access to your funds whenever you want them then money markets would be a better choice. You can open your account at most any financial institution, from which you should receive a checkbook that will give you the ability to regularly invest in the form of purchasing stocks, bonds or mutual funds. Also, you can deposit cash easily in these accounts.
If you're still not sure of which route to take, here are some other ideas to keep in mind:
• Certificates of deposit are FDIC insured up to $100,000, much like money in a savings account; however, if you decide to opt for a longer maturity period (and higher interest rate), you may have to wait a very long time to access your funds.
• Money markets tend to keep their share price right at $1 per share, which works out nicely for some; however, if you want to take advantage of interest rate maturation you will have to deposit more money instead of waiting over a period of time like with CDs.
Making the decision of what you should do with your cash can be a tough one. But with certificates of deposit and money markets both clearly offering unique perks, your biggest job will be to decide which goals are most important to your investment future.

Index funds - Introduction

2009-02-16T00:36:00.000-08:00

Mutual funds are without a doubt the most significant invention of the 20th century as far as the small individual investor of modest means is concerned. Thanks to these mutual funds, the benefits of the international capital markets can now accrue to the vast majority of the population and now just the wealthy elite. A special type of mutual fund, called an index fund, represents an important evolution of the mutual fund model, allowing small investors to benefit even more than before.

What Is An Index Fund?

An index fund is merely a mutual fund that seeks to track the performance of a broad market index such as the S&P 500 or EAFE. Unlike traditional mutual funds, an index fund doesn't attempt to outperform the market by making shrewd purchase and sell decisions. Why not? Because as it turns out, most traditional mutual funds fail in their goals to beat the market. As a whole, index funds tend to outperform most non-index mutual funds for a variety of reasons.

Why Do Index Funds Outperform?

The main reason index funds tend to outperform traditional mutual funds over the long term is their very low cost, expressed as a low expense ratio. Since an indexing strategy doesn't need an expensive manager and cadre of research analysts, these funds have an immediate cost advantage of 0.5%, 1%, or more over other funds. As it turns out, a 1% head start is nearly insurmountable in the world of investing: sure, some will manage it but how do you know which ones in advance?

Where To Buy Mutual Funds?

Most of the large fund companies now sell index funds, but not all are created equal. For my money, I consider Vanguard to be the best of the best when it comes to index funds. Vanguard is inexpensive, customer-focused, very easy to deal with, and doesn't charge any transaction or brokerage fees. In fact, you could make a good argument that Vanguard is the only company you need use at all.

Tips For Finding a Hard Money Lender

2009-02-16T00:28:00.000-08:00

Since "hard money" lenders don't have storefronts like banks or finance companies, how do you find one? They're usually not listed in the phone directory under "hard money lenders". But they may be advertised in the classified section of the newspaper or online as "private lenders".

Hard money lenders are usually private individuals who have access to large amounts of cash. The easiest way to locate them is to start making inquiries to accountants and attorneys who have a wealthy client base. Often you can locate people who have experience making private loans. Of course, these people are the easiest to do business with since they already understand the process.

Attorneys that handle real estate closings are a good resource, especially those who have clients with large estates or trusts with real estate holdings. Often, these people are happy to discover a relatively low risk investment that can give them a return of 10% or higher.

Because these private loans are highly collateralized (30% or more down payment or equity is required), they're considered to be low risk. When compared with stocks or bonds, which have no hard assets as collateral, a private money loan becomes very attractive as an investment.

Accountants may also be a good resource if they have a wealthy clientele. Clients with large amounts of cash available are always looking for good investments. And again, if you can find people who have successfully loaned money before, it can make the process of structuring a new loan very simple.

Accountants are also in a position to educate their clients on the value of lending money as a business investment. Their clients already look to them for investment and tax advice, so the relationship of trust is already established. The accountant can evaluate the loan terms for the client, and add reassurance about the soundness of a private loan as a good investment vehicle.

But if the thought of approaching attorneys and accountants doesn't appeal to you, there are other ways of discovering who's in the private money lending business in your county. The names of private money lenders will appear on the recorded loan documents.

This can take some time to research, but you can easily weed out the names of large corporate mortgage companies like Wells Fargo or Bank of America. Most of the remaining names will be private lenders.

Last but not least, talk with real estate brokers who work with other real estate investors. Real estate brokers usually have a large network of resources available. And some brokers are even in a position to lend private money themselves.

7 Best Mutual Funds For 2009

2009-02-16T00:25:00.000-08:00

As our economic outlook continues to be poor and as the stock market is in turmoil, stock investing has become increasingly difficult. Maintaining a solid investment portfolio can be hard work. One alternative to the difficult work of stock selection is to invest in mutual funds. With thousands of mutual funds to choose from, how can you tell which ones are the best?

That's why I have compiled a list of the 7 Best Mutual Funds for 2009. After researching the performance, stability, and income of hundreds of top-rated funds, I found the best mutual funds to invest in for 2009 and beyond.

Income-Dividends

One part of my selection process was to find mutual funds with cash flow, either through dividends or bond interest payments (in the form of dividends for mutual funds). This factor is becoming ever more important during a time when stocks continue to decline. Through dividends you can know that you will have an income of the yield percentage.

Future Trends

Another selection criteria was to find mutual funds that are going to perform well for years to come. As you will see, I have included a mutual fund that invests in stocks of alternative energy or "green" companies. The whole environmentally-friendly, green movement is just getting started and will be a boon to the economy for the next 10-20 years. One aspect that is somewhat more of a near-term strategy is the gold focused fund because of the predicted rise in the price of gold over the next year or two.

Long-Term Performance

The last and most important selection criteria was the long-term performance of the mutual fund. Any one stock or mutual fund can perform well over one or two years by luck, but it takes true skill to manage a portfolio that has good returns over a ten year period. A major failure of many investors that buy mutual funds is that they chase the fund that is currently performing the best or just recently had its best year. If the mutual fund is having an unbelievably great year, then either stay away from it because it's too late or sell it if you own it.

The 7 Best Mutual Funds for 2009:

1. American Century High-Yield Fund (AHYVX)

- With the current state of the economy, your best bet for making money is finding an investment with a stated income (i.e. dividends, bond interest payments). American Century's High Yield Fund has a dividend yield of 9.38%, which is much larger than most high yielding mutual funds or stocks.

2. The New Alternatives Fund (NALFX)

- this is the perfect mutual fund for times when people and companies are looking for environmentally-friendly ways of doing things. This mutual fund invests in companies that focus on renewable energy sources, as well as companies that are concerned with energy conservation and environmental protection. Over the next decade green and alternative energy stocks will most likely sky-rocket with gaining popularity and necessity.

3. Franklin Utilities Fund (FKUTX)

- A utilities fund is also a great way to get a flow of decent income during a time of poor stock performance. This mutual fund has a dividend yield of 4% and a 10-year annualized return of 5.17%, which is very impressive. Utility companies are a solid investment for having a stream of dividend income.

4. ING Corporate Leaders Trust Fund (LEXCX)

- Although its 10-year annualized return has been hurt by the recent stock market downturn putting it at 3.67% (which is better than all but two main value strategy mutual funds), ING's fund has performed 10% better than the S&P 500 over the past year. It also has a dividend yield of 2.46%.

5. Franklin Gold and Precious Metals (FKRCX)

- This mutual fund has been a top performer over the past decade with a 10-year annualized return of 14.42% and a current dividend yield of 8.34%. This mutual fund has performed amazingly, and it will continue to perform with gold becoming more of a flight-to-safety investment for investors.

6. Vanguard Energy Fund (VGENX)

- although the commodities boom of earlier this year has faded, oil prices will come back. It is only a matter of time. Vanguard's Energy Fund has had a 10-year annualized return of 14.81%, which is better than most mutual funds of any kind. It is positioned to perform well over the next few years.

7. Municipal Bond Fund (of your choice)

- municipal bond rates have gone up in recent months and continue to be a great source of extra income. For example, some bonds in Florida are paying 6% a year in interest. Remember with municipal bonds that interest payments are tax-exempt; just make sure you pick a bond that is within your state (otherwise interest payments become taxable). How does a tax-free income of 5% or 6% on your investment sound for 2009- with the U.S. still in recession?

Iron Condor Option Trading - An Introduction

2009-02-16T00:23:00.000-08:00

Iron Condor Defined

An Iron Condor is an option spread trade constructed from two other separate spread trades - a bull put spread and a bear call spread.

Briefly:

A bull put spread is a neutral to bullish trade. It's constructed by selling, or writing, a put at one strike price (presumably below the current share price) and then purchasing a second put at a lower strike price. Since the put you sell costs more than the put you buy, the transaction results in a net credit. This net premium income is your maximum gain and is yours to retain in full as long as the stock closes at or above the strike price of the initial put you sold. Since the put you purchased acts as a hedge, your maximum loss is the difference between the two strike prices (multiplied by 100 since each contract represents 100 shares of the underlying stock) less the net premium you originally received.
A bear call spread is a neutral to bearish trade. It's constructed by selling, or writing, a call at one strike price (presumably above the current share price) and then purchasing a second call at a higher strike price. Since the call you sell costs more than the call you buy, the transaction results in a credit. This net premium income is your maximum gain and is yours to retain in full as long as the stock closes at or below the strike price of the initial call you sold. Since the call you purchased acts as a hedge, your maximum loss is the difference between the two strike prices (multiplied by 100 since each contract represents 100 shares of the underlying stock) less the net premium you originally received.

The iron condor combines these two trades, collecting net premium income from two sources instead of just one. In effect, the iron condor sets up a predetermined trading range with boundaries on both the upside and the downside. If the stock closes within that set range at the time of expiration, the maximum gain is achieved which, on a percentage basis based on the total amount of capital at risk, can be quite lucrative.

An Iron Condor Example

[note: for simplicity, commissions have been excluded from the example that follows.]

Suppose XYZ is trading at $35/share and you don't expect the stock to move much higher or lower in the near term. You choose to set up an iron condor spread trade where all options will expire in one month.

You simultaneously sell a $32.50 put for $1 and purchase a $30 put for $0.50. Since each contract represents 100 shares of underlying stock, that means you collect $50 in net premium. This constructs the bull put portion of the iron condor.

At the other end of the trade, you simultaneously sell a $37.50 call for $1 and purchase a $40 call for $0.50. Multiplying each contract by the 100 underlying shares which it represents, you collect an additional $50 in net premium. This constructs the bear call portion of the iron condor.

You have collected $100 in net premium. As long as XYZ closes anywhere between $32.50/share and $37.50/share, all options will expire worthless and you will achieve your maximum gain of $100

Your maximum loss occurs if the stock closes at expiration either at or below $30 (the maximum loss on the bull put portion) or at or above $40 (the maximum loss on the bear call portion). The maximum loss for the iron condor is the difference in the strike price of either the bull put or the bear call times 100 (per contract - the number of shares a contract represents) less the total amount of net premium received.

In the example above, the maximum loss equals $250 (the difference between the strike prices of either leg) less $100 in collected net premium, or $150 total. Even though you have two legs set up, because the stock can't close both above $40/share and below $30/share, the maximum loss is limited to the strike prices of only one leg.

Conclusion:

Iron condors can be a great way to earn high rates of return on range bound stocks. They are not without risk, however. An individual trader considering iron condors is advised to conduct additional research and consider all the risks involved before placing the trade.

Key Dates in Gold Price History

2009-02-16T00:21:00.000-08:00

Through all of the turmoil that the world has gone through, the price of gold is one thing that has largely remained the same. Gold, which was originally used as a form of legal tender, both in the U.S. and international marketplace, is now more widely used for investing rather than actual purchasing, so its value has changed drastically over the years. For many, gold is a commodity that is more valuable as a collection than an investment or any other type of use.

The gold rushes of dates past greatly changed the value of gold throughout those times, making anyone who mined for it a rich person very quickly in many cases. During the 19th century, there were different gold rushes that helped the gold mined towns and areas turn into booming cities overnight because of the influx of pioneers and immigrants that came to mine the gold. Cities were born and still stand tall today that were created out of the gold rush, including San Francisco and Melbourne.

During the 20th century, gold prices were determined by a method known as the gold standard. This meant that currencies in many of the western countries were attached to the price of gold, and in 1971, the U.S. government removed the U.S. Dollar from the gold standard. This left gold to find its own price on the free market, and it became more valuable and useful for investing than it had ever been before. In 1980, gold reached a record high value at the time on the market, when it was priced at $850 per ounce. This created a boom for investors who wanted to cash in on their investments, but also didn't last for long.

The price of gold gradually declined from that point, bringing it to an all-time low since taken off the gold standard of just under $253 per ounce in 1999, which had never happened before. After September 11, 2001, the markets changed drastically, and gold has been gradually rising back up in price since then. In 2006, the value of gold reached about $715 per ounce, which was another high point for the precious metal. Gold then reached an all time high again on March 17, 2008 at $1023.50 the first time ever over the magical $1,000 mark.

It remains to be seen what will happen to the price of gold since the United States has taken an economic downturn and is heading into 2009 in facing huge financial bailouts from the government. However, many people don't actually value the gold for what it is worth, and collecting rare gold coins can often prove to be much more lucrative than actually investing in gold and keeping up with the markets.

You can invest in gold today without even having to get your hands on any of it, which often makes it a great addition to any investment portfolio. However, like any stock, although it has remained fairly steady through the years, it is still subject to its ups and downs, making it a moderate risk for investors of all types.

Definition of Mutual Funds

2009-02-16T00:13:00.000-08:00

The definition of mutual funds is the pooling of investors cash to buy securities. The most common types of securities purchased are stocks, bonds, and cash instruments. Currently, there is over 26 trillion dollars of investors money in many types of funds.

Individual funds are not limited to just stocks, bonds, and cash. Many funds pool money together to invest in real estate, gold, and other investments. Before mutual funds came along, these sectors were really hard and not worth investing for an individual investor.

Mutual funds can be separated into two categories, open-end and close-end. Open-end funds allow investors to be in and out of funds at any time with no fees or sales load. A close-ended fund has either a fee and or a sales charge for buying and/or a fee or a sales charge for selling.

Even though the definition of an open ended fund allows you to go in and out of the investment with no sales charge, both types of funds still have other ways in which they make money. The most common fee is an expense ratio, which can be found in the fund's prospectus. Expense ratios can vary widely, so make sure you do your proper homework before investing.

Each mutual fund has a manager, which directs the investments. Typically, the manager of each fund will have a specific purpose for the investments. For example, one fund's purpose might be outpacing a benchmark index, like the S&P 500, using growth stocks. Another funds purpose might be to provide a steady income during retirement using dividends stocks and bonds. Today, there is a fund for just about every time frame and risk tolerance imaginable.

Mutual funds allow an individual investor an easy way to diversify. Imagine the struggle of investing in the top 500 securities in the U.S. by yourself. Not only will your trading fees by outrageous, but also the paperwork and taxes would be too much to handle for the individual investor. It would be a full time job!

The popularity of mutual funds has risen for good reason. They allow you to get a professional manager for your investments for a very low cost. Another advantage that mutual funds give to investors is the ability to invest in markets that were previously unavailable. For example, without mutual funds international investing would be very complex for an individual investor.

Mutual funds are here to stay. There simplicity has many advantages to the individual investor. If you're looking for more then just a definition mutual funds, read this Mutual Fund Guide. It will answer many questions that beginners have, including where and how to get started.

Timing the Markets

2009-02-16T00:10:00.000-08:00

With stock markets battered by the credit crunch and resulting recession many investors are trying to gauge the best time to re-enter the market and/or boost exiting positions. But is it really possible to determine the bottom before it becomes history?

Überinvestor Warren Buffett declared he was going bargain hunting last October (2008), but markets subsequently fell further. In Great Britain the real estate market bucked predictions by rising 1.9% in January (according to major mortgage lender, Halifax). Has longstanding pent-up demand caused the market to bottom early, or is it a mere aberration in the continuing downtrend predicted by economists?

Who knows? And that's the key point in attempting to time markets. Without the benefit of hindsight it really is impossible to determine optimal entry/exit points.

In his modern classic, The Black Swan, Nassim Taleb points out that in the 50 years prior to writing the 10 days with the biggest moves contributed 50% of the returns. You'd only need to be out the market 10 days out of 50 years to be down 50%!

The only rational conclusion is that you simply cannot afford to be out of the market, because there's no way of knowing when those most influential days are going to be. A 50% difference in capital represents a hell of a difference in the quality of your retirement.

Dollar cost averaging might be one of the oldest strategies in the investing handbook, but it's one that stands the test of time. Basically it means you invest a certain amount at frequent intervals, e.g. on a monthly basis. The idea is that when stocks are cheap your purchase buys more, and when they're expensive it buys less. The simplest way is through a low-cost tracker fund or ETF.

You can tinker with it if you like, e.g. investing more when you feel markets are cheap, and abstaining when they seem expensive. But whatever you do, don't withdraw from the markets altogether, lest you miss one of the 10 ultra-significant days of this half-century.

Mutual Fund Disadvantages

2009-02-16T00:03:00.000-08:00

If you're new to stock market investing you may have heard that mutual funds would be a good way for you to get started. That's actually good advice, but mutual funds have their own pitfalls to watch out for. Here are some of the things you need to know about the disadvantages of mutual fund investing.

First, many people are under the impression that mutual funds have a lower risk than investing directly in stocks because they are managed by professional fund managers. That's not necessarily true, because the fund's performance will ultimately be determined by the experience and expertise of the fund manager. So if the fund manager is good at her job, the fund will do well. If the fund manager is inexperienced or just lacks talent, the fund could perform poorly.

That means you still need to perform your own due diligence on the fund itself, and on its manager. And you'll still need to monitor the fund's performance over time. It won't be something you can purchase and then ignore, and still expected to prosper.

Next, you will still have to take responsibility for diversifying your portfolio. You can do this by choosing a fund that purchases stocks in a wide variety of sectors, and is widely diversified across the market. Or you can invest in more than one fund if each fund specializes in a particular sector. But you will still have to become knowledgeable about investing in the stock market at some point, in order to make good choices about diversification. Otherwise you run the risk of over-diversifying and canceling out your profit, or under-diversifying and losing the risk-reducing characteristics that mutual funds can provide.

Another disadvantage of mutual funds is the cost of the management fees. Typically, there will be fees assessed each time you buy and sell shares. In addition, there are usually yearly management fees to offset the cost of the built in stock market research and the fund manager's salary.

And there's one more disadvantage that most people don't think about. Mutual funds are usually marketed as being more liquid than owning individual stocks. Generally, it's easier and faster to draw cash out of a mutual fund than it is to trade a stock. But that liquidity comes at a cost to the yield of your investment. In order for the fund to have the liquid cash available for quick and easy withdrawals, the cash cannot be invested in additional stocks (and earning money). So the cash liquidity of the mutual fund comes at the opportunity cost of investing in more stocks.

Despite these drawbacks, mutual funds may be a good investment for you. Just be sure to investigate the issues listed in this article in order to make an informed decision.

5 Things Your Bank Doesn't Want You to Know - 30 Percent Monthly Interest on Your Cash?

2008-07-11T01:55:00.001-07:00

If your bank told you what I'm about to share with you, then you would be there first thing in the morning withdrawing all your money. We all know that The Stock Market is unstable, the economy is in crisis mode and unemployment numbers are out of control. What I'm about to share with you is not a hoax, nor a scam. I've written many articles and I don't write fiction. I'm going to present you with the facts, and I'm going to back them up beyond any doubt. You can't afford to miss this!

No matter who you are or what your financial situation is, this article is going to light a fire under you. I have to tell you though, if your playing the market or an investment broker then your going to really benefit from it. However, we need to keep in mind that this information that I'm about to share with you is beneficial for anyone and everyone. Okay, let's get down to the details.

Here are 5 Things YOUR Bank Doesn't Want You To Know

1) Your Bank Is loaning Your money out to investors and charging them an Interest fee of 5-6%.
Of course this rate may vary but it doesn't even matter in the big scheme of things. There are certain investors who are reinvesting this same money and receiving 1-1.5 percent interest a DAY. Yes I said "A DAY", which amounts to over 30% PER MONTH. Now let's say the reinvest $10,000. Each day they are earning $100-$150 a day in interest seven days a week. Most people could quit their job on that money alone. Even at the lower 1% they make $3,000 on their $ 10,000 in 30 days. In 3 months their initial investment is doubled. Yes, I can prove it and I will.

2) Your Bank offers lower lending rates to these investors because these same investors are taking a percent of the Bank's money and quietly investing it for these very same banks. Well, actually it's not the banks money it's yours. I really have to watch myself here because these are very serious people who I really don't want as my enemies although it's probably a little too late for that.

3) Your bank goes out if it's way to find excuses to make you open a Savings account to attach to your checking account. Their favorite pitch is to "protect you from over-draft fees" by adding a savings account to your existing checking account. Checking accounts fluctuate because we use them to pay our bills and attach credit or debit cards to them. Savings account funds pretty much just sit there earning a ridiculously low interest which makes it available for YOUR bank to play monopoly with your money and in return give you a couple of hundred dollars a YEAR if your lucky. Are you starting to get the picture?

4) Your bank and it's investors are not only capitalizing on the insane interest their earning but they are earning free advertising while their money is sitting in these accounts. That's right, free advertising for their business or their Internet website. It's crazy, yet it's true. I'll show you in detail how this is being done at the end of this article. For now let's move on.

5) Your bank doesn't want you to know that YOU can take YOUR money and be reaping the very same rewards. Why would they? I stumbled across this by complete accident. Actually the first time I heard about it I dismissed it as one of those "too good to be trues". One of our students at the University of Internet Science told me about it about 4 months ago. He was an Investment trader and was loosing his pants playing the market. He invited me to attend a pre-launch convention and I politely turned him down. Some time later some of my associates and I decided to give a test run. One of us invested $2,000, and me being the skeptic that I am came in with $500 that was sitting in my savings account collecting dust. On day one I made $7.20 which peaked my interest right away. My partner made $32.00 his first day. After about 90 days or so we both had made our original seed money back. So after a couple of months I'm feeling really excited and decide to call my friend who originally told me about this.

After telling him how I was making the "big bucks" by earning $500 a day he dropped the bomb on me that had me feeling like a peasant. He told me he was making in excess of $10,000.00 every day. I invited him on my nightly Video conference call and he accepted but not before letting me know he was holding a slight resentment against me for not following his lead in the first place some 5 or 6 months earlier.

THE CONFERENCE CALL

I sent emails out to all my students about our special guest and we had 200 plus people in the room from several different Companies as well as many internet "Gurus" who are part of the school along with students who were just there to learn how to subsidize their income. Our guest opened up his back office to us and showed us step by step how his 1 time deposit had just continued to roll over. Now we were a bit more frugal when we decided to test this out, but our guest had jumped in with $50,000 that most of us don't have or even if we did would never had been that bold. In 8 months his original investment grew to $ 730,000. We were blown away, but we were even more impressed when a young lady on the call of whom I know personally shared her story with us. She had deposited $500.00 about 4 months earlier and she was now making $123.00 a day. Now that's something that most people could relate to. She did not recruit or make commissions off of anyone. This was passive income. That really blew everyone away.

Six months ago there were only 3200 people Worldwide who new about this. Today there are 68,000 and growing. We have researched every bit of information in this article and can confirm it beyond a shadow of a doubt. My associates and I have put together a Concise and well detailed report as well as several videos of the actual process from start to finish. We have made available actual account details to confirm that these findings are true and you will completely understand why these are definitely...
5 THINGS YOUR BANK DOESN'T WANT YOU TO KNOW.

Time to Buy Asia and Emerging Funds

2008-07-11T01:55:00.000-07:00

Despite the downturn in US market, there is a good chance that asia and emerging markets will continue to report strong economic growth and above-average expansion in corporate profits.

Lower demand from US and the expected economic slowdown in the Eurozone are affecting the Asia and emerging markets less severely than a few years ago for various reasons. Lower exports to the US are being offset by higher exports to other emerging markets.

Surge in domestic demand is becoming an increasingly important growth driver in the BRIC countries (Brazil, Russia, India and China) and Mexico. This is due to rising wealth levels, higher consumer demand and strong investment demand, a result of instrastructure projects.

Many of good Asia and emerging markets' stock prices are down 30% - 50% due to broad market pessimistic sentiment, but their fundamentals just get better and better. Huge gap between the fundamental of the business and valuation of the stock presents great money-making opportunity.

