Tuesday, October 9, 2007

Avoid "Buying" Mutual Fund Dividends

At this time of year, you need to be aware of the ex-dividend date of any mutual funds you plan on purchasing. If you heed this advice, you avoid some nasty tax and investment performance consequences.

To explain why, let me first define ex-dividend date. On the ex-dividend date, all registered owners of a mutual fund become eligible to receive any declared dividends and capital gains distributions. If you do not own the fund by that date, you do not receive the payout. You also want to keep in mind the distribution date. After that date, you can go ahead and buy your shares without the negative impact on the NAV (Net Asset Value).

At this time of year (Oct Dec), most mutual funds declare their dividend and capital gains distributions. You have nothing to worry about if you want to buy stock. Such distributions do not impact the share price. However, if you own mutual funds you need to consider the impact of this distribution on the NAV or share value. On the day of the distribution, you will see the NAV of your mutual fund shares drop by the declared dollar amount. In industry parlance, we call this buying dividends.

Heres how it works. Throughout the year, the cash from dividends paid by stocks within the fund and capital gains realized from the sale of assets either accumulates adding to the funds cash balance or gets reinvested in equities by the fund manager. At the end of the year, the fund must distribute at least 95% (?) of the dividends/realized capital gains not reinvested in new securities. Typically, funds declare this distribution in the months of October and November.

At the end of the year, the NAV of the fund reflects the value of all the investments it contains plus the starting cash balance and the accumulated cash resulting from dividends and capital gains. When the fund manger distributes the dividends and capital gains, the NAV drops a corresponding amount. Thats fine for the people who have owned the fund most of the year. They enjoyed the NAV appreciation that resulted from the growth of the investment, the dividends, and the realized capital gains. An investor who buys just before the ex-dividend and distribution dates has purchased cash value. When the fund distributes the cash, the new shareholder sees the value of her fund shared decrease, receives back part of her investment, and then gets to pay taxes on in essence her own money! Not a good deal.

A look at an example will show why you want to avoid buying dividends. Suppose the ex-dividend date is tomorrow and you buy shares at a NAV of $25. The fund declares a dividend of $3.00 per share. Doing so means that tomorrow the fund distributes $3.00 of the NAV so your shares are now worth $22 instead of the original $25. You now owe taxes on $3.00 per share even though you didnt enjoy the price appreciation you would have had if you had purchased at the beginning of the year.

You can see that you lose in this situation. You should avoid buying dividends. Instead, wait until after the after the distribution date to purchase your shares. Then you will get to enjoy any price appreciate throughout the year and not pay taxes on the return of your own cash!

About the Author:

Catie Fitzgerald is a 10+ years veteran of the money management profession and the founder of Financially Savvy. Financially Savvy provides investors with the education and resources necessary to gain confidence in making their own financial decisions. We offer a variety of educational venues including classroom sessions, one-on-one coaching, and online resources. If you have a personal finance question you would like answered, contact Catie at cfitz@financiallysavvy.com.

Forex Strategy - How Do You Trade The Non-Farm Payroll Report?

In the development of your forex strategy do you wonder how you can trade the non-farm payroll report?

Seeing this is one of the most, if not the most, volatile announcement during the month (first Friday in every month) newer traders watch the huge movements and wonder how to make money from all that volatility.

The answer given below you may not fully appreciate until some explanation is offered.


"How do I trade the non-farm payroll report?"


"You DON'T!"

Or to put it another way, "By maintaining a neutral position!"

The market is far too volatile at this time to expect a high probability trade. There may be some gamblers out there who relish the thought of 'placing a bet' to go long or short. But serious traders know better.

Actually, the professional traders I know all say the same thing: "Stand aside and wait for the market to calm down."

This may take between 30 to 45 minutes in some cases and even then the direction of the market may be uncertain.

Some suggest you can trade volatile market movers such as the non-farm payroll report by waiting for the first leg of the move, up or down, then wait for price to pull back 10 or 15 pips, then enter a trade to catch the second leg of the move which often follows.

That's one possibility but still high risk. Personally I prefer to base my forex strategy on sound market assessment and carefully researched trades.

Trading The Aftermath

However, while many professional traders sit out the non-farm payroll report, that doesn't mean they don't trade afterwards.

After the market has made a violent move in one direction you sometimes see price stalling and then give a clear signal that it's momentum is exhausted.

Look For Combination Factors

This may be in the form of a candle pattern such as a hammer with a very large shadow which also happens to be on a key support or resistance level.

Now you can enter a trade with a small level of risk as you place your stop just above the high or low of the candle signal.

By applying a number of technical indicators to the chart pattern after a non-farm payroll report, you may see a point where a previous support/resistance level convergences with a Fibonacci retracement or extension, or the 200 EMA (Exponential Moving Average), or a pivot point.

If a distinctive candle forms at that level also you can expect a reasonable price bounce and extract a number of pips from the market.

This advice applies to all fundamental announcements which are considered 'market movers'.

By developing a cautious forex strategy based on sound trading principles, you will enjoy this business and get the satisfaction of seeing your account equity steadily growing.

Get a useful free tip on how to use the MACD indicator for safe trading here:


To learn how to preserve your mental and emotional equity in addition to your account equity click here:


For the best free economic calendars plus a free pivot point calculator and Fibonacci calculator click here:


Set Yourself A Set Of Forex Trading Rules And Stick To Them

One of the biggest problems for the new Forex trader (and quite a few experienced traders) is that they are no real rules to Forex trading. Now in some ways that's one of the beauties of forex trading and it's nice to have the freedom to trade when you want to, to enter and exit positions whenever you feel like it, to increase or decrease an existing position and simply not to trade at all if you don't feel like it.

But within this freedom there also lies considerable danger.

No matter what we do in life there is no doubt that we do much better if we have a clear objective in mind and a roadmap to get us there. However, even though having a road to follow is essential, it is also important that we have a set of rules to follow to keep us on that road and to stop us from taking a wrong turning and ending up heading off course or driving up a dead end road.

In Forex trading there's no doubt at all that traders who follow a strict set of rules meet with far greater success than those who simply 'wing it'. Also, if you speak to traders who do follow a set of rules they'll tell you that, nine times out ten, when they have a bad day it's because they don't follow the rules and, when they have a good day, it's because they stick to them like glue.

The problem is that, since Forex trading doesn't really have any rules, you have to create a set of rules for yourself.

Now exactly what rules you will lay down for yourself will depend very much on your own trading plan and your rules will need to be reviewed whenever you update your plan - which you should do on a regular basis. So what sort of rules are we looking at?

Well, you might for example decide that you will never enter a trade without ensuring that you have a stop loss order in place. You might also decide that you will only enter a trade if certain analytical conditions are met. In other words, you will not enter a trade simply because you have a feeling about it, but will only do so if the numbers tell you that you should do so. In addition, you might decide when you are in a profitable trade you will move your stop when your profit reaches a pre-determined level in order to protect your position.

These are just a few ideas and your own list will need to meet your own particular trading strategy. However, whatever shape your list takes and however long or short it is, it is vitally important that you draw up a list, having thought about it very carefully, and that you then stick to it and also review it at regular intervals.

ForexOnlineTradingSystem.info is the ideal place to learn Forex trading and provides information on a wide range of topics including currency exchange rates and the benefits of testing the water through mini Forex trading.

Futures Contracts - Profitable Investment Alternatives?

With the growing popularity of futures trading, more and more people are jumping into this interesting form of investing. People quickly find out that futures contracts are vastly different than agreements to purchase common stocks; with futures contracts, you are not actually buying a particular commodity, you are obtaining the right to purchase the underlying asset during a particular time period.

Pork Bellies?

Another difference between investing in the stock market and investing in futures contracts is the asset itself. Of course stocks are the assets involved in the stock market, while the commodity assets in futures contracts include:

Currencies The currency market is one of the best known commodities, trading the likes of the British pound and the American dollar.

Interest Rate Futures T-Bonds represent long-term interest rates and Eurodollars are for short-term interest rates.

Energy Futures Natural gas, heating oil and crude oil futures are the most widely known in this sector.

Food Sector Coffee, orange juice and sugar are well known commodities in this sector.

Metals Gold, silver and copper are traditionally strong commodities.

Agricultural Wheat, coffee, cotton, soybeans, pork bellies and corn futures are among those that are best known.

With so many futures contracts available, it can be difficult to decide which commodities interest you, especially if you are new to commodities trading. Sometimes it can be helpful when you start trading to begin with more popular commodities.

Below are five of the most popularly traded futures contracts:

1.S&P 500 E-mini This is extremely popular for those investing in the futures markets. The E-mini can be traded electronically 24 hours a day, five days a week. In addition, the E-mini has most of the same advantages of the regular S&P 500 commodity but the cost of investment is much less.

