Sunday, October 7, 2007

The Role of an Online Stock Broker

Online stock brokers play a large role in the investment life of people who want to get into investing but either dont know where to start or dont have a large capital to get them started. Online stockbrokers are very different from usual brokers. So they will help you with investing but will not normally manage your investments and money.

The investment world that we live in now it has become increasingly hard to know what the best path for your money is. There are no longer any sure bets. There is however an art to the science of investment.

The stock exchange has always been the middle ground that acts like a platform for the stock traders and the offering companies to buy and sell. Generally once a company is invested in, it will use the invested funds to grow the company and expand areas, which will help them, achieve long-term goals. So once a company is ready to float, it means that is ready to grow.

In the pre-Internet world the traditional stock market works a little like this. Investors use and are assisted by stock brokers who will help their clients buy and sell their stocks. The broker will help their clients build a portfolio and help manage it. This is still done, but because of the Internet you have options.

The Internet provides you with the option of having an online stockbroker. An online stockbroker will offer you help in reaching your financial goals. By keeping a breast f the financial condition your online broker will make informed decisions. Online stockbrokers will charge less in commissions but will generally give you a little less for it. But if you work with someone that you trust, it should work out to your benefit.

When choosing and using an online broker you should however take these points in to consideration.

1.Its best to start with a full service broker and wean off then to an online broker.
2.Check your performance regularly so that you are familiar with your portfolio.
3.Always have a range of contact points for your broker.
4.Always choose a broker that has range of services and can offer you a range of options.
5.Go for a broker, which will allow you to start with a smaller minimum deposit. Perhaps go for a broker that will let you open an account without a minimum deposit. You will gage their dedication by this.
6.Go for a broker with low commission structures, but not always the lowest because you might not get a good service.
7.Do a quick background search on your broker; the Internet has made this very easy. Just do a search with their name, address and or phone number.
8.Never go with a broker that does not give you all of the fee information up front and straight away. If they hide anything, dont give them your hard earned money!

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Day Trading Courses

Day trading is the practice of buying and selling currencies before the close of the Foreign Exchange each day hopefully for the most profit. Anyone with a little money to invest can now trade over the internet. But its best to know a little bit about what youre doing first and theres no shortage of day trading courses to teach you about that.

Courses can be studied online or in face-to-face classes and duration differs between one day to five days - or indefinitely if you teach yourself in an internet correspondence course.

You dont need any specific paper qualifications in order to trade but you do need a few skills and a bit of knowledge that you could gain through a day trading course.

You will need to shop around, because courses can cost anything between $2,000 and $12,000 and they vary massively in quality for these prices its not always true to say that the most expensive option is the best one; it all depends on what you are looking for.

Here are a few of your options so you can see which one might be right for you.


Since Day Trading University came online, there have sprung up literally hundreds of websites offering day trading courses supposedly to university standard but be wary of these claims. These courses are unregulated, especially on the internet. You want to make doubly sure that they offer you the tuition you need.

Makes sure that the website you give your hard-earned cash to, to teach you day trading, is not simply an article directory. Thats not a substitute for a proper course in day trading and is probably not something that you want to be paying too much for. To maximize the benefit of an online course, it should offer you multimedia audio or video clips as well as downloadable activities and charts to continue and consolidate your learning.

Home study courses in day trading are also available in book form. They are easy t peruse at your leisure and you can browse before you buy, so you know exactly what youre getting. But books dont have the multi-sensory approach that a good website will have, with audio and visual streaming. It works for some people though. Many are written by experts in the field.

Face-to-face courses
This is where you might be spending big bucks to learn about day trading: make sure its worth it.

Tuition can be large group, small group or even one-to-one, although you may have to pay through the nose for one-to-one tuition. Be sure you really need it before you lay out your course fee, bearing in mind that if you are assertive and confident enough, *any* face-to-face tuition offers you the chance to ask the tutor(s) any specific questions which you might have.

Here are a few things you should be looking for in a good day trading course, whether that be face to face, online or in a book:
What to trade in
OK so that one was obvious, but how do you spot an opportunity for bigger trading profits? A good course should tell you this. On the flip side, they should inform you of what sort of trading to avoid and why, so you dont make big, costly mistakes.

Trading psychology
What is the best mindset for a successful trader? What opportunities should you look for? Who makes the most money?

Long-term and short-term trading
Now, as were talking day trading here, there is no real long-term, but a good trading course will differentiate between deals you strike every few minutes and ones you should sit on for a few hours. You need to recognize these in order to maximize your profits. Find out how to pick momentum stocks every day to squeeze the most out of your money. Tools of the trade

A good course will not be trying to sell you anything, so watch out for courses and books linked to a particular product or automated trading software. Of course theyll tell you that is the best one but you know your own mind. Make it up yourself without the sales pitch.