According to Deutsche Bank, investors may pile more than $200 billion into hedge funds focused on Asia excluding Japan this year, betting on emerging markets despite concerns about the global economy and waning risk appetite. Hedge fund investors' predictions that Asia, along with the Middle East and Latin America, will be the top-performing regions in 2008 indicate a clear re-allocation of capital towards emerging markets. When the smart money flow into Asia region, we are likely to expect another bull run from Asia markets.

But some of my friends and readers had reflected to me that stocks investment are too risky for them. I would advise them to buy into mutual funds that invest in Asia and Emerging markets, based on dollar cost average basis. Do not throw all your money in, fresh bad news from US can affect the overall market sentiment.

How to Buy Stock in Oil? Here Are 5 Quick Tips to Help You

2008-07-11T01:53:00.000-07:00

Are you looking towards buying stock in oil? With the booming oil stocks most investors are trying to book profit with these stocks. And this condition will remain alike until oil demand and production are in balance. This article will provide you with some quick tips about how to buy stock in oil.

According to the experts the global oil production was at its peak in last three years even though supply was less. But, there is no fall in demand. These oil stocks are good for long-term investment. But, the question is how to buy stocks in oil?

Here are 5 tips to help with buying stock in oil.

Tip #1: Look for performance of the companies in oil industry before you select a particular oil stock. Online journals will help to get more information about different oil and gas industries. The integrated oil and gas industries are the main participants of the oil stocks.Most large industries will pay large dividends. Smaller companies involved in production and exploration plays the major role in these oil and gas industries.

Tip #2: Sreening of the oil and gas industries will help while selecting specific oil stock. There are three categories in this industry. They are oil and gas production, oil well services and equipment and integrated oil and gas.

Tip #3: Look for financial status of the company. Crude prices show much flexibility. It affects the oil stock. To reduce risk, take expert recommendations while buying any stock in oil.

Tip #4: Experts categorize these oil stocks into integrated oil companies, independent companies, Refiners, natural gas and Oil services. Most of the experts suggests to buy big company stocks in the integrated category. Natural gas sector is also showing steady growth in last few years. Hike in crude price made oil service companies more significant. Few companies are involved in production and exploration.

Tip #5: Exchange Trade Funds are the best option to invest in oil stock. In last few years, oil services ETFs given 724% returns to their investors. The great advantage while investing in ETFs is that you are not required to think of an individual company. Just pick one of the best Exchange trade funds (ETFs) and invest into it. You will get more returns in this. Many investors experience trouble when they buy ETFs when their price is sky-scraping and sell at a failure.

If you are thinking about how to buy stock in oil, keep high risks at bay. Every investment brings its own risk factors into the picture. And there is no 100 % risk free investment.

Learn How Banking Offshore Can Make Your Money Grow

2008-07-11T01:51:00.000-07:00

Offshore banking generally means that a person can have his accounts in such a bank that is situated outside his own country. So, it means using the facilities of a bank that is situated in a place outside the jurisdiction of the account holder. These bank accounts mainly protect the asset and the wealth of their account holder. Besides, they also help their account holders to carry on their business in both a private and confidential way. So, a person opting for offshore banking will try to find a bank that can provide him with the same services that he gets from a bank situated in his own city.

All the offshore banks allow their account holders to withdraw and deposit money in their accounts. However, these banks provide their account holders with credit cards to conduct their bank transactions. The credit cards provided by the different offshore banks are similar to that of a credit card provided by the local banks. Besides, a person possessing such a credit card can use it in any ATM all around the globe.

The offshore banks provide different services to its account holders. Some of the services provided by this bank include money transmissions, currency exchange, loans, fund management and investment management. Managing of investment or funds mean that the banks manage the securities on behalf of their customers. However, some of these offshore banks also provide certain additional services to their customers. These banks charge some money from their customers for their services. However, different offshore banks have different charges and a person can avail the services of these banks online as the banks are situated in other countries.

The Way to Invest in Mutual Funds

2008-07-11T01:49:00.000-07:00

Mutual funds investing is just one of many ways you can make your money grow. However, if the investor just goes into it quickly without sufficient knowledge, he may just bail out when there is a drastic decrease in the price of the fund. Money is at stake here. My advice is to know what you are investing before you go deeper into it.

Firstly, what are mutual funds? When you invest in a mutual fund, an investment company will pool your money together with the money of other investors and invest it in bonds, securities and stocks which fit the profile of the fund invested.

In the following paragraphs, I'll explain how best to allocate your money for the funds, manage your portfolio of funds, as well as a good amount of time to keep the funds. In addition, I'll add on other tips of investing in mutual funds.

There are many ways of investing in funds. One of the recommended ways is to invest into a diversified portfolio of stocks. This is done well by dollar-cost averaging (DCA). An equal amount of money is put aside for investment on a regular basis, into a fixed portfolio. This allows for investments in the riskier funds because the investor will buy more when the price falls. The average cost per unit thus drops to a low. In addition, the investor will buy and hold the portfolio of stocks over a good number of years. In the long term, volatility is smoothened out nicely. If an investor who has a lump sum of cash and does not know what to do about it, DCA will be a much better method of investing, than placing the whole lump sum of money into a certain portfolio and then suffering if the fund turns stale. The only disadvantage of DCA is that the investor would wish that he would have invested faster into a certain fund when the price is going up. From the long term view, this will not really affect much though.

It will be good if we own good funds. It will be easy investing for us. There is just one precaution. Never chase the newest hottest fund every time or else it will affect your compounded earnings at the end. Similarly, never time the market. Time in the market is more important. Just find a good fund and stay with it. Have the awareness that things could change though. Do not just buy and forget.

What if all the funds are good? I would recommend placing an equal weighting on every fund. If you still need additional help, a financial adviser from a nationwide, reputable company will be useful. First, you have to tell the adviser your goals for the future. He or she will then tell you what he thinks your money should be invested in. A good adviser will usually also tell you what will happen in the next few years. Since it's your money, make sure you ask questions and get everything explained to you so that you understand what you are investing in and what your money is doing for you.

On a final note, investing in mutual funds should be for the long term and money set aside for the funds should be untouchable or gone for the number of years you have determined for your goals. Make it a point not to take out the money invested for emergency usage. The money put aside is only for your goals, nothing else.

10 Rules to Spot a Big Winner Early

2008-07-11T01:47:00.001-07:00

How to Spot A Winner

Everyone who invests in the market wants to find the big winner. The problem is they are super hard to spot, much less know ahead of time to hold it for the big run versus trade out of it for a smaller profit and move on. Too many people think EVERY trade is going to be the big winner and just hold everything, ignoring smaller profits that should be taken. The more volatile the market is, the more people should consider taking the smaller profits. After all, six 2 point winners is the same as one 12 point winner. With not every trade going to work out as a profit, you need some of these scalper plays to mitigate the inevitable losses that will happen over time. The key is to find a big winner now and again to really supercharge your returns.

Stocks that have a potential to be a big winner are not really found by doing fundamental research. Do you actually believe that you are more astute than the hedge funds and mutual funds who travel all over the world and pay analysts millions of dollars to find them big winners? Probably not. Now I am talking about finding big winners in real companies, not penny stocks. So a little research is ok, but don't expect to outsmart these big guys. Besides, these big guys are the only ones that can make a stock move. What is the point of buying something that is so under the radar that no one cares. Remember, half of investing, if not more, is efficient use of capital. If you tie up all your money in under the radar plays that might take years and years before they do anything, you are giving up return potential of other things in the meantime. So even if they do double in price, you are still net behind because you earned nothing for 4 years basically.

Most big moves happen in a short time frame, 6 months or so for the majority of a run. Sometimes it can last a year or more, but I am talking about a fast, sharp rally where funds are stepping all over themselves to get in. That is why you see stocks that have meandered in a 5 point range for years all a sudden shoot up 250% in a matter of months. Why? The funds decided its super undervalued and all want in like a herd of cattle. What we want to do is to get in on the first 1/3 of this move, not tie up our money for years WAITING for the move or trying to anticipate the move. Most of these types move so much higher that you have no fear of "missing" it by waiting for it to start.

Here are a 10 rules to use that can signal a big move is about to happen:

1. Look for an out of the ordinary earnings report. Meaning something that is at least 30% above consensus or more. The main thing here is revenues HAVE to be above also by a decent amount. A third thing is you want profit margins to expand. This is where it pays to do a bit of digging. Under no circumstances do you want anything to do with a stock if the earnings/revenue are a result of a 1 time gain, no matter where it comes from. This company should have had 2 quarters prior where earnings were ok (in line basically, but no big deal).

2. Stock sector overall is in expansion mode. Expansion means the market for goods and services in this sector is in growth mode, not contraction mode. International expansion is best, but sometimes US only is totally fine if its smaller niche sector. Funds will not buy into companies really in a contracting sector - sometimes as players leave, the ones that are left will start to grow earnings nicely by grabbing market share, however the pie they are grabbing is shrinking, so longer term earnings will shrink as there is less of a market to capitalize on. These types might move up, but its easier to just find the bigger potential rather than gamble on this type.

3. Look for an out of the ordinary gain day versus normal. By normal I mean go on a price chart for the last 3 months, and look for an average move up (approximate only). What we don't want is a large gap for the gain - we want gain as open to close only. So if a stock on an average decent gain day goes up 1, and we see that today (or a few days ago) it ran up 3 points, that should go on the radar to watch. We want the stock to TRADE up, because that shows buyers are super aggressive to own stock. The best ones here are ones that do this when the market is pretty much flat or lower on the day of the rally. This again shows out performance.

4. The stock recovers from selloff attempts (meaning it gets knocked down but recovers at least 3/4 of the loss either that day or the next day. In addition look for big down days on the market in the last 2 weeks or so. Big winners do not usually get sold much. Dow is down 130 points for the day and the stock is up 20c type thing. The more repeated a pattern is like this, the better.

5. Days where it has big gains, in the next 3 days it holds or pushes more. Usually you do not want to see it give up more than about 1/3 of that gain at the close of the day max. So if the stock was at 40 and rallies up to 43 in 1 day, in general over the next 3 days you want it to always close over 42, holding most of the gains. This shows funds are not interested in selling into the big gain.
Ideally you want the market to have a decent sell day in one of these 3 days so you can see if the big guys are still trying to accumulate the stock or not.

6. If the big earnings beat is the first that has occurred in a long time, often times the stock will not go really big because it might be viewed as a one time event and might not repeat. If the company comes around in 3 months time and does a similar feat, it is almost assured that the funds will take notice and start accumulating more aggressively. This kind of depends on the sector/industry and overall macro events whether a one time beat is enough to start launching it higher.

7. Watch the daily chart on your issue, and put a 13 period simple moving average on the chart. Stocks that get into a nice uptrend usually will almost always close above the 13 period average. When they do dip below, they try to quickly push higher and re-establish a position above the 13 period average. In addition, put up a 200 day average. Most big winner types will not be below the 200 period average for long periods of time prior to starting a move up. Sure there are exceptions, but in general stocks that have been in a really sharp downtrend will have a much harder time turning around and holding gains, as there will be sellers all the way up. Just because it is below the 200 average and its a candidate based on other things does not mean its out as an idea. What you do not want is a sharply downloping 200 day average - those I would ignore and find a better candidate.

8. Once you have found a candidate and are in for the big gain potential, remember to still use money management and common sense. If the stock should be moving up but instead all a sudden starts showing a pattern of doing the opposite, odds are something is off. I am not talking about a few days down, I am talking about repeated underperformance vs the market and other stocks in its group. If you truly have a potential big winner, this is not how they act. Remember, if you are worried about a position, the best case is to always just sell it. Its just a stock, and if you think that was a mistake to get out, you can always re-enter the name again.

9. Any time you have a 100% gain ALWAYS sell half your position or put a stop loss at the 100% level and then trail it up on this half. Why? Well if you have a 100% gain and sell half, you have all of your original risk money out. No no matter what, even if the stock goes to 0, you cannot lose ever. Once you have sold half, look to sell another 1/4 at 150-200% gain from entry. This will lock in a decent profit. Let the rest ride, as you never know when you might get a 500% winner. These are rare but do happen, but also take some time (9-18 months usually). Just remember to not let greed cloud your judgement.

10. Stocks are an investment to make money, not get attached to. Odds are if a gain is making you feel excited and you see yourself thinking what if this runs another 50% and figuring out how much money you are going to make - its time to sell. Usually this is a result of large gains in a short period of time and others are thinking the same thing - the excitement usually peaks and the stock takes profits. You should anticipate this happening.

Forex Software Reviews

2008-07-11T01:47:00.000-07:00

Forex is undoubtedly the fastest growing largest financial market in the world today. The daily transaction amounts to nearly USD 2.5 to 3 trillion. Are you a part of it? Are you scared that you don't know much to enter the "complexities" of forex trading? You don't need to. Here we picked up some autopilot software that will do everything for you to make sure that you earn profit from your forex investment.

The first software that we reviewed is Forex Tracer. This autopilot is simply amazing. It's so simple that, at times, you are forced to disbelieve it as "too good to be true". The best thing is this Forex Tracer autopilot works as efficiently for the new entrants, as it would for an experienced trader.

You get the tightest spreads. It supports all trading strategies as well. You need not to be present in front of the computer terminal where this autopilot is running. All you need is a reliable net connection. You pursue your hobbies, attend some other important commitments, and let the forex tracer work hard by pulling and signaling profits for you. Forex is a round-the-clock market, and for maximizing your chances of profit, you must attend the trades nonstop. This is humanly impossible, but not for Forex tracer. Its tested and mathematically proven systems and algorithm are backed by the experience and knowledge of the industry leaders. If you are, by any chance, not happy with the Forex tracer's performance, you can get your full money back within 60 days of your purchase.

You can start with a paltry sum of $100 which all 3 offer as a free added bonus. Yes you read that right, they offer $100 signup bonus to their optimized forex broker that their software works best with. You do not have to spend hours for collecting and analyzing technical or fundamental indicators or forex signals. It has an interface with Metatrader4 and therefore backed by the mathematical calculations and historical data needed to become a successful forex trader. It opens the trade, sees the exit signal, and closes the trade for an easy profit.

Our next product is Forex Killer. The Forex Killer Newsletter is offered for free is another added bonus. For this autopilot too, you do not need any trading experience. It generates its own forex signals. You have to attend to the system a few minutes a day just to monitor things. Developed by an industry guru, this software does the "thinking" job and eliminates the chances of human errors.

Start with as little as $500 on a real forex account and gain experience with a demo account without risking your real money. You need to feed the data and get the signal generated instantly with its probability. Place your order accordingly to earn the profit.

You also get signals for your intraday trading too. The software also has a lifetime free update option as well through which you keep your system authentic year after year. You also get an exclusive forex e-book with your purchase that works as a free tutorial.

Your last pick, however, turned out to be less attractive than it promises to be. Running Forex Autopilot System led to losses. We found the system to be slow. In forex where every millisecond matters, a slower performance can ruin a winning game. You may not get a chance to test the performance of the autopilot within the money-back guarantee period. Running under the same condition and with same currency pair it made a meager $200 profit against an investment of $5,000, whereas Forex Tracer returned a handsome $1800. Against the price of $99, the purchase is not very promising.

Understanding How Bonds Work

2008-04-10T21:30:00.000-07:00

Before investing in bonds, you must understand some things about bonds. Understanding what kind of bonds to purchase, what maturity date to purchase, is necessary before you begin to invest in them. Par value, maturity date and coupon rate. These three characteristics of a bond are the most important things to consider before purchasing a bond. Buying a bond without thoroughly studying these characteristics of a bond is the surest way to make the wrong decision.

The par value of a bond refers to the returns on your investment once the bond matures. It is the amount of money that you will receive at the maturity date. In other words, when buying a bond, it is important to note that you will be receiving your entire investment plus interest only at the maturity date. This is the bond's par value.

Naturally, the maturity date refers to the date that your bond reaches its full value. This is the date that you receive all the returns of your investment. However, when purchasing corporate, state and local government bonds, you do not need to wait until the maturity date before you obtain the money back. Such bonds can be 'called' before they reach the maturity date. When the bond is called, the corporation or government issuing the bond will return your investment as well as any interest your bond has earned up to that point in time. However, federal bonds are unable to be 'called'.

The coupon rate refers to the interest rate. This determines the amount of money that you will receive when the bond matures. This is specified as a percentage. For example, a bond with a $1000 par value with a coupon rate of 10% will earn an annual interest of $100 until the bond matures. Similarly, a bond with a $2000 par value and a coupon rate of 5% will also earn an annual interest of $100 until the bond matures. This is important to note as the different bond value means a different initial investment, even though the annual interest is the same.

However, many people still do not understand how to purchase a bond. This is because bonds are not sold by banks, but rather by the government. This makes things slightly more confusing for most people. However, there are two ways of buying a bond.

The first way, is to go to a broker or a brokerage firm. The broker is able to make the purchase from the government on your behalf. However, you are likely to be charged a commission fee. Shopping around for the lowest commission fee is prudent if you want to use a broker.

On the other hand, you can purchase bonds directly from the govnerment. This process, although more troublesome is not nearly as difficult as it used to be. With the introduction of the program called Treasury Direct, all your bonds can be purchased and held in one single account that you have easy access to. If you choose to buy directly from the government, you can avoid using a broker and thus saving on the commission.

US Investors Are Looking For A Rebound

2008-04-10T21:29:00.000-07:00

While a weak employment report last Friday (April 4, 2008) seems to confirm the U.S. economy is in the early stages of a recession, investors that are looking at the longer term are already thinking about which stocks will work best for a recovery.

Many are saying that the future might be brightest for one of the worst performing sectors this year - technology - and one of the best - energy. And they're also finding things to like about health-care stocks.

Although worries about the economy still loom over the stock market, there were hopeful signs last week as the Dow Jones soared nearly 400 points on Tuesday, April 4. The 8th largest gain for the Dow in it's history.

Still, this month could be challenging as companies report first-quarter earnings and issue their expectations for the rest of the year. Many on Wall Street believe that earnings expectations for the second half of 2008, with forcasts of double-digit percentage growth, are too high and the U.S. market remains vulnerable to disappoint if those forecasts don't materialize.

Some had been looking to financials to help lead the stock market out of it's downturn. While stability in bank and brokerage stocks may be necessary for the market to head higher, the kind of earnings growth that powered strong returns on financials in recent years now appears to have been driven by borrowing and moving certain assets off their balance sheets.

With the severity of the credit crunch and a downturn in consumers ability to spend, a steady flow of good news that would fuel a sustained rally may be in short supply for months.

But the steps taken by the U.S. Treasury and Federal Reserve to stabilize the financial system have some investors thinking that the worst of the selloff could be over. They were encouraged by the market's calm response to last Friday's, April 4, employment report showing a loss of 80,000 jobs in March 2008.

Technology companies are at the top of the list of many Fund managers. The sector that was expected to be strong this year, is down 15% since the S&P 500 hit it's all-time high in October 2007, making it among the worst performers of the indexe's 10 sectors.

Tech companies have been hit way too hard. The reason behind this is suspected to be in investors thinking back to the last recession when holding tech stocks was the worst possible strategy. But the market shouldn't underestimate the profit growth this sector can generate over the longer term. Techs could miss expectations this year, but not for the next 2 -3 years!

One factor for the recent selloff of tech stocks is that financial companies traditionally are big buyers of new technology and their ability to spend might be compromised by their losses from the credit crunch and the economic slowdown.

And talking about health-care stocks. Some Fund managers are shying away from the big pharmaceutical companies that face the continuing problem of big drug products losing their patent protection. Instead, these Funds are taking a liking in biotechnology or medical equipment makers because whether it's fixing the eyes, the knees or fixing hearts, there's always going to be a tailwind from an aging population.

The 7 Most Common Forex Trading Mistakes

2008-04-10T21:26:00.001-07:00

When trading currencies online, there seems to be no end to the mistakes a beginning forex trader can make. Beginning traders are always the most susceptible, but experienced traders can often revert back into bad practices as well. Here are some of the most common trading mistakes listed in no particular order, and how to avoid them.

Predicting instead of reacting. Otherwise known as overconfidence. This usually happens after a winning trade or two. The trader starts to think that if he can enter a trade sooner, he will get more pips. He begins to believe he can pick the top or bottom before the market reveals it to him. So instead of reacting to what the market is telling him, he starts to predict what the market will do. He enters a trade and the market continues its move, which is against him. Now, does he admit he was wrong and close his position, or does he add to it?

Adding to losing positions. Here is an extension of predicting instead of reacting. Look, you just entered a trade and the market is going against your position. The market is telling you, you are wrong. Now is the time to close your position, not add to it. If you add to your losing position, you are making at least two incorrect decisions. First, you are predicting the market will turn around. Second, you are hoping the market will prove you right because you are unable to admit you made a losing trade. Losing trades are a fact of life in the forex market. You weren't wrong, simply, your edge didn't play in your favor on this trade. Close your losing position and move onto the next trade.

Insufficient capitalization. Forex trading is already highly leveraged. Insufficient capitalization just magnifies the potential problems you can face. If you read about the famous and big name traders, they never use more than 1% - 2% of their trading capital on a position. Get out a calculator and let's see... 1% of $10,000 is $100. So as a position trader who might have a stop-loss order of 100 pips, you can only trade one mini lot of one currency pair for each $10,000 in your trading account. That is, if you want to trade like the pros. Do you have $10,000 in your account? Why do forex dealers boldly advertise you can start trading with only $250 then? Because they are in business to make money, and if they can convince you to commit trading errors, they stand a much better chance that they will soon have your money.

Overtrading. A close cousin of insufficient capitalization. Knowing that very few currency traders trade with sufficient capital in the first place, they further compound the potential problems by trading too actively and in too many currency pairs. Spreading themselves too thin you might say. Potential problems include loosing focus and margin calls. Getting a margin call is a very irresponsible position for a forex trader to be in and is a direct result of overtrading, over leveraging, and insufficient capitalization. This is as close to the perfect recipe for failure as you can get.

Not using stop-loss orders. There are very few times when not using stop-loss orders is the correct action to take. Large traders with several hundred or more lots don't want to advertise where their stops are placed is one. The other might be scalpers whose stop is only 10-15 pips away. By the time they figure the math and enter it in the system, the price might already be there or even past it. And some forex dealing stations won't let you place stops closer than 15 pips anyway, especially in fast moving situations. Other than those times, you need to put stop-loss orders in on every position. It is in your own best interest to protect yourself. I know, some people whine that their stops are always being run by the dealer. A whole article could be written on stop-loss order management, if not a complete chapter in a book. Let's just say for now, don't put them where everybody else does, and don't put them too close.

Trading as a hobby. Golf is a hobby and it costs you money to play. Horseback riding is a hobby and it costs you money as well. The point is hobbies cost money, business makes money. You need to treat your forex trading as a business if you ever hope to make money on a consistent basis. That means keeping records, keeping a trading journal, and have a written business plan. You wouldn't invest money into a start up business without first seeing a business plan, so why would you invest money into your own trading account without the same thoughtful consideration.

Not having a trading plan. This is one of those catch-all mistakes. If you have a written trading plan, and follow it, you will already have identified and hopefully eliminated all of the above mistakes. If you don't have a written trading plan, you are almost assuredly making some, if not all of the above mistakes. Maybe not all at once, but even occasional mistakes add up quickly. Do yourself a favor and don't put on another trade until you think through and write down the response for all of the above mistakes and any others you can identify, as well as entry and exit rules. Then follow it.

These are just some of the many mistakes you can make as a forex trader. You need to take responsibility for yourself and your money and act in your own best interest. The currency markets are a zero sum game and the many players are out to make a profit. Don't let them profit with your money. Do your best to eliminate the above mistakes, and you will go a long way to ensuring you are the one who profits in the forex market.

Beware Of E-Gold Investment Sites

2008-04-10T21:26:00.000-07:00

There are some websites that allegedly claim to pay up to 500 per cent returns on e-gold invested for periods as little as 30 days. Now just wait a minute, did I say 500%? Or was that a typographical error?

It is no typographical error. It is actually 500 per cent and that should be the first signal to you that there is something terribly wrong at any site offering such an unusually high return on investment. Still numerous people get scammed daily all over the world investing in these so-called high returns e-gold sites.

Actually it is hardly surprising that scammers would want to target e-gold for their rackets. Since e-gold or electronic gold was introduced and started to catch on, problems of Internet payments have been solved for many web users the world over. In fact for the first time there is a true means of global payment that is widely accepted and easy to use and it does not matter what corner of the world you are based in. There is no doubt now that e-gold is the biggest universally accepted means of online exchange for goods and services.