2.E-mini NASDAQ 100 The E-mini NASDAQ 100 follows the movement of the NASDAQ 100. Like the S&P 500 E-mini, this futures contract can be electronically traded and the contract and the amount of margin you have to set aside to trade the contract are smaller than a standard contract. Since most individuals don't have large enough accounts to trade regular contracts for the NASDAQ 100, the E-mini works out great.

3.Light Sweet Crude Oil Probably the most famous commodity traded is oil futures. When you see the price of oil discussed on the evening news or in an investment newsletter, this is exactly what they are discussing.

4.Gold If oil isnt the most famous futures contract, then gold surely is. A gold contract tracks the price variations of one ounce of gold. Gold became an important part of the US economy when the United States went to the Gold Standard in the 1970s. Since then, the price of gold changes dramatically, almost always in the opposite direction of the US dollar. Gold investments are frequently used as hedge funds because of the relationship with the US dollar.

5.E-mini Euro FX - The E-mini Euro FX contract tracks the movement of the exchange rate between the U.S. dollar and the Euro. The "E-mini" means that the contract and the amount of margin you have to set aside to trade these futures contracts are smaller than regular contracts. Most individuals don't have large enough accounts to trade a regular contract for the Euro, so E-minis are excellent investment strategies.


Futures contracts provide interesting and potentially profitable investment alternatives to many investors. Understanding the investment basics of futures contracts and commodities such as these will help you to be a more successful trader when it comes to futures contracts.

http://www.candlestickforum.com/PPF/Parameters/1_21_/candlestick.asp A site dedicated to stock market investing using Japanese Candlesticks

Vertical Spread - Vertical Option

When option traders or investors engage in spread strategies, many times they are working with vertical spreads.

Any spread is created when a person buys and sells call options on the same stock or buys and sells puts on the same stock.

A vertical or price spread gets it's name from the vertical movement of prices. In this options strategy, the strike prices are different but the months are the same.

Vertical vs. Horizontal

A horizontal spread is when the strike prices are the same, but the months are different. They are also called calendar spreads. A vertical strategy is the opposite. The months are the same, but the strike prices on the options are different.

The strategy behind this is to make money on the strike price difference potential or the premiums - if a premium gain was achieved. All spreads come down to premium gain vs. trading or exercising potential. Verticals can be credit or debit.

Debit Spread

When a spread is created and the investor has lost money on the premiums (more money was spent on the buy then the sell), it is a debit spread. Because money was lost on the options, the investor will lose money if the options expire worthless (which is possible). The only way a debit spread holder can profit is by the options widening or getting exercised. Widening refers to the premiums growing and the contracts becoming valuable enough to trade later on. A vertical debit spread tells the trader that these contracts need to be traded or exercised for profit.

Credit Spread

When a spread is set up and the investor has gained money on the premium, it is a credit spread. The profit here rests with the options expiring worthless and the person making the premium as their maximum gain. A vertical credit spread is a strategy that does not work if the options are exercised. The strike prices would be inverted - profit wise.


Buy 1 WEF Oct 60 Call for $500
Short 1 WEF Oct 70 Call for $200

This is a vertical or price spread because the strike prices are different. It is also a debit, because the premiums have resulted in a $300 loss. This is also a bullish spread. It is bullish because the trader needs the market to rise, hoping the options get exercised. The buy call gives him the right to buy the stock at 60 and the short call carries an obligation to sell the stock at 70. This 10 point potential gain on the stock is why someone would create a vertical debit spread. If the options expire, the maximum loss would be the $300.

Buy 1 GHF Apr 30 Call for $600
Short 1 GHF Apr 20 Call for $900

This is a price or vertical spread as well, but it is a credit spread. It is also bearish. The strike prices are not attractive to this investor, as he will suffer a 10 point loss on them - if exercised. The goal here is for the stock to decline and the vertical options to expire. Credit spreads are always bearish.

These and all spread strategies are most effective profit wise, when working them with stocks you are familiar with. Knowing the trading ranges and price habits of your stocks can make them attractive candidates for options or vertical spreads.

More on Stock Option Trading HERE

Good Luck!

Nick Hunter is the President of American Investment Training. Their website http://www.aitraining.com offers investors and brokers with education courses, trading investment information and a free financial glossary look-up.

Real Estate Property Investment Series: Focus Morocco 2007

The Moroccan government realised that the way forward for their nation in terms of creating employment and boosting the economy significantly was to increase tourism and to create an environment so attractive for investors that they would come in their droves and buy up real estate stock.

To that end the government has been promoting Morocco around the world there is a permanent stand at Walt Disney World Resort in Florida heralding the virtues of this North African nation that practically touches Europe across the Mediterranean Sea that divides it from mainland Spain for example, and now the skies over Morocco are open to cheap flight operators from across Europe and the UK. The nation has year round sunshine and is directly south and a short flying time from affluent Western Europe and all of these factors are starting to affect Morocco positively.

In 2006 in the first nine months alone tourism traffic was up almost 10% on the previous year with revenue generated from tourism up almost 30% which proves that the government are targeting the right sort of tourist i.e., the ones who come, stay, enjoy and spend money in Morocco! Looking to the longer term the Moroccan government has plans to increase tourism until 10 million visitors annually enter the nation by 2010. There are even plans afoot to build a tunnel under the sea to connect Morocco to Gibraltar in Europe

But why all this information about tourism I hear you ask?

Because it is the tourism market that property investors in Morocco are targeting. On the one hand they are targeting those seeking villa and apartment rental and on the other hand they are aware that todays holiday maker is tomorrows second, retirement or holiday home buyer. And investors really are in Morocco buying up and developing real estate stock. Already six brand new coastal resorts are in the planning and development stages, money is flooding in from Dubai and Qatar based development companies and European buyers are purchasing off plan knowing full well that their real estate assets are appreciating even before they are completed and handed over. Buyers in 2007 have a chance to buy in ahead of the continued predicted rise in tourism and before Morocco is established in many peoples minds as a place to invest in real estate.

Consider buying off plan and flipping stock or better still, simply buying and renting to the tourism market on the Atlantic or Mediterranean coasts or in the mountainous ski resort of Oukaimeden. Rental income is earned tax free in Morocco for the first five years and those who hold property for ten years or more pay no capital gains tax when they resell, furthermore one is not subject to local inheritance tax in Morocco either. In conclusion - Morocco offers an investor a wealth of opportunity. Basically an investor needs to consider his preferred investment approach and his target market and then seek suitable real estate with room for growth or with prospects for returning good yields.

Rhiannon Williamson writes about property investment worldwide, to read more about property investment in Morocco in 2007 and beyond visit her site http://www.amberlamb.com

FOREX Brokers What I Learned as a Broker Trading 5,000 Clients

I spent 10 years as a forex broker and traded thousands of clients, here I will give you a brokers view of trading clients.

I will reveal who won, who lost, how we made money and how we treated them.

I joined as a rather green salesman and had no idea about the reality of forex and futures trading.

I was excited about joining an industry where millions were made and millions were lost by clients It was very exciting!

The company

I was rather shocked at the reality which was:

Clients didnt appear to win very often and the company based its balance sheet on commission to equity.

The view was that about 95% of clients would lose and they would do it all on their own, with no help from us.

The clients we liked (from a financial perspective) were the ones who made commission for the company and top of the list were:

Day traders:

They lasted for short periods, never won and made loads of money for the company.

If they believed it worked, let them get on with it and we would take the commission.

Shoot from the hip traders

The action men.

They loved the buzz, in and out all the time, trading the news and advice from gurus and with no discipline.

Again, they wiped themselves out and made us plenty of money.

The company did not dislike its clients.

We treated all clients well and did what a good broker should:

Help them with queries and made sure they got fast accurate executions.

We just let them do as they wanted and in most cases they lost thats simply the reality of trading.

The clients

We had clients from all walks of life, from retired people, to highly educated mathematicians and the few that did win surprised me.

The ones I personally hated were the ones I will refer to as educated fools

Cocky as anything and believed they had a divine right to win, because they were clever.

They would ignore my warnings, that they would not win with systems that were too complicated and tell me to mind my own business.

If I am honest, when they learned the reality of a wipe out, I felt a little inclination to say told you so, but never did.

Perhaps my favorite client was a retired lady, 81 years of age, who lived on a sheep farm in Australia.

A lovely lady and she taught me a few things, that I remember to this day.

She devised a system and showed it to me.

It was a simple buy and sell strategy and relied on holding big trends for months on end and you could learn it in a few hours.

Personally I thought it was to simple to work, but she built a $5,000 account to $39,000 in three months and had passed $100,000 in under a year.

She drew her charts by hand ( this was the late eighties) and didnt have a TV and never read the papers.

Each day she would check her prices draw her charts and make her trades if she needed to.

A polite, humble trader, who was loved in the office by all.

We all had respect for the way she was our most profitable trader, even above some quite well known money managers.

We had many other clients.

Most lost and some won ( very few), but the ones who did win were humble, had simple systems, traded only when their systems told them to, had iron discipline and believed they were right.

