Posts tagged Investing

Tools For Forex Trading Strategies

Everybody has to have money, that is clear enough, but how do you get it, or enough of it, on a recurring basis to be able to enjoy a fairly comfortable life? Most people work for somebody else, some others prefer to set up their own firm in order to be their own bosses and still others choose to buy and sell intangible goods like stocks and shares. A concept comparable to this last one is trading currencies on the foreign currency exchange, which is normally shortened to Forex or even FX.

The Forex is the largest market in the world. It turns over trillions of dollars every day and is actually open 24/7. Every country in the world has access to the Forex and every government and every bank trades on it every day. With all this money sloshing about it is obvious that there is a lot of money to be made from trading on the Forex. However, one must never forget that when someone wins, someone else loses. Billions of dollars are made and lost every day.

Never let anyone persuade you that making money on the Forex is easy. If it were easy, everyone would be rich and if everyone were rich no one would be. There is no easy money. However, what Forex traders try to do is establish a strategy that works for them. Once a profitable strategy has been developed, traders try to utilize that same strategy over and over again. This is a way of minimizing risk and, it is hoped, maximizing profits.

As you are developing your own strategy or maybe adapting one that you have read about in a book on Forex strategies, you will come across various terms which describe tools that are used in parts of those strategies. One of the most common tools is called ‘Leverage’.

Leverage effectively multiplies the value of your trading account. Leverage is often 100 times the real, funded value. Consequently, if you have $1,000 in your account, you can use leverage to ‘play’ with $100,000. This evidently gives you higher gains or losses and is a dangerously useful tool.

Another tool to be utilized in your general strategy is the ‘Stop Loss Order’. In many ways, the stop loss order can be used to stop you making a total idiot of yourself with leverage. For example, if you bought the USD/GBP at 1.50 and expected it to go to 1.60 and it does head off in that direction all well and good. However, you could place a stop loss order on the transaction at, say, 1.47, so that if it goes in the wrong direction you can only lose a ‘little bit’. The stop loss order is there to permit you to run your profits, but minimize your losses.

An ‘Automatic Entry Order’ allows you to enter the market at a price prearranged by you. So, for instance you may think that the USD would never drop below GBP 0.66 in a million years, but if it does hit 0.66, you are so sure that it will rebound that you want to purchase at that price at any time. You place an automatic entry order and you will never miss that opportunity, if it ever crops up.

These tools or strategies can be used in an overall strategy to minimize risk, but not eliminate it, you still have keep your eye on the ball and learn the rules of the game.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading

Top 20 Terms You Need to Know To Understand To Trade FX

When you start a new hobby or even profession, you are bound to come across terminology that you do not understand. The problem with not understanding the terminology of the industry, is that it hinders your development in your chosen field.

I know many people, especially older people, who think that they will never be able to grasp computers, because the terminology sounds like a foreign language. The same can be said for Forex, so I am going to explain my top 20 terms to trade Forex that I think you have to be aware of.

Ask, Offer – the price at which a trader will buy a currency; it is the seller’s price

Base Currency – the currency that all trades are quoted in. This will usually be the USD, but some systems allow the trader to choose

Bear – someone who thinks that the market or position will fall

Bull – someone who thinks that the market or position will rise

Broker – the person who places and deals with the trade for the trader. In FX there are no fees as such, as they are dealt with by the spread.

Cable – dealers’ slang for the USD/GBP exchange rate

Currency Risk – the risk of incurring losses resulting from an adverse change in exchange rates.

Day Trading – refers to opening and closing the same position or positions within one day’s trading (day trader)

ECB – the European Central Bank

Forex, FX or Foreign Exchange – the concurrent buying of one currency and selling of another. The currencies are written in pairs such as USD/GBP.

GTC – ‘good till cancelled’ – this means that an order is left with the dealer to buy or sell at a price pre-set by the trader. When the price is met the trade will be automatically carried out.

Initial Margin – this is the initial deposit of collateral required in order to enter into a position. It is a guarantee on future performance

Margin – clients must deposit funds as security to cover any potential losses from unfavorable movements in currency prices

Market Maker – is a dealer who offers prices and is prepared to buy or sell at those stated bid and ask (offer) prices. A market maker keeps a trading book

Open Position – this refers to any deal which has not been sorted out by monetary payment or reversed by an equal and opposite deal for the same value date.