The way most scam investment websites work is that they pay you interest for a very brief period initially to attract even more people that they can fleece. They then proceed to suddenly fold up and disappear into thin air with investor's funds.

This does not mean that there are no e-gold investment sites that are genuine. The truth is that there are web sites that are run by genuine investment set ups.. You just need to be extremely cautious as you go about the task of finding them.

One of the danger signals to look out for is whether the e-gold investment company you would like to invest with has a physical address. This is very important. When you click on the "contact us" link on the site and only see an email address, then the right thing to do is to flee without looking back because you are dealing with scammers. Flee and save your hard earned cash from being taken away from you.

It is also prudent that you put through a call to any telephone numbers that you may see displayed on the website. How is the phone answered and who answers it? You can also take the opportunity to ask all the questions you would like to ask.

Then you can also visit forums and search engines and ask as many questions as you can so that you are able to discover which particular e-gold investment sites you can be able to work with.

Should You Create A Mock Portfolio?

2008-03-24T00:07:00.001-07:00

There are a number of reasons why one should create a mock stock portfolio. Here are my top 3:

#1: Find out how good you really are

Of course we're all good at picking stocks - we're intelligent and have a unique perspective that leads to the way we picking stocks. But is there an objective, scientific way of knowing that you'll make more money investing in stocks yourself, rather than investing in mutual funds or ETF? People may point to research that shows that ETFs and mutual funds perform better than the average investor. But am I really just an average investor? What if Warren Buffet fell for that line without trying?

Mock stock portfolios are one of the better ways to find out. You don't risk any real money and can still find out how good you are. Create one and measure yourself against some of the alternatives like an index fund or a few mutual funds. Don't measure yourself against stock investment newsletters that report their own performance - you can never be sure how accurate their numbers are.

#2: Learn from your mistakes

Having a mock stock portfolio, lets you learn from your mistakes without actually losing any money. You'll learn if you buy too early or too late, sell winners before you should or hold onto losers for too long. You'll know if you tend to focus too much on a few sectors, making your portfolio volatile. If someone offers you a free no risk trial period with your portfolio, wouldn't you accept it? A mock portfolio is quite the same. Even though you're giving up potential real profit, it's worth the effort.

#3: Test different strategies

Maybe you have different theories on what will make the most money. Should you pick growth stocks or rely on dividends? Follow the Dogs of the Dow or the Alphabet Portfolio? Each strategy has different ways of being implemented. You could rebalance the Dogs of the Dow every year so that all positions are equal, or you could choose not to. You could choose stocks that have a good dividend yield either because they increase how much they pay or because their stock price fell. Using mock portfolios will help you see how you perform with each strategy.

There are a number of websites where you can create mock portfolios. Make sure to choose one where you can place orders just like you would at a real stock brokerage. This lets you try out market and limit orders and allows you to test your money management skills. Xearn.com is a great place to create to create a mock portfolio. In addition to 3 benefits above, you also get to showcase your abilities and maybe even make some more money.

Why Went Wrong with The China Super Hot Stock Market?

2008-03-24T00:07:00.000-07:00

In 2007, we saw the Shanghai Stock Index went from 2,700 points to 6,100 points. A staggering 126% gain. The economy was going very strong, hot money was rushing into the country from global investment funds. Property market was also going good and the locals were taking a free ride on the fast appreciation of RMB currency against the USD. (From the 8.28 before de-pegging to the current 7.09)

2008, the Beijing Olympics year for China, is seen as another strong bull-run year. During the end of last year and even beginning of this year, 95% of stock analysts stated China stocks are going to shoot up from Q1 to Q3, surfing the Olympics wave and the RMB appreciation tide, and would only cools off in Q4 for needed technical correction. But since the Shanghai has swooned to the unbelievable 3,516 points today, the March 20th, 2008. What went wrong? What are still ahead of the China stock market?

I think 3 key factors have caused the present agony. First is the over-valuation of China stocks in the A markets in Shanghai and Shenzhen exchanges, which are only open to the local investors. The locals who were optimistic in the Chinese economy, in the last few years, took PE ratio of 30 times as very normal figure. Only those companies which posted 100 or more are thought to be overbought. Look at the Hong Kong Market and other developed nations' stock markets, anything beyond 20 times are positioned for selling. When Warren Buffett sold China Petroleum at HK15 a share, the locals were still rushing to buy the China Petroleum A stocks at RMB38. The over optimism of the China economy, strong future performances of local companies paid a heavy penalty now, as local investors realize now they have to see past returns as the solid 'rock' references and not to use the future promises as the 'sandy' foundation.

The second cause for the erosion of China market is the overlooking of the effect of restructured companies who are allowed to sell their holding of shares after 6 months or 12 months of their share floating. Many restructured entities past the 'Closed Window' periods and are given green light to sell their holding to the markets. Although the market index has gone to the pit bottom, an oversold position, but to many of these holding entities, their historical reference prices of their portfolio could be just 105 to 20% of the current share prices. They are still gaining multiple 100% even they sell off in the current market.

The sub-prime effect of the U.S. is the 3rd factor in pushing the China stocks down. In the past few years, many thought China as the single strongest developing economy with 1.3 billion population market would be self-sustainable, without being affected by the outside economies. But USA continues to be the major importer of China products. At this past 3 quarters of US sufferings from its sub-prime crisis, this western leading economy is on the edge of a fearful recession. This will definitely threaten the huge reduction in imports from China. In tandem with the RMB currency appreciation, the import prices of merchandises increase, posing a gloomy future for Chinese factories. Listed companies which rely mainly on exports are greatly affected in future revenues.

This is a connected borderless world. Company value perception, risk prevention and the problem of one nation such as the sub-prime crisis have all become global and international. Such is the new breakthrough realization of the Chinese stock investors.

Hoarding Silver Kookaburras

2008-03-12T20:23:00.000-07:00

Collecting silver coins can be an enjoyable, affordable and lucrative pastime. You do not need a fortune to get started yet you can build a hobby into a respectable, profitable business if you avoid the potential pitfalls and stick to some basic valuation rules.

I wrote this article when my personal collection of silver coins started to build. Although there are a plethora of numismatic books covering all manner of specialty subjects I have yet to locate one that deals with the collection of all coins with a high silver content for pleasure and profit. Hopefully that imbalance is at now redressed.

For our definition an average "silver bullion coin" consists of 1 troy ounce of pure (.999) silver. Unlike other coins, which may contain silver in part, the fact that these coins are, effectively, solid silver gives them a unique investment advantage. We can instantly obtain the base metal value of the coin simply by checking the world's spot silver price at any time on a website such as Kitco.com.

Silver bullion coins make a great investment and many have beautiful and unique designs. Some - such as the Australian Kookaburra - are also legal tender. Popular examples of recent silver bullion coins include the Somalian African Monkey, The Canadian Maple, The Mexican Libertad, The Australian Kookaburra, the Chinese Panda and the American Silver Dollar Eagle (and variants of all these, including special editions and collector's sets). The British Britannia bullion coin contains marginally less silver, at 95.8%.

Gold bullion coin collecting offers even greater opportunity for profit, and exactly the same principles apply.

The ownership of gold is proving a popular and lucrative investment proposition. With world currencies in a state of flux, gold is also seen as the perfect hedge against inflation. Whilst the prices of any precious metal can go down, a cursory glance over a gold chart will show an inexorable rise over the years. This trend is likely to continue, possibly even escalate due to the current currency weakness created by the global "credit crunch".

One option to obtain maximum exposure to gold value is to own an EFT (Exchange Traded Fund). One such vehicle which tracks the actual price of physical gold (as opposed to owning a gold mining stock, for instance) is PHAU. Many share dealers will allow you to trade this ETF which you can buy and sell online like any share. Check with the broker for terms and conditions.

In a nutshell it has never been easier (or more affordable) to own gold without having to have a kings ransom worth of bullion (and the associated security risks) lying around your house.

Gas prices jump, oil hits $110

2008-03-12T20:17:00.000-07:00

Gasoline and oil prices extended their record-setting streaks Wednesday, with gas at the pump reaching a new high of nearly $3.25 and crude surpassing $110 for the first time.

The gains came as a weakening dollar led investors to shrug off an Energy Department report that crude oil and gasoline supplies jumped last week.

The national average price of a gallon of regular gas rose by 1.9 cents overnight to $3.246 a gallon, a new record, according to AAA and the Oil Price Information Service. Pump prices are following crude's recent surge, and could rise as high as $3.75 a gallon this spring, analysts say.

Meanwhile, light, sweet crude for April delivery rose $1.17 to settle at a record $109.92 a barrel on the New York Mercantile Exchange after earlier rising to a new trading record of $110.20.

The dollar weakened throughout the day Wednesday, setting a number of new lows against the euro and attracting new buyers to the oil market. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Many analysts believe the dollar's decline is the reason crude futures have surged to new records in 12 of the past 13 sessions, despite the fact that crude supplies have risen 10.2 percent since early January.

"It's almost like people are worried they're going to miss the ... train," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., of investors' dollar driven enthusiasm for oil futures.

For consumers also facing rising food prices and a drop in housing values, the dollar-fed oil rally simply means more pain at the pump. Analysts see little reason for the dollar to stop falling, or for oil and gas prices to stop rising, any time soon. And with gas prices certain to rise as the summer driving season approaches, consumers will be even more cash-strapped.

In part, the dollar is falling in anticipation of another interest rate cut by the Federal Reserve next week. Lower rates tend to weaken the dollar.

The importance of dollar weakness to crude prices is reflected in the fact that oil's latest record came the same day the Energy Department's Energy Information Administration said crude supplies jumped by 6.2 million barrels last week, more than three times the 1.6 million barrel forecast of analysts surveyed by Dow Jones Newswires. The EIA also reported that gasoline supplies rose by 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped by 1.2 million barrels, less than the expected 2 million barrel decline.

It was the eighth increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline. Meanwhile, forecasters including the Energy Department, the International Energy Agency and OPEC have consistently reduced their demand growth predictions for this year.

Wednesday's EIA report offered more evidence demand is falling: Gasoline consumption fell 0.7 percent last week compared to the same week last year. Normally, gas consumption grows about 1.5 percent year-over-year, just to keep pace with population growth.

"Product demand remains quite weak," said Tim Evans, an analyst at Citigroup Inc., in a research note. "This was another set of consistently bearish data."

Yet negative supply and demand fundamentals don't seem to matter to oil investors as long as the dollar keeps falling.

In other Nymex trading Wednesday, April gasoline futures rose 0.25 cent to settle at $2.7286 a gallon on the Nymex, and April heating oil futures rose 2.87 cents to settle at a record $3.0244 a gallon.

April natural gas futures rose 1.1 cents to settle at $10.011 per 1,000 cubic feet.

In London, April Brent crude futures rose $1.02 to settle at $106.27 a barrel on the ICE Futures exchange.

Euro hits new high of 1.55 usd

2008-03-12T20:12:00.000-07:00

The euro hit a new record high against the dollar, rising briefly above the 1.55 usd threshold for the first time before dropping back. Analysts said the move was likely due to technical matters, noting an option expiry in New York just moments before.

Matthew Foster-Smith at Thomson's IFR Markets noted the euro/dollar traded to a new all-time high "less than a minute after the 1400 GMT New York option cut".

"The new historic highs are yet be extended with spot initially easing back into the 1.5490's rather than extend the rally deeper into the 1.55's," he added.

At 1417 GMT, the euro was trading around 1.5490 usd, having peaked at 1.5503 shortly after 1400 GMT.

The euro's continued storming run against the dollar reflects the dismal prospects for the US economy, which contrast markedly with those of the euro zone.

While the US Federal Reserve is busy cutting US interest rates to support growth, the European Central Bank is yet to shift from its hawkish stance on inflation.

Stock Trading Software Programs - The Top 3 Reviewed

2008-03-12T01:40:00.000-07:00

Stock trading software programs are something that people have dreamed of for years - something that will automatically trade the markets for you, systematically finding the best prices and making profitable deals. In the last few years it's become possible, but which to choose? Check out our review of the best stock trading software programs.

The most popular stock trading software program is named "Marl" after the guys that developed it. Their company is named Doubling Stocks, and fresh from developing the Global Alpha computer stock trading model that earns Goldman Sachs in excess of 4 BILLION dollars each year, they developed a sofware trading model for themselves, named Marl. The only catch is, you can't actually buy it for yourself. It's not for sale, and what you get from these guys instead is a weekly report- Marl's top stocks for the week. This doesn't seem worth bothering with until you realise that this particular stock trading software program generates an average of 106% return on investment. Makes your average 5% savings account look pretty poor doesn't it?

Overall it's easy to see why Marl is the most popular - it costs $47 for a lifetime membership, and you receive your weekly tips like clockwork. It hasn't been long for me but I've seen a definite profit. There's also a 2 month guarantee, so there is nothing stopping you trying it for 2 months to see how much you make.

The second most popular stock trading software program is probably the Forex Autopilot. As you can tell from the title, this software, or Robot, as they are known, trades on the Forex market, without much input from yourself. All you need to do is install it and set it on it's way. It certainly seems to work, but in all honesty it's hard to beat the ease of dealing with Marl, as receiving his tips doesn't require any degree of trading knowledge at all. Forex Autopilot has proved successful for hundreds and thousands of users, and has even made some into millionaires. At about a hundred bucks, it's more expensive than Marl's tips, but you get a fully working stock trading software program, and for once the bonuses offered are actually worthwhile.

The last stock trading software program is probably a tie for second place with Forex Autopilot, and confusingly, is also called Forex Autopilot System. I guess there's no way to copyright the name or something! Anyway, it's a pretty similar completely automated and trades on the Forex platform. It works using Metatrader, which is one of the main trading platforms, and to be honest I found it a little easier to install and set up than the other Forex Autopilot system. The other thing I liked was the fact that you can easily set up demo accounts to start, so you can get to grips with it without risking your cash.

It's really up to you to decide what you want from a stock trading software program - if you want the easiest and possibly the most profitable method, go with our old buddy Marl. On the other hand if you'd like to learn a little about the markets and own your own stock trading software program to make money while you sleep, the second Forex Autopilot System is going to be your best bet, as the demo accounts really help you learn.

Five Reasons You Should Invest In The Stock Market

2008-03-12T01:36:00.000-07:00

Are you scared away from reading this article? Don't be. Everyone (18 and over mind you ) can invest in the stock market, regardless of job, education and location... and its easy! Whether you are a work at home mom, a blogger, entrepreneur, student or what have you, investing in the stock market is as simple as finding a product you use and predicting the company will turn out something newer and better.

I am 18 years old and I hold $1,500 worth of stocks in a brokerage account. I'm sure you are considering all of the bad economic news that is out, and really the height of the crash came in early January. I started my trading account on January 1st, and I have positive gains thus far. If you haven't put serious thought into buying stocks, now is the time.

Here are five clear-cut reasons you shouldn't be scared to invest in stocks:

1. The "Big Dogs" Don't Want You To Its a fact. Plain and simple, the big market players (mutual funds, investment banks, stock advisers, etc.) don't want you messing around in their rich-man's game because it is a market that they used to control. Slowly, but steadily, more and more people are owning stocks... and for good reasons! The stock market is the best way to make money ever created, and it is totally open to the public. If you think you are too inexperienced to own stocks, think again! One thing that really benefits small investors is that they don't move the market. When you trade, nobody is going to see that impact... so you can basically sneak in and out of companies taking profits off the table left and right.

I want to see the age when everyone plays the stock market. I think that it is coming sooner than we expect. Not only is it a fun, gambling experience, owning stock will educate you in the ways businesses work! If an 18 year old student can figure this game out, you can too! ;)

2. The Stock Market Typically Goes Up Don't always believe the recession-doomsday hype. It is a fact, in fact, that throughout the history of the stock market, the average recession has seen S&P Index returns of +3.14% during the actual recession, and of +28.20% three years forward from the first warning signs of recession. The stock market has the ability to weather a storm, and it seems like the most brutal hit has already been served up...although we could fall a bit further. The point of the matter is that as long as you are investing in the right areas, you should be recession-proofed enough to make money regardless of the macroeconomic conditions at play.

3. It's Cheap and Affordable to Invest Now!

Over the past decade, tons of discount brokers have been cutting their rates to encourage you to use their services and invest. Equity trading has gotten faster, cheaper and easier than ever in the 21st century! There are services like Zecco.com that offer $0 commission fees, and more reputable and established brokers that charge a meager $7.99/trade. When considering you are probably going to be buying stocks that cost a total of $250-1000 per purchase, the commission fees are a blip on the radar.

These discount brokers (or premium if you are interested) offer fast, reliable services that basically do it all for you. I am with Scottrade currently, and they have programs they give you for free to research stocks, see what experts are saying, and they even track all of your taxable gains for you. It is easier than ever to sign up for an account and deposit as little as $500 to get on your way! Check out my "getting started" post for more information.

4. Potential Upside Outweighs Downside Risk

A lot of my friends at Penn State are hesitant to get into the stock market game. They claim they are "just not ready" or "too scared to make a first move"... I call this a load of garbage. Investing is not about letting it all ride on lucky seven. When you buy a stock, you own a piece of that company, if the stock price goes down, it goes down... but you shouldn't be losing any more than 20% of your initial investment at any rate. Your money is generally safe in stocks, so stop worrying and focus on the upside!

At this point, I want to bring up my portfolio's performance in 2008. At first, I was off to a horrendous start with everything trading down on poor news. As of late, everything has just about balanced out and I am actually sitting on a gain! I have stocks like Yamana Gold I have profited more than 26% on in a month, and stocks like NVidia where I am down 15.5%. The point is, you have your winners and your losers. Take the bad with the good and you have a favorable amount of upside compared to downside. If you play your cards right, you will see more money than surfing the internet could ever bring you.

5. It's Easy and People Want to Help You

I've mentioned just how easy it is to get started in the stock market. Stock brokers like TD Ameritrade, Scottrade and Charles Schwaub are practically throwing themselves at your feet. People want to help you nowadays, and it is so easy to get started you won't believe your eyes. If you don't know where to invest, turn on CNBC for an hour. Seriously. Jim Cramer? Fast Money? These programs are chock-full of investment ideas that are well researched. It simply becomes your job to look into these stocks a bit more to make sure they are right for you.

The internet can be your best investment friend. I suggest the Motley Fool for reading up on terrific stock opportunities. There are even bloggers looking to help you like the Intelligent Speculator and some guy named the Net Fool.

The Bottom Line: There is NO better way to get high returns on your investment than with the stock market. Whether it is high-growth risky plays you are gunning for, or established conglomerate powerhouses... almost any sound trading should make you money. Consider an initial $100 deposit gaining just 10% (you can do better ;) ) for five years... BAM! That's about $1,650. What if you added $100 every year to that one grand deposit? SHAZAM! That's a whopping $2,300. The magic is in the fact that when your stock value increases, you basically own more of that company, nominally speaking. Instead of making money on your $1000, you are making money on your $2,300! The possibilities are endless, and it is easier than ever to get in on the action.

Secure Your Future By Investing In Bonds

2008-03-12T01:33:00.000-07:00

For any financial plan, bonds are the core element to invest and grow wealth. It can be defined as a debt security. When you purchase a bond, you are lending money to an issuer such as government, municipality, corporation, federal agency or other entity. In return for that, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond when it "matures," or comes due. It is best to invest in bonds because one will get a predictable stream of payments and repayment of principal, with interest.

There are different types of bonds for you to choose. It includes municipal bonds, corporate bonds, mortage-backed bonds, surety bonds etc.Surety bond is an agreement among three parties the principal, oblige and surety. In construction companies surety bonds are frequently used. A key term in nearly every surety bond is the penal sum, and it is specified amount of money which is the maximum amount that the surety will be required to pay in the event of the principal's default.

This allows the surety to assess the risk involved in giving the bond; and the premium charged is determined accordingly. If the principal defaults and the surety turn out to be insolvent, the purpose of the bond is rendered futile. The principal will pay a premium in exchange for the bonding company's financial strength inorder to extend surety credit. In the event of a claim, the surety will investigate it and if it turns out to be a valid claim, the surety will pay it and then turn to the principal for reimbursement of the amount paid on the claim and any legal fees incurred. There are mainly two categories of bond types: contract bonds and commercial bonds. Contract bonds guarantee a specific contract and it includes performance, bid, supply, maintenance and subdivision bonds. Commercial bonds guarantee per the terms of the bond form and examples are license & permit, union bonds, etc.

A surety bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor is performance bond. Many performance bonds give the surety three choices they are; completing the contract itself through a completion contractor ; selecting a new contractor to contract directly with the owner; or allowing the owner to complete the work with the surety paying the costs.

A bid bond guarantees the owner that the principal will honor its bid if awarded the contract. If the principal refuses to honor its bid, the principal and surety are liable on the bond for any additional costs that the owner incurs in reletting the contract. The penal sum of a bid bond is often ten to twenty percent of the bid amount. In the case of payment bonds it gives guarantee to the owner that subcontractors and suppliers will be paid the monies that they are due from the principal.

If you need a good return in your requirements for any of your needs then the best investment is in bonds.

Hedge Funds Have Become a Popular Investment Strategy

2008-03-12T01:30:00.000-07:00

Hedge funds used to be reserved, by SEC regulation, for the rich and very rich. The SEC required hedge fund investors to have a cool $1 million in the bank, earn more than $200,000 a year or have investments worth $5 million.

Those restrictions have relaxed though and now almost anyone can take advantage of hedge fund investment opportunities. There are many types of hedge funds available. In fact they are now nearly as diverse as mutual funds.

Though much the same as mutual funds hedge fund portfolios are drawn from the private sector. They use a pooled fund investment strategy but are more flexible than mutual funds because they are not subject to many of the SEC regulations that govern mutual funds. This flexibility is both good and bad. Return on your investment can be very high but because the fund manager is free to employ risky strategies that a mutual fund manager must stay away from, but your losses can be large as well. Typical investment tactics include investment in short stocks, options and futures and buying on margin, that is, using borrowed money.

Hedge fund managers typically have their own money invested in the fund and they are paid a hefty percentage of fund performance. This means they can generally be relied on to maximize profits on the fund while watching carefully for dangerous situations. But they are also paid a management fee that they get whether the fund performs well or not.

The popularity of hedge funds has resulted in a wide variety of differing types of funds but the strategies they employ generally fall into three broad categories:

Arbitrage Strategies
Event-Driven Strategies
Directional Strategies

Each of these hedge fund strategies have their own strengths and weaknesses. A wise investor will investigate the pros and cons of each and discuss their relative merits with a qualified investment advisor.

US Economic Recession History

2008-02-26T00:07:00.000-08:00

The old saying "History doesn't always repeat itself, but often rhymes", is based more on fact than fiction. By studying the US Economic Recession History, you should better understand how current recessions may affect your financial life today.

I focus on recessions simply because they have a dramatic effect on 401k balances and investments in general. During the last recession, which was officially from March of 2001 through November 2001, the major market indexes plummeted. The Nasdaq Index declined over 70% from it's high within a year surrounding the recession. This index still hasn't recovered. It is still only half of where it once was.

Could you have avoided this downfall by studying the US Economic Recession History? Maybe, but maybe not. Let's look at the problem. The National Bureau of Economic Research (NBER) is the official agency that determines when recessions begin and end in history. Since recessions have such a detrimental effect on our investments, wouldn't it be nice if they would notify us when one is beginning? Yes it would, but they don't. The Nasdaq Index lost over 43% from its high before the NBER determined we were in our last recession. It took them 9 months after the beginning of the recession to announce it had begun. Is this a fluke? Unfortunately not. The official notification of the beginning of the last 4 recessions came an average of 228 days after they had already begun. This is an 8 month delay.

The way numbers work, if you lose 50% of your portfolio, you must earn 100% just to break even. If you had $100,000 and lost 50% ($50,000), you are left with $50,000. You must double this (100%) in order to break even. This is why it seems to be twice as hard to regain money after losing it. It took the Dow Industrial Index and S&P 500 Index around 6 years to get back to even after the last recession.

Let's pretend you've lost 43% of your portfolio and are determined NOT to lose any more. You sell your stock funds and put your account into the safety of the money market. Your account is now safe for the rest of the recession. Will knowing the US Economic Recession History help you determine when the recession is over? Once the recession is over, you definitely want to move back into stocks so that you don't miss the next increase in the market. After all, you need to make almost 100% just to break even!