This is just my experience.

I did trade a lot of people.

They from all walks of life and I learned very few won, but the ones who did, kept it simple, the ones who didnt, had big egos, or liked excitement and traded with their emotions lost.


On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html

Stock Trading Psychology

A key strategy and habit to successful stock trading is the ability to take losses comfortably. The stock market is not stable, it never was and it is not likely to be. This requires the trader to have proper stock trading psychology. Due to the unpredictable nature of stock trading, the trader must be able to face the prospect of unexpected losses. Even the best traders will eventually run into some loss making situation, there is simply no way to avoid it. The only thing is to be prepared and watch out for the signs that indicate imminent loss.

Stock trading psychology indicates that traders tend to become perfectionists when they face a loss. All traders assume that every single day will end in profit when that is simply not true. A good day in stock trading is not defined by profits at all. Instead, experts in stock trading psychology define a good day as one that is researched and planned and follows an overall trading strategy. Planning is the key to facing and walking out of a loss and also the key factor that enables the trader to accept loss as a part of the game.

Stock trading psychology suggests that a trader focuses on what is within control. In this unpredictable market there will always be random factors that can lead to frustration and despair. Do not focus on things beyond your control. This essentially means that neither profits nor losses are exactly in your control. You are always playing against a market that has a mind of its own so you have to be able to understand this. Your control is limited, so focus on that.

Within this control is your freedom to fully understand the stock market and develop the right strategies. Use every experience to refine these strategies and come up with a strong trading plan. The more you understand your own strategies, the better results you will achieve.

The stock trading market is no place for perfectionists. Instead, you must train yourself to be realistic. A perfectionist will always see a small loss as an overall failure and that is bad stock trading psychology. This eventually leads to obsession with failure. The realistic traders understand that loss is just part of the market and they have to face it eventually. Instead of focusing on failure, you must focus on limiting your losses. A trader that becomes obsessed with failure will find it next to impossible to bounce back and even the best strategies will not be able to get that trader back into the profit zone.

Stock trading psychology experts recommend 3 strategies for effectively stopping losses. These are called Price Based, Time Based, and Indicator Based strategies.

Priced Based stops simply involve a low point beyond which you will cut your losses and quit the trade. Time Based means you wait for a specified time to make a profit and if the time expires you quit. Indicator Based strategy uses market indicators. This requires some experience and you will eventually be able to pull out based on indicator movement.

Alan King is a writer that concentrates on helping people better themselves, for cutting edge information you NEED to know about stock trading before you try to cash in on this multi TRILLION dollar industry I strongly suggest that you check out my friend Mark Crisp's awesome free 9 page e-book at http://www.stressfreetrading.com

Essential Investment Books What I Learned Losing a MILLION Dollars

This book by Jim Paul and Brendan Moynihan is a book any trader should read The book correctly states that there are lots of different ways to make money and only a few ways to lose it. Therefore you need to concentrate on not losing first

If you have not read this book you will see the markets in a completely different light and one that could lead you to bigger profits and is simply one of the best investment books ever writtten.

What I Learned Losing a Million Dollars is a fascinating, insightful, easy-to-read true story of Jim Pauls rise from a humble country background to jet-setting millionaire trader and Governor of the Chicago Mercantile Exchange.

It is an examination of the lessons he learned from losing a million dollars in the market which brought about his demise and then covers his rise from the ashes.

This book contains no technical theories and really focuses on how NOT To lose money there are plenty of ways to make money so how come most traders lose it?

The answer lies as we have stated that:

Its not how you make money thats important there are many ways to do that, but are only a few ways to lose it and if you are mindful of them and dont make losing mistakes - you can emerge a winner.

The book is essentially divided into two parts:

Section 1

The first half of the book about Jims life makes you feel close to him and the experience he is facing as his world crashes around him. Its both funny and sad in equal measure and is a superb fiction story.

Section 2

After the loss and its aftermath, comes the authors views of what he had learned and this really is original, thought provoking and insightful. The authors show you how to identify and manage the risks, both monetary and emotional that is part of any decision making including trading.

Playing great defense

The authors covers the key areas ALL losing traders fail in, that let losses get out of control.

Key areas covered are:

- The three biggest mistakes traders make and how to avoid them.

- Why the most important part of building wealth is not losing it.

- The psychological pattern which all losses take in a traders head, regardless of the position size

The discussion on the risk/reward ratio, and why most other books get it wrong is perhaps the most interesting part of the book.

This point is worth the books price alone as the aothor explains

Why you have to take into account the PROBABILITY of return, and PROBABILITY of loss, when trading and not simply divide the size of your expected return by the size of your expected loss, as most authors suggest if you do you will lose!

This really is the key point of the book if you want to keep losses under control as it states in the preface.

This book is a case study of the classic tale of countless entrepreneurs: the risk taker who sees an opportunity, the idea that clicks the intoxicating growth, the errors and the collapse. Our case is that of a trader, but as with all case studies and parables the lessons can be applied to a great many other situations.

If you want a book to show you the importance of emotional discipline and the art of risk management, then this is it.

This book has recently gone out of print, so get your hands on a second hand copy or get to the library and read it.


On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html

What is the Foreign Exchange Market

Foreign exchange, Forex or FX as it is know is the Planets oldest and largest financial market. It is the place where one countrys currency is exchanged for that of another. On average $2 Trillion exchanges hands every day in the form of currency transactions. This volume makes equity markets look minuscule by comparison. For example, the daily market for equities is $50 billion and the average daily value of futures contracts traded is roughly $30 billion.

Trading Hours
Foreign exchange is a 24-hours-a-day, interbank (or OTC) market. Since currencies are traded 24-hours-a-day there is no central exchange like you will find with the Worlds major stock markets. Proceedings begin in the financial centres of the Far East after the weekend and close in the US on a Friday evening. There are three main financial centres, each of which has specific opening and closing times. Tokyo: Open 19:00, close 04:00
London: Open 03:00, close 12:00
New York: Open 08:00, close 17:00
All times EST.

Who Participates?
The arrival and the growth of the Internet has allowed individual speculators to enter a market that was once dominated by large investment banks, multinational corporations, currency dealers and international money. There are currently countless on-line brokerage firms who offer access to the currency market. The advantages of this competitive market place are low spreads and very often, no commission on your trades.

Why Participate?
The main reasons for participation in the foreign exchange market are:

Actual currency exchange: From the small scale money exchanges made when you want to go on holiday to a foreign country to large multinationals changing profits made abroad into their domestic currency.
Hedging: Large multinationals often hedge against unwanted currency fluctuations that can harm profit figures.
Speculation for profit: It is estimated that 95% of foreign exchange participation falls under this category. Large multinationals, investment banks and individuals are all active at this level.

How does it work?
Currencies are traded in crosses and pairs such as EURUSD, GBPUSD and USDJPY. This means that every time you trade a currency pair you are simultaneously buying one currency and selling another. For example, if you were to buy the EURUSD at 1.2700 then you are buying the Euro and selling the Dollar, or buying the Euro against the Dollar.

The most commonly traded currencies are those of the Worlds largest economies. It is estimated that 85% of currency trading takes place involving the U.S. Dollar, the Euro, the Japanese Yen, the British Pound Sterling, the Swiss Franc, the Canadian Dollar, the Australian Dollar and the New Zealand Dollar. These currencies are popular because of the stable political environments in their respective countries as well as respected central banks and sound monetary policy.

USD: US Dollar
EUR: Euro
JPY: Japanese Yen
GBP: Great British Pound
CHF: Swiss Franc
CAD: Canadian Dollar
AUD: Australian Dollar
NZD: New Zealand Dollar

Currency rates are displayed as follows:

EUR/USD 1.2723/ 1.2725
EURUSD 1.2723/ 1.2725

A quote is read as follows: For our EURUSD example earlier of 1.2700, 1 Euro (the first currency in the quote) is worth 1.2700 U.S. Dollars. The first currency is known as the base currency. It is always the case that the base currency is assumed to have the value of 1 unit. So if the EURUSD is currently quoted at 1.2700, 1 Euro is worth 1.8870 Dollars. This means it will take 1.8870 Dollars to buy 1 unit of the Euro.

Therefore if the quoted value is higher than 1, it means that one unit of the base currency has a higher value than one unit of the second currency in the quote (quote currency, counter currency or terms currency). This is not always the case; for example, the AUDUSD quote currently reads 0.7490. This means that 1 Australian Dollar currently has a market value of slightly less than 0.75 US Dollars (or 75 cents).

You will also notice that a quote is listed as 1.2700/ 1.2702. The difference between the first price (bid) and the second price (offer) is known as the spread.

Foreign exchange currency is traded in something known as lots. There are three type of lots, standard or maxi (100 000 units of currency), mini (10 000 units of currency) or micro (1 000 units of currency). You are free to trade in as many multiples of these lot sizes as your account balance will allow. However, not all brokerage firms offer all of the different lot sizes and you should check before opening your account. In each case you are trading in units of base currency.