However, day trading need not be about constantly sitting at your computer, glued to currency reports. Automated trading is a great boost to day trading, and a good course should give you some ideas of what automation software is out there and how to discriminate between the packages available.

Now you know some of the options as far as day trading courses go and what to look for, you should be able to find the right training option for you.

Frank J Vanderlugt owns and operates

Day Trading

FOREX Brokers - Tips for Choosing the Best Forex Broker

There are many Forex brokers to choose from when trading currencies online - and choosing the right one is essential, if youre going to maximize your FX trading profits.

This article is all about choosing the best broker to help you trade online - and help you achieve currency-trading success.

Firstly, you need to understand the following:

A Forex broker is there to help you place orders and give you a good service when doing so.

Many novice traders however choose a broker assisted account - and then expect their broker to help them make money!

You shouldnt use a broker-assisted account.

To succeed in FX trading you need to understand that you alone are responsible for your trading success, and no one else.

Now you have your FOREX trading system / trading plan, its time to choose a broker. Here are some tips to help you:

Spreads Offered

Spreads can be very competitive and you need them to be. Transaction costs mount up - especially if you are trading frequently.

The tighter the spread, the more profits you will make.

Today, many brokers offer spreads as tight as 3 - 5 pips - and this is what you should look for.

Deposit Online

Look for a broker who will take online payments to your Forex account - and make sure the payment method is secure.

This is a great facility for funding your account quickly - and getting your trading profits back into your bank account!

Guaranteed Stop Loss Protection

The leverage is one of the main reasons that people are attracted to currency trading, as it increases the profit potential dramatically.

Of course, leverage is a double-edged sword - and where there are high rewards, there is high risk.

Many traders are nervous of trading with the potential to lose more than their initial deposit. With this in mind many Forex brokers now offer guaranteed stops and negative balance protection.

This is a sensible service to utilize when you first venture into trading, as it gives peace of mind for a small fee.

Leverage Offered

The leverage brokers will give you varies dramatically from broker to broker.

You should look at a broker who will grant you at least 200:1, as it will maximize your potential profits.

In fact, many brokers will give you leverage of up to 400:1.

Other Charges

Your only transaction cost should be the currency spread - you should not pay other commissions.

Always make sure that the currency spread is the only fee youre charged, and that you dont pay any extra brokerage commissions.

Investment Amounts

Today, currency trading is not just the preserve of wealthy individuals and banks - anyone can get involved, as deposits are affordable to all investors.

You can open a trading account online with as little as $100.00 this means that novice traders who want to start out with a small amount can do so.

Trading Platform

If you are trading online, you will go through a Forex trading platform - and you should look at this closely when looking to trade with a broker.

You want ease of use and reliability but also check that the broker provides assistance and support.

FOREX Trading Education

While you should always make your own investment decisions, its nice to get free trading tools such as:

FREE trading guides
Forex training seminars
Trading news
Trading recommendations
Forex trading systems
Trading books

These can be useful when you first start to learn Forex trading, and you are developing your own Forex trading strategy.

Choose Your Broker Wisely

When choosing a Forex broker you have a lot of choice, and the above tips will help you choose a broker that will be a valuable partner in your quest for profits from online Forex trading.

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Terrorist Nightmare on Wall Street

"Past history and recent intelligence have shown that New York City, a critical node of the U.S. economy, is clearly in the terrorist's crosshairs." - John Sudnik, Dirty Bomb Attack: Accessing New York City's Level of Prepardness From A First Responders Perspective. Naval Postgraduate School, Monterey, CA.

Here is a short story describing a possible dirty bomb attack on Wall Street and how such an event might impact the U.S. economy and financial markets. Let us hope this third Islamic terrorist attack on Wall Street will never happen, but remember 9/11 was the second terrorist attack against the World Trade Center Towers. Could both incidents have been an attempt to topple the World Trade Centers twin towers into the NYSE building? As an investment professional and a close follower of the news and current events, I would not recommend that you bet your entire investment portfolio that this nightmare on Wall Street never happens.

To set the stage we have three different types of investors in this scenario: First, there is Paul, a dentist in St. Paul, Minnesota. Paul has his entire qualified retirement plan managed by a major investment firm in New York City. Second, there is John, an entrepreneur in New Jersey. His business is located about thirty miles west of Manhattan. John has half of his investments in U.S. global mutual funds and a U.S. variable annuity. The rest of John's investments are in a global portfolio managed by a private bank in Geneva, Switzerland. Third, is a wealthy, pro-western Saudi businessman. His investment portfolio is managed by a large international bank headquartered in Charlotte, North Carolina.