NBER announced the last recession was over on July 17, 2003. Unfortunately they announced it was over in November of 2001! Yes they didn't determine the last recession was over until nearly 2 years later. Had you had your investments strapped down for the winter winds of recession, you could have missed the excellent recovery period that typically follow recessions. The end of the last 4 recessions were officially announced an average of 522 days (17 months) after they were over.

Studying the US Economic Recession History may be helpful for some, but I don't find it very helpful in managing investment portfolios. I find that tracking Supply vs. Demand in the investment markets is a much better way to protect assets. When supply begins to outweigh demand, simply change the portfolio to a more conservative stance. This usually happens near the beginning of recessions and you have plenty of time to switch your portfolio to safety. The opposite occurs near the end of recessions. Demand shows back up and you begin to change the portfolio to one of moderate risk.

The upside to recessions is the fact that periods of expansion last about 5 times longer than recessionary periods. There were 10 Recessionary cycles since 1945. The recession side of these cycles lasted on average 10 months. The expansion side lasted on average 57 months. If you can protect your money during the 10 recessionary months you won't have to spend a lot of the expansion months trying to get back to even. You can instead be exploring new highs for the portfolio.

Recession Effects on Forex Trading

2008-02-25T23:43:00.000-08:00

I've seen the dreaded "R" word rear its ugly head in a few choice financial columns that I loyally read. Not many; but enough to make my spider senses tingle a bit. Seems as if some feel conditions are beginning to line up in such a way to cause at least some thought be given to the issue of a possible recession in our business decisions. And my business is retail Forex trading.

When we talk about recession as currency traders we must discern the type of recession we are talking about. Most of the time we are looking at the economy of an individual nation or group of economically entwined nations. Rarely do you hear the term "global recession" mentioned, as this occurrence is rare due to the nature and vastness of the global economy (but not impossible). Generally speaking, if some countries economies are contracting, others are expanding to fill the void.

This puts us in excellent position as currency traders. Since a trade on the forex market differs from stock trading in that, instead of buying or selling one equity, we simultaneously buy one currency and sell the other (or vice versa). Further, stock traders have special conditions placed on them in order to sell, or short, stocks that can be limiting and annoying at best. Conditions like higher margin minimums and the "up tic" requirement constantly nag and erode possible profits. Currency traders have no such requirements since every trade has a sell, or short, involved with one of the two currencies being traded.

Our objective as currency traders on the forex market focuses on which nations are struggling with recession, and which nations will prosper from that struggle. If a nation's economy enters a recession - sales recede, profits decline, jobs decline and price of goods decline. This also adversely affects national trade balances, research investment levels and venture capital, all of which are vital to economic expansion. When this happens, governments and financial institutions must free up credit and monetary supply by reducing interest rates; making the currency less attractive to investors. This switching from low interest currencies to higher interest currencies on the Forex market is also known as the carry trade. In carry trades, investors borrow currencies whose countries have lower interest rates, such as Japan and Switzerland, to buy higher-yielding assets.

On the opposite side of the situation will be countries benefiting from the situation. Their lower priced products see a surge in sales and exports which increase profits. Eventually prices will begin to climb to keep the high profit margins intact. In these countries interest rates will come under pressure and begin to climb in order to check inflation. The currencies higher rates are attractive to investors and become heavy with buy orders.

This is when the Forex market does it job in the global economy. If a countries currency becomes so attractive that it actually causes it to spike too high, that countries own population will spend their valuable currency in other countries due to the favorable exchange rate. We saw this in the US during this last holiday season. Many Europeans spent their currencies in the US because the exchange rate was so favorable for the Euro, Pound and Swiss Franc. This market reaction will eventually begin to balance everything out by causing opposite economic reactions.

While "global recession" does not appear to be looming around the corner in any sense; the US, as well as other nations could experience what is called a growth recession. Not true recession where the economies actually decline, but one where only the "growth rate" or "rate of expansion" of their economy declines or completely stagnates. Careful evaluation will be necessary to determine which currencies will benefit by monitoring not only interest rate moves, but also trade, manufacturing, commodity and unemployment figures as well.

While no one wants to see a recession on any level, it is an economic must for global balance. As retail Forex traders we learn to keep our emotions in check to survive the volatility of the market swings. We should also keep our loyalties in check as to our currency preferences. Remembering always that any economic recession is merely a trading opportunity in two directions - up for one currency, and down for the other. Our trading activity will actually benefit the struggling nation's recovery from the forces causing their economic contraction.

4 Myths That Most Beginner Forex Traders Would Like to Believe

2008-02-25T23:39:00.000-08:00

If you were to google the term "forex" you would get 57 million pages, most of which is complete garbage. Now I say this with a slight hint of reservation but understand that in the short 5 years of me trading on the FX market, I have come across outright scams, automated "systems" that supposedly would make an investor rich, gurus that profess huge returns if you allow them to trade using managed accounts, books that make outstanding claims ect. ect. The list goes on and on.

I am going to attempt to blow apart a lot of these "myths" that seem to circumvent the forex market online and hopefully, you will be able to use common sense when approaching these "products" and give you a solution that you can research to better help you with your trades.

Myth #1

You can easily double your forex account by using (stick a broker or site name here).

Reality- Any site or broker that can give you a fixed percentage per month (like 10%) is doing something with your money other than trading forex. That is the bottom line and it doesn't matter if you think that it must be real because the site has been paying for several months.

My own experience: I had a managed account with an unsaid site that was averaging 20% per month and had been in operation for a couple years. I was quite pleased with the results and then all of a sudden, they vanished into cyber space...along with my money. This was a lesson learned the hard way but I want to tell you that if it sounds too good to be true, then...it is too good to be true.

As an aside, there are thousands of sites that claim to be trading forex. Most promise returns upwards of 50-100% per month. It is simply not possible.

Myth #2

Automated Software is better than Human Based Trading

I have heard this spouted about since I came online and started trading. The idea is this...by taking away the human emotion, you can make significant profits. Since Fear and Greed moves the market, a computer based product that just crunches numbers should be able to accurately predict the market.

Reality- Automated Software does not work because the market moves because of human greed and emotion....

Real life Example- a couple years ago, after seeing automated system after system touted, I finally took the plunge and bought some software that would make my trades automatic. Luckily for me, I tested the bot using a demo account because after a month's time, I would have gone broke. The bottom line is that a computer can only implement indicators, much like a human can.

As an aside, if someone developed a "bot" that could do the dirty work for you and succeed, why on earth would someone sell it? Think about it...if it is too good to be true, it normally is.

Myth #3

Trading the news is the quickest way to profits and even a newbie can do it.Reality- While it is true that trading the news can result in some significant jumps in PIPS, it also has a few can of worms that most traders won't tell you about....

Getting in on these trades has to be quick and most platforms perform typically slower than normal during these high volume times. The worst part of this is that you can't tell which brokerage firm is the better because the trades are seemless on demo accounts. The result is you get in trades but sometimes can't get out.

Real Life Example- I was subscribed to a service where the trader had a chat room in which trader's could come in. He had one of those fancy Reuters news tickers (that cost $2,500+) in which he could get the news at the exact same time that the banks got them. Basically, he would get the news and type "buy" or "sell" or "do nothing". When something hot broke, it would sometimes break for 60+ PIPS. That would have been great if I could have gotten in on the trade. However, I tried 5 different platforms and all of them were either very slow to open the trade (resulting in a loss of profit) or crashed at the time of the news....not good.

I investigated this and found that my problem wasn't just me. Other trader's had the same exact problem.

Now, my only way to combat this was to "guess" which way the market would go and place a stop/loss point on the other side just in case it went the other way. Then again...that is not trading...that is gambling...

Lesson learned: If you are going to trade the news, be prepared for some major frustration along the way.

Myth #4

You can make a lot of money consistently trading short term time frames (day trading)..

Reality- The key word is consistently. There are two things that are certain with trading forex. One, the market will rise....and two, the market will fall. With short time frames, you are basically guesstimating which way the market will go. And the market moves in these short time frames without much reason. In other words, it is no better than flipping a coin. Technical and chart analysis is absolutely pointless in these short time frames. If you don't believe me, spend a week watching these numbers and do all the chart analysis you want....Without knowing the long term trends, you are no more than a gambler betting red or black.

This said, there is only one PROVEN technical indicator in stock OR forex trading. And that is understanding retracements and how to chart using fibronacci techniques. Basically, it implies that when a market starts a pull back or rally, normally there are some keypoints that it retraces back to. The most important number is 50% (or the 50% retracement rule).

Now, I am not going to say that it is a slam dunk (there is none in trading). However, if you use history as an indicator, then you would see that the 50% retracement rule actually works more often than not.

A Good Financial Advisor

2008-02-25T23:37:00.000-08:00

A lot has been written on this topic over the years. This is probably the most difficult and the most important step in your financial future. The reason that finding a good advisor is so difficult is the corporate world produces very professional looking and talking salespeople.

Most of the Financial Advisors or Brokers/Investments Reps that I know are nothing more than well polished salespeople. Their product is investments. They can make any investment look right for portfolio and give you reason after reason to buy it. They will even print reports and professional looking literature to convince you that these investments are a "good deal" and you shouldn't pass it up.

Some investments are a good deal and could be taken advantage of but only if they truly fit your needs and your families needs. So how do you really choose a good financial advisor and what does he or she look like? What do they do that really makes them better than the rest?

The first thing that they will do is get to know you and your situation before they invest your money. Clients sometimes feel like this is small talk and wants to get the main point quickly. The main point is you! Our part as a Financial Advisor is to get to know you so that we can make the best recommendations possible for your situation. We work together as a team. That way, every investment is made according to your goals and not according to the new "hot" thing.

How do you know that this is what's happening? Your advisor will provide you with a written plan. They will refer to it when talking about new investment opportunities. You should know well beforehand what the next investment should be. Your plan will show you and your advisor.

The next way that you can tell that you have a good advisor is how they get paid. I am a firm believer in a fee-based arrangement. In a commission based arrangement, the broker gets paid up front for picking an investment and selling it to you. Ever feel like your broker is just trying to get paid? The amount that you pay the broker has nothing to do with how good the investment is. There are times as well when the broker gets paid when you sell the investment too. That amount is not based on how well the investment performed. This arrangement usually ends up being more like a salesman-customer relationship.

The better way is to have a fee-based arrangement. You deposit money with an advisor and you are charged an asset fee. These are usually taken out monthly and based on an annual percentage. Then the advisor invests according to your needs and goals. What that means is that if your advisor performs well and chooses good investments for you, they get paid more. If they do poorly then they get paid less. The investments then are chosen based on how well they fit into your plan for investing. Finally, a client doesn't have to worry about the commission problem anymore. This arrangement aligns the client and the advisor on the same team, working together to achieve the clients financial goals.

Communication is the final way that you can tell if your advisor is good. This is especially evident when the market takes a downturn. Are they communicating with you? Are they following the plan set up to whether the downturns? Are they doing anything at all to help you recover your losses?

Finding a good advisor is a difficult thing to do. When searching, ask if the advisor that you are talking with does each of these things. Ask about their plans and how they prepare them. Ask for details on how they get paid. Ask them what they do and what kind of strategies they have in place in case the market does slow or have a downturn in the future. Above all, don't settle. Keep looking until you find exactly what you are looking for.

Stock Market Trading, Dos And Don'ts

2008-02-19T21:41:00.000-08:00

There are 6 mistakes that all traders in the stock market make. These mistakes can cost amateurs and experienced traders alike to lose all of their money. That is why I have put together a list of do's and do not's that can help you to make good decisions with your stock accounts.

What not to do.

1. Do not buy what the news media tells you to. Too many people will buy stocks based on what they heard on CNN last night. This type of investing is risky. You should always decide for yourself with stock is the best pick.

2. Do not buy what a friend tells you is the next "hot pick". This can be even more dangerous than relying on the news to make your investment decisions.

3. Do not overtrade. This is a mistake many professional traders will make. They will have developed a system that turned their $20,000 into $100,000 in 1 year. Then the market changes. They continue to trade their same way and lose it all in the next 2 months. When money isn't easy to make in the markets don't trade because you'll probably lose what you have now.

4. Do not risk too much on one trade. As a rule of thumb you should not risk more than 2-5% of your portfolio in any one trade. Also don't risk any more than 10% of your account in option trades. Risking any more than this can be dangerous to your financial future.

5. Do not bottom fish. This goes for top picking too. I'm sure many bottom fishers lost a lot of money buying Enron stock.

6. Do not stay in a losing trade. This is something I have seen a lot. Someone will buy a stock at $56 and stay with it even as it goes lower. First to $45, then to $35 and then $20. If you are in a stock that goes against you get out.

What to do

1. Do develop your own system. No one cares about your money more than you do. Creating your own trading system is the best way to go about investing your money.

2. Do paper trade before risking any of your own real money. If you can't make money on paper, chances are you won't make money when you put real money in the stock market either. Best to figure it out on paper.

3. Do remember to always use proper risk management. Remember never risk more then 2-5% of your portfolio in any 1 trade. Cutting your loses short is the name of the game.

Best Time To Trade In The 24-Hour Forex Market

2008-02-19T21:37:00.000-08:00

I think most of my readers know by now that the Forex market is a global 24/7 market. All the players can gain into the market very conveniently without having to wait for the markets to open.

At any given time, there is always a major financial center open where banks, dealers, hedge funds, corporations, individual investors and speculators are trading currencies.

Traders can trade during anytime of the day or night, and do not have to wait for any markets to be opened before placing their trades. Unlike other markets such as stock or futures, traders would have to wait till the markets open and trading is usually confine to about less than 7 hours a day. It's truly a global market where everyone could participate in it without having to worry about different time zone.

Being a market that operates 24/7, there must be readers who wonder when will be the best time to trade Forex or is there a better time than others.

This article will not only cover the topic of Forex operating hours, but also reveal the overall trader mindsets towards market hours on the whole.

To understand whether there is a best time to trade the Forex market or not, one's need to understand what is the 'actual' operating hours of the 4 Forex market - Sybney, Tokyo, London & New York.

Below is the hours in GMT when all the markets open and close for operation.

Forex Market GMT

Sydney Open 21:00
Sydney Close 06:00
Tokyo Open 23:00
Tokyo Close 08:00
London Open 07:00
London Close 16:00
New York Open 12:00
New York Close 21:00

From the above graph, you will notice that there are three times when the Forex market overlaps. Meaning 2 markets are traded concurrently.

23:00 - 06:00 GMT - Sydney and Tokyo Overlap.
07:00 - 08:00 GMT - Tokyo and London Overlap.
16:00 - 21:00 GMT - London and New York Overlap.

In Forex Trading, when 2 markets are open concurrently, there are usually more volume and volatility.

Knowing the operating hours is only the beginning of the story. What that is more important is that every Forex trader has to understand his/her own trading style. You must ask yourself this question. Are you a Forex Intraday trader? Are you a Swing trader? Are you a Long term player? If you don't even know what type of trader you are, it will not be easy for you to be successful in this business.

In the Forex market, unlike equity trading, there are very few so-called Long Term investors. Basically, the long term traders don't bother much about market hours, as their open trading orders normally attempt to bypass all the short term volatility of the market.

Swing traders who hold their position for one or more weeks are also not too concerned about market hours. Their main concern will be for entry or existing of trades when more than one market is open to take advantage of more volatility.

Of all the trading style, Intraday traders are the one most concerned about market hours. Based on below-mentioned report, London session provides the most liquidity and volatility. London operating hours also overlaps two other markets, namely the Tokyo market and New York market.

According to a survey complied by Basel-based Bank for International Settlements (BIS), in April 2007, the average market turnover in the global Forex market reached an all-time record high of US$3.2 Trillion. The report mentioned that London had the biggest global share of US$1.3 Trillion in daily turnover, or 34.1%. The New York market came in second with a daily trading volume of US$664 billion, or 16.6% share. The third, fourth and fifth ranking went to Switzerland, Japan and Singapore accordingly. Singapore's Forex market share of 5.8% or US$231 billion was ahead of Hong Kong and Sydney with about 4.4% global share.

For Intraday traders, they will most likely prefer to be around when more than one market is open. But that does not mean that currencies will not move when only one market is open.

It is also important to trade that currency pairs that are related to the particular markets open. For example, when Sydney and Tokyo markets are open, currency pair such as AUDJPY will have increase volatility compared to New York market opens. Likewise, when the London market is open all the currency pairs such as EURGBP and EURCHF will tend to move more than in Sydney session.

However, Forex market being a fully and truly connected global market, when a particular market makes big move, don't even think that other markets will not move. There is a saying that big and successful Forex traders never sleep, as the market is always open for business.

What is a Hedge Fund?

2008-02-14T01:00:00.000-08:00

A Hedge Fund is a private equity fund that provides a hedge against market conditions. It is certainly not easy to manage and run a Hedge Fund. Statistics suggest Hedge funds around the globe manage more than a trillion dollars of private equity. It is invested in commodity, currency indices and stocks and bonds. As opposed to traditional investing a Hedge Fund may go long or short the market. Since it is a private equity, taxation rules are likely to be different than normal capital gains taxes.

Basically a Hedge Fund is formed by individual investors who have a stake in the fund. Normally buy-ins are always in the millions. George Soros and the Blackstone Group founded by Peter G. Peterson and Stephen A. Schwarzman are two of the noted Hedge Funds.

The Blackstone Group is a fairy tale. The Blackstone Group was founded by Peter G. Peterson and Stephen A. Schwarsman. According to the Blackstone Group corporate biography the initial private funds in 1985 were $400,000. By forging alliances and partnerships with some of the most well-heeled on Wall Street their assets under management are over 88.5 billion dollars.

The Blackstone Group is a considered a world leader in alternative investment strategies and investment counseling. It could manage to raise fresh inflows of about 22 billion dollars in a recent IPO.

Hedge Funds are only a segment of the Blackstone Group Investments. The Blackstone Group has a stellar Hedge Fund management in the world market. Its group of Hedge Funds are uniquely tailored for a variety of investment strategies and goals. In fact the Blackstone Group can provide individualized tailoring of a Hedge Fund to fit the needs of large investment endowments and retirement funds. Anyone can purchase a unit of stock in the Blackstone Group through a licensed stock broker. It trades on the New York Stock Exchange under the stock ticker BX.

Another financial wizard George Soros is worth mentioning. His ability to sense movements in the market place is known throughout the financial world. His Hedge Fund and investment company is Quantum Fund. He senses weaknesses and strengths as only a master financial investor/trader can. In 1992 his legendary move to short the British pound nearly broke the Bank of London is part of the lore of George Soros. He can play the upside or the downside of any market. Some may call it a sixth sense, but it is an all encompassing ability to assess with precision the reality of the market and strengths of the underlying values with the reactions of the wild and crazy speculator will do. It is this investor savvy that has placed him in the Forbes wealthiest category.

You will find there are thousands of Hedge Funds present in markets across the world. Lately some have not done as well due to the roller coaster ride that has taken place. This is the time when the true test of a Hedge Fund manager is put to the test. The average mutual fund holder or retirement beneficiary may be surprised to learn that their funds are in part invested in low risk Hedge Funds. Historical records show that some of the most successful endowment funds have utilized the Hedge Fund investment to capitalize on market movement and volatility.

Hedge Funds are managed by highly qualified finance professionals who are supposed to be very sharp and quick in taking decisions.Those who can't, will nor survive in this lucrative yet risky field of Hedge Funds.

What is Leverage in Forex?

2008-02-14T00:58:00.000-08:00

The forex deals are accomplished in lots and each lot consists of 100,000 units of any particular foreign currency, to purchase one single lot of foreign exchange a lot of investment is required and that may run into hundreds of thousands of dollars which means the small investors are left out of the fray. For this very purpose the concept of leverage was introduced in the forex trade. Leverage backed with credit, such as a margin account is very common in Forex trade. The leverage account in which Forex can be purchased for a combination of cash or collateral, what the broker accepts is quite popular with the forex traders. Usually the leverage in the margined account is collateralized by the initial deposit made by you in that account, if the value of the trade goes down significantly then the broker may ask you to either deposit more cash, or sell a portion of your holding.

Margin requirements and interest vary among broker/dealers. The amount of leverage you use will depend on your broker and what you feel comfortable with. You can get leverage from a high as 1% with some brokers. This means you can control $100,000 with the investment of only $1,000. The broker sets a minimum account size also known as account margin or initial investment. Once you have deposited the required sum you will be able to trade in the forex market. The minimum security for each lot usually varies from broker to broker. While with the brokers you should be well aware of the Margin call. Suppose for any reason, if the broker thinks that your holdings are in danger and your losses are approaching your margin quite fast. He may ask you to deposit more money, or dispose your holding of the forex lots to limit your risk and his risk.

Another term is quite relevant in this connection and that is variation margin. Variation Margin is also very important and it is the amount of profit or loss your account is showing on the holdings of the forex lots. There is one more point to keep in the mind is that some brokers require a higher margin during the weekends. It all depends on your broker. The leverage accounts in the forex market have actually made the life easy for the small investors. These leverage accounts helps the small investors to buy the big lots of the foreign currencies and in turn allow them to earn handsome profits. They also act as the alarm bell for the unaware investor while making any loosing proposition and in case of the loss it restricts the amount of the loss of the investor to a bearable limit of the initial investment.

The online forex market has further reduced the requirement of the margin amount to a great extent and it is now reduced to couple of hundred dollars from the initial hundreds of thousands dollars. The small investor in a forex market can earn handsomely due to the presence of the leverage accounts in the online forex market. The effect of the leverage accounts actually enables the small investor to earn huge returns like if he invests $300 on 1% leverage he gets to operate the forex of $30,000. The forex moves from 0.5 to 1.5% at the maximum on daily basis and the earnings if taken on your own investment of $300 make it quite a negligible sum but the leverage provides the magical touch to it and it becomes 100 times and now the amount interests you and attracts you. The leverage is the key to make this forex trade lucrative for the investors in true sense and till it is there it will continue to attract thousands and thousands of people towards the forex trade.

Rare Coins For The Collector and Investor - To Slab Or Not To Slab

2008-02-14T00:57:00.000-08:00

The older coin collector-investor can remember the days before slabbed coins.
A slab is a coin that has been graded and certified by an expert? Rare coin grader.
Usually rare coin grades are subjective to the buyers eyes.

With a lot of time and thousands of rare coins one can become a rare coin grader.
Some grade with the naked eye, others with a microscope. How much detail do you really need to have a fair grade on your coin.

PCGS and NGC are two of the biggest grading services.
You send in your rare coin and they have an expert grade it for a fee. Then they send it back in a slab and record the info in a database that is public record.

As you can clearly see, if a coin is in a lower grade, ie: good to extra fine it is usually not worth the cost and time to get it graded. However if it is a rare coin with few known examples then it may be worth the cost.

The grading system used for rare coins is a scale of numbers...0-70 with 70 being the most perfect coin. Collectors had to learn the grades themselves in the past. Today, investors and new collectors rely on the grading service or slabbed coins. Myself as a collector and rare coin dealer have come to rely on my learned skill in the real world. You will be best served by learning the grades yourself too.

In the 1980's and 90's investors jumped into the rare coin market and didn't know how to grade or care to learn. Buying anything that was sold to them. When the boom was over and they tried to sell the coins many found they had lost great deals of money. This is part of the reason we have slabbed coins today.

A big uproar ensued and the US Govt. was ready to set some rules down, unless the coin industry did something to correct this grading problem. They did... Coin grading and slabbing was born.

Now remember, just because a coin is graded does not mean it is really that grade evel. Many very smart collectors and dealers saw coins they felt would grade higher than the grade it was at. Ripping the coin out of the holder and sending it to a different service might and in some cases did result in a higher grade coin...This means 100's of dollars difference in price.

The majority of graded coins are in the uncirculated range of rare coins, for example, mint state (MS) 60 thru MS 69... In my view any coin graded a MS70 is a Proof Coin. As we all know the mint makes coins on machines and then they roll along a conveyor and drop into a bin. This causes what we collectors call dings. This is an imperfect coin. Now a Proof coin is different.

Proof coins are usually minted in lesser quantities and are handled carefully. The proof coin is struck twice with the press using special dies. It causes a highly polished shine to the coin. Proof coins are then handled by hand and placed in special containers and display boxes, thus commanding a higher price.