Advantages of currency speculation
The fact that the Forex market is so large is significant for the following reasons:

All of this money changing hands creates massive liquidity (the degree to which a currency can be bought or sold without affecting its price). Therefore as your account grows you have no worries about ever moving the market or having an order only partially filled (however the reliability of your broker may have something to say about this). In effect you can remain completely anonymous within the market place.
The fact that the foreign exchange market is so large is partly due to the fact that big banks (both commercial and federal) are active participants. By following their money you can, in theory, eliminate a lot of risk from your trading.
As we have already established, there are smaller costs associated with Forex trading when compared to trading stocks or futures. Forex brokers also offer a higher rate of leverage. Typically this figure stands at 1:100, which means that you can command a $100 000 position with a balance of $1 000.

David Thorpe is a senior contributor for http://www.passion-trading.munbuns.com a free educational resource centre for traders and investors. The site has a dedicated forex trading and currency trading portal and its goal is to stimulate the minds of its users, enabling them to achieve a greater understanding the forex market, thus helping them to become more profitable.

Learn How to Trade in Foreign Exchange

There are millions of people around the globe who trade in foreign exchange. It can be pretty easy or difficult to trade in foreign exchange depending on whether or not you know how to.

First of all some facts - Foreign exchange market operates 24 hours a day, 365 days a year. Trade in foreign Exchange is a multi trillion market. Yes, Multi trillion dollars change hands each and every day of the year.

So it is really obvious that thousands of people are taking to trade in foreign exchange every day. But it is really surprising that only a few people know how to trade in foreign exchange. This is also a fact that more than 90% of the people who take to trading in foreign exchange lose lots of money because they fail on the first basic principle - They did not invest in learning how to trade in foreign exchange.

There are a number of different strategies which you can choose from before deciding on how to trade in foreign exchange. The most important thing is you will need to come up with a strategy that suits you.

At the end of the day exactly what strategy you decide to adopt is largely immaterial but, what is important, is that have you a strategy before you start to trade in foreign exchange.

Many traders today choose to base their strategy on a technical approach to trading while others prefer to follow a fundamental approach. Both approaches are fine but the truly successful traders will tell you that the real secret lies in not selecting one or the other but in combining the two.

Deep technical analysis reveals that prices follow trends and that markets possess clearly identifiable patterns which can be recognized if you know what you are looking for. Both knowledge and experience play an important role in technical analysis but here it is a case of knowledge and experience of not just the patterns in the market but of working with the barrage of tools which are now available.

Many people who trade in foreign exchange like to work with what are called support and resistance levels. In this case a support price is a low price to which a currency repeatedly returns, effectively representing the bottom of the market or the price at which it supports the market. By contrast, a resistance price is the high price which a currency reaches from time to time but above which it tends to resist rising.

The importance of these two levels is that once a currency price drops below its support level it will commonly continue to fall and, similarly, once the price exceeds its resistance level it will continue to climb.

It is also common for many traders to make use of moving averages which show the average price of a currency over a given period of time within a longer period. This is extremely useful for eliminating short term fluctuations in a currency price and producing a clearer picture of the movement of a currency over time.

These are of course just the two of the strategies. And there are many more if you want to learn how to trade in foreign exchange. I cannot stress it enough that how important it is to learn to trade in foreign exchange before you dive right in. You will owe it to yourself in the long run.

I have highlighted one course for you right here. You will learn three strategies, not one.Click here to gain access

Forex - Trade The Non-Farm Payroll Report for Super Profits

Many investors in the foreign-exchange (FOREX) market trade only at or around the time of the release of the U.S. Non-farm Payroll Report (NFP). They are attracted by the volatility of currencies - particularly the major pairs involving the U.S. dollar - that occur during that time. Investors relying on this and other financial news events for their trading activity are referred to as news traders. Many others, while perhaps utilizing other methods of trading are sure to include the NFP on their trading calendars. Let's find out why so many traders are interested in this report.

The NFP comes out once per month, typically on the first Friday at 8:30 a.m., New York time. On occasion, it will come out on the second Friday of the month rather than the first, but always at the same hour of the day. The U.S. Department of Labor is responsible for the compilation and release of the report, which is kept secret until the official time for release arrives. The report contains data regarding unemployment in non-agricultural sectors of the U.S. economy. Incidentally, other industrialized countries also publish some semblance of this type of report. Simply put, if the numbers published in the NFP represent a major revision of the estimates previously made, the market response is likely to be quite pronounced.

The reaction to the anticipated NFP data on the part of traders world-wide, in terms of buying and selling activity, generally causes the price of the U.S. dollar to spike up or down. This usually happens the very moment the report becomes public. Sometimes, the spike occurs early, i.e. within the minute immediately preceding the 8:30 a.m. release. Although less frequently, it has also been observed that the spike can occur up to 15 or 20 minutes after the release of the report.

Other regular financial reports can also move currency prices, but are not as consistently dramatic or dynamic as the NFP in their result. Within the past couple of years, the range of movement in the price of the U.S. dollar as a result of the NFP has usually been between 50 and 90 pips in one general direction. Re-tracement, i.e. movement of the price back toward the original price, often provides additional trading opportunities. Many traders experience returns ranging from 5 to 20 percent from this one report alone.

Why does the NFP stand out in its ability to move the market? The NFP is published by the government of the United States as an official statement of what the U.S. economy is doing. Based on the contents of the report, the measurement of the health of the country is viewed in terms of its employment situation. Many scholars and traders alike view the employment situation in a country as a leading indicator of how things are economically with that country. If the employment situation is bleak, so must be its general economy. A weak economy invariably spells bad news for the currency of that particular country.

One must acknowledge and appreciate that the U.S. dollar has always generated a lot of interest among traders world-wide. Known for its liquidity, relative stability, and being backed by the worlds largest economy (at least until China takes the number one spot as expected in 2026), the greenback is often accepted as payment for goods and services all around the world. This is true even where it is not the official currency in a given jurisdiction. It is one of the relative few currencies known as hard currency, in the global financial realm. It is always in the spotlight as a global player.

Recent times have seen the U.S. dollar in a weakening trend in comparison to other currencies. Undoubtedly, global events including the U.S. involvement in Iraq, Pakistan and Afghanistan have contributed to the dim view shared by some regarding the value of the dollar. On the other hand, some see it as a good opportunity for U.S. corporations, large and small, to export goods and services to other countries. This may result in a rebound of the dollar in the long term.

Various strategies have been devised to take advantage of the tendency of the market prices to spike during the time of the NFP news release. As one might expect, some strategies work better than others. More and more vendors and programmers are developing and selling automated software to traders interested in the fast-paced environment surrounding the release of the NFP. The price range of such software can be anywhere from a few hundred dollars to several thousand dollars. Of course, manually trading the NFP can still be done successfully as many traders are proving. Regardless of the method or strategy, many in the trading world will continue to pay attention to the NFP and utilize its release as one of the greatest regular and recurring opportunities for trading in the FOREX market.

If you are ready to change your future by stepping into the exciting world of trading FOREX, go to winningtradersassociation.com for more information. Sandy Robinson, J.D. is part of the Winning Traders Association, an educational organization founded by John Beiler, President. The organization consists of a network of committed trainers and motivated traders willing to provide support to those interested in trading foreign exchange. Many of the members work from home.
Sandy Robinson, J.D.
Copyright 2007

Tell Me What to Do

Because almost everyone has been baffled by Wall Street baloney they have accepted the conventional wisdom that every investor needs a stock broker or financial planner if they are going to invest in the stock market.

That would be true if brokers and planners were trained to not only pick stocks, but also protect the investors money. Neither is true. That seems like a pretty horrific statement. I know because I used to own a brokerage firm and have hired 300 brokers. Only 1% or 2% of them knew what they were doing and consequently lost money for their clients. That probably applies to so-called financial planners because they all went to the same non-school.

Yes, I said they received no training which is true in almost 99% of the individuals. What little advice they received was based on false and untrue premises. The Buy and Hold philosophy is the biggest lie of Wall Street. No broker is taught an exit strategy how and when to sell. Protection of customers money should be number one on their list; however, brokerage companies do not want you to sell . They would rather have you go broke. (Of course, they dont say that.) The investor is quoted the Ibbotson study. Unfortunately, the quote only shares one half of the study and the part about why Buy and Hold does not work is never given.

Wall Street has told you that you are too dumb to pick your own investments and that you need a broker to help you decipher the intricate maze that leads to financial freedom. Too bad most brokers havent learned or the 7 trillion dollars in losses that occurred from 2000 would not have happened.

Not only have liars and thieves been uncovered in Enron and World Com, but now we find that the fund managers of great bastions of safe investing in mutual funds have also been stealing from their shareholders. Yes, late trading is theft and has been misnamed market timing. This also leads me to realize that the SEC has not been doing their job of protecting the small investor.