The event:

An Islamic terrorist group managed to obtain enough radioactive materials and conventional explosives to construct a dirty bomb. The explosives were strategically positioned in vacant warehouses in New Jersey just north of the Newark Airport and the detonation was timed to take place during a winter day when the winds were blowing east south east, carrying the radiation across the Hudson River area of New Jersey, on across lower Manhattan Island, and then on to Long Island.

Another advantage of this particular wind direction was that the Wall Street emergency back up facilities, back office operations, and data storage centers were located in eastern New Jersey and western Long Island. Terrorist cells, along with the American people had been told of these emergency locations and back up facilities following the 9/11 attack three years earlier in an attempt to ease investor concern and stop a possible market panic during the market closure. Of course, it did not take a rocket scientist to figure out that the hundreds of thousands of Wall Street workers would need the back up emergency facilities within easy commuting distance of Manhattan to make the system work.

While the physical damage to the Newark warehouse district was quite extensive, the number of lives lost there was minimal. The problem began with the radiation, debris, and dust cloud which swept across a narrow but widening area beginning on the Hudson River, taking in the southern part of Manhattan including Wall Street and covering much of western Long Island.

The resulting rioting and panic as the radiation cloud moved over Manhattan killed over 100,000 people, as millions of residents and commuters tried to flee. This, however, was just the beginning of the problem. After the panic had subsided came the radiation sickness and poisoning. The markets were immediately closed and the U.S. army cordoned off the entire area as millions of sick refugees were slowly decontaminated and allowed through the lines to be transported to emergency medical treatment facilities all across the United States. The tragedy and Wall Street holocaust, as it became known, resulted in the largest number of Jewish deaths since the Nazi holocaust - something that the terrorists had been calculating.

The terrorists hated America, Israel, and Saudi Arabia with almost equal intensity. Another component of their terrorist plan had been for selected supporters in Saudi Arabia within the banking and financial industry to spend hundreds of millions of dollars buying put options on the U.S. stock market in the days leading up to the attack. Their plan was not just to destroy the U.S. financial markets, but to also take down Saudi Arabia in the process. Even though they knew the tremendous profits from these market puts would be disallowed, their actions within the Saudi financial establishment had a more important goal: Making these investments also served to implicate the Saudi financial establishment and government which, when discovered, brought the full wrath of U.S. public opinion and the government down on Saudi Arabia. Every dollar of Saudi funds by individuals, banks, financial managers, and even the government invested in the U.S. markets were frozen and seized.

Immediately following the attack, all existing Presidential Emergency Orders were activated and all banks and investment markets were shut down. The press was forbidden to publicize or even discuss the amount of contamination to Wall Street and, more importantly, to the back up emergency centers. All they could say was that the investment markets are sound and closed on a temporary basis until we can get the employees back into New York City. The media downplayed the damage to the facilities and all evidence of the rioting and massive panic that caused most of the initial causalities. All freedom of speech, civil liberties, the Bill of Rights, Habeas corpus, and constitutional protections were suspended for the duration of the emergency.

The problem the media did not tell investors was that the contamination of the area meant it had to be quarantined for a minimum of six months before clean up crews could make it safe for the financial service employees who survived to return to work.

While the human toll from the terrorist attack was incalculable due to the delayed effects of the radiation poisoning, the financial toll was not. The American dollar lost 70% of its value during the six-month period compared to the Euro, the Yen and the Swiss Franc. There was a brief one week solidarity closure of all world markets but eventually one at a time they started trading again. The U.S. markets remained closed as the 'temporary' one week delay stretched to 3 weeks, then 2 months, then finally 6 months.

The foreign market panic finally subsided as investors outside the U.S. and American investors with funds outside the closed American markets picked up investments at very low prices. It became apparent that Americas misfortune would throw all liquidity-starved U.S. companies and citizens into a depression far worse than the Great Depression of the 1930s. Although the banks opened back up after a month, there were severe limits on the amount of funds which could be withdrawn from checking or savings accounts. No U.S. stocks or bonds could be traded, as was the case for mutual funds, investment management accounts, and variable annuity portfolios.

After six months, the U.S. markets opened again on a limited basis for a few hours each day but there was little interest with the Dow trading at around 1,000 and the NASDAQ was down to 120. The minimal liquidity available in the U.S. and the Presidential Executive Orders allowing only 5% of a bank account, security or portfolio to be liquidated per month turned corporate America into a buying basement opportunity. Foreign investors and the few Americans with liquidity from investment accounts outside the closed U.S. markets purchased U.S. securities at a mere fraction of their values before the attack.