Pip or Points – in currency markets refer to the smallest move an exchange rate can make. This could be 0.0001 in the case of EUR/USD, GBD/USD, USD/CHF or 0.01 in the case of USD/JPY

Resistance – is the level at which charts suggest that selling will take place

Spread – this is the difference between the bid and offer (ask) prices. It is used to measure market liquidity, narrower spreads often indicate higher liquidity

Stop Loss Order – an order to buy or sell when a particular price is reached, either above or below the price that prevailed when the order was given

Technical Analysis – is an attempt to predict future market activity by analyzing historical market data. It is usually represented in the form of charts, price trends and volume graphs.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading

Patience Is The Key With Covered Calls

Investors looking for a long-term strategy where conservative stocks can eventually be sold for profit may want to look into a strategy called covered calls.

Also frequently referred to as a “buy-write”, this strategy calls for an investor to buy shares of a company that may not make them an immediate profit. However, the stock may look promising in the long-term, so a threshold is placed, and the stock will be sold at that price, should it be reached.

To start this type of investment, a buyer will set a ceiling for the stock. If they bought it at $15, they may set a threshold (strike price) of $18. This means that once the price hits $18, the stock will be sold with a tidy profit.

This is a very conservative strategy because it requires patience and a long-term way of thinking. Several weeks, months or possibly even years may pass before the cap is reached to get the targeted profit.

The buy-write may take several weeks or even months. In some cases, a year or more may pass before the shares will get close to the capped price set by the investor.

In the waiting period, if the shares go above the threshold, it means that the buyer may have been too careful and will only get the profit on the $18, because that is what the stock will be sold at. If it never gets to that point, then the covered call strategy was a failure because the stock underperformed.

Though these risks are fairly small compared to riskier investment strategies, covered calls should still not be taken lightly. Much research should be done in regards to a stock before purchase. Due diligence means a greater chance of hitting the threshold and a profitable investment.

Joseph Eric Vencius has been an avid covered call investor since 2003. In addition to investing he likes basketball, hockey, and the beach.

how To Choose An Online Forex Trading System

The Forex market used to be the realm of governments, banks, financial institutions and very rich people. That was not so long ago either. Fifteen years ago, perhaps, maybe even less. The development that altered all that is the Internet. These days, the Forex market is played by small companies and even ordinary people as well as the big players of yesteryear.

Whether or not it is a level playing field for the big and the small, you will have to decide for yourself, because so much shame has come to light recently about issues in other financial markets. However, the Forex is so big that it is hard to think that it can be manipulated. (Although George Soros is blamed for a run on the GBP in the early nineties).

It is probable that the big players have more access to information that the rest of us. Particularly governments as they introduce the policies that affect the way a currency moves. Information is the key to successful Forex trading. Therefore, you have to know the terminology of the Forex market; how to utilize the financial instruments that your broker makes available to you and you have to be up-to-date on the information affecting your target currencies.

Therefore, it stands to reason that you should decide to open an account with a Forex broker that provides the most advanced trading platform, supplies the best training and distributes the best, up-to-date news and market analysis.

The best way of selecting an online Forex trading system is to Google “online Forex trading system” and pick six of the most impressive to you and save them into a folder in your ‘Favourites’ list. If you are new to Forex trading, you should read the companies’ training literature. This will give you an impression of how much the broker cares. Try putting some of the doctrines that you learn into practice in a ‘practice account’. The practice account is free, but sometimes you may only use a practice account for a month or so.

You will discover that some online Forex trading systems are simpler to use than others. One online Forex trading system might suit you but not suit me, it is a personal preference. Some online Forex trading systems will have all the bells and whistles, but you may prefer a simpler system. For example, if your computer is slow or your Internet connection is slow, you may want to be able to turn off any elements that you do not need in order to speed your system up.

Another aspect that you should pay close consideration to when choosing an online Forex trading system, is the system’s functionality for technical analysis. You will have to have free access to the historical data of the currencies that you are interested in. These data can then be interpreted by graphs, which may be able to help you determine which way a particular currency pair may go. Breaking news is also very important and your broker should supply you with all the most recent news stories ‘hot off the wire’.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading

Structuring Your Business

The type of legal structure you choose for your business can have a major influence on the success or failure of your venture. This is because your ability to take decisions quickly, to compete in the market-place and raise additional capital if necessary is directly related to the legal structure of that business.