With all this corruption you, the investors, are more confused than ever. What do I do now? Where should I put my money? You need expert advice and I must say to you that you will not get it from a broker. Advice from a broker is a eulogy for your money. No, now is the time for you to take charge of your own investment portfolio. Could you have done any worse in the past 3 years than letting a professional handle your money?

There are many places you can seek advice, but none of them are on Wall Street. The library and the Internet are both great sources of information. Find someone who does not fit the Wall Street pattern. Several someones. And start your financial education.

Go look in the mirror and say, Tell me what to do.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market - Part 2

Fundamental analysis.

Fundamentals analysis says the best way to predict the future trends of a stock is to understand the financial figures of the underlying company. The fundamental analyst would calculate a theoretical value of the company using cash flow analysis, recent dividends and earnings, future dividends and earnings projections plus a host of other economic numbers. If the current stock price is lower than the calculated value, a trader who uses fundamental analysis would buy this stock.

This writer has the opinion that fundamental analysis is difficult to master for it to be useful as a forecasting tool. Understanding and analyzing balance sheets and profit and loss accounts is not enough. You will need to analyze the micro and macroeconomic picture as well. Often you will need to be have the same knowledge equivalent to senior-management of a company you want to analyze minus the leadership and management skills.

Take the example of Googles free 2 GB e-mail service. How much does it cost them? Probably about $2 yearly for each customer. Assuming 100 million internet users sign up, the advertising revenues from this segment alone would provide a tidy profit. It is the analyst job to provide a good educated-guess of this number. More importantly, this new signings will provide a customer base to challenge Yahoo and Microsoft. With Googles dominance in the search engine market, the data mining of such a huge pool of internet users will provide them with an edge in deciding future strategies over its two nearest rivals. Try translating this to what can Google earn in the next two quarters.

One of the better tools is the Z-Score, developed by Edward Altman, a financial economist and professor at New York University's Stern School of Business, in 1968 to predict corporate bankruptcies within a two-year period. This formula has a 70-plus percent accuracy rate

Technical analysis.

The price action discounts everything premise is central to charting, also known as technical analysis. Technical analysis uses graphic representations for prices and makes uses of various quantitative techniques to forecast price trends.

A technician makes profits in any market by having positions in line with the price trend. When the trend is up, then buy. Conversely, when the trend is down, then look to sell. Technical analysis is not an exact science, but it is easy to learn and effective.

Technical analysis is a good starting point for beginners. The foundation should include classical technical analysis, Japanese candlesticks, trendlines, RSI, MACD, ADX, stochastics and moving averages. Learners can complete these core topics within three to six months. With constant practice, you should be able to independently analyze and identify the current trends in the stock market.

Most users of stock charts may only focus on daily charts. However, if users pay equal attention to weekly as well as monthly charts, the picture is intuitively more complete. This is equivalent to understanding how the short, medium and long-term investors are viewing the markets, after all three main types of investors form the market. A handful of stock charting software has this feature of showing say, the relative strength index for the daily, weekly and monthly values on a single screen.

One last point - no single method in technical analysis is sufficient for real-world investing. For example, even if you master Elliott Wave Theory or Gann techniques, by itself it would bring more heartache and disappointment. Often, you will need knowledge from other disciplines and sources to improve your overall investing skills.

Some tips for successful investing in stock markets.

1.Investing is a business. The rules of running a profitable business are the same as investing in stock markets.

2.Learn to spot your own mistakes fast. When a mistake is made, exit your position and live to fight any day. The faster you realize your own mistake and the faster you react will reduce your losses, hence increasing your chances of winning in the long run. A useful method is using a 10% stop loss exit strategy. If you are long, and your stock price goes down by 10%, exit. If this same stock reverses and starts to surge, take this as your mistake of not identifying a more accurate (lower) entry point.

3.Understand yourself inside out. What makes you happy, sad, excited, depressed, ecstatic - the whole spectrum of human emotions are merely states of the mind. This is easier said than done but you have to keep improving your own control mechanisms.

4.Learn the methods of successful fund managers diversification, emotional detachment and having realistic expectations. Investing is a marathon not a sprint.

5.Money management skills. Whether the amount is $10,000 or $10 billion, the same rules apply. There are plenty of sources of information on this subject from the internet.

6.Learn technical analysis.

The main thrust of this article is to avoid making mistakes that will cost you dearly. How you prepare yourself for bear markets, sideways markets and market crashes are vital to your success.

There are no secrets in investing no magic formula, no discovery of some useful ancient secrets. Just knowledge, hard work, common sense and discipline will serve you well in the years ahead. This verse from a 2500-years-old text is a useful reminder:

Those who know do not speak, Those who speak do not know.
- Tao Te Ching, 56th verse

Stan Seecrets Postulate: There are two types of people in the world those who know what they dont know and those who dont know what they dont know.

You may freely reprint this article provided you publish it in its entirety, including the authors bio and activating the link to the URL below.

The author, Stan Seecrets, is a veteran software developer with 25+ years experience at (http://www.seecrets.biz) which specializes in protecting digital assets. He has developed real-time prices delivery systems and has witnessed stock markets collapse of 1987 and 2000/2001 in real-time. You can contact him via email (Stan at Seecrets.biz).

Copyright 2005, Stan Seecrets. All rights reserved.

Forex Trading - Understand Your Principles

Forex trading has been growing rapidly among day traders since the 1990s, as day traders have seen the advantages that trading currencies can have over trading stocks. However, since there are fewer currencies for beginners to purchase over the large number of stocks available, forex trading can be much more difficult for a newcomer to learn and master. Still, there are some basic principles that someone new to forex trading should learn, and these concepts may even be helpful to the experienced trader.

The first principle of forex trading is to understand that trading is an investment, not an income. If you are looking to constantly boom in forex trading, then you may need to do a reassessment. forex trading, like other forms of trading, allows you to make a good return on your initial capital annually. However, during that year you need to expect some ups and downs in your forex trading. You could even have several months where you have consecutive losses. It is probably in your best interest to have another source of income while you do forex trading.

Another area where beginners sometimes find themselves frustrated is that they try to predict the forex trading markets. Thousands of traders have influence over the forex trading markets, along with politics and economic events, so there is no way to predict which way the market will move. There are some types of analysis that may provide an educated guess into market flow when doing forex trading, but they are not always reliable. Do not be discouraged, though, by the fact that you may lose on more trades that you gain on, as using sound money management can help you be successful with forex trading.

Making money from forex trading means that you need to make enough to cover your losses and gain profit to increase capital. When forex trading, you will need to allow your money-making trades ride while knowing when to cut your losses as soon as possible. forex trading means learning some finesse, as there can be a fine line where you will want to wait a little for the market to turn in your favor on your losing trades and also making sure you do not take your profit to soon on your better trades.

One way to handle your forex trading is to use a tested system and a money management strategy. There is no room for emotion when forex trading, so you will need to use a business-like approach that has been tested on market data. Using a tested approach will save you a lot of stress when forex trading. Also, using a sound money management strategy will allow you to use your capital in the best way when forex trading so that you can maximize profit and avoid major losses.

Read the rest of the article here: Forex Trading.

Download the Home Based Business Manual (Free $97 Value!) and receive valuable tips, strategies and techniques designed to grow a very successful Home Based Business.

Copyright Charles Fuchs is an established online marketer who specializes in helping people start their very own Home Based Business. He specializes in showing people the best way to Make Money at Home.

Why A Dividend Payment Is Important To An Investor

To an investor looking for high and fast capital gains, a company that makes a dividend payment is a low priority. However, for long term investors, research shows that such a payment is an important part of the overall return on investment.

Many of the biggest quoted companies have been paying an annual dividend every year for years. Part of the appeal of their shares as an investment, and part of the valuation in the price is this dividend policy and reliability.

As a general rule, the largest companies also make the largest and most secure dividend payment. Of course, this can never be true of every situation, but the bigger and more established businesses have the security and often the profits to cover a payment comfortably.

It may not be the most rewarding of actions for a company which has a track record of creating a high return on investment to pay funds out to shareholders. Unfortunately, there are too few businesses of this nature. Company management also recognize that by paying an annual dividend their company can potentially be called an income stock.

Income stocks are not necessarily viewed as 'sexy' in the market, but there is a wide array of mutual type funds that specifically invest in such companies. This of course opens the way to much larger institutional investment in a firm which in turn will help to underpin the price in the market. As big funds buy big holdings, the number of shares floating in the market will usually be reduced. By lowering liquidity, the share price will generally be assisted.

There are, of course, many investors that will purchase company stock and are specifically attracted by the payment of a dividend. These investors will use the payment to subsidize their income and as such, value stability.

It is for this reason that once company management has started paying an annual dividend, they will be fearful of ceasing payment. Should the income funds be forced to sell their holdings, the market price will almost certainly suffer. The bonuses and stock options of management are usually tied to this market price!