As a collector and not an investor, what are we to do? Well we can buy a few lower graded MS60-Ms62/3 rare coins in our price range and add the raw or unslabbed coins along with these to form a nice collection. Raw coins from dealers and flea markets can and do yield some great finds. You can look thru junk boxes and lots of raw coins and find a few good deals. This takes knowledge and that is why I am writing you. I want you to know all you can before you buy the coin.

With all the books and other learning from coin mags and the internet, there is no reason for you to make bad buys on the coins you want.

Yes silver, gold and platinum are at higher levels but I believe these markets are just now starting to move. With the US economy kinda unstable and the housing slump I see rare coins of gold and silver as a great hedge against this uncertainty.

You must remember from the start of time gold and silver were and are desired as precious and valuable. They also preserve your wealth and buying power over time.

Slabbed coins are here to stay and have a place in our coin hobby, so don't over look them but also be on the lookout for the great bargins in raw coins. To lab or not to slab...that is the question.

Is The Fundamental Or The Technical Method Better For Forex Trading?

2008-02-14T00:52:00.000-08:00

Getting started with Forex trading means that you will have to choose either the fundamental method of the technical method. Many people use one method or the other and are able to get the profit they want for either system. This means both methods will work, it may just depend on what kind of person you are or what you prefer. Here are some things about the fundamental and the technical methods that will help you decide which one is better for your Forex trading.

Fundamental Method Requires Greater Amount Of Research

The fundamental method is the older of the two and has been relied on by many through the years. It will also mean that you will need to do more research.

Your research will provide you with a lot of general information about the news and other worldwide events that may affect world economies. You will also need to keep an eye on political events that may shake up economies, and actions of large corporations and central banks. Economic trends, such as are shaking up national currencies now, also definitely play a factor in Forex predictions.

Technical Method Relies On Charts

The technical method, on the other hand, uses charts. These charts are indicators of various factors that play a part in understanding what may be happening to national currencies in the past hours, days, weeks, etc., so that trends are revealed. By looking at what has been happening to a currency, you can often tell when something may occur that will indicate the desired market fluctuation that will result in profit for you.

The idea behind the technical approach is that everything you need is right there in front of you. By studying charts of the past, and looking to see when desirable fluctuations occurred, you should be able to see when it will happen again.

One reason that more people may rely on the technical approach is because it takes less effort to see what they want to know. It is all right there on the charts. This certainly keeps it simple. They only have to go one place.

The Algo Method May Even Be Better

A rather new method, called the algo (short for algorithmic) or black box method, uses computer generated methods to determine when market fluctuations are about to occur. More and more people are switching to this method and it seems to be working for them.

Basically, you learn to rely on the black box rather than having to learn or know about events or situations leading up to possible profit. It seems like it does all the work for you. This could be good, but changing the method and factors you use may be out.

Some Traders Use Some of Both

A number of Forex traders actually rely on both methods, with a possibility of leaning more toward one than the other. Their thinking is that the fundamental approach will reveal places to look, and then the technical approach will indicate the time - quite possible. You will need to learn the ins and outs of both before you decide which approach you want.

You may also want to keep in mind that the software at different Forex trading Web sites is different. This means that as you learn which method is better for you that you will want to try out the software at different Forex Dealers Web sites because it may offer more calculations put into their charts, or other data that may be useful to you.

Is the U.S. Dollar On a Collision Course?

2008-01-22T23:49:00.000-08:00

The comments from Washington suggest that the US economy might slip into a recession. The testimony by the Federal Reserve Chairman Ben Bernanke before the house budget committee on Thursday backed President Bush's idea of a fiscal stimulus plan that should be carried soon to put the economy back on track.

Bernanke hinted that since late summer, the financial markets in the United States and in a number of other industrialised countries have been under considerable strain. Heightened investor concerns about the credit quality of mortgages, especially sub-prime mortgages with adjustable interest rates, triggered the financial turmoil.

Yet since Bush's November 2004 re-election, and the related action in the foreign exchange market, make it clear that "go for growth" will continue to be the preferred Bush strategy.

This is an administration driven by ideological supply-siders, not fiscal conservatives. Sure, this suggests a still wider current-account deficit. And America's current account deficit, already accounts for about 77% of the world's total current account deficits. But this is a game of chicken which Asia will be expected to continue financing.

In the meantime, the Bush emphasis on growth at all costs means a continuing benign acceptance of a weaker dollar so long as that trend is not precipitous. Dollar weakening is clearly underway again and this is renewing focus on Asia's failure so far to let its own currencies appreciate. The pain of this adjustment is again becoming apparent in Europe, while the Japanese are threatening intervention again.

All this means renewed attention on the renminbi's perceived extreme undervaluation. This is best reflected in China's growing share of world exports. China's share of world exports has risen from 1.8% in 1990 to 6% in the first five months of 2004 and continues to rise through 2007.

The result of the above is renewed focus among the world's community of speculators on the renminbi revaluation". Courtesy of America's "go for growth" strategy, the Asian-reflation story is also back in full swing since if Asian currencies are being artificially held down by central bank intervention, as has been the case, then the only way natural appreciation pressures can be expressed is via higher asset prices. It is, as a result, like early 2003 all over again, with the dollar declining and the Asian asset-reflation stock rising. The main difference is that, this time, there is much more focus on the inevitable need for Asian currencies to start rising. This growing speculative pressure is clear from the renminbi forward market as well as the strength of other Asian currencies. In financial markets, it is usually better to travel than to arrive. In part, this also applies to the asset-reflation theme in Asia. For the story is largely driven by the seeming inevitability of Asian currency appreciation, which, is, in turn, seen to be triggered by the presumed inevitability of a renminbi revaluation.

Thus, so long as the Chinese do not move, the story can continue to run. Traditionally, with the notable exception of SARS, the PRC (People's Republic of China) leadership prefers to do nothing when there is external pressure on it to do something. On this point, the market's renewed focus on the renminbi, as reflected in the rising premium on the spot market, would suggest nothing will happen on the revaluation front.

China is now at the centre, not the periphery, of discussions about the developments in the world economy. This massively higher profile on the global stage makes it much harder for the Chinese to ignore external pressures. Their problem is that, if they only revalue by a marginal amount, by which I mean say 10% or less, is only likely to fuel speculative pressures as the animal spirits move in for the kill. All this raises another question: Is it really in America's interests to pressure China for a renminbi revaluation?

The US increasing trade deficit is clearly one motivating factor, with China accounting for about 24 percent. But the US pressure also seems to be driven by other considerations, notably the ideological view that floating currencies are a good thing and that mercantilism is fundamentally unfair as well as misconceived in that it suppresses the purchasing power of Asian consumers.

If this is all true, it also ignores the point that America needs to be careful what it wishes for. The Bush administration can only "go for growth" on the assumption that Asia will keep financing its current-account deficit because it has no choice, if the region's exporters want to maintain access to America's domestic markets.

But America can only run such a strategy because the dollar holds the privileged position of being the world's reserve currency. The dollar paper standard, which has been in place since President Richard Nixon broke the last link with gold in 1971, has meant that America has the luxury of running its own independent monetary policy. That happy situation on US macro-economy can continue only for so long as the dollar decline remains gradual and does not turn into a rout.

Another consequence of the Asian currency revaluation is that it would increase the inflationary pressure in America, or at least reduce the deflationary bias stemming from the boom in importing cheap Asian goods. This would raise the risk of inflation scare.

Ironically, this would be ultimately bullish for the government bonds inside the US since any inflation scare in the United States means significantly higher interest rates, which would likely precipitate a deflationary deleveraging cycle among America's highly indebted consumers-for the consumer finance driven American economy would prove highly sensitive to higher short term interest rates.

There are, then, risks from the narrow US perspective of pushing China and other Asian governments to revalue since the present "game of chicken" suits the US even if this means increasingly scary macro imbalances which, if they are allowed to continue to grow, will ultimately trigger the demise of the dollar paper stance to the benefit of owners of gold bullion.

The writer is a Ph D Candidate with special emphasis on Macroeconomic Modelling, Development Economics and Time Series Econometrics in the USA

Southeast Asia may face biggest impact from US slowdown

2008-01-22T23:44:00.000-08:00

Southeast Asia will face stiffer export competition from China and likely bear the brunt of any impact in Asia from a major economic slowdown in the United States, an IMF official said Tuesday.

A recession in the United States, anticipated by some economists as a result of a current housing slump and related credit crunch, will obviously lead to a cutback in exports by Asia's rapidly-growing economies, led by China.

Based on a "rough rule of thumb," for about a one percentage point decline in US economic growth, there could be a "half to a full percent decline in Asian growth, depending upon what the effects are beyond the United States," said Steven Dunaway, deputy director of the International Monetary Fund's Asia and Pacific department.

"There will be much more of an impact in Southeast Asia," which faces direct competition from China in terms of a number of export products, he said.

"Those (Southeast Asian) countries will all face a much tougher time with the slowdown in the United States and probably some extra competition from China," he said at a forum on the Chinese economy at the Woodrow Wilson International Center for Scholars in Washington.

Dunaway said Asia's exporting nations were "going to be competing for a piece of a smaller pie" if US imports shrunk. He raised the possibility of China slashing prices to remain competitive.

"If the Chinese themselves face a more difficult environment, there will be some tendency probably at least to hold prices if not cut prices," he said.

This would "affect profit margins and put some additional competitive pressure on Southeast Asian firms as well as firms in other countries competing with Chinese companies," he said.

Labor-intensive manufacturing already appears to have given a competitive edge to China in trade and investments at the expense of export-driven Southeast Asian countries such as Thailand, Indonesia, Vietnam, and the Philippines, economists say.

But rapid Chinese economic growth in recent years has also resulted in increased imports of raw materials and intermediate inputs from Southeast Asia, helping propel growth in the region, they say.

Amid the competition for exports to the United States, China and Southeast Asia are also opening up their economies to each other through a free trade agreement covering a total of nearly two billion people.

IMF head Dominique Strauss-Kahn warned in Paris Monday that the global economic situation in the wake of a US slowdown was "serious" and could impact the world's emerging economies.

"Fortunately emerging nations continue to have fairly strong growth and to drive growth worldwide. But it is not impossible that even in emerging nations it could have a certain effect, that growth could be weaker than expected."

Dunaway said any decline in growth in Asian economies as a result of a US slowdown would depend on policy responses.

"Most of the countries are in positions where they can ease monetary policy, they can ease fiscal policy, so they can offset some of the decline coming out of the US," he said.

There is one school of thought that a US slowdown would provide a much needed breather for China, which was stepping up efforts to cool inflation to prevent the world's fastest growing major economy from overheating.

"There may also be some impact with respect to FDI (foreign direct investment) that might slow (in China)," Dunaway said.

But Beijing would probably raise government spending, particularly on infrastructure investment, to keep the economy chugging along at a growth rate of nine to 10 percent, he said.

Advantages of Investing in India

2008-01-21T21:42:00.000-08:00

India has a 20 million-strong scientific and technical manpower, more than the population of Taiwan. The number of literates in India is more than the combined population of France and Japan. India has a vast domestic market - a 300 million-strong middle class population with substantial purchasing power and another 700 million-strong population whose capacity to purchase is gradually increasing. Being a vibrant democracy with a large democratic set-up supplemented by a broad-based legal framework including arbitration and an independent judicial system, it boasts of a vast network of bank branches, financial institutions and well-organized capital and money markets. These attributes make India a favorable destination for NRI investments.

India also has a huge network of technical and management institutions of the highest international standard for development of excellent human resources. India has an enviable record of honouring its international financial obligations and has never defaulted. The country has a strong English language base for business purposes. The strong and vibrant small-scale sector is good enough for establishing strategic alliances with its foreign counterparts. The strategic location of the country in the context of the third world markets particularly the rapidly growing South and South-East Asian markets together with a supportive infrastructure base help in promoting a healthy environment for NRI inflows into the country.

India has more billionaires than China. This year there are 15 billionaires in China but last year in India, there were 20 billionaires, according to the Forbes magazine. India has emerged as the world's fastest growing wealth creator, thanks to a buoyant stock market and higher earnings. A number of Indian companies surpassed last year's net profit in just six months of the current fiscal, reflecting accelerating corporate earnings. 44% percent of the top 100 of the Fortune 500 companies are present in India. With its manufacturing and service sector on a searing growth path, India's economy may soon touch the coveted 10 percent figure.

The Indian diaspora's business has turned hot of late. Government has always wooed non-resident Indians assiduously to attract more inflows. Apart from the money transfer business, which compared to money invested in India is smaller; the Centre is trying its best to persuade NRIs to pump money into the country like never before. And, it has seen superlative success in re-cent years. The Prime Minister of India has announced dual citizenship for people of Indian origin. It has given a big boost to the NRI community across the world. With recruitment levels for overseas jobs skyrocketing, there is scope for more money coming into India. According to a recent Business Standard report, in the last three years, 850,000 people went to West Asia alone. And even as the official figure for Indians living in the US is put at 2 million, unofficial estimates put it at 3.5 million. And emigration to Canada and Australia continues to grow.

The ministries concerned have made sure that rules and regulations are simplified to make inflows easier. Where does the government see money being invested? Investment in bank deposits and company deposits may be made by NRIs. They are subject to different rules; investments with and without repatriation facilities are permitted under the schemes. As of now, NRIs are permitted to make direct investment in partnership and proprietorship firms in the country. This, the NRIs can do by way of subscription for shares or debentures of Indian companies. Further, they can also now place funds in company deposits. NRIs who undertake not to seek at any time repatriation of the capital invested in India and the income earned thereon are permitted to invest on non-repatriation basis. NRIs also have the option of investing in mutual funds floated by domestic public sector and private sector mutual funds on non-repatriation basis.

All they have to do is to make their applications to the Reserve Bank. They can also now invest in money market mutual funds (MMMFs) floated by commercial banks and financial institutions with authorization from the apex bank or the Securities and Exchange Board of India (Sebi), the market regulator. Yet another option is to invest in the securities of the Central or State governments and the National Plan/Savings Certificates by making remittances from abroad or out of funds held in their NRE/FCNR accounts. In effect, with regulations tapering off, compared with the scene some 7-8 years ago, non-resident Indians today have more choices to invest their hard-earned money in India. And, to make things easier and hassle-free, the government is doing all it can to persuade Indians who make big money away from home to park their funds here. Commendable though is the fact that the Indian diaspora has also begun to believe that it is better to channel their money home, thereby contributing to the development process of the nation they actually belong to.

How To Protect Yourself In A Declining Stock Market

2008-01-21T21:41:00.001-08:00

Stock prices have cascaded downward persistently since the nominal high in the Dow Jones Industrial Average (and in other Indexes) in October 2007. Many of the major Indexes have fallen below their spike lows of last August 16, which we consider significant; and this week, the Dow Industrials and the S&P 500 fell below their August 16 lows as well, and have continued to drop. Today has started with a corrective bounce, which was expected, because the markets are severely oversold.

What is a stock market Investor to do when the market turns against him? The better question is "What should he have done BEFORE the market turned against him?" "Timing is everything."

Most Investors have a fixed belief that the only way to make a profit in the stock market is to be invested during a time of price increases. That is false. There are great vehicles available not only to protect invested capital when markets turn down (such vehicles being in the nature of "insurance"), but also to make a profit when they do so. A great many people do not know that such vehicles even exist.

There are countless mutual funds on the market which are geared to making money when the markets rise. Investors should be aware that there are also mutual funds which are geared to making money when the markets decline. Since they work in opposite fashion to, for example, the Vanguard 500 Fund, they are called "inverse" funds. The first and largest inverse Index fund is operated by the Rydex Companies of Rockville, MD. (The writer has no connection of any kind with Rydex). Rydex's inverse S&P 500 fund is geared to INCREASE in value by a dollar when the S&P 500 DECREASES in value by a dollar. (The reverse is also true). Rydex offers an entire family of mutual funds, many of which are inverse funds which have other Indexes as their basis - the NASDAQ 100, for example. Other well-regarded companies offer inverse funds, as well.

Taking the Rydex inverse S&P 500 fund as an example, it is an excellent vehicle to use as "insurance" against a market downturn, for investors who are already "long" in the market. The amount of "insurance" is the investor's decision. It's even possible to calculate the amount of inverse fund "insurance" which would be needed to almost exactly, or approximately, offset the investor's exposure in the market, so that every dollar of decline in the value of the investor's stocks would be nearly offset by an increase in the value of the inverse fund.

Apart from the "insurance" aspect, an inverse fund can also be used for the deliberate purpose of making a profit from a downturn in the stock market, just as one might "go short" in the market itself. One advantage to using an inverse mutual fund is that the investor can never be subject to a margin call.

There are other devices, too, for protecting an existing stock investment from a downturn, such as going short on an exchange-traded fund which is geared to the Nasdaq 100, or purchasing shares outright in an inverse exchange-traded fund similarly geared, or purchasing Put options on the NASDAQ 100.

But for the investor who has an existing portfolio of stocks, and who doesn't have the luxury of watching the progress of the stock market all day every day, an inverse mutual fund is an excellent device to consider, in order to help protect his investment while at the same time offering the opportunity to make a profit if the market declines. Intelligent timing is essential. Recognizing that profit can be made regardless of the direction of the market, it helps to have the benefit of knowledgeable analysis - a compass, a GPS if you will, not merely guesswork such as a wet finger held up to the wind, to gauge the probable next major direction of the market.

Interested in Commodities Investing? Try These Tips

2008-01-21T21:41:00.000-08:00

Perhaps you have heard of commodities trading. Commodities are products of commerce traded in commodity markets. These types of materials include foreign currencies, financial investments, agricultural products, petroleum and metals. When they began, commodity markets were used to trade in agricultural products in local markets. Today, however, commodity markets expand globally, because country barriers have been broken down through technological advancement. In addition, goods have been industrialized, and globalization has meant that the world itself has become a trading center.

There are certain rules that one has to follow when you are trading in commodities. First, the trading is to be done only for standard products. Second, commodities transactions take place through the use of "futures contracts." This is where commodities are actually bought or sold on the future date. Even though the transaction technically takes place at a later date, the commodities selling price is the price that is agreed upon when the contract is made.

"Futures contracts" are not the only type of commodities contracts. Spot contracts are put in place so that commodities get transferred when a contract is made instead of at a later date. You use a spot contract to exercise future contract after a period of time has gone by. Some types of commodities investing include commodity food market, commodity fund investing, and commodity petroleum.

At its start, investing in commodities was received only by a few sectors and were received to the trade of commodities meant for regular and everyday use. However today anyone interested in trading in commodities can do so.

There are numerous benefits in investing in commodities like its reduced risks. With these reduced risks, the gains you gain in commodity investing helps in counterbalancing other losses you may have in financial instruments of your portfolio. The reason commodities offer reduced risks is that it's investing deals with diverse items. In addition to this, contracts entered for future dates ensure that you exercise care to ensure that risk chances are reduced or nullified.

It is easy to monitor the performance of commodities on the commodity market. This is because the commodity market usually performs well when other stocks and shares don't perform well; and vice versa. With this rule, it is easy to predict the prices of commodities and thus consider the ups and downs of the market. However always remember to never correlate the commodity market with the stock and bond market.

To help you in investing in commodities, you can always seek the guidance of commodity trading advisors. They are usually firms or individuals that guide you on whether to establish a long or short position in the commodity market and when it is advised to liquidate that position. They also help you in matching your special goals with their own trading philosophies and strategies.

For the best commodity-trading advisor, first figure out what your own goals and objectives are. Then, choose an advisor that matches what you want as closely as possible. Communications these days are easy, and you can keep in touch with your advisor by fax, pager, phone, or e-mail. In addition, if you don't want to trade in commodities yourself, you can still invest in commodities trading by utilizing a variety of investment funds that do just this with their portfolios.

Types of Brokerage Accounts

2008-01-21T21:35:00.000-08:00

When you decide to start investing in the stock market, you have to somehow actually pay for the stocks you buy. Most brokerage firms offer investors several different types of accounts, each serving a different purpose.

Three of the most common types in the following sections.

The basic difference boils down to how particular brokers view your "creditworthiness" when it comes to buying and selling securities. If your credit isn't great, your only choice is a cash account. If your credit is good, you can open either a cash account or a margin account. Once you qualify for a margin account, you can (with additional approval) upgrade it to do options trades. To open an account, you have to fill out an application and submit a check or money order for at least the minimum amount required to establish an account.

Cash accounts

A cash account means just what you think it means. You must deposit a sum of money along with the new account application to begin trading. The amount of your initial deposit varies from broker to broker. Some brokers have a minimum of $10,000, while others let you open an account for as little as $500. Once in a while you may see a broker offering cash accounts with no minimum deposit, usually as part of a promotion. Qualifying for a cash account is usually easy as long as you have cash and a pulse.

With a cash account, your money has to be deposited in the account before the closing (or settlement) date for any trade you make. The closing occurs three business days after the date you make the trade (the date of execution). You may be required to have the money in the account even before the date of execution. In other words, if you call your broker on Monday, October 10, and order 50 shares of CashLess Corp. at $20 per share, then on Thursday, October 13, you better have $1,000 in cash sitting in your account (plus commission).Otherwise, the purchase doesn't go through.

If you have cash in a brokerage account, see whether the broker will pay you interest on the uninvested cash in it. Some offer a service in which uninvested money earns money market rates and you can even make a choice about whether the venue is a regular money market account or a tax-free municipal money market account.

Margin accounts

A margin account gives you the ability to borrow money against the securities in the account to buy more stock. Because you have the ability to borrow in a margin account, you have to be qualified and approved by the broker. After you're approved, this newfound credit gives you more leverage so that you can buy more stock or do short selling.

For stock trading, the margin limit is 50 percent. For example, if you plan to buy $10,000 worth of stock on margin, you need at least $5,000 in cash (or securities owned) sitting in your account. The interest rate that you pay varies depending on the broker, but most brokers generally charge a rate that's several points higher than their own borrowing rate.

Why use margin? Margin is to stocks what mortgage is to buying real estate. You can buy real estate with all cash, but many times, using borrowed funds makes sense since you may not have enough money to make a 100% cash purchase or you prefer not to pay all cash. With margin, you could, for example, be able to buy $10,000 worth of stock with as little as $5,000. The balance of the stock purchase is acquired using a loan (margin) from the brokerage firm.

Option accounts

An option account gives you all the capabilities of a margin account (which in turn also gives you the capabilities of a cash account) plus the ability to trade options on stocks and stock indexes. To upgrade your margin account to an options account, the broker usually asks you to sign a statement that you're knowledgeable about options and familiar with the risks associated with them.

The Fundamentals of Listed Options

2008-01-17T23:30:00.000-08:00

What are options?

An option is a contractual agreement that gives the holder the right to buy (call option) or sell (put option) a fixed quantity of a security or commodity (for example, a commodity or commodity futures contract), at a fixed price, within a specified period of time. May either be standardized, exchange-traded, and government regulated, or over-the-counter customized and non-regulated.

An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties.

The Chicago Board Options Exchange (CBOE), located in Chicago, is one of the world's largest options exchanges with an annual trade of over 450 million options contracts. It was established in 1973 when it created and listed the first exchange-listed standardized stock options.

Once the CBOE was instituted, the listed option industry began, and investors had a world of endless investment choices previously unavailable. Prior to the creation of the CBOE, investors had limited choices of where to invest their money. They could either be long or short individual stocks, or they could purchase treasury securities or other bonds.

Call Options and Put Options

Options take many forms. If you own a house or have automobile insurance, you have already dealt with the basic forms of options in your everyday life. However, in the listed options world there are only two kinds of options, Call and Put.

A call option is a financial contract between two parties, the buyer and the seller. The buyer of the option has the right, but not the obligation to buy an agreed quantity of a particular commodity (called the underlier) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or "writer") is obligated to sell the underlier should the buyer so decide to make the purchase. The buyer pays a fee (called a premium) for this right.

The buyer of a call option wants the price of the underlier to rise in the future; the seller either expects that it will not, or is willing to give up some of the upside (profit) from a price rise in return for the premium (paid immediately) and retaining the opportunity to make a gain up to the strike price (see below for examples).

Call options are most profitable for the buyer when the underlier is moving up, making it's price closer to the strike price. When the price of the underlier surpasses the strike price, the option is said to be "in the money".

The initial transaction in this context (buying/selling a call option) is not the supplying of a physical or financial asset (the underlier). Rather it is the granting of the right to buy the underlying asset, in exchange for a fee - the option price or premium.

