Monday, October 1, 2007

General Money Management

Trade Limit
For any given trade, the trader will not lose more than $X. If your last trade losses are greater than this preset amount, then you should determine what course of actions you will take. These actions will likely force you to stop trading for the rest of the day. This means that you should shut down your trading platform FOR THE DAY. You then should determine how the free time well be spent. You might want to re-evaluate the strategy that lead to your loss and make any changes if necessary, and then paper trade until you are certain that the strategy continues to work.

Weekly Limit
For any given trading week, you will not lose more than $X. If your weekly cumulative losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week. Again, you will shut down your trading platform FOR THE DAY and refrain from trading the REST OF THE WEEK. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.

Monthly Limit
For any given trading month, you will not lose more than $X. If your cumulative monthly losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week and the remainder of the month. You will shut down your trading platform FOR THE DAY, FOR THE WEEK, and FOR THE REST OF THE MONTH. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.

How Will You Handle Large Losses and Profits?

Your trading capital must be money that you can afford to lose. You need to determine at what point you will bring in more money in the event of a large loss. In addition youll need to define when you will take money out of your account as your profits increase.

How Will You Determine Your Position Size?

The size of your position should never exceed the limitations listed in your risk management rules. Something you might want to consider is that some strategies might have a high probability of success (e.g. trend continuation strategies) which enable you to adopt a more aggressive position size at entry. Other strategies might have a lower probability of success (e.g. reversal strategies) and your risk management rules may only allow for a more conservative position size at entry. However, once the trade and the new trend are established, you might want to think about adding to the position at predetermined continuation signals. This potentially allows you to increase your position size while at the same time maintaining a very low exposure to risk

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Forex Trading - The 3 Keys to a Winning Trader's Mindset

Forex trading is simple to learn, and anyone can acquire the skills - so, why is it that 95% of traders lose money? Many traders lose money because they have poor methods, though some have sound methods but still lose - because they lack the right mindset to succeed.

Here well look at the three keys for getting the mindset of the millionaire traders.

1. Desire and Passion

If you want success in anything - including forex trading, then you must desire success. If you have the desire, then youll do whats required to succeed. If you look at any of the legendary traders, they all had desire - and they loved what they did with a passion.

You must also have desire and passion for what you do. However, thats not enough - you must also avoid worrying about risk and setbacks. Currency trading success doesnt come easily so, if you cant build up the strong desire and passion required for successful trading, then you should find something else to do - as youll lose your money trading in the currency markets.

If however, you accept that its not any easy road - and youre prepared to put in the effort, then forex trading can earn you an income that most people can only dream of.

2. Confidence

You hear traders talk a lot about discipline when forex trading - but you dont hear them talk much about confidence. However, confidence is a vital component of your forex trading strategy - confidence in yourself not in some mentor, or guru youre following.

If you want to succeed in currency trading, then you have to have rock solid confidence that your currency trading system this will lead you to currency trading success. You must retain your confidence, even when youre losing money - and therell be periods when you lose money, for weeks, or months on end.

If you dont have unshakeable confidence that youll ultimately succeed, then currency trading will break you and youll throw in the towel before you become a winner.

To have confidence, you need to understand exactly how, and why your forex trading strategy works. This will give you a trading edge - and ultimately, success. If you dont know what your trading edge is, then youll be joining the majority of traders - the ones who lose money!

3. Discipline

Youve probably heard that discipline is vital to trading success - and if you think that following a system with discipline is easy then, think again.

Lets look at an example of just how hard currency trading with discipline really is: In the eighties, legendary trader Richard Dennis taught a group of traders with no previous experience, how to trade - and he gave them a method they could all use. In 14 days, these traders were given trading accounts - and collectively, they quickly made over $100 million.

They were all successful traders - yet there was a huge variation between the results of the individual traders. In Curtis M. Faiths great book The Way of the Turtle, he discusses this in depth and the lesson is: Learning a successful trading system is not enough! You need the correct mindset to execute the system correctly and nothing can prepare you for this. You simply have to experience it yourself - and its tough trying to stick with a currency trading system, when the pressure is on - and youre losing money. Money is on the line and emotions are involved.

Many forex traders try to prepare for trading, with demo accounts - and making big percentage wins. However, theres no pressure - its practice, and its easy try doing it for real, with real money thats when if becomes difficult!

Now you have them - the three keys to adopting the right mindset, in order to achieve currency-trading success. Its not easy to achieve the winning traders mindset - but when the rewards are as great as they are in FX trading, you wouldnt expect them to be.

If you can adopt the right mindset, the world of currency trading will give you immense rewards for your effort. Good Luck!

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Moving Average Convergence-Divergence - The Trading signal

Moving Average convergence/Divergence (MACD) was developed by Gerald Appel, it is one of the simplest and most reliable trend-following indicator. It shows the difference between a fast and slow exponential moving average of the closing price, the result are then plot to forms a line that oscillates above and below zero, without any upper or lower limits.

The fast line called the MACD line and is the difference between two smoothed exponential moving averages of closing prices (usually 12 and 26-days). The slower line called the signal line and is usually a 9-days smoothed exponential moving average of the MACD line.

MACD Formula
The following are the steps to calculate MACD

1. Calculate the 12-days EMA of closing price
2. Calculate the 26-days EMA of closing price
3. MACD = 12-days EMA - 26-days EMA
4. Signal Line = 9-days EMA of MACD

Formula for EMA

EMA = (SC X (CP - PE)) + PE

SC = Smoothing Constant (Number of days)
CP = Current Price
PE = Previous EMA
* A SMA is used for first period's calculation

Trading signals
MACD crossing Signal line
There are 2 types of cross over between MACD and Signal line.