A private investor will almost certainly be required to pay income tax on any or all dividend income received. In many countries, some of this tax is deducted at source so that the dividend payment is reduced and the company sends money to the tax authorities on behalf of investors.

Stuart Langridge is an experienced investor, investment adviser and writer. For more information about the workings of the stock exchange, please visit:


Why the Rich Keep Getting Richer

Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated, caring, brilliant individuals? Becoming rich isnt hard, but it does require a bit of time and knowledge. Having time to get rich, educating oneself, and buying assets are the three key factors in attaining untold wealth.

Rich people usually either have or make time to get rich. Most people that now own huge mansions, have wonderful riches, and drive the nicest cars usually begin taking the road to riches in their spare time. One plan, the most common, is to work at a low-risk, steady job until one has enough money to invest in something that will feed one for the rest of their life. But before one can invest in anything, one first has to educate oneself.

Although the best way to educate oneself in a particular investment is to have a mentor, and thereby gaining valuable hands-on experience, another excellent way to do this is to listen to tapes and CDs and to read books on the subject. I have done both, mainly pertaining to real estate, but also I have read a wonderful book about making money on the Internet, called Multiple Streams of Internet Income, by Robert Allen.

Lastly, after creating time to get rich, and educating oneself, one simply MUST buy assets that will create money for one, and not liabilities and toys such as a new car every other year, and boats. These come only after one can prove that he is capable of handling and keeping money. Simply put, according to multi-millionaire Robert Kiyosaki: Assets will feed you, and liabilities will eat you. An example of an asset is a rent-house, or stocks and bonds in a certain company. Only, that is, if the company is good and the stocks are ultimately going up in value.

In conclusion, we see that the three most important ways the rich keep getting richer are: having or making time, subject education, and buying assets. These are the key factors influencing wealth. I personally plan on educating myself in real estate, as it seems the simplest and safest way of getting rich.**

**Note: If youd like to use this article, feel free to do so, but please remember to include this message, and my resource box in every copy. Thank you!

Aaron Kater has been writing articles for quite a while, and has his own weekly newsletter, Katerzine! If youd like to subscribe, please visit his website at www.aaronkater.4t.com, or send him an email at aaron_kater@yahoo.com

What's An EMA? The Concept Behind The 5 EMAs Forex System

There is a concept in forex trading and in trading in general that is used as an indicator by many forex traders. This widely used concept is that of the moving average. Its used in the field of finance and specially with technical analysis. It belongs to a family of many similar statistical techniques widely used to analyze time series data.

You can calculate a moving average for any time series, but in our case we are mostly concerned about this average calculated over currency pair prices over time. As an averaged quantity, MAs can bee seen as a smoothed representation of the current market activity and an indicator of the trend influencing the market behavior. Thus highlighting longer-term trends or cycles. The limit between short-term and long-term depends on the market you are observing, and the parameters of the moving average should be set accordingly.

There are three main types of moving averages. Simple moving average, Weighted moving average, and the Exponential moving average. They are all moving averages but differ on how time period are weighted for the final value of the indicator.

In the case of the Exponential Moving Average (EMA), which is also called Exponentially Weighted Moving Average (EWMA) sometimes, during the calculation the formula applies weighting factors which decrease exponentially. What this means is that more weight (importance) is given to the latest data.

From this definition we can conclude that an exponential moving average reacts faster to recent price changes than a simple moving average. The 12 and 26 day EMAs are the most popular short-term averages. And in general, the 50- and 200-day EMAs are used as signals of long-term trends.

Take your first step into profitable forex trading, visit:

=>> http://5EMAsForexTradingSystem.googlepages.com/

E-Security Legal Issues

One way for a reseller to gain an edge on competitors is to market the advantages associated with its products in a unique way. In the security channel, a white paper marketing the legal and commercial advantages of a security product presented in a compelling way may prove to be a successful method of enticing a customer into purchasing your security solution.

Security is critical, there is no doubt about it. The smallest breach or compromise can result in situations that can cripple business. Recently, the two big e-security stories have been the disruption to the Russian Trading System (RTS) stock exchange caused by a virus in early February and the extradition proceedings currently underway in the UK against a hacker who allegedly hacked into approximately 100 Pentagon, NASA and other American military networks.

One area of e-security that a white paper could be prepared on is surveillance. Many organisations are already aware of the vulnerabilities posed by internal staff and subcontractors using the organisation's corporate network and always-on internet access. In fact, most large organisations now track their employees' internet and email usage to ensure that trade secrets are not being leaked to competitors via these means and that employees are not using internet access for other unscrupulous purposes.

In New South Wales, parliament recently passed new workplace surveillance legislation that is now in effect. Your customers should be made aware of these laws. The new laws regulate the use of computer, camera and tracking devices. The main obligation imposed on your customers under these laws is the obligation to notify employees of surveillance practices at least 14 days prior to commencing surveillance activities. The new laws also set out specific procedures and practices associated with covert surveillance. Further, obligations are imposed in relation to the retention of surveillance records and there are new obligations related to computer policies and other documentation that employees need to be made aware of. The new laws should not be taken lightly. Breach of the new laws may attract significant penalties. In addition, if a company contravenes any provision of the new laws, all directors and management of the company may also be held accountable.

Another way of enticing your customers is to mention the legal consequences associated with breaching e-security. Hackers can be brought before courts under Australian computer crime laws for gaining unauthorised access to computer systems. These laws may even see hackers thrown in jail.

Organisations who are serious about e-security should ensure they are covered by an insurance policy that extends to loss occasioned as a result of hacking or breach of the organisation's e-security generally. Customers should be reminded that breaches of electronic security measures can be just as disastrous as breaches of physical security measures.

Disclaimer: This column is for general informational purposes only. It is not legal advice nor is it a substitute for legal advice. Readers should seek legal advice on their own particular circumstances.

Alan Arnott is a technology & telecommunications lawyer with qualifications in computer science and law with Arnotts Lawyers in Sydney. For more information, please visit http://www.arnotts.net.au

Invest in Stocks


A risk cell, comprising of bulls, bears, and a competitive market with tones of manipulative elements, have been unearthed with the passage of time. The stock market as commonly said is the market, which involves high risks on high amounts. It purely involves playing with the difficulties of the shares and commodities of the stock market and making or loosing money accordingly. It is a tough decision to make to invest in stock, as there is a high risk involved of loosing the hard-earned money. Every single second counts in the Share Market when it comes to the change in prices of the stocks.

Stock is nothing but a part of assets of other company being owned by other person in return of the money. This money acts as an asset for the company to be used in further functioning of the company on part of the company accounts and serves as an investment for the stakeholder who invests his hard earned saving to earn better profits for him. The profits of the company are shared with the people who invest in them. Stock, as such, is not as simple as it seems. It involves various categories involving shares, commodities, mutual funds, and a lot more. It can be stated that stock is a vehicle of choice for those who agree to bear all the risks involved and try to stock better monetary results for them.

Well, investing in stocks is not a childs play. It demands good grip of knowledge about the season chance in the market along with an expertise comments. The share market expertises are generally the brokers who are involved in the trading of stocks. Invests in stock relate to the sale and purchase of stock in the share market. These brokers are the facilitators of change that helps to locate funds in the right direction to fetch maximum return and relocate the profits to squeeze more out of it. In return, of their services, a fair percentage of the invested amount is paid in order to motivate them to make the way clear for investment in stocks, known as brokerage. They act as a guiding manual for the investor in an unknown world of stock market.

The stock market has been uncovered with the passage of time due to improvement in technology along with the rearrangement of ideas of peoples minds. The shares play was generally associated with the bureaucrats, leaders and the crme of the society. It went to the common man with the advancement of technology to the ground level. Going to share market to trade seems to be the story of the medieval period. Times have changed, so the trends have. Now, a person sitting at home can operate in stock market as an active player. The brokers are available with their services and tips on cyber space itself. Cyber space, commonly known as information superhighway or internet has become the backbone of every market through out the world. It provides same services as a virtual presence of a person may offer. An investor may communicate to people, buy and sell stocks and may transfer the money from one place to another. All these functions can be carried out within fractions of seconds through internet.

The advantage of working on Internet lies in its high speed, along with the accomplishment of work without virtual presence of the particular person at the work place. It also offeres the huge ocean of information that supports the activity of the investor. However, its disadvantage lies in its incredibility and the uncertainty of the quality of the work offered.

As such, despite of the downsides and risks involved in investing in stocks, it is still charming and welcoming the investors to trade. In simple words, the facilities of online trading add to the glory and charm of the invests in stocks.

Get extensive information on online stock investing and get expert tips on how to invest in stocks.

W.D. Gann Trading Methods - Genius Trader or Overrated Guru?

W.D. Gann is one of the most famous traders of all time, and has a huge devoted following - however the fact is, Gann never made the huge profits many of his disciples claim.