A put option is a financial contract between two parties, the buyer and the writer (seller). The put allows the buyer the right but not the obligation to sell a commodity or financial instrument (underlier) to the writer (seller) of the option at a certain time for a certain price (the strike price). The writer (seller) has the obligation to purchase the underlying asset at that strike price, if the buyer exercises the option.

Note that the writer of the option is agreeing to buy the underlying asset if the buyer exercises the option. In exchange for having this option, the buyer pays the writer (seller) a fee (the premium). (Note: Although option writers are frequently referred to as sellers, because they initially sell the option that they create, thus taking a long position in the option, they are not the only sellers. An option holder can also sell his short position in the option. However, the difference between the two sellers is that the option writer takes on the legal obligation to buy the underlying asset at the strike price, whereas the option holder is merely selling his short position, and is not contractually obligated by the sold option.)

The put buyer either believes it's likely the price of the underlier will fall by the exercise date, or hopes to protect a long position in the asset. The advantage of buying a put over shorting the asset is that the risk is limited to the premium. The put writer does not believe the price of the underlier is likely to fall. The writer sells the put to collect the premium.

LEAPS

Given the plethora of opportunities that options allow, it is also important to know that there are options available which can be used to implement longer-term strategies.

These are called LEAPS (Long Term Equity Anticipation Securities) and are yet another alternative that options offer to investors.

LEAPS are publicly traded options contracts with expiration dates that are longer than one year. Structurally, LEAPS are no different than short-term options, but the later expiration dates offer the opportunity for long-term investors to gain exposure to prolonged price changes without needing to use a combination of shorter-term option contracts. The premiums for LEAPs are higher than for standard options in the same stock because the increased expiration date gives the underlying asset more time to make a substantial move and for the investor to make a healthy profit.

LEAPS are an excellent way for a longer-term trader to gain exposure to a prolonged trend in a given security without having to roll several short-term contracts together. The ability to buy a call/put option that expires one or two years in the future is very alluring because it gives the holder exposure to the long-term price movement without the need to invest the larger amount of capital that would be required to own the underlying asset outright. These long-term options can be purchased not only for individual stocks, but also for equity indexes.

How Many Days Is The Stock Market Open Per Year?

2008-01-17T23:27:00.000-08:00

Some people wonder how many days the stock market is open in the United States. This is a very useful number because many of the online day traders want to calculate how much money they need to make per day, to replace their current salary. The numbers below represent standard stock market hours which usually span from 9:30 to 16:00 Eastern Standard Time.

Some futures markets will trade up to 16:15 Eastern Standard time.

The markets are usually open for the normal trading session Monday Through Friday.

I have not included after hours trading, pre market trading, currency (FOREX) markets, international markets or GLOBEX.

So lets take a look at the number of trading days in 2008 by month:

January: 21 days

February: 19 Days

March: 19 Days

April: 23 Days

May: 21 Days

June: 20 Days

July: 22.5 Days (The 0.5 is because July 3rd ,2008 is a half day for the market)

August: 21 Days

September: 21 Days

October: 23 Days

November: 18.5 Days (The 0.5 is because Nov. 28,2008 is a half day for the market)

December: 21 Days (I counted the .5 day on Dec. 24, 2008 and the .5 day on Dec. 26, 2008 as 1 day)

This brings the total number of trading days in 2008 to: 250 trading days in 2008.

So if you wanted to replace a salary of $100,000 per year before taxes, we could need to do the following math:

$100,000 divided by 250 trading days equals $400 dollars per day.

The trader would then need to have an average net profit of $400 dollars per day in 2008 (after commissions, software, data services, taxes and other overhead is factored into the picture.)

Many traders do not trade every single day for a wide variety of reasons, but at least you know the maximum numbers of days you could possible trade in 2008.

Why Women Invest More Carefully Than Men

2008-01-17T23:26:00.000-08:00

We all know the saying that men are from mars, and women are from Venus. This is an old saying that tells us that we have a different way of approaching life. We have a different opinion on most things in our daily life. Especially when we invest our money we use a different style and risk strategy.

Basically men are found to tend to focus on a single task while women have the tendency and ability of multitasking. The same attitude is adopted by men and women when investing. It is the large and bold investments that have more of a risk that men like investing in. On the contrary, women like to diversify their holdings so that they tend to assume lower risk in their investments.

It is this difference in thoughts of investing money that gives men and women different criteria when investing money. It is difficult to proclaim which method of investing is better or worse as the investment style of women is just as successful as a man's investment style. The only difference is that women are generally more creative than men in their investments.

Men like to do the investing themselves without any help from the outside. They rarely talk about their investment approach with outsiders. If they decide to ask for advice most of the time they will turn to a broker or investment advisor. But women like to join investment clubs for advice and strategy discussion as women are more social in nature. The less experienced women tend to do this more often ten the experienced female investors.

On joining this club, they can seek guidance from the seniors and more knowledgeable women who have been investing in stocks and shares for quite some time. When joining investment clubs, women should join clubs where there are women you trust and know. If these women are unknown, there is a chance that they may end up giving wrong financial tips with the intention of duping the woman.

The safest thing that any beginning investor should do is talk to a financial advisor or let an investment fund handle their money as they are more experienced and the change of losing your money is much smaller. These advisors can also assist women on the tax regulations involved.

In addition to all this, women tend to be more commercially savvy than men. They tend to focus on day to day expenses related to the finances of running a home while men concentrate on big-ticket items like the latest sports car. Women realize that if the cost of gasoline is rising, with some research, they invest in oil stocks that are due to rise after some time. The toys their kids invest in also give them ideas for investing. They find out about the new brand of toys kids like and find out more about the company so that they can consider investing in the toy company.

Most women are also in the habit of setting up a separate savings account where they will put some money in each time a paycheck arrives. Over a period of time these small amounts will end up to be be a big amount which can be used for investing purposes. It can be said that women tend to be far more creative then men when it comes to investing with less risk involved.

How to Become a Successful Investor

2008-01-17T23:23:00.000-08:00

Investing in the stock market is one of the most profitable and the riskiest kind of investments. Nowadays, in most cases, investment allocation is a result of flowing cash to the assets where the current return and risk are satisfied a certain investor expectation. There are some differences between such participants on the stock market as investors and traders. However, a classical investor and trader are both aim at gaining money. History evidences the different cases, when an investor started with a small amount of money and eventually became very rich, or on the contrary, when a millionaire lost all investments on the stock market and became poor. What is the most important quality that separates the winners from the losers on the stock market? The answer is simple - it is knowledge in investing, either that is based on collected wisdom by other investors or gained through making own mistakes. Anyway, the following basic principles could be useful to remember:

Never invest all your money in the stock market, especially, if you are a beginner. Common recommended portion of invested money in stocks is from 25% to 50% of your total budget.
Never invest all money in one stock - always diversify among several stocks in different sectors.
Always watch closely general market conditions, especially, when bear market is about to start. Be prepared by selling most holdings in advance.
Never rush with investment solution. Carefully watch financial quarterly reports, news, and macroeconomics trends before making any decision.
Never let your emotions prevail over a rational disciplined approach.
To improve return/risk ratio, use reliable software tools that embody the investors' concentrated wisdom.
All stocks are volatile without exception. There will be always a certain probability that something suddenly will go wrong with any stock. Even the best stocks can depreciate.

USA recent researches show that an average investor has around $250,000 investment assets and more than half investors uses brokerage advices. Investing is popular for both genders almost equally. For the last decades, the expectation of most investors decreased from about 30% to about 10% of annual return on investment. Most investors prefer a long-term type of investments with less than five transactions per year. Not everyone is able to succeed in investing. Most losses in investing happen because of lack of knowledge, over-confidence, impatience, greed, fear, and different delusions. An experienced investor knows that there is a direct proportion between time spent to increase investing skills and return on investment.

Self-education can help to improve investment skills. Usually, after reading tens of books about investing, investors come to conclusion about importance of fundamental analysis and interpretation of technical analysis indicators. Also investors need to read quarterly financial reports, watch market conditions, try to predict macroeconomics trends, etc. How much time all these take? Fortunately, there is an optimized approach that allows investing time effectively to give a maximum return. As an example, to reach excellence in driving it is enough to read one book, get driving training, and regularly practice. Something similar is possible with investing skills, except that a few books will be required. The following books could be good for improving the investment competence:

Lessons from the Greatest Stock Traders of All Time by John Boik (good introduction in investing)
Stock Investing by Paul Mladjenovic (very useful and important to read book)

The following books by William J. O'Neil:

How to Make Money in Stocks
24 Essential Lessons for Investment Success
The Successful Investor

These books are easy and enjoyable to read. Some experts opinion can be contradictory. For example, some authors offer using such method as "averaging down". This is a method to reduce the cost of purchases. "Averaging down" means to buy more stock of a given issue at a price less than the last purchase successively as the price declines. However, other authors insist that such method is bad. They suggest sell any stock if the market price drops below around 8% - 10% of the purchase price. The problem of this contradiction is that averaging down works well in case if decreasing price is a temporal correction but not a sign of declining business and long-term dropping demand for the stocks. How to distinguish correction from alarming signal? The answer is - to evaluate exactly a real value of company and its stocks, as well as, understand current market condition and know macroeconomic trends.

Nevertheless, all books about investing are useful to a certain extent. The next important step is training. It can be done without money, in a simulation mode. Then it will be naturally to use real money for learning lessons more effectively. A regular practicing is important. However, it is hard to acquire good investing skills fast. One of the reasons is that the market is not always the same. It can be bull or bear market with different corrections. Some market cycles can be very long. For example, a real bear market happens seldom, around once in 12-14 years. Even so, it would be useful to experience a bear market, at least once.

The first step in investment analysis has to be fundamental analysis. The fundamental analysis allows predicting a long-term stock performance. It depends on many factors: company profitability and its growth, liquidity, market stock value relatively to earning, book value, and sales, etc. Stock price also depends on news, analysts opinions, and different ratings. Such factors can be many and it is clear that each of them differently exerts influence on stock performance. For example, statistical research of hundreds of companies for period of several years reveals that the more number of bad parameters belong to the company and its stock, the riskier investing in it. In general, any company and its stock can be considered as a system and the best model of such system quality is a combination of all influential factors with different weights.

Using technical analysis additionally to fundamental analysis can increase chances of successful investing. One of the best software tools to perform technical analysis is MetaStock www.metastock.com However, since there are hundreds of technical indicators with different interpretations for each of them, it is not easy to complete a full-scale technical analysis. Some investors use only some of indicators that are good from their point of view. In general, each indicator has its own ability to predict stock price. Ideally, it would be good to allow computer software to define the current ability of indicators in prediction of stocks prices and assign each of indicators corresponding weight. Then logically, to maximize accuracy of prediction it would be good to combine all signals from all indicators. Besides fundamental and technical analyses, it should be taken into consideration that price of any stock goes up and down depending on other many factors, including general market and sectors conditions. That means there should be an optimal time for buying stock (as well as for selling). Therefore, timing analysis is also important.

To summarize, it is better to use the software that takes into consideration fundamental, technical, and timing analyses together. One of the computer programs on the market with such capabilities is InvAn by Addaptron Software www.addaptron.com InvAn combines the results of fundamental, technical, and timing analyses into a single composite rating using a special algorithm. InvAn defines prediction ability of each technical indicator and then combines signals from all of them into technical analysis rating using Artificial Neural Networks. The main output is the composite rating, i.e., the list of stocks from the worst to the best. Due to a fast and automatic data processing, InvAn enables watching hundreds of stocks. It also has other useful features, such as, calculating optimal cash reserve depending on the market condition and forecasting stock price on the basis of Fourier spectrum analysis. You can find other software tools; the best way to choose the right one is to try their demo versions and read software descriptions (what data used and how they are processed).

If you have never invested in stocks before, consider this. Nowadays of technical progress, buying and selling stocks become very simple. To use the Internet for stock investing, all you need to do is just to open account with some Internet stock investing brokerage. The recommended minimum amount to invest in one stock can be $2000..3000. Using smaller amount may be unreasonable because of the commission to buy and then sell. Good luck!

Forex Broker Scams

2008-01-17T23:22:00.000-08:00

If you already trade the Forex market, this isn't new to you. Although, if you are a beginner, please be aware that this is a common thing in Forex.

For trading in any financial market you need a broker. As the Forex market isn't regulated, you have to make a better due diligence to find a good broker than in any other financial market that is regulated like stocks, futures or options.

I have encountered several things that you should avoid in a broker. All the criteria I'm going to refer have to be accomplished in order for you to have safety of funds.

In the first place, you should avoid forex brokers that are based offshore, in third world countries or brokers that don't even state where they are based. I'm telling you this because of the safety of your funds. As there are many forex broker scams, you need to pay special attention to this factor. If your present broker or the broker you are thinking of opening an account with has this characteristic, my advice is to look somewhere else.

In the second place, the forex broker you choose can't trade against you. This may seem new to you but there are a lot of forex brokers out there that are doing this. Of course, as they are stronger than you, a simple trader, they will always win and you will always lose. Please be aware of this situation.

In the third place, you should read reviews about your broker or the broker you are thinking of using. It is always important to read what other traders think about them, their executions, their spreads and even their customer support. You should read their webpage but nothing is better that asking or reading about them from someone that is already using their services.

Finally, don't let the money and greed talk too loud. If a forex broker allows you to trade with just $100, it's because they allow you to have a big leverage. Using big leverage is not a good idea because, if you have a small account, you can get ripped off with just a loss. Of course, you can use this leverage in your favor if it is a small percentage of your money. But if you're trading with just $100, there's no space for leveraging without incurring in a very high risk of losing your entire account in a single trade.

Don't get discouraged by the fact that there are so many forex broker scams. There are also good and solid forex brokers. You just have to do a deeper search in order to find one that fits your needs and your security.

Ten Top Money Making Strategies for 2008

2008-01-07T20:41:00.000-08:00

What does 2008 bring to the average American? Does it fill you with dread or with a promise of better things to come? If learning ten new ways to make money sounds like what you may be interested in, do read on. This article will highlight ten top ways that you can make money in 2008 to generate some extra income and hopefully one of them would prove successful for you to carry out on a more regular basis.

Firstly, start clearing your house and have a garage sale. If you are like most consumer minded people, you would find that your house has gathered lots of clutter and unwanted things over the last year and a great way to clear your house and to make some money from it is to sell it at your garage sale. If you are slightly more gutsy you can try opening an account on ebay and selling your wares there.

Secondly, start small and start giving tuition to your neighbour's kid. Teach some simple things like English or simple low level maths. Some people have actually created industries around such teaching jobs so you might want to consider the extra income that you could make from this.

Thirdly, you might consider doing a newspaper delivery round via your bicycle and this might spark off larger ideas. Many important people started doing business when they were younger doing newspaper runs and got fitter that way. Skills that can be learnt in this endeavour include distance analysis and cost efficiency and time estimation all of which are great skills that any entrepreneur later might use in any trading endeavour.

Fourthly, you might consider making money online via forex trading or otherwise known as FX Trading. In this new year, you would want to start reading all you can on forex trading both in terms of trading strategy and also in terms of the psychology of trading. Most people generally can pick up the various fundamental trading and technical trading strategies necessary but it is always the psychology of trading that will trip people up. How many people can stomach a falling market and buy in that situation? This is what trading psychology is all about and is one key to success in online trading.

Fifthly, if you have decided online trading is for you, you might wish to examine the world of stock trading. This instrument deals with company forecasts and market psychology. You would have to learn how to read balance sheets, insomuch as to tell if the Company is doing well or not and thereafter learn technical analysis to determine what the trading public's sentiment is with regards to the particular stock you are watching.

Sixthly, if you are risk adverse, you would want to learn the strategy otherwise known as index fund dollar cost averaging. Rather than putting money in a bank account where interest may be low depending on what bank account you are depositing in, fundamental analysis guru Benjamin Graham noted that after doing extensive back research all the way to the Great Depression, that investing in index funds on a monthly basis would yield returns that would beat saving in the bank and this is also known as defensive investing and is what I would recommend before taking any excess cash for active investing.

Seventhly, start examining your hobbies with an idea to profit. For example if you are interested in stamps, spend some time pouring over pricing guides and eBay auctions to learn all you can about what you are interested in and then start planning to become a trader of whatever collectible item that you are interested in. There are lots of collectors on ebay and this market is potentially huge. Who knows, you might have the next highly prized item lying around your house.

Eighth, as a variation of the above idea, spend some time gathering all your hobby related books and considering letting others know about your hobby by blogging. Making money by blogging in recent times has become rather fashionable with online blogging superstars that can be found by doing a quick search on Google with the search terms "Pro blogger". Making money by blogging requires some planning of content and site structure and this planning phase is critical to the success of your blog. Learn what niches are ripe for the picking and avoid niches where there are too many competitors.

Ninth, if you are a consultant or make money via the provision of services, a critical technique to making more this year is to start spending time giving free talks in your locality to trade associations and bodies and helping them along with their activities. Above all these promotional activities, the key to making money with the provision of services is to develop trust with your customers at the same time you do work for them.

Tenth, if you are not in the habit of tithing, start the habit of giving money away to the poor. People gain a sense of fulfillment when giving to their church, their charity and it is this sense of fulfillment that drives rich people like Bill Gates and Warren Buffet to make more money. Joy, peace and fulfillment are things which cannot be bought with money, but can provide the unseen impetus to propel you to greater financial achievement.

China And India Could Be Opportunities For Investors In 2008

2008-01-07T20:39:00.000-08:00

If you track currency exchange rates at all you know that the dollar is taking a beating worldwide. The housing crash and worried consumers are having a huge impact on the economy. There really seems to be no end in sight for these two negative trends. I would look at 2008 as another year where housing markets continue their downward trend and consumers really start feeling the pinch of their credit card debt.

All-in-all, 2008 could be a bad year for the United States' economy, but there are a few areas that may prove to be lucrative investments. One such area is investing in US based companies providing goods or services to international markets, especially in India or China.

China's economic growth does not appear to be slowing down; in fact, the CIA World Fact Book says that China, in 2006, was the second largest economy in the world. The China Daily web site said that by 2010 there will be nearly 100 million households in China meeting the "middle class" criterion. That equates to a 100 million household consumer market that can afford to buy higher-end products.

That market will want cell phones, iPods, homes, cars, clothes, Internet connections and everything else middle class America has. China will have to not only import products, but they will also have to build their infrastructure up to support the demands of their middle class. American investors would be smart to look for US based companies that provide the materials and expertise necessary to accommodate China's growth requirements.

India too, is a huge market, which according to CNNMoney.com has a $300 billion dollar consumer market. With the US dollar being weak it invites India's middle class buy up American products. Simple economics say that when a country's currency's value weakens the products and services from that country become cheaper. That means that more American products will be bought by that $300 billion dollar consumer market. Again, smart investors should research companies that can meet some of the demands of India's consumer market.

Between China and India, there are roughly 2.5 billion potential consumers waiting for products, services and basic necessities. While the economic boom being experienced in these two countries does not come without a price, negative effects on the environment for one, the investment opportunities are apparent. US companies will make money in the region in 2008, so should US investors.

While China is not known for its stellar performance in the human rights arena or in the environmental arena, a larger middle class may prove to be an equalizer that curtails China's questionable actions. As more and more of China's people become educated and foreign companies become ingrained into China's economy the government may soften its hardline communist practices. As this occurs investment opportunities will continue to increase. Smart investors will look to international markets in 2008.

Different Types of Stocks

2008-01-07T20:36:00.000-08:00

On the surface the stock market can seem a cold place - investors snap up stocks and dump them just as quickly if they believe a downturn is near. But, there is a lot more to stocks than the daily highs and lows. As an investor you give companies the capital they need to realize their goals and aspirations. Being a stockholder means you can have influence in a company, but the type of responsibility and influence you have depends on the type of stocks you have. Being aware of these benefits of different stock types can help you decide on what the best investment choice is for you.

Stocks

Generally speaking, stocks represent ownership of a company. When you purchase a share of a company, or a stock, the firm will typically issue a stock certificate as proof of your ownership. Each type of stock, even if it falls under a certain category, can have its own defined benefits or terms as defined by the issuing company. It's always good to have an understanding of the stock type prior to investing.

Common Stock

This is the most frequently issued type of stock. It is also the most risky type of stock. When a company goes bankrupt, common stockholders are the last to receive compensation. With this risk, comes the greatest opportunity for long-term investment. As the company yields a profit, common stock holders are entitled to dividends corresponding with the quantity of shares they own. The investors who own common stock in a company are the company's shareholders. They traditionally receive one vote per share to elect the members of the board. However, not all common stock comes with voting rights. It is possible for stocks to be issued without including voting privileges.

Preferred Stock

What makes preferred stock so poignantly different from common stock is that the shareholders of preferred stock are usually legally guaranteed to receive a specified amount of dividend payments before all other shareholders on a fixed schedule for the duration of their ownership of the stock. In other words, they are guaranteed a certain return on their investment - no more, and no less - regardless of the state of the business. This reduces the risk involved with the investment, but it also puts a cap on the potential earnings from the investment. Additionally, preferred stock does not usually have the voting privileges associated with common stock. These matters are all clearly stated in the stock's Certificate of Designation. Sometimes it is also referred to as "convertible preferred stock". This means that there are provisions for the preferred shares to be converted into common stock. Usually, there is a time-frame and quantity established in the terms.

Growth Stock

When mentioning a "growth stock", investors are referring to stocks belonging to companies with an anticipated return on equity (also called ROE) of 15 percent or more. The ROE is determined by dividing a company's net income by their total equity. These firms are expected to appreciate in their value quickly over time, and as they grow, yield decent returns.

Initial Public Offering (IPO) Stock

The first time a company sells shares to be publicly traded is called the company's IPO, or Initial Public Offering. At this crucial time for the company, there may be stock options available during the IPO that will not be available months later. A successful IPO is often thought to indicate a positive outlook for the company, although this is not always the case.

Penny Stock

This type of stock typically sells for less than five dollars on the market. Penny stocks are high risk stocks for businesses that are struggling to survive or that are still in their early stages. Most of these stocks tend not to fare to well, but on occasion they can, and do, surprise investors.

Basics About How Banks Operate

2008-01-07T20:33:00.000-08:00

There are some people who may wish to know a little about what banks are all about, especially when these financial institutions have had to swim in rather troubled waters just lately.

Banks are here to make money. It is hard to manage without them, and it is hard for them to manage without us. On the face of it, this looks like a marriage made in heaven. However, since all marriages are based on absolute trust and hate turbulent situations, and because these two features seem to be coming into play, it is not surprising that this is causing a certain amount of concern to depositors.

Basically, a client places money into his account. The bank will lend that money to other clients and make a profit on the deal. If the client banked say $10000, the bank can lend $90000 out because they must maintain a 10 per cent cash reserve ratio. In other countries, the cash reserve ratio requirement can be higher or lower. Any country can decide to alter the cash reserve ratio if needs be.

There is nothing to stop a bank to set aside more than the required minimum, meaning having excess reserves. It is not particularly rewarding for banks to do this, since they get no interest on that money, albeit they can channel it out on short and overnight terms to banks which need to maintain their minimum reserve ratio.

Getting back to that $90000 the bank can lend out, and let us say grant overdrafts but creating of course a liability factor, as the bank has to pay out whenever the various borrowers issue their cheques.

The position of the bank is that it has a total cash sum of $10000 received. However, it has lent out deposits of totaling $90000. Add this together and you get a figure of $100000 representing total assets which are the $90000 in overdrafts plus the original $10000 cash received, which of course includes the required 10% reserve.

What took place is that the bank granted loans worth $90000 giving birth to money which did not exist before, based on the $10000 received in cash and locked in the safe.

People do not put in all the money on the same day, and they do not take out all the money on the same day. Cash in form of bank reserves is there to meet some withdrawals that may possibly be required. Banks have been managing quite well with small cash reserves in their safe, because they hold a number of liquid assets which they can sell for instant money. It is better for them to earn more money out of these liquid assets than having cash. Bankers are clever enough to know what kind of mixture of investments they should hold not to be caught with their pants down.

As well as lending money both short and long term, banks place investments in other areas. For instance, apart from the liquid assets, they can purchase long term government bonds and other securities. However, without cash reserves it is not possible to give birth to additional money unless breaking the rules.

Of course banking is far more intricate than that, but at least one can grasp some basics, and understand why, when a spanner is thrown into the works due to whatever reason, hiccups can follow.