MACD falls below Signal line
It is a bearish sign which indicates as a sell signal and the price of the underlying stock is likely to experience downward momentum.

MACD rises above Signal line
It is a bullish signal which indicates as a buy signal and the price of the underlying stock is likely to experience upward momentum.

MACD line crossing Zero MACD can cross above or below the Zero line. A crossing of the MACD line above Zero interpreted as a bullish sign and the stock likely to go upward. On the other hand, a crossing of MACD line below the Zero line interpreted as a bearish sign and the stock is likely to go downward.

The Zero line is often acts as an support or resistance for MACD.

Overbought / Oversold
MACD values can also fluctuate above and below the Zero line. When it rises dramatically and is too far above the Zero line, it indicate as an overbought condition. When MACD falls dramatically and is too far below from the Zero line, it indicates as an oversold condition.

When either one of the condition above occurs, the shorter moving average pulls away from the longer term moving average. The stock is extremely overbought or oversold under these conditions and will soon return to normal levels.

Divergences appear between the trend of the MACD lines and the stock price. There are two types of divergences: Bearish divergence and Bullish divergence.

Bullish divergence occurs when MACD line is below the Zero line and start to show strength while prices continue to move downward. This is always a signal that underlying stock has reached bottom.

Bearish divergence occurs when MACD line is above the Zero line and start to weaken while prices continue to raise or trend higher. This is a warning where the underlying stock has reached the Top.

Both of these divergences are most significant when they occur at relatively high or low levels.

In MACD-Trader blog, we scan for more than 6000+ stock symbols in the NYSE and NASDQA for MACD line crossovers. You can visit us at

For other tips and advice on how to perform you own market analysis, please visit DIY Traders page at

We strongly recommend you to combine MACD with other indicators as a confirmation of the trend.

Types of Retirement Accounts

We all need to save more for our retirement years. The biggest issue and deciding factor of how much you have at retirement is twofold.

First, how early you begin to save has a significant impact on the end result. Second, the type of retirement account can mean the difference between retiring rich and retiring "comfortably".

You should know before making one of the most important decisions of your financial life that there are a vast variety of different retirement plans for us to choose from, and seeking professional advice may be the best way to figure out what fits you best.

The retirement plan we are probably all the most familiar with is the 401K plan. This plan is sponsored by our place of employment. The employee makes his or her specified contribution per paycheck.

Not every employer offers a 401k, but most bigger corporations offer it as an incentive for their employees to take advantage of.

The contributions to a 401 are made pretax, and are withdrawn directly from the individual's paycheck. Whatever an individual earns on these contributions may compound and remains tax-free until the employee has it distributed upon retirement.

The next retirement plan, and perhaps the second most well-known and commonly utilized for it's tax benefits at the opposite end is the IRA.

With the IRA, or individual retirement account, the amount a person can contribute pretax is connected to the amount earned in wages.

Using an IRA makes sense if your contributions are fully deductible or your contributions are partially deductible and you won't need the money before age 59 1/2, or if you're already maxing out your 401K.

Within the category of IRA's, there are many different types. The Keogh Plan is designed for a self employed person or a partnership.

For small businesses to set up retirement plans, there is the simplified employee pension or SEP plan. With the Roth IRA, the contributions made are not tax deductible, however, the returns will be distributed tax-free.

When contributing to a Roth IRA, your plan would be that you'll pay less in taxes now than the rate you'd pay in retirement.

You would also want to confirm with your financial advisor any tax benefits you may receive now for making contributions to your IRA, if any, as this can significantly reduce your taxable income in some cases.

A rollover IRA is meant for people who are retiring and receiving money from a 401K or for people who are leaving a job.

There are more variations to investing for retirement and far more detail to each kind of retirement account.

Review your own personal financial situation, your age (big rule of thumb, the earlier the better), your income and other variables to determine which investment option is best for you so you can retire with peace of mind.

Danna Schneider is the founder of Credit Card Directory for information on low interest credit cards, special interest credit cards, and the best deals currently going in credit. She also manages an online financial and credit info blog Credit Tips, Financial News.

Money Transfer Services Have Increased The Business Connectivity Worldwide

Conducting a business means you have to send invoices to your clients to make payments. The extent of your business determines how far you need to send invoices. For example, for a businessperson in China having a clientele in the USA means that he needs to send have a set of options whereby sending and receiving invoice would be seamless, fast, and reliable. This was a difficulty earlier, a reason why business hesitated setting the seas.

Online money transfer services have come as a boon to these problems. With the advent of online money transfer, today business can send invoice to its worldwide customers instantly and reliably, making it easy for business to maintain profitability. Sending invoice to another part of the world is easy. You can choose from a variety of online invoice forms from the Internet. Whatever form you choose, you should ensure that it consists of detailed information about the goods or service price, current contact information, quantity of product, freight and transport charges, validity, terms of payment etc. You can also opt for software programs for generating the invoice.

Once your invoice is ready, you can start generating them online. a number of online money transfer service providers offer invoice sending facilities. Epay has a whole lot of features for sending invoices through email and also mobile. Recipients need to click on the invoice and make payments. The advantage of this feature is quickness and reliability of payments. An email can travel around the world in seconds and so can the payments. Hence, if you are choosing to set up a worldwide business, make sure that you have access to such online money transfer services that let you make send invoices and accept payments to the invoices fast, easy, and secured.

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