He did not have a success rate of 90%, as is often claimed - the logic his methods are based upon are unsound, and his predictive methods dont predict - they leave everything to subjective opinion!

Lets examine his theories of investment in more detail and see.

Lets look at some common myths about how great a trader Gann actually was:

Many sources quote Ganns trading profits at $50 million dollars, however this is not true.

An interview that Alexander Elder had with his son tells the truth.

Firstly, his son confirmed that when his father died in the 1950s his estate was valued at just $100,000 - and that included his house.

Secondly, his son confirmed that Gann was unable to make enough money from trading, and therefore supplemented his income by writing and selling courses.

W.D. Ganns Predictions

Many sources quote he had a success rate in all his trades of over 90% - again not true. We can easily deduce this from the value of his estate.

If he could make money trading and had a 90% success rate, he would have made hundreds of millions in his trading career - and he clearly did not - thats why he had to sell books and courses.

The only evidence of a 90% success rate came from a small number of trades - and was not representative of them all.

Ganns Methods are Predictive

Gann came to the conclusion that all natural phenomena are cyclical - including financial markets. This is true, but this is an obvious statement - we all know were going to die but when exactly?

A predictive theory is not a predictive theory if it cant predict.

If Ganns theory really is predictive, then there would be no market - as we would all know the price in advance!

Ganns theory is subjective - and he really had no way of predicting the future with accuracy. Its all subjective analysis and this is NOT a predictive theory.

Ganns Logic

The basis of Ganns theory is the principle that price and time must balance.

His methods are based on the squaring of price with time - this occurs when a unit of price equals a unit of time.

Gann for example would take a prominent high in the market, convert that dollar unit into a specified period of time and project it forward. When that time is reached, price and time are squared - and a market turn is due.

What? - How can one unit of price equal one unit of time? If you think about and answer this question for yourself, you will see how absurd the connection is.

This isnt the only inconsistency used in his analysis - we also have the legendary Fibonacci numbers which are supposed to work with stunning accuracy - but they dont, and neither do all sorts of astrology and geometry, that appeals to the far out investment crowd.

As we have seen, Gann was a trader who had modest success, and claimed to have discovered a predictive theory - which predicts nothing with accuracy.

Finally, we have so many subjective indicators cobbled together, that the theory can prove anything in hindsight, but if you want a tool to trade the markets look elsewhere.

For those of you still not convinced - I recently saw on the Internet, Ganns trading methods selling for under $1,000!

Sounds like a bargain to get trades with 90% accuracy - I wonder how many serious money managers have it on their bookshelf.

Enough said.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and trading systems info. Visit our web site now and grab your CD http://www.tradercurrencies.com.

Fair Value with Negative Growth

Our investing journey revolves around finding the fair value of a common stock. You can invest in companies that grow rapidly and lose money. On the other hand, you can also invest in companies in a declining industry, yet you can still make money. Investing profitably does not merely depend on what you invest in, but rather how much you pay for a given company.

Therefore, let's look at company with negative earning growth. How do we value them? For a 0% growth company, P/E ratio for the fair value is 13.4, which is equal to 7.45% return year in and year out. For negative growth company, P/E ratio should be lower of course, since it is giving less and less as the year goes by.

Let's try valuing negative growth with the following assumption. EPS growth is negative ten percent for the next five years and then stay constant. EPS for the current year is $ 1.00. So, after five years, EPS will come in at $ 0.59. Now, this is the constant $ 0.59 that we will get five years from now. The value of that cash flow today assuming 4.5% discounting rate is $ 0.47. Applying P/E of 13.4, this company is fairly valued at $ 6.34. Currently, earning per share comes in at $ 1.00 per share. If you look at the stock trading at $ 6.00, you may think that it is cheap since it is trading at a P/E of 6. But, if you expect it to have negative growth of negative ten percent for the next five years, this P/E of 6 doesn't sound cheap after all.

If you expect negative growth, even a seemingly low P/E ratio does not translate into profitable investment. The industry I can think of right now is the auto industry. The US auto maker has been struggling for years to compete with its Japanese counterparts. Investors has priced in negative growth for quite sometime now. If you look at say GM or Ford, they have been trading at a seemingly low P/E ratio for several years. Until this year, both of them has been able to post profits. This year, they are all expected to post a loss. The moral of the story here is to watch out for company with low P/E ratio.

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Eight Rules For ETF Success

Managing a global portfolio of exchange-traded funds (ETFs) is a great way to build a diversified portfolio with exposure to equities around the globe. Fortunately, you need not be a rocket scientist to do this, but many investors fail to observe some basic guidelines, and it can get them into real trouble. Follow these eight steps and sleep easier.

1. Liquidity Comes First: Before you even think of building an investment portfolio, you should set aside about six months of income in a rainy day account. This could be put into a money market fund or U.S. Treasury securities. Having this money set aside will ease your mind and allow you to be more open and creative with your global portfolios.

2. Separate Portfolios: You should separate your core conservative portfolio from your growth portfolios. With the core conservative portfolio, your top priority is capital preservation, and growth is a secondary consideration. Your growth portfolios are more speculative, with capital growth as the primary goal.

3. Really Diversify Your Portfolios: You need positions in your portfolios that are likely to offset each other as unexpected events and market movements become a reality. This is not accomplished with different sectors of ETFs or a mix of small-cap, mid-cap and large-cap ETFs. Rather the goal is to have some investments that are on both sides of risks.

For example, if the U.S. dollar declines, have some investments in precious metals or denominated in other currencies, such as Switzerland or Australia or Singapore ETFs. If inflation heats up, have some investments that hedge this risk such as timber, gold or Treasury inflation-protected bonds (TIPs). If political events or policies in one country take a turn for the worst, it is helpful to have investments in other well-developed countries to offset any loss of value. You get the idea, spread your risk and avoid having one ETF account for more than 5%-10% of your core portfolio.

4. Be Careful Which Countries You Pick: You need some guidelines to help keep you from getting carried away and having too concentrated a position in a particular country or region. In particular, take a good look at the following: 1) the stability and overall political and corporate governance; 2) the legal environment, respect for contracts, low levels of corruption, due process and rule of law; 3) the macroeconomic environment including fiscal discipline and currency strength; and 4) political risks that could affect financial markets.

Keep in mind that the quality of the countries you choose to invest in is the primary but not the only factor. The price or valuation of a countrys stock market is also extremely important. Oftentimes, the best time to buy into a countrys stock market is when it is beaten down, but there are signs that its economic and political problems will sharply improve. If you have a long-term perspective, you might consider annuities specially structured for ETF portfolios.

5. Minimize Company Risk by using our buy countries, not stocks strategy. Instead of trying to pick the best three stocks on the Tokyo Stock Exchange, why not just minimize company risk by buying the iShares MSCI Japan Index, which tracks the Nikkei 225 and spreads this risk across 225 Japanese companies.

6. Monitor ETF Country And Company Exposure: Be careful to look under the hood of ETFs to see where your money is going. For example, lets look at the iShares MSCI Emerging Markets ETF. It invests in 26 different countries, so it is natural to think that you will get broad exposure to all 26 countries. You would be wrong: 50% of your investment in this fund is going to four countries: South Korea, South Africa, Taiwan and China. In addition, incredibly, 7.5% is going to one company, Samsung Electronics of South Korea.

The same is true for the MSCI Europe, Asia and Far East index. It contains 21 developed countries, but 48% of the money you invest would go to just two: Japan and the United Kingdom. Meanwhile, less than 1% would go to Singapore and Ireland! Country specific ETFs such as the new iShares FTSE/Xinhua China 25 Index can also have a fair amount of concentrated risk. Although the China ETF tracks a basket of 25 companies, the largest five companies account for nearly 50% of your exposure.

7. Cut Losses With A Trailing Stop-Loss Policy And ETF Put Options: We have all been there. You buy a stock or fund, and it appreciates in value rapidly. Then it stumbles and begins to decline. What do you do? Should you buy more, let it ride, or sell? Save yourself a lot of pain and agony by following a simple rule. If a position ever falls more than 20% from its high, sell it immediately and reassess the situation. If you invest in an ETF with a sizable downside risk, why not spend a few hundred dollars to purchase a put-option as an insurance policy?

8. Rebalance Your Portfolio: At least annually, you need to make some changes so that you are not overly exposed to countries that have higher risk factors and volatility. One way is by selling some shares of your winners and increasing exposure to under performers. This accomplishes another goal, locking in gains and taking some money off the table. Remember, only a fool holds out for top dollar, especially in the more volatile emerging market countries.

Building your portfolios with low-cost, tax-efficient ETFs is a smart strategy, but dont set it on auto pilot.

For more information go to http://www.chartwellasia.com or call 877-221-1496

Carl Delfeld is head of the global advisory firm Chartwell Partners and editor of the the "Asia-Pacific Growth" newsletter. He served on the executive board of the Asian Development Bank and is the author of "The New Global Investor." For more information go to http://www.chartwellasia.com or call 877-221-1496.