Overseas Investment Property - 2008 Hotspots

2007-12-27T00:52:00.000-08:00

Overseas Investment Property is becoming increasingly popular with people in the UK for a multitude of reasons. Some simply want sun, sea, and sand and of course to make good money in the process.

We all know it is the investors that get into an emerging market early that make the real money. Now the burning questions is,

What and where are going to be the new emerging hotspots for overseas investment property in 2008?

Lots of companies, property developers and agents all shout that there properties are the best, the locations are the best and the properties being sold off plan are under market value.

That's all good and well but of course you can not take things on face value and its important, as the savvy investors will tell you , to examine the facts and to do your own due diligence and home work.

Here are a couple of new emerging markets we feel are rising start with a few facts to back them up and to point you in the right direction.

Brazil: land of the carnival and now as we have found out miles and miles of quintessential tropical white sandy beaches.

We have not got room here to go over all the facts so will only highlight some of the financial ones, the important ones, right?

Cost of living: For those people looking to enjoy the properties themselves the Brazil is a big attraction when it comes to living expenses which is 20% that of the UK plus with low property prices, you can purchase a beach front villa for under 50K its easy to see the attraction.

Capital Growth: As mentioned overseas property investors are of course looking top make money from the properties they are buying and capital growth, high increases in the value of the properties is another big attraction.

As the Brazilian economy keeps getting stronger with no sign of slowing down and with the inward investment in both tourist and infrastructure (the massive airport being built 15 minutes from Natal), then it stands to reason that the right properties in the right locations will increase in value, some properties in the North east have increased in value by 100% in the last 36 month.

Rental potential: Ok so a lot of investors will not be using the properties themselves and will of course be looking for good rental returns for extra income or to pay for loans taken out on the properties. Natal and the north east regions of Brazil are experiencing an ever increasing international tourist demand from both North America and Europe so therefore the right type of property on a nice Tourist resorts (right location with good infrastructure and facilities should offer excellent rental potential.

To learn more about Brazil we recommend you take a look at Brazil Real Estate.co.uk it's a nice little site that show cases investment properties on new tourist developments in the North East of Brazil, they also offer a free country and property buyers guide to download.

Cape Verde: dubbed the Caribbean on Europe's doorstep; the nearest tropical Islands to Europe: Around 4 hours closer than the Caribbean islands with direct flights of only 5.5 hrs from the UK with no Jet-lag, interesting, lets investigate further.

So why are second home & holiday home buyers as well as international property investors heading to these islands, again we can think of lots of reasons but let's keep this article focused on the financial attractions.

High Retail potential: High Rental Value: Fantastic climate and sunshine for most of the 365 days of the year as well as booming tourism industry equals a strong possibility of year round rental income.

However as we know a destination needs either a good domestic rental marker or a very good and growing tourism market, and of course lack of quality accommodation, meaning that new build quality tourism properties should rent well

Here are some facts and statistics about Cape Verdes Tourism industry

Huge growth tourist industry: The National Statistics Institute (INE) says that around 250,000 tourists arrived in 2006 - a 25% increase over 2005. Seventy percent of tourists visited Sal and 15% Santiago. INE estimates that tourist arrivals will increase by 22% during 2007 and forecasts around 1m tourists annually by 2015. It also predicts that the number of cruise ships visiting the islands will increase from 30 in 2006 to as many as 70 this year, further putting the destination on the tourist trail.

Huge government investment: The Cape Verde government identified the growth tourism as a strategy for sustainable economic growth.

The Government implementing a number of programmes through The NDP (National Development Plan 2001 - 2005) to develop and improve the infrastructure of the Islands.

The NDP covers areas such as transportation (air, maritime, inter-island and road transportation), communications, banking, and health provisions. A major new airport, new roads, water desalination plants, and improved electricity have already been implemented.

Tourism development: The infrastructure development and increased awareness mean that the islands are becoming increasing popular with holiday makers looking for a tropical holiday destination with our the very long flight times to say the Caribbean and Thailand.

In summary it is still early days but as soon as Cape Verde becomes a mainstream holiday destination the price of property should almost certainly increase drastically.

Other factors that are an attraction of Cape Verde for overseas property investors are;

Low property prices: Cape Verde remains much cheaper than many Mediterranean places, and offers the opportunity to get in 'on the ground' of a soon to be booming tourist destination.

High Capital Growth: all the above activity has led experts to predict a 30% increase per year in property values on the main tourist locations and resorts in Cape Verde.

Again here is another little site that is showcasing current investment opportunities Cape Verde Real Estate

To summaries both Brazil and Cape Verde are set to be two of the hottest emerging overseas investment property markets for 2008, the facts speak for themselves and we hope this short article gives you food for thought.

11 Advantages Of Mini Forex Trading

2007-12-27T00:44:00.000-08:00

The forex industry has seen the entry of many traders with limited capital.Traders who are comparatively new to the online forex trading business are also able to sustain the risks involved.

The traders were exposed to the world of currency trading with not that high a risk with the development of Mini forex trading accounts that requires a minimum account size of $300. Also, the mini forex trading account holders can trade 1/10 currency lots instead of the entire currency lots.With smaller lot sizes, the traders are exposed to real life trading with comparitively lesser market and risk exposure because,the value of one mini pip is the same as one dollar.

The traders are exposed to the trading and are made aware of the reliability and the quality maintained in the trade practices and also the stability of the forex trading.Individuals who are wanting to develop their own strategy and build on their confidence in this particular industry will be benefited by mini forex account trading.

The advantage of mini forex trading is that, the traders in this segment have the liberty to enjoy the benefits that are applicable to the full size holders as well.

1. Mini forex trading uses the exact same state of art resources and tools as that of standard account.

2. The traders will continue to be exposed to the world's biggest liquid market.

3. Traders receive a complete free streaming, live and double sided quotes

4. It provides immediate fill reports

5. The trades are not commission based and the traders are able to check their accounts live.

6. Another important advantage in case of mini forex trading is that the traders are able to create a strategy on forex trades and they also improve their discipline and at the same time, not giving more importance to their profits and losses.

7. A trader can fixate on the fluctuations of his equity, if he can trade a full size currency of 100,000 units. This can be done by traders who have small balances.By doing so, the decision making capacity of the trader can get affected, as it is highly based on the emotions of the traders.

8. The traders usually do not close out those trades that do not result in profits, as they continue hoping that the market would in fact favour them.It is the instinct of the traders to make immediate profits with the market movement, rather than maximising gains by allowing free flow of profits.

9. The training methods developed in case of mini forex trading, gaining the confidence of a particular trader who is successful, helps one to sustain the distractions, pressure and the anxiety in case of occurrence of any P&L swing.

10. It is not always necessary to use all currency units when starting a mini forex trading account. The lots can be utilized as and when required when a trader builds his confidence level, in order to increase his profits. The lot of 10,000 is available for a trader to customise the size per deal that might suit his needs and requirements.

11. Another good point in case of mini forex trading is that, a trader would not be too stressed out in case of a loss. It depends on the trader's ability to stick to his strategy and to maintain discipline in order to perform well in the future. For example, a loss of 50-pip on a position of 100,000 EUR/USD is the same as $500 loss, however, it would only be $50 in case of a 10,000 EUR/USD with respect to a mini account.

One has to have the guts and the will power to face losses in a forex trading industry;however,if one can perform making use of the platform that is similar to the standard account, why not go for mini forex which gives an individual it's unlimited benefits.

History Of Gold With Relation To Currencies And Its Outlook

2007-12-12T00:02:00.000-08:00

Much has been written about the current bull market in gold and how it compares to previous moves, in particular during the 1970s when the metal soared to at the time unimaginable heights.

On this basis it is worth looking at the background to the value story on gold, and this may shed some light on why its bull market may have significantly further to go for CFD traders in coming years.

The gold standard

The UK, which at the time was the world's dominant economic powerhouse, adopted a gold standard in the early 19th century. Other currencies then looked to have gold backing, and towards the end of the century, various European countries joined the standard, though some chose for a time use a joint gold and silver standard.

The emerging strength of the US saw it adopt the standard in 1879, by making "greenbacks" that had been issued during the Civil War period convertible into gold, and the gold standard was formalised by legislation in 1900. On the outbreak of World War One, it was accepted by the whole of the developed world. This called for fixed exchange rates, with parities set for participating currencies in terms of gold, and it provided that any paper currency could on demand be exchanged for gold by its central bank

The system worked well having been designed to make each country adjust in terms of external deficits or surpluses in transactions between countries. Any deficit country would then have to surrender gold to cover its deficit, with the result that the volume of its money would be reduced, leading to lower prices, while the influx of that gold into the surplus economy would expand the volume of that country's money and lead to higher prices.

This meant that there were effective pegs in the foreign exchange market, so that exchange rates would fluctuate only within very narrow limits determined by the costs of shipping and insuring gold.

US and UK comparisons in terms of gold

Up until 1914, the parity between the U.S. dollar and sterling was approximately $4.87, based on a U.S. official gold price of $20.67 per ounce and a U.K. official gold price of £ 4.24 per ounce, and the exchange rate would not fluctuate beyond about three cents above and below the mint parity, which represented the cost of shipping and insuring gold, since otherwise there would be arbitrage potential.

Although there were some gold transfers under the system, it was easier to adjust monetary policy to attract currencies, which might offset the financial impact of any import excess. Higher interest rates would usually have a deflationary effect in the deficit country aswell.

Under this system, participating countries needed to give an absolute priority to external adjustment over domestic objectives, so if there was a conflict between domestic and external objectives, policy tools might not be available to be used for domestic problems of recession, unemployment, or inflation. This reflected the prevailing economic philosophy that economies would tend naturally toward reasonably high levels of employment and reasonable price stability without such government policy actions.

The effect of the First World War

The four great economic powers, the US, UK, Germany, and France saw unchanged currency values up until the war. There were few barriers to gold shipments or capital controls in the major countries, and capital flows appeared to play a stabilising role.

After the outbreak of the First World War, each country needed to raise cash for the war effort, and at this stage they began to issue more and more bonds, some of which still exist today. These were domestically issued at the time and not backed by gold, but the promise to repay came from the central bank and was seen as rock solid. This was the beginning of what is known as fiat monetary policy, and which is widespread today.

The result of this was that as more and more paper was not backed by the common value of gold, floating exchange rates began. The US, which entered the war later than the others, had maintained gold convertibility, and soon the dollar floated against the other currencies, which were no longer convertible into dollars.

Dollar strength and weakness

Once the war ended there were significant economic problems in Europe, and exchange rates began to change rapidly, with many major currencies devaluing against the dollar.

This helped cement the US dominance of world trade, as the dollar had greatly improved its competitive strength over European currencies during the war.

In a reverse of what is happening today, within much of Europe and certainly in the UK there was a widespread desire to return to the stability of the gold standard, and growing concern over the attractiveness of the dollar, which was still convertible into gold, and of dollar-denominated assets. The pound thus went back on the gold standard, but this coincided with the Wall Street Crash and the beginning of the great depression, which highlighted the weaknesses in existing economic policy.

Following a disastrous five years back on the gold standard, the UK abandoned it in 1931, and others followed over the next few years. There were also problems in the US, and in 1933, President Franklin Roosevelt imposed a ban on US citizens buying, selling, or owning gold in order to kickstart the depressed economy. This was the birth of Keynesian policies which shaped much of economic policy in coming decades.

At the same rime, the Federal Reserve continued to sell gold to foreign central banks and government institutions, but the ban prevented hoarders from profiting after Congress devalued the dollar against gold in 1934.

This action raised the official price of gold by more than 65% to $35 per ounce. Only gold coins and certificates considered collectors' items were exempt from this prohibition, and artistic and industrial users were allowed to deal in gold under a special Treasury license. Once the price rose, there was a mining boom, which saw major growth in gold output.

The 1970s

The licence to print money had been conveniently forgotten, despite the widely remembered problems in Germany's Weimar republic in the 1920s, and just fifty years later, in 1971, President Nixon ended US dollar convertibility to gold. On the 31st December of that year, gold stood at $43.8 per ounce.

This finally ended the central role of gold in world currency systems and it then began a spectacular bull market as inflation raged and the value of paper currencies fell. Gold enjoyed a nine year bull market, with the price hitting a record of $850 per ounce against a background of an international crisis arising from the Soviet invasion of Afghanistan and the Islamic Revolution in Iran. If this was rebased to today, the all time high would be equivalent to $2,100 per ounce.

Why gold could go a lot, lot higher

Gold's current bull market has lasted six years, during which it has risen around 200%. In the 1970s, gold peaked with a 2000% rise in just nine years, so this gives some food for thought.

Admittedly inflation art present is not the problem it was at the beginning of that decade, but don't bet against major changes in the value of gold against paper currencies in the years to come. For long and short term CFD traders this creates a major opportunity to profit from a potential further major revaluation.

Most Common Investment Terminology - Terms

2007-12-11T23:52:00.002-08:00

Below is a list of twenty five of the most common investment terminology and tools, as well as their basic definitions. Make sure you take the time to learn all of these terms; if you plan on get involved with investing you'll hear them daily.

Assets - Resources owned by a company, fund, or individual; i.e. cash, investments, money due, materials, inventories, etc.

Bear Market - A market in which prices are falling, or expected to do so.

Bond - A debt security issued by corporations, governments, or their agencies, in return for cash from lenders and investors. A bond holder is a creditor, not a shareholder.

Bull Market - A market in which prices are rising, or expected to do so.

Commodity - A tradeable item that can generally be further processed and sold; i.e. metals, wheat, coal, etc.

Compound Interest - Interest which is calculated on both the principal and interest previously earned.

Dividend - The amount of a corporation's after-tax earnings that it pays to its shareholders.

Dow Jones Index - A leading index of U.S. stock market prices.

Financial Analyst - A person trained to advise on the risk and return characteristics of investments and in the management of investment portfolios.

Index - A numerical measure of price movement in financial markets.

Investment - An asset acquired for the purpose of producing income and/or capital gains.

Liquidity - The ability of an investment to be easily converted into cash with little- to no loss of capital and a minimum of delay.

Market - A public place where buyers and sellers conduct transactions, either directly or via intermediaries.

National Association of Securities Dealers Automated Quotations (NASDAQ) - The New York based U.S. stock exchange that specializes in technology companies.

Option - An agreement that conveys the right, but not the obligation, to the holder to buy or sell a particular security at a stipulated price within a stated period of time.

Portfolio - An investor's collection of investment holdings, usually with reference to its composition.

Prospectus - A legal document, required by the Securities Act of 1933, setting forth the complete history and current status of a security or fund; it must be made available whenever an offer to sell is made to the public.

Return - The amount of money received annually from an investment, usually expressed as a percentage.

Risk - The measurable likelihood of loss or less-than-expected returns.

Securities and Exchange Commission (SEC) - The U.S. regulatory authority for the securities industry.

Security - The paper right to a tradeable asset.

Simple Interest - Interest that is paid on the initial investment alone.

Stock - An instrument that signifies an ownership position (equity) in a corporation.

Trend - The current general direction of movement security or commodity prices.

Volatility - The extent of fluctuation in share price, interest rates, etc. The higher the volatility, the less certain an investor is of return; therefore, volatility is one measure of risk.

Buy, Hold, or Sell?

2007-12-05T00:35:00.000-08:00

The markets continue to be tumultuous and we're seeing the markets re-test the lows that were reached in August. Since October 29th, the S&P 500 is down 8.5%, the Russell 2000 is down 10.7% and the emerging markets are down over 15%. Even energy stocks are getting hit hard. Should you be selling stocks, gritting your teeth and hanging on or be stepping up to the plate and buying?

To answer that question, you can't just look at the headlines or your account value and decide whether or not action should be taken. The market headlines are based on averages. Movements of the bigger companies in the averages can easily skew the performance. The financials have been getting hammered lately and financials make up a large part of the S&P 500.

Of course, that doesn't mean that other stocks are immune. Investors (and traders) can panic when they see the decline of the averages and they sell everything. And sell they have.

The decision to buy, sell or hold shouldn't be based on the overall market. It shouldn't be based on fear or greed. I believe we need to look at individual holdings to determine which action we should take.

I don't know of anyone who has stopped using their telephone or internet based on the recent decline in the market. You'll continue to use it and you'll continue to pay your phone bill month after month. That's money the telephone companies can use to grow their businesses and to pay dividends. Rural telephone companies also receive subsidies from the U.S. Government. This represents a very stable cash flow.

To say that differently, a rural telephone company's ability to pay their dividend usually isn't affected by the economic cycle. That's one reason I regularly use them in my clients' portfolios.

That hasn't prevented a sell-off of these rural telephone carriers of late. Those buying these stable companies now are handsomely rewarded by higher dividend yield (many now in the 6-10% range).

The underlying businesses of these companies haven't changed. Their ability to pay and increase their dividends hasn't changed. So it's hard to justify selling them now. It's quite easy to build the case for buying them.

Another group of securities that haven't been fairing well lately is the closed-end bond funds. Typically, bond funds do well when the stock market is falling and interest rates are going down. Credit-related panic selling, though, has driven the price some quality shares down 8-10%. Will the credit crunch adversely affect these holdings?

I don't think it will. There are closed-end funds with attractive portfolios of bonds that can be purchased for less than the underlying costs of the bonds themselves. For instance, a sovereign government fund isn't going to be adversely affected by the sub-prime mortgage situation, yet these shares have been sold-off just like everything else. But they continue to pay their dividends and have yields over 6%.

With the 10-year U.S. Treasury now yielding less than 4%, these are very attractive yields. As market fears subside, investors looking for a higher level of income will once again recognize these securities and move money back into them. That should bring a recovery in their share prices. In the meantime, we continue to earn over double the 10-year Treasury note.

In short, if we just look at the headline numbers of the major stock market averages, it's easy to come to the conclusion that we should get fearful, sell off stocks and move a large part of the portfolio to cash. When you dig below the headlines and do some research you see that there are high-quality, defensive companies that make sense to continue to hold and to buy more.

I've just highlighted a few examples. The market downturn, in my opinion, has also created some attractive opportunities in growth-oriented companies. In particular, I like companies that are part of longer-term global trends. For instance, global growth and the need for alternative energy have spurred tremendous demand in several industries. Those stocks are now very attractive.

The key is to not run with the herd. When everyone is rushing for the exits, those brave enough to stay behind can pick up some real bargains. I believe that now is one of those times.

History Of The Stock Market

2007-12-05T00:30:00.000-08:00

While some historians believe that the roots of the modern stock market go back as far as 11th century Egypt, most focus their study on European markets in the 12th - 14th centuries. From the first debt brokers in France through the commodity and government security traders of Italy, various models of investment trading flourished. It was the Dutch who first started joint stock companies, allowing shareholders to invest in exchange for a share of the profits. This culminated with the first offering of shares on the Amsterdam Stock Exchange in 1602.

American Stock Markets

Alexander Hamilton, first US Secretary of the Treasury, facilitated the development of the American stock market. After studying British exchanges, he promoted security trading in New York in the government's formative years. The corner of Wall Street & Broad Street in what was then the US capital city was the center of trading which quickly expanded from government securities to stocks.

In 1792 the New York Stock Exchange (NYSE) began with an agreement of 24 men to sell shares in companies, charging commissions to outsiders in order to trade on their behalf. In 1817, the New York Stock & Exchange Board was organized, moving into a building at 40 Wall Street. NYSE is the world's largest exchange, trading $7.3 trillion in 1998 and has been in near continuous operation since its inception.

During the Industrial Revolution of the 1900s, investors wanted a way to trade shares of companies not included in the NYSE. These stocks ended up traded outdoors and coined the name "curb trading." In 1842 the New York Curb Exchange was founded to formalize trading of curb stocks. This eventually became the American Stock Exchange (AMEX). They remained outdoors, where the shouting of brokers reached such levels that a system of hand signals had to be developed to allow facilitate trading. Even after the move indoors in 1921, the hand signals remained in use for several decades.

Stock Market Crashes

Certainly the most famous American stock market crash came in 1929. While known as "the Crash of '29," the collapse was a series of crashes that began on Black Thursday (October 24th) with a significant drop and peaked on Black Tuesday (October 29th) with the disastrous crash that led to widespread panic and a collapse that lasted a month. In one week, the market lost $30 billion in value, tens times more than the annual budget of the US.

More recently, the Black Monday Crash of October 1987 saw the largest one-day percentage decline in stock market history. In 2001, another large decline occurred when the markets reopened on September 17th (the first day of trading after the September 11th terrorist attacks).

Stock Markets in the Computer Age

In 1971, NASDAQ became the world's first electronic stock market. Originally a simple computer bulletin board system, it grew to include trade and volume reporting and automated trading systems. After the 1987 Black Monday crash, when many brokers refused to answer their phones, the Small Order Execution System (SOES) was created to provide electronic submission of trades.

In 1992 NASDAQ formed the first intercontinental securities market, linking with the London Stock Exchange. Then in 1998, it merged with the American Stock Exchange to become the NASDAQ-Amex Market Group. By the early 21st century, it was largest electronic stock market in the US in share volume as well as dollar value.

With the advent of personal computing combined with electronic markets such as NASDAQ, trading has evolved from the physical transaction of brokers yelling on street corners. Both NYSE and NASDAQ began allowing after-hours trading in 1999. Day trading developed as technology created opportunities for numerous computer trades to occur in a single day with large cumulative gains and losses.

Computers also allow for trading across international markets and for the performance of markets in one country to significantly affect those in others. Additionally, online trading software and the availability of market research online, provides opportunities for investors to take increasing control of their portfolios and stock activities.

The Power Of Small Consistent Returns

2007-11-30T00:05:00.000-08:00

For most of us, 'safe investments' are limited to the rate of return that we can earn on our savings accounts or long-term deposits. The return would depend on the interest rate applicable in each country. At the time of writing, November 2007, the interest rate earned on a savings account in Australia is around 7% a year. That is a return of 0.57% a month. Despite this fact, many have preconceptions regarding the type of returns they can make from trading the financial markets.

A novice trader puts on a winning trade and gains between ten to fifty percent of his trading account. He forms a belief that, by trading, he can quickly become a millionaire. Indeed, if we assume a 20% return per month on a $10,000 trading account, we can expect $89,161 by the end of our first twelve months of trading. What if we assume an estimate of 50% return per month? We would have $1,297,463 by the end of the year. Of course, the problem with expectations like these is that they are unrealistic. Even most of those who claim to have made these types of returns have only done so in simulated environments, in trading competitions using game accounts, for example, where real money was not at risk.

It is possible to make these types of returns for a short while but I have not heard of anybody achieving such steep returns consistently year after year. After testing hundreds of trading systems and ideas I have come to believe that systems, which seem to promise exorbitant returns, turn out to be over-optimized for the period they have been tested on. Or even worse, they have flaws in their logic or assumptions.

Lately, I have been looking at the performance reports of trading firms in the USA. What would you say if I told you that the top trading firm over the last ten years only made an average return of 25% a year and the median trading firm made somewhere around 15% a year? Well, this is in fact what I am telling you.

A 20% and a 15% return a year is 'only' 1.877% and 1.171% return a month, respectively. I am sure that many novice traders and investors reading this article will have a mix of reactions towards these figures. Some might laugh and scoff at such 'paltry' returns, secretly believing that they can do a lot better than just 1.877% a month. Others may be surprised or even disappointed because their dreams of living rich will not come as quickly as they hoped.

Setting aside your initial reaction to these figures however, let us refocus on what these numbers actually mean in the real world. I would like to show you that these types of returns are very powerful. With time, these seemingly small, but consistent, gains will give you enormous profits in the future.

15% A YEAR RETURN ON A $10,000 ACCOUNT

Let us start with the assumption of having a $10,000 account, making at least 1.171% return a month, or 15% a year, trading the market. Based on these, the projections are:

1. $11,500 (15% growth) after 1 year.
2. $13,223 (32% growth) after 2 years.
3. $20,108 (101% growth) after 5 years.
4. $40,432 (304% growth) after 10 years.
5. $163,475 (1535% growth) after 20 years.
6. $660,960 (6510% growth) after 30 years.

25% A YEAR RETURN ON A $10,000 ACCOUNT

Let us now assume having a $10,000 account, making at least 1.877% a month, or 25% a year, trading the market Based on these, the projections are:

1. $12,500 (25% growth) after 1 year.
2. $15,625 (56% growth) after 2 years.
3. $30,519 (205% growth) after 5 years.
4. $93,140 (831% growth) after 10 years.
5. $867,512 (8575% growth) after 20 years.
6. $8,080,034 (80700% growth) after 30 years.