There are basically three legal structures to choose from: sole proprietorship, partnership and corporation or limited company. No on form is better than another per se, because each has its own peculiar advantages and disadvantages. Therefore, what is important is to choose the legal structure that is best for you.

There are several questions that you should ask yourself to help you decide which form of business to choose. What do I already know about this type of business? In which ares of the business will I need help? How much money will I need to get started? Where will I be able to get money from, should I wish to expand later? What kinds of risks will I be exposed to later? How can I limit my liability? What kinds of taxes will I be expected to pay?

Sole Proprietorship More than 75% of all businesses in the United States are sole proprietorship. The essence of this type of business is that they are owned by just one person and usually, that person is directly involved in the day-to-day running of that business. As a sole proprietor, you have total responsibility for that business and all the profits from that business will be your too, as will all the debts and liabilities.

The advantages of a sole proprietorship are that you are the only boss, it is very simple to get started, you retain all the profits, income from the business is taxed as your personal income and you can stop whenever you like. The disadvantages are that you take on unlimited liability, your ability to raise investment capital is limited, you have to be able to do everything yourself from book-keeping to advertising, retaining high-quality employees can be hard and the life of the business is limited to your own life time.

Partnership A partnership is when two or more people share in the ownership of the business. The partners are accountable for every decision collectively, although decision-making might be divided up unevenly by agreement of all partners equally. All agreements should be written down, if at all possible in the presence of a solicitor.

The advantages of a partnership are that you get the benefit of other opinions, it is easy to get started, more investment capital is accessible, partners pay only personal income tax, high-quality employees can be made partners to encourage them to stay. The disadvantages are that partners have limitless responsibility, profits must be shared,partners, may quarrel and the lifetime of the partnership is limited by death.

Corporation A corporation differs from the other types of company, because a corporation is considered as a ‘person’ by the law. It has a wholly separate existence from its owners. As such it can sue and be sued..

The advantages of a corporation are that stockholders have limited liability, corporations can raise the most investment capital, they have an unlimited lifespan, ownership is easily transferable and they utilize specialists. The disadvantages are that they are taxed twice, starting up is expensive and they are more closely regulated.

Are you interested in structuring your Internet business? If so, please go to our website called Internet Business

Using Options To Generate Income And Protect Assets

The stock market industry is rife with terminology that can be confusing. Understanding not only the terms, but how each of the products can be used, is an important part of the excitement of being involved in taking risks that can provide significant rewards. Options are products that can be lucrative or can be costly, as all ventures into the market, and should only be used when the investor is experienced.

Options are contracts sold by a writer to a buyer. They are considered derivatives because their worth is based on the underlying stock. They give the buyer the right to purchase stock or sell the stock at an agreed-upon price by a specific date. In stock parlance, the writer sells a contract to the holder, which allows the holder to call or put the asset at the strike price by the exercise date.

There are four types of options, including the buyers and sellers of calls, and the buyers and sellers of puts. Buyers of calls think the stock will go up in price. Sellers of calls, or writers, receive a premium for the option contract, and must sell the stock if it hits the strike price.

Those who buy puts believe the underlying stock price will go down. Investors who sell puts make money on the sale of the options and are obligated to buy the stock if the strike price is reached. It is very important that only seasoned investors use these products.

The safest and most conservative of all contracts is a covered call. It can actually save an investor money and act as insurance against significant losses. The investor writes a contract for stocks already owned. The stock must be sold if it hits the strike price, but the premium for the contract remains with the investor. It can offset losses that would otherwise be damaging.

Hedge funds use covered calls to protect against devastating losses. With a volatile market, it is important to have some insurance against severe swings. While a certain amount can still be lost, it is a more controlled loss and, with the premiums, it can offset money the decline.

Speculators are high risk takers and use options to increase their potential for high earnings. But this same risk can cause huge deficits as well. When attempting to speculate, the investor must be educated about several variables. The variables include the price change, how much it will be and when it will change. They must be well informed about the risks and have experience reading the market.

These extremely volatile times make options both enticing and frightening. Unless the investor has a great deal of knowledge and experience, they should seek the help of a financial advisor. Stock brokers must obtain a license to complete transactions. The licensing includes a comprehensive test called the Series 7. It is demanding and covers all aspects of the market. When deciding whether you would like to start investing, contact a licensed broker for more information.

Born To Sell, www.borntosell.com, is a web site about covered call options. A common question is “how to do covered calls“? It’s not hard as long as you own one hundred shares (or more) of stock.