12 Tips for Currency Trading Success

Here are 12 tips for currency trading success if you are new to trading each point is explained more fully in our other material, but these are the basics that can lead you to successful forex trading.

Use them in your trading plan, your chances of currency trading success will be increase dramatically.

1. You are responsible

You need to take responsibility for your actions only you can give yourself success. Dont follow anyone else blindly.

2. Desire to Succeed

All the great traders have a burning desire to succeed and learn the right way to succeed and this involves getting a trading edge.

3. Work Smart - The amount of effort you put into currency trading has no bearing on how successful you will be and you can easily do all your trading in under an hour a day which leads onto:

4. Simple Systems are best

Many traders think the more complex a system is the more better it will perform, but the opposite is true.

Most of the top trading systems are simple. Why?

Because they are more robust in the fact of brutal market conditions.

5. Dont day trade

This is the biggest myth of currency trading. You will lose the odds are against you read our other articles and you will see why this is a guaranteed way to lose.

6. Dont follow the herd

Most of your most successful trades will be uncomfortable as the majority will not agree with. Keep in mind thats no bad thing as most currency traders lose

7. Discipline

Many traders have good trading methods but they lack discipline to apply the method this is normally because they are following someone elses system without having confidence in it. Which leads on to, you guessed..

8. Confidence

You must have confidence in your ability to make money longer term from the method you are using which means knowing exactly how and why it works.

9. Patience

Many traders think they always need to be in the market and want the excitement but there is no correlation between this and making money.

The big trends only come a few times a year so be patient wait for them and hold them

10. Risk Management

All traders know that money management is one of the keys to trading so you need a money management system that allows you to maximize risk and reward.

11. Be Realistic

Dont be in to much of a hurry to make money or you will lose it quickly be patent and realistic in your trading aims.

12. Whats your edge?

By a trading edge we mean, what makes your system likely to succeed when 90% of traders fail to make money?

If you dont know what your edge is you dont have one and will lose.

Currency trading success looks easy to achieve but it is not. Of course you can succeed but you need to approach it in the right way, with the right method and have the confidence and discipline to succeed.


On all aspects of becoming a profitable trader and some essential exclusive FREE PDF Trading downloads visit our website at http://www.net-planet.org/index.html

Online Currency Trading Strategy The Insider Secret

If you have an online currency trading strategy, then you should incorporate the advice given in this article to make bigger profits - and maybe even change a losing system into a winning one.

The advice were giving here is contrary to almost everyone else on this subject - keep in mind however that 90% of traders lose! So, lets stay away from the losers and make some profits.

Get Set for Bigger Profits

So, whats this insider secret anyway? - Its about looking at money management in a different light.

Money Management and your Odds of Success

Most traders are virtually guaranteed to lose - because they have money management strategies that ensure they are constantly going to get stopped out by normal market volatility.

For example, many traders risk say 2% of their equity on a trade. On small accounts, this amounts to just a few hundred dollars. They enter the trade, and market volatility ensures their stop is hit. The market then goes back in the direction they had anticipated - and piles up thousands of dollars! Our trader though, thinks he was just unlucky - and tries again, but he wasnt unlucky, and volatility will take him out every time.

Money Management Guaranteed to Lose

A string of small losses soon adds up, and the trader runs out of money - and his online currency strategy is at an end.

The trader may have been right, on where markets were going - but got stopped out of the trade - and ended up losing instead of winning.

Does this sound familiar? - It happens all the time.

How to Protect Equity and make Bigger Profits

Here are seven tips to incorporate into your currency trading strategy, to protect equity and build huge profits.

1. Dont listen to advisors or brokers. Advisors dont care if you win or lose - and brokers certainly dont mind, as they work on the assumption you will lose anyway. The more commission a broker makes the better - and tight stops ensure this.

2. You need to risk more per trade - so you need to be very selective in trades. Forget day trading, and concentrate on the big, longer-term trends.

3. Keep in mind this truism with risk goes reward. Without risk, there cannot be big rewards. Currency trading offers big rewards - but you have to be prepared to take the risk.

4. Taking a risk with no thought, and taking a calculated risk, is entirely different. If you are taking a bigger risk, you are not necessarily going to lose - it depends on the logic behind the trade - and the profit potential. Thats why you should trade sparingly - and concentrate on the big trends.

5. Use up to 10%, or maybe even more, on the trades you are confident in - these are the big moves - and you dont want to be stopped out!

6. Dont move stops up too quickly to protect equity big currency trends last months or years - so give the trade room to move. You dont want to get into a big trade, and get stopped out on the first correction - if you think the trade is going to be big, then have the courage of your conviction.

7. Use options as a vehicle theyre great if used correctly - to give you staying power. Use at the money, or in the money options - with plenty of time value, for greater staying power. Options are a great tool, but NEVER buy out of the money options - or options that are close to expiry.

An online currency strategy consists of a number of components - and the one that lets down the bulk of traders, is money management. They try so hard to avoid risk, but end up creating it - and lose. Dont make this mistake in your currency trading strategy - you need to take risks, pure and simple - and as the famous, US general George Patton said:

Take calculated risks - that is quite different from being rash

The fact is, most traders dont believe this they end up creating risk by trying to avoid it - and thats why their currency trading strategies fail every time dont make the same mistake!

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and money management info. Visit our web site now and grab your CD http://www.tradercurrencies.com

Some Healthy Investor Skepticism

It seems as though Enron is a distant memory. The markets have already discounted the sub-prime meltdown and the demise of New Century Financial (see old post pre-collapse with warning signals). The headlines are now focused on Iran and less importantly, Anna Nicole and abysmally, whether Sanjaya will win American Idol. Although Sarbanes-Oxley was meant to prevent another Enron, all it really did was make the U.S. exchanges less desirable to list on. Note the resurgence of the London exchange and deceleration of U.S. listings. Sarb-Ox didn't really and can't address the true root cause of Enron: unbridled greed and lying. Just because the CFO and CEO now need to validate financial reports, it doesn't preclude them from the same behaviors that led to the demise of Enron. Therefore, continued vigilance and skepticism is required, especially on the part of individual investors. And if put to the right use, it can be quite profitable.

Markets are efficient, but not quite so for the masses, who generally don't have access to program trading and advance warning of impending disasters. What small investors can do though, is be skeptical. Questioning abnormal projections, erratic and abhorrent behavior on the part of company executives can save you money; or make you money if you want to hedge your portfolio with stocks just itching for a crash. Rather than going 100% equities in a portfolio, broad diversification is important. This means a lot of things to a lot of people. To me, it means some commodities, some international, some small cap, large cap, real estate, etc. It also means a component of my portfolio that zigs when the majors zag. A nice way to do that is to buy puts on the major indices (rudimentary and somewhat counterproductive), by owning some funds that employ hedging strategies (more successful, but not always a perfect negative correlation; see earlier posts on hedge funds for the masses) or finally, by shorting (for sophisticated investors only) or buying puts on overpriced stocks (easy to do; options offered for most listed companies with some volume).

What are some warning signs of companies that are about to go down? In hindsight, a lot of these crashes were staring us all in the face and only a few vigilant analysts or hedge fund managers were crying foul. In some cases, there were too far out ahead of the pack and had to cover their positions as the stocks rallied. For those who could hold out or timed it better, they made a killing. Is it coincidental that Dennis Koslowski was buying thousand dollar shower curtains and throwing lavish parties for his wife's birthday with company funds while the stock was poised for a precipitous decline? Did it seem odd that Enron executives were telling their employees to hold their company stock and cursing (for real, in recorded conference calls) at analysts who questioned the sustainability of their earnings from fictitious subsidiaries?

What else to watch for? As Cramer would say, when you hear "accounting irregularities", RUN. By then, it's usually too late for individual investors. That's where some independent research and healthy investor skepticism comes in handy. These two sites are great resources for independent skepticism.

Stocklemon, newly named Citron Research (I guess they're all grown up now): This site is a MUST for any small cap you're thinking about. I was very pleased with the quality and depth of the research completely outing scams and shell companies. They routinely report on the back-office pump and dump schemes, the family members who happen to be the "analysts" reporting favorably on the stocks, and phone numbers listed for companies that are just unused cell numbers. If you're even thinking about investing in a smaller unproven company for that speculative part of your portfolio, check it out here. If you're lucky enough to find a stock that you don't think is all it's cracked up to be AND it lists put options, this may validate your opinion.


Another great resource is Footnoted.org. This site scours 10-K, annual reports and other SEC filings for things that look...strange. For instance, they noted that the CEO of ITWO was alloted 6 times the annual spending compared to last year for being ferried around on the company jet for about a million dollars. The site abounds with information that needs to be reported, but appears in the fine print and requires a seasoned investigator to highlight.


Everydayfinance Blog: http://www.everydayfinance.blogspot.com