It is very important to note that not all fund managers make money. Returns of 15% or 25% a year belong only to those money managers who were consistently profitable. Furthermore, these types of returns are out-of-bounds for most investors. To invest in such schemes, most of the fund managers I have been looking into will deal with you only if you are a 'sophisticated' investor with a spare $500,000 minimum to invest. In fact, the highest earner only took on investors with a minimum of $25,000,000 US dollars to invest. (I will not mention any names here, however, you can do your own research by typing "commodity trading advisors" in your favourite search engine.)

I do not know about you but I certainly do not have 25 million dollars lying around, to hand over for someone else to manage. The dilemma, however, is that life is way too short for me to be satisfied with a 7% annual return either. I guess this is why you and I have taken the decision to trade and invest in the financial markets ourselves. At least there, we have full control and responsibility over the returns we get. It has its risks, but we can all avoid being reckless if we keep realistic expectations.

Basics of Japanese Candlestick Charting

2007-11-30T00:03:00.000-08:00

During the 17th century, there was a Japanese man who became famous with regards to rice trading. It is believed that this man won over one hundred trades. His secret was using candlestick charting.

You may have a common query which most people have in mind: What are candlesticks?

Candlesticks can be visualized as your typical bar chart outlined in two dimensions. Many are aware that the usual bar chart has its components, just like using the candlestick chart.

The major components in candlestick charting are:

1. Real Body - this term refers to the main body of the candlestick wherein it corresponds to the opening and closing of prices. Real body is again subdivided into two categories:

? Black body, this is sometimes called "filled-in" body. Black body signifies that the "close" in a certain period of time is lower than the "open."
? White body, which is sometimes referred to as "open" denotes that the "close" is on top of "open."

2. Shadow - it is a narrow vertical line which characterizes the increase and decrease of price in a given period of time. Shadows are as well subdivided into two categories: (1) lower shadow; and (2) upper shadow.

Now that you have a basic background with regards to the components of candlestick charting, the next step is to have an idea of candlestick charting patterns. There are six common patterns to look into:

1. Hammer pattern - this is a candlestick with a small "real body" and a lengthy low shadow. This pattern can usually be viewed whenever there is a downtrend in the market.

2. Engulfing pattern - with this type of pattern, the market trend can be very well defined due to the candlestick's white real body which surrounds the preceding day's real body.

3. Dark-cloud cover pattern - this can be viewed where the pattern during the first market day is composed of resilient white real body in a top reverse form.

4. Hanging man pattern - the features of a hanging man pattern resembles that of the hammer pattern, the only difference is that the framework is on an uptrend form.

5. Bearish pattern - instead of a white real body, a black real body surrounds the preceding day's real body.

6. Piercing pattern - this type of pattern is the exact reverse of dark-cloud pattern where instead of an uptrend, a downtrend occurs.

Each pattern is distinct from one another. Your advantage though is you can experiment mixing two or more patterns. You can also modify the patterns from its original to come up with a strategy which suits your preference.

The above-mentioned information is merely a prologue to Japanese candlestick charting. There are still so many information to decipher, there are still so many patterns to detail out, and there are still so much things to learn. What you can do is have an in-depth study of this type of currency trading strategy by reading books about Japanese candlestick charting. Additionally, you can also enroll in an institution where the said trading strategy is being taught.

With proper education and accurate application of learned theories about Japanese candlestick, many traders will be able to succeed with their goals of gaining profit and strategically learning the market. Who knows you would be able to win over one hundred trades just like what the Japanese man did.

Investing Steps - Step By Step Guide

2007-11-27T21:28:00.000-08:00

The moment you get into the stock investment, your mind conjures up thoughts of the risk you are taking out of the hard earned money. It is definitely tough for any person to invest in any business without better return prospects. However, stock investing needs a better perspective and calculations. Thereby, here are some investing steps that can certainly add to the investing techniques.

1. Set the goals to be achieved: by goal setting, we do not mean daily money goals for any investor, rather setting up goals can be segregated into many parts:

* Firstly, the financial goals. These goals refer to the estimated profit one calculates over his investments. Setting short-term money goals and running after them is of no use.

* Secondly, the path to reach these goals is to be settled. Believe us, stock investing is no one day miracle; hence, it needs time, patience and consistency to flourish. Hence, there are no short cuts to be followed.

* Thirdly, setting goals involves the money one wants to save. Each investor must make an estimate of how much to be saved and how much to be invested.

2. Identify your taste of investments: it is important to identify of what type of investor you are? Your investing approach and things you are attracted to, is an inevitable feature. For example, a day trader may be long term or short tem player and so on. Also, the risk bearing capability contributes to the type of investor. Very often, it is said that "no pains, no gains", this applies to stock market too. An investor who does not have sound risk bearing capability cannot grow much in this industry.

3. The third investing step includes segregating the investments: we all know that there are hundreds of investment options available in the stock market. It is the investor's choice to pick a bunch of the investment companies. Hence, any day trader may pick any bunch of a particular type of investments and work accordingly. Picking a mix of investment type not only contribute to better returns but also maintains a balanced portfolio of the investor.

4. Tracking the investment: once a particular mix of investments is picked and the amount is integrated to various shares of different companies, here comes the main task that is, tracking them. Keeping a track of investments decides the time of buying and selling of stocks corresponding to their process. Also, tracking the investments decides the profits and losses for any investor.

Last but not the least, always remember that investing steps starts and end with clear goals and good information. Any stock trader that posses clear goals in his mind would do each and every possible effort to achieve them. Unclear goals create confusions and decisions in hustle. Also, good information lets an investor to devise a plan it to contribute to the feasible and practical goals. Hence, the mantra remains with smart investing accompanied by clear, practical goals and good information.

All About Dividends

2007-11-22T00:19:00.000-08:00

A dividend is a manner in which a company shares its wealth, which it generates out of the course of business with the shareholders. Dividends are paid to a shareholder on a quarterly or half yearly or on an annual basis. Dividends, by the name of dividends have to be mandatory paid in cash as per Section 205 (3) of the Companies Act 1956. However, another form of dividend though not termed, as dividend is the issue of bonus shares, which for all financial purposes is also a proxy for dividends. Companies have an option of paying out dividends out of their current earnings after tax or out of retained earnings. Companies in a high growth phase normally deploy the complete earnings in the business and so tend to not give dividends, but companies, which are in a stable phase, normally share it with the investors as dividends

Implications of Dividends

Implications to the Company

A company paying out dividend, would normally create a liability in their books termed as "dividend payable", which gets removed as soon as the dividend is paid, which happens a few weeks after the ex-date. The company also has to pay a dividend tax on the amount of dividends paid. The amount of earnings after tax reduced by the amount of dividend and dividend tax is then transferred to the Reserves in the Balance Sheet.

In the case of bonus shares, though, the amount is removed from reserves and is added to the Equity Capital Account at face value. New shares are issued to the shareholders at par. For instance, for issue of bonus shares of face value, Rs 10, to the extent of a 10% dividend with 100 million shares outstanding, retained earnings is reduced by Rs 1 billion, and equity share capital is increased by that much amount. The total number of shares outstanding then increases to 110 million from an earlier 100 million.

Implications on the Share Price

On the ex-dividend date, the price of the share is adjusted downward by the amount of dividend per share, as this amount so paid does not belong to the company any more. The dividend amount now belongs to the shareholders and not the company and so should not be carried in the price of the company. This also implies that any investor becoming a shareholder after the ex-date would not have a right to the dividend, as he gets the share at a price lower by that much amount.

Implication on the Shareholder

The shareholder gets the dividend after the company has paid corporate income tax on its earnings and an over and above dividend distribution tax. Therefore, the amount of dividend earned by the shareholder is tax free in the hands of the investor. However, the interest so earned out of this dividend from the bank account to which it has been deposited will be taxable in the hands of the investor (with the exception of NRE Accounts-Section 10(3)(ii) of the Income Tax Act).

Why Passive Investing Beats Active Investing

2007-11-22T00:16:00.000-08:00

I'm a big proponent of investing passively by maintaining a diversified portfolio of index funds. It definitely takes the fun out of investing, but as far as I'm concerned, taking risks with money that is earmarked for my daughter's education and our retirement is not meant to be fun anyway. Its serious business.

So what do I mean by passive investing. For me, it means that I don't stay awake at night thinking (and worrying) of ways I can beat the stock market and make millions of dollars or on the flip side, make sure that I don't gamble away all my hard earned money.

If you want to hear stories of why trying to beat the market is a waste of time, I would definitely recommend reading the book "Wise Investing made Simple" by Larry Swedroe.

The best definition for Passive Investing I have seen so far is: An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance.

Investopedia adds to this by saying, Passive Investing is also known as a buy-and-hold or couch potato strategy, passive investing requires good initial research, patience and a well diversified portfolio. Unlike active investors, passive investors buy a security and typically don't actively attempt to profit from short-term price fluctuations. Passive investors instead rely on their belief that in the long term the investment will be profitable.

Passive investment management makes no attempt to distinguish attractive from unattractive securities, or forecast securities prices, or time markets and market sectors. Passive managers invest in broad sectors of the market, called asset classes or indexes, and, like active investors, want to make a profit, but accept the average returns various asset classes produce. Passive investors make little or no use of the information active investors seek out. Instead, they allocate assets based upon empirical research delineating probable asset class risks and returns, diversify widely within and across asset classes, and maintain allocations long-term through periodic re-balancing of asset classes.

Where as, Active management might best be described as an attempt to apply human intelligence to find "good deals" in the financial markets. Active management is the predominant model for investment strategy today. Active managers try to pick attractive stocks, bonds, mutual funds, time when to move into or out of markets or market sectors, and place leveraged bets on the future direction of securities and markets with options, futures, and other derivatives. Their objective is to make a profit, and, often without intention, to do better than they would have done if they simply accepted average market returns. In pursuing their objectives, active managers search out information they believe to be valuable, and often develop complex or proprietary selection and trading systems. Active management encompasses hundreds of methods, and includes fundamental analysis, technical analysis, and macroeconomic analysis, all having in common an attempt to determine profitable future investment trends.

So, in order to reach your financial goals, slow and steady wins the race!

4 Steps to Purchasing a Forex Course

2007-11-22T00:07:00.000-08:00

Purchasing a forex course can be a lot like going into a bubble gum factory asking for a sample piece of gum. You have to know what flavor you want, what shape, etc .. When you purchase a forex course there are four steps I outlined in order to help you narrow down what to look for in a forex course.

Step One - Figure out how much money to invest in a forex course. This should be money that you can afford to lose. Most people cannot afford to lose money. Make sure that losing this money won't devastate you financially.
Step Two - Make sure the forex course costs less than 50% of the money you have to invest. The cost of the course will not be invested directly in the market. You want to put most of the money you have to trade into your trading account.
Step Three - Make sure that the course does not have any hidden costs. You do not want to have to pay for any subscriptions. You should also find out if the company that sells the course has any paid subscription type services. If they have these types of services, chances are that their system will eventually require that you use them. (free resources however, are always great!)
Step Four - Don't get stuck on the "demo account advertisement." Having access to a demo account can actually lead the forex trader into a false sense of security. It is like paper trading for the stock trader. There is no real preparation for what actually happens psychologically to a trader when his money is on the line. That is why I suggest learning and then starting with a very small amount of capital. The great benefit of the forex trading world is that you can start with $50 (on a good trading platform) and with that $50 have leverage to $10,000 yet only risk the $50, it does not get better than that. Starting with $50 in an actual account is a much more effective route to success in forex trading then getting stuck in the bogus world of the "demo accounts."

Picking Stocks

2007-11-22T00:01:00.000-08:00

First of all an investor should make an investment plan, specifying how much he is going to invest per year, how long will he will invest and what return rate he expects. With these parameters, an investor should make an outline of his portfolio specifying industries to invest in. An investor could be a little emotional with this by excluding certain industries, but he must not be to emotional and exclude all but one (or two) industries. Also, an investor should have at least 30 different assets in his portfolio. The rationale for this is the reduction of risk. If one asset goes to zero (which is very unlikely), than an investor still have the remaining 97% of his investment. This means that in process of picking stocks an investor should first look at his portfolio and investment plan, and then to select a certain industry to invest in.

When a certain industry is selected, then an investor should select different stocks (the more of them the better) and to compare them one by one. In that process, favorites will emerge. How could we compare two different companies? There are a lot of parameters that one could take into account: EPS, P/E, PEG, P/S, P/B, Dividend Payout Ratio, Dividend Yield, Book Value, Return on Equity. The history of these parameters are also very interesting. Let's discus each one of them.

Earnings

Earnings is the after tax net income that company produces during a certain period (usually a quarter which is three months, or a year). This is a widely used indicator. Usually is compared to the prognosis of the management and independent analysts. Surpassing the prognosis significantly usually drives price up and vice-versa. To summarize, earnings should be compared to the estimates of the management and the independent analysts. Comparing earnings with earnings of some other company does not carry crucial informations. Big companies will have large earnings while small companies will have small earnings.

EPS - Earnings per Share

In order to somehow relate one company with another EPS is devised and is calculated as Net Earnings/Number of shares outstanding. Now we can see how much money each share generates. Greater EPS is better. EPS can be observed for different period of time, previous year, current year and the following year. In the first case, it is the actual data, while in other two cases it is a prognosis. The problem with EPS is in the fact that a company could generate the same amount of money with much less capital being more efficient and a better opportunity for buying. A good indicator for possible buying is the raising of EPS. An investor should be careful with earnings because that parameter could be "tuned up". As number of shares outstanding can differ from time to time, the weighted average number of shares could be used. For example if there were 1000 shares for the first nine months, and 2000 shares for the remaining three, average number of shares can be calculated as 1000x(9/12)+2000x(3/12) and that yields average number of shares 1250.

P/E - Price to Earnings Ratio

As mentioned above two companies cannot be compared neither using Earnings nor Earnings per Share. Let's say that the companies A and B have the same value 10,000$ and the same earnings 1,000$ and that company A has 10 shares and company B has 100 shares. That would give that EPS for the company A is equal 100 and for the company Bis equal to 10. We can see that although companies have the same value, EPS can differ a lot. That is the reason for introducing the Price to Earnings ratio as (Price per share)/(Earnings per share). Price to earnings ratio is usually labeled with P/E, and sometimes is called "earnings multiple" or just "multiple". The meaning of this parameter is how much do you pay for a single dollar of earning.

Let's look at the previous example. Company A has P/E = 1000/100 = 10. Company B has P/E = 100/10 = 10. That would mean that both companies have the same P/E ratio and that it takes 10$ to buy 1$ of earnings. Suppose that there will be the same earnings each year then it would take 10 years to return investment completely. Thus if we want to compare two companies having other important parameters equal we would chose the one with smaller P/E ratio i.e. the one that would return investment sooner.

Average P/E ratios for different industries can differ significantly, making comparison of two companies from different industries difficult. That is not a real problem because if we wish to maintain a portfolio, we are looking for appropriate investment in a certain industry. Average P/E ratio in the last century for the US equity is around 15. If there is unusual activity, it is possible to calculate P/E ratio that would take into account previous years.

What does it mean if a certain company has small P/E ratio (let's say 8)? It could mean several things: company is undervalued at this moment (consequently a good buy), or company is experiencing a great increase in earnings in that period. Also, it is possible that the price of stock is declining.

What does it mean if a certain company has high P/E ratio (let's say 30)? It could mean that the company is overvalued or company is experiencing a great decrease in earnings or that the price of stock is growing expecting increase in future earnings (that could be for example pharmaceutical or mining company).

PEG - Projected Earning Growth

This ratio is calculated as PEG = (Price to Earnings ratio)/(projected growth in earnings). PEG is based on projection, and therefore is a little bit subjective. Being based on P/E, PEGs for companies from different industries are different. Greater the projected growth in earnings, smaller the PEG, meaning "the smaller PEG the better".

P/S - Price to Sales

Price to sales ratio is calculated as P/S=(Share price)/(Revenue per share). Instead of P/S, abbreviation PSR is also used (Price to Sales Ratio). P/S gives us the information how much revenue generates each dollar. For example a Share price could be 100$ and Revenue per share could be 100$ yielding P/S = 1. Usually, the smaller P/S the better (one dollar of investment generates more revenue). P/S can differ for different industries. It is important to note that information about profitability of production of a certain company is not included in this ratio. A company could have small P/S but could be also unprofitable.

Book Value

Book value is the net value of a company (assets minus liabilities). Book value for itself does not mean a lot.

P/B - Price to Book

Price to Book ratio is calculated as P/B=(stocks capitalization)/(book value). Usually the lower P/B the better. This ratio is also dependent on industries. For example P/B for consulting firms is different then P/B for manufacture firms.

Dividend Payout Ratio

Dividend Payout Ratio is calculated as DPR = Dividends/(Net income). This ratio is the percentage of earnings paid to shareholders in dividends. Dividend Payout Ratio is usually used for estimation a good cash flow management.

Dividend Yield

Dividend Yield is calculated as DY = (Dividend per share)/(Share price). The greater the Dividend Yield the better. It should be noted that a profitable firm could decide not to payout dividends and to use profits for development. In that case Dividend yield is 0, but firm is still profitable.

ROE - Return on Equity

The Return on Equity is calculated as ROE = (Net income)/(Shareholder's equity). As other ratios ROE is also industry dependent but is useful to compare companies within the same industry. Usually the greater the ROE the better.

This is only a list of the most important ratios. An investor should do his homework and to check all parameters available before any investment made.

How Physics Can Make You A Lot Of Money In Forex Trading

2007-11-21T23:45:00.000-08:00

If you are a trader, physics could make you a lot of money and you do not have to study black holes and string theory to reach your goal.

Just think Time and Gravity.

Let these be your friend. Study these two and you are home free. What does time and gravity have to do with trading you say? Have you ever heard of "the trend is your friend until it ends"? To use physics, you have to then apply one of Newton's Law of Motion - the one that says, an object remains in motion until it is stopped by a greater opposing force.

Then if the trend is up, you have to keep buying until you can no longer buy. And if the trend is down, you have to keep on selling until you can no longer sell. To be successful at trading forex, you have to then know the trend and trade accordingly. When you trade with the trend, Time then becomes your ally. You can enter at a crappy price and time will probably bail you out and make you profitable if you understood how it works.

First of all, many traders jump in the market regardless of the conditions. They enter a dead market with no volatility and enter a volatile market against the trend; big mistake!

A bigger mistake is that they often set tight stops that are sure to be taken out!

This is the lesson to take out of this article. Be slow to take profits when you trade with the trend and be fast to take profits when you trade against the trend.

The reason? Time.

The passage of time is favorable to the trend trader and a killer to the counter-trend trader.

Take the following steps:

1. Plot a Simple Moving average 49 on your chart

2. When price crosses it to the upside, trend is up and to the downside, down

3. Buy when the trend is up. No sells

4. Sell when the trend is down. No buys

5. Attempt counter-trend trades only after price has made a considerable run away from the 49 MA.

In the GBP/USD I wait for about 100-120 pips before attempting a counter-trend trade.

The 49 MA is a special MA with a peculiar behavior that you can learn to exploit.

How To Invest In Gold Jewelry

2007-11-16T00:32:00.000-08:00

Investment is one of the most common ways to make money in modern times as people have less disposable income and want more freedom of choice over their money. The internet has made all types of investment accessible, and more people are becoming interested in how investments can work for them. One of the most obvious and easy forms of investment is jewelry. It is easy to purchase and it is a commodity that everyone is familiar with.

Gold jewelry is the current hotspot in jewelry investment. Jewelry is proven throughout history to be a longstanding and stable investment, being popular throughout time. This is because the price and the financial returns made rely upon many factors, not just the price of the precious metal or stones used at that moment in time. Jewelry has survived many economical collapses, worldwide. It is not susceptible to fluctuating stocks and shares or currency markets and so does not lose its value.

Jewelry is an art form. It is subject to originality and intricacies in design, and there is always great demand. Recent global reports state that the demand for gold jewelry is rising by an impressive 19% a year, which is a record breaking amount. Jewelry demand is predicted to rise even further. It is covetable and collectible and becomes worth more with age. This can be reflected by the way in which gold stores are used; around 75% of all gold consumed is in the form of jewelry. The World Gold Council states in its latest gold report that in the US in 2006, jewelry sales totalled $44 billion.

Jewelry makes a visual statement about the person that is wearing it and so it is an enjoyable investment also. Like in ancient times, jewelry is closely associated with wealth, and so gives the wearer a confident demeanour. As an investment it has many advantages. For instance, antique jewelry can be bought and sold rapidly for a quick turnover; the demand has already been established above. Jewelry prices are also subject to trends. The latest fair in Vicenza states that yellow gold is of the highest demand in both the US and Europe, so it would be a good investment. However, due to the nature of the fashion industry this means that white gold jewelry will be a trend at some point soon.

The secret of jewelry investment is to know what you want and where to get it. This has been made much easier by the internet, as dealers can be contacted and business completed between any destinations on the globe. Furthermore, the internet has increased possibilities for jewelry wholesalers who can advertise their goods more easily, which means investors can get more for their money. A jewelry dealer will be able to provide you with information on the quality of the piece and the style, but a gold advisor or investment professional may be needed to ensure you buy the right type of jewelry for the investment you are looking for.

When buying gold jewelry, the most important factor is the caratage. The caratage details the amount of gold content present in the jewelry. Gold is pliable and so needs other metals such as silver and copper to be added to make it durable. This also affects the colour of the jewelry. The purest gold jewelry available is 24 carat and will be a strong yellow-orange colour. Jewelry in other colours can have a lower caratage as bigger quantities of the other metals are required to create the special effect. However, this does not mean that for white gold jewelry will be any less wise an investment as a yellow gold piece, as design, designer and personal taste also feature in the value.

Make sure you choose jewelry that reflects your tastes and brings you joy, as well as thinking of the long term investment to enjoy its full value.

12 Interesting Facts About The Forex Trading Market

2007-11-16T00:19:00.000-08:00

Forex is an abbreviated name for "foreign exchange." The Forex trading market is an around-the-clock cash market where the currencies of nations are bought and sold, typically via brokers. For many years, the market was dominated by large institutions such as banks and brokerage firms. However, the market has experienced a major change over the past several years, as a growing number of private investors and traders just like you have started to actively participate and trade. The purpose of this article is to reveal 12 interesting facts about the Forex trading market.

1. What is a Forex trading system? According to Howard Abell, "The [Forex] trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A [trading] system is a disciplined method for organizing dynamic, ever-changing market phenomena."

2. It is the most liquid market in the world, thus making it easy to trade most currencies.

3. Unlike equities or futures trading, you pay no commissions on the Forex deals that you make.

4. According to the Wall Street Journal Europe, the most commonly traded currencies on the Forex market are the U.S. Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the British Pound (GPB), the Canadian Dollar (CAD), the Australian Dollar (AUD), and the Swiss Franc (CHF).

5. The most commonly traded currency pairs are the U.S. Dollar and the Japanese Yen, the U.S. Dollar and the Euro, and the U.S. Dollar and the Swiss Franc.

6. The U.S. Dollar is involved in nearly 90% of all Forex transactions.

7. Ten financial institutions account for nearly 73% of the total trading market volume. The Top 10 most active traders include Deutsche Bank (17.0%), UBS (12.5%), Citigroup (7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J. P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%), and Morgan Stanley (3.9%).

8. The five major Forex trading centers are London, New York, Tokyo, Sydney, and Frankfurt.

9. The three major Forex trading countries are the United Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).

10. Currency market players typically use "Forex analysis" as a means of predicting currency price movements. Forex analysis is divided into two types: fundamental and technical. A fundamental analysis uses economic and political factors, such as unemployment rates, interest rates, or inflation, as a means of predicting currency movements. A technical analysis uses reliable historical data as a means of forecasting these movements. The technical analyst believes that history repeats itself over and over again.

11. Some traders depend on fundamental analysis while others depend on technical analysis. However, many successful traders use a combination of both strategies. The important point to remember here is that no one strategy or combination of strategies is 100% certain.

12. Margin is referred to as the collateral needed to facilitate the deal. Usually, this is a very small portion of the entire deal, say 1% or 1:100. Please note that margin is a "double-edged sword." Without the proper use of risk management tools (for example, the stop-loss option), you can experience substantial losses as well as gains. We suggest that you take complete advantage of stop-loss and take-profit options in your trading.

Trading Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.