Using Options Trading To Make Money And Lower Your Risk

Options are a special type of investment contract that allows the investor to control large blocks of common stock without tying up their capital. Calls and puts are the two types of option contracts that are available. This is an investment strategy that is more complicated than simply buying common stock or bonds and holding on to them. However, there are ways that an ordinary investor can use calls and puts to boost the rate of return of their investment portfolio.

There are many different types of trades that can be put together with call and put contracts. Some can be quite risky for the average investor. There is one play that is very conservative that the typical investor can do well with. This strategy is called the covered call strategy. It is a low risk trade that generates immediate income when you begin the transaction.

In the event the covered call contract is in the money there is a way to terminate the trade for only a minimal loss. You terminate the trade by buying the same call contracts that you sold. This transaction offsets the first transaction when you sold the call contracts. In reality, most call contracts expire out of the money. This means they expire worthless, which the seller of the contract wants.

This trade is extremely liquid. It is easy to terminate the trade for only a minimal loss, but this happens rarely because most call contracts expire with no value. This mean as a seller of the contract you made a nice profit off of the premium you received when you sold the contract. Now you may turn right around and sell another call contract on the stock and make some more profit.

When you set up a regular process of selling covered call contracts you will have income streaming into your account on a consistent basis. While each individual trade may only earn a relatively small amount, it begins to add up to a substantial income. It is the closet thing to having a money machine that you can think of.

Covered calls are so safe that stock brokers do not even require strict net worth requirements or margin accounts. Other types of trades require the investor to put up collateral for large risky trades.The fact that the stock brokers consider this a safe investment is telling. Information is important when you are considering investments. It is important for the individual investor to understand what they are investing in.

You may want to speak to your financial adviser about adding this income generating technique to your financial plan. It is a low risk way to boost the performance of your investments. Because it is a safe way to preserve a strong common stock portfolio while generating an income stream, this is something all savvy investors should consider.

Talk to your financial planer to see how options can work in your investment plan. There are many different strategies that can be implemented to increase your stock market earnings. This is a sophisticated investment strategy that may not be appropriate for all investors. You should make sure that you have solid investments in your retirement accounts first before you start experimenting with this. However, it is definitely worth exploring the money making possibilities of using calls and put contracts.

Born To Sell’s web site offers additional information about covered call trading. A lot of people use covered call writing to generate consistent income from stocks and ETFs they own.

Forex Trading On The Internet

Picture being able to work any hours you like, day or night, from home. Picture if most of the work involved with this dream job was reading and thinking. No heavy manual work and no going to bed early so that you can get up early, unless you want to. Well, these jobs do exist. The newer ones are all Internet based, but you seem to be on the Internet anyway. You could build websites, blog, play the stock markets or you could try Forex trading.

Although each of these new jobs has its own virtues, I want to talk about the Internet and Forex trading, because it has the most promise. Blogging and websites will make you some money and there is little financial risk. The stock markets are only open about nine hours a day, but Forex never stops.

It is live literally twenty-four hours a day. This is because Forex exists only in machines, there is no Forex Building in the same way that there is a London or New York Stock Exchange, where people actually, physically go to work five days a week.

At this stage of the game, I will suppose that you are not going to give up your full-time job and that Forex will be a hobby. Hopefully a profitable one, but first you have to learn how to get started. Go to your favourite search engine and type in ‘forex brokers’ or ‘forex platforms’.

A dozen or more will crop up and you should visit the individual websites and save three or four that you like in a Favourites Folder. Then write down there titles, for example, AC Markets, and type into the SE: ‘AC Markets problems’. You may want to discard a few from your chosen ones after doing this. Anyway, ultimately, you will come up with a Forex broker that you are content with.

Pick a broker that gives a free Forex trading account and a free practice trading account too. A good Forex trader will provide you with free online charting services and access to information on the currencies that they deal with. So begins the protracted process of learning the principals of Forex trading. The point is that you should be able to learn how to place Forex trades prudently based on knowledge that you have gleaned and test your ideas all free of charge, until you feel self-confident enough to risk some of your own, hard-earned, real money.

One of the good elements of Forex trading is ’set and forget’. For example, your research may lead you to believe that over the next month, the GBP will rise by two cents against the USD and then fall back to being one cent ahead of where it is now. These trades can be programmed in automatically, so that if the GBP starts going up, the software buys for you and then sells for you at a given price, waits for a given fall and then buys back again. This is very helpful, if you are convinced but you have other things to do, like a real job to get on with.