Did the American economy recover? Yes, but at a high price for investors. Many of our corporations became foreign owned and controlled when they were picked up at stock prices for pennies on the dollar at the market reopening. The real estate market crashed like everything else and we went through a period similar to what Russia went through after the fall of the former Soviet Union. Eventually, the extreme Presidential Executive Orders were moderated and America slowly returned to normalcy but investor confidence and portfolios were devastated.

What happened to Paul, John, and the Saudi businessman?

Paul, the dentist in St. Paul, Minnesota, had his entire qualified retirement plan managed by a major investment firm in New York City. It took Paul and his accountant years to prove what was in his retirement plan investments, since most of the records were destroyed in the panic, and the investment firm employees perished in the disaster. When the market finally reopened and the statements were again available, Paul ended up with about 5 cents on the dollar because many of his equity holdings had declared bankruptcy during the year following the attack.

John, the entrepreneur with half of his investments in global mutual funds and a variable annuity and the rest in a managed global portfolio handled by a private bank in Geneva, Switzerland, was better off. John heard the explosion and saw the cloud heading toward the Hudson River and Manhattan but the wind direction spared his area of the destruction and panic. All of his global mutual funds were headquartered in the Wall Street financial district so they, along with his variable annuity, were frozen during the six-month market closure.

However, John did not know at the time that even though the funds were frozen, the underlying foreign securities kept trading and his portfolio actually increased about 30% when the U.S. markets started trading again. The 70% fall in the dollar that continued after the six months period actually helped restart the American economy. This translated into a 100% purchasing power gain in John's foreign funds. Although it took him 20 months to liquidate his U.S. investments at the 5% allowed each month, he eventually sold all at a profit. The money managed by the private bank in Geneva, of course, continued being managed in non-U.S. investments and he was able to use the proceeds to purchase several quality properties in the distressed U.S. real estate market after the collapse.

The Saudi businessman with his investments managed by an international bank in Charlotte, North Carolina, was horrified at the attack but he and other Arab investors, regardless of their political persuasion, suffered the greatest financial losses from the terrorist attack. The American government froze most Arab government and individual private investments during the market closure and these assets were temporarily transferred to the American treasury until the real culprits behind the attack were apprehended and tried. It has been five years now and the U.S. government has yet to release any of his U.S. investments even though his name has never appeared on a suspect list. In the end, it really did not matter because Saudi Arabia and the other remaining moderate or pro-American nations all overthrew their existing governments and became militant Islamic republics, due to the Moslem worlds outrage at the American asset freeze and confiscation.

This is a long case study but is important to think about if you share my concerns of a future attack. I do not have inside information or a crystal ball but this is what I think could possibly happen if Islamic terrorists are able to build and detonate a dirty bomb or weapon of mass destruction.

Currently, I do not have a single dime invested in the American stock market because I believe the risk of another terrorist attack is too great. Islamic terrorists have already twice targeted the Wall Street area of New York City. If in the future they have the capacity to use a WMD, every investor in the U.S. markets could be left holding the bag and little else, since the American markets could be closed for six months or more depending on the technology damage, death toll in the financial industry, and degree of contamination.

Have you considered the likely consequences for another terrorist attack against New York City and Wall Street? Have you found yourself wondering why media reports constantly warn about the likelihood of an Islamic terrorist attack on a U.S. target with a weapon of mass destruction or dirty bomb, but there is never any speculation as to the possible target? There are simple reasons. First, we have no way to prevent such an attack. It is just that simple. Second, the government warning of a threat to the U.S. financial markets would generate a financial and market panic that could equal the effects of the actual terror attack.

Obviously Washington and the financial establishment have decided it is best to treat the terrorist attack risk to Wall Street like every stock market collapse--as something that will never happen but always does. There will be no warning, no suggestion to diversify outside of New York Stock Exchange and NASDAQ securities, or out of mutual funds and variable annuity products in these investments.

Will this horrible nightmare take place? I surely hope not, but I urge investors to take this scenario risk into consideration when reviewing how much of their portfolio is invested only in the U.S. dollar and Wall Street investment markets.

Ron Holland is the author this article and it is from the online book, The Swiss Preserve Solution at This is a politically incorrect guide to defending your wealth & liberty from internal and external 21st Century threats.

Currency Trading: Understanding the Basics of Currency Trading

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

GBP/USD: Pound
USD/CAD: Canadian dollar
USD/CHF: Swiss franc
AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

EUR/USD 1.2545/48 or 1.2545/8
The bid price is 1.2545
The ask price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.

Margin Call

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader theoretically with the maintenance margin.

Most of the time margin calls occur when money management is not properly applied.

How are the mechanics of a Forex trade?

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

Its very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

Raul Lopez is a full time Forex trader and founder of a high quality Forex training and Forex trading course provider.