The main thing to keep in mind is that you have all the time in the world, so take your time and be careful. Learn how to play the game before you take a seat at the table and you should find yourself earning a nice little extra income.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading

Reading A Forex Chart

Gambling on Forex is all about forecasting and the only tools you have to help you predict are news and charts, both being ways of representing historical data. Therefore, if you want to make money out of currency dealing, it follows that you will have to be able to understand these data correctly. The news can be manipulated by corrupt governments and corrupt officials, but historical charts can not. Therefore, the first task of any aspiring currency trader is to come to learn how to read a Forex chart.

The basic Forex chart is a graphical depiction of how one currency has fared against another. Therefore, you see USD/GBP and USD/EUR charts, showing the historical movements of the US dollar against the British pound and the Euro respectively.

When you open a Forex account with a broker, charting software should be part of the deal, if it is not look elsewhere quickly. The charting software will allow you to plot your two target currencies against each other.

A standard Forex chart or graph will have two axes. The bottom axis or line is a time line and can read in any units: years, months, days, hours or even minutes. The side axis will read in units of currency: usually tenths of a cent or penny or possibly whole cents. Whatever the units are, they will be clearly stated on the chart.

You can alter the time frame at the click of a button so that you can first look at the long term tendency, then the medium term trend and finally the short term tendency, which could be as short the last hour or minute by minute. It is especially interesting to watch a currency pair when important news breaks, like, for example, the GBP/EUR when the UK election results are announced.

It could go either way, but if there is a strong vote for one party or another, it means stability, whereas a hung parliament means instability. Stability will probably mean a stronger GBP, but will the international financial community rather a Labour or a Conservative government?

There are thousands of possible currency pairs, but most Forex brokers will only deal in a few dozen. However, it is very hard to remember all that data, so charting is useful to remind the currency trader of recent and not-so-recent trends.

Some people say that charting is more or less a waste of time, because no chart would have predicted 9/11 and that is true, but the fact is in truth, that if you want to gamble real money on the Forex market, you will have to learn how to read a Forex chart.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading

Using Market Indicators For Forex Trading

If you want to attempt to make some money by trading in foreign currencies, you clearly need to do a great deal of research. The basis for this research should be provided for you if you have opened a Forex account with a good Forex broker.

A decent Forex broker should provide its account-holders with sufficient news and sufficient charting functions to make good financial judgments. Because the Forex market is active every second of every day, the news has to be up-to-date as well. And precise.

A Forex market trader endeavours to use market indicators to forecast the future trends of currency pairs – for instance, the UK pound against the US dollar. Market indicators could be good or bad news concerning your target countries.

They might be jobless or gross national product (GNP) figures. Other market indicators might be the threat of war or the rise in the price of oil. In fact, almost all political and economic news can affect the way a currency moves.

These items of news will have a short term or a long term affect on the trend of a currency and the longer term trends are depicted in graphs or charts as they are known as in financial circles. Charting software should be integrated in your Forex trading account system.

These charts can be utilized to trace almost any time span, so you can make a trace of how two currencies fared against each other over the last five years, five months, five weeks, five days or even five hours.

The best technique to make full use of these charts is to use them in conjunction with current affairs. That way, you will see that so-and-so bit of news had so-and-so effect on the market price of so-and-so currency. For example, a steep rise in the price of crude oil will injure the dollar [USD], the pound [GBP] and the Euro [EURO], but it will help the currencies of oil-producing nations.

You can set triggers on your charting software so that you become aware of certain financial events. For instance, if you see that the USD is falling against the GBP, but you think that a fall under 1GBP/2USD is not justified, you could set a trigger point to advise you when that level is attained, so that you can buy back in or sell or reverse whichever position you are holding.

There are many market indicators and if you want to be a flourishing Forex market trader, you will need to learn how to utilize them. There are Stochastics, Fibonacci Retracements and dozens and dozens more.

The good thing about using a Forex broker’s online software is that the raw data is updated automatically, so that when you call up a graph, you know that the data is up to date and that the market indicators are working as they should be.

The only problem, and it is a big problem, is that then you have to interpret that data in order to forecast the future trend of a currency pair. At the end of the day, it is your money and you cannot blame the indicators, you can only blame your interpretation of them.

If you are interested in this article on online stock trades, visit our web site at Online Stock Trading