Learn Forex Trading - 4 Key Points for Success Part 1

If you want to learn Forex trading, and join the elite 5% of traders who make money, then you need to consider the following 4 key points. If you ignore these 4 key points, then youll lose money - and never achieve currency trading success.

Anyone can learn Forex trading - but most traders simply get the wrong Forex education and then lose their money.

Here are the 4 key points:

1. Youre On Your Own

There are many e-books and currency trading systems sold online, each of which promise you success in return for spending a few hundred dollars. However, these books and systems wont help you win in Forex trading.

If you think about it, if these vendors were so good at currency trading, they wouldnt need your money theyd be too busy making money trading. They wouldnt have the time, or inclination to sell you their winning strategies!

If you want to learn Forex trading, youre on your own - and you need to devise your own Forex trading strategy, in order to achieve success. This is a lot easier than many traders think and is covered in part 2 of this article series.

Theres another advantage to building your own Forex trading strategy which is:

Youll understand the strategy, and it will suit your trading personality. This will lead to confidence in your method - which is essential, if you are to follow it through the inevitable losing periods.

Its a fact that if you dont understand and have confidence in your system, then you wont have the discipline to follow it. Without the discipline to follow a trading system, then you dont have a system in the first place.

2. Use Technical Analysis

When you start to learn Forex trading you need a methodology - and the best place to start is with Forex charts - and a system based on technical analysis.

Technical analysis works because human nature is constant - and chart patterns repeat themselves. This means we can trade the patterns for profit.

Many traders like to trade using news - but this is a critical error! Why? Quite simply, news is stories - and you cant trade news for profit. The stories are interesting and convincing - and in most cases dead wrong.

The main thing to remember is that the Forex markets are a discounting mechanism - and news is instantly discounted in the price. This means that you are trading old information. The market moves on future perception - not what has just happened!

By simply looking at your Forex charts, and following price, you see the reality of prices now, and act on them - thats what makes technical analysis so powerful.

3. Keep it Simple

Any currency trading system based on technical analysis should be kept simple. Simple systems work much better than complicated methods. Why? Because theyre more robust they have fewer elements to break, in the brutal world of trading.

You should use trend lines, and just a few confirming indicators, to give you an indication of price momentum - and thats it.

In currency trading, you get your reward for being right, and the success of your trading signals - not the effort you put in.

4. Patience and Discipline

Youve probably heard that discipline is a key factor in successful currency trading - and it is, but dont forget that you also need patience. You need patience to wait for the right opportunities to present themselves. You also need patience to trade through the losing periods. Finally, you need patience to make the huge gains.

Many Forex traders lack patience and discipline, and trade too often. They cant follow a big trend they get excited when they make a decent profit. In their excitement, they cant resist taking their profit too soon - or move their stop to quickly. This leads to marginal profits - when they could have made a much bigger profit.

If you want to make money in Forex trading, then you need patience and discipline. Without patience and discipline, youre certain to lose your money.

Finally

The 4 points above are critical to your currency trading success especially when youre starting to learn Forex trading.

So far, youve learned that you need to devise your own system - to gain confidence and discipline. Then, by basing your system on simple technical analysis, you have the basis of your Forex trading strategy.

Part 2 of this article continues your Forex education with the need for money management, the best trading methods, and how to trade the odds in order to achieve success in Forex trading.

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Key Timing Builds Trader Confidence

Without a doubt, trading is 90% psychological and 10% technique. Without the proper mindset and attitude, the best trading technique does not stand a chance against a mind that is uncertain, afraid or greedy. The wrong attitude, the lack of real confidence, will assert its influence on any given trade and distort reality, resulting in making bad decisions and costly mistakes.

There can be several reasons that affect how a trader sees each trade or the market overall, or how the trader sees oneself. Without a careful self-examination along with professional direction, all the reasons may never be clear.

This article will address only one aspect of trading psychology, and that is 'trader confidence' as it relates to trading techniques.

Looking at this issue from the other direction, a trader can have very little in the way of psychological baggage and is best suited to trading, only to be hampered by trading techniques that do not instill confidence in trading decisions. Traders that lack confidence in their trading decisions are just as likely to make poor trading decisions that can result in poor results.

For nearly 20 years, my work has been mostly about market TIMING. Early in my trading career, I found myself putting on trades and then immediately starting to feel that perhaps I waited too long, or maybe I was in too early. Needless to say, this did not help in trying to manage the trade. The "not knowing" had detrimentally affected my decision making process and resulted in many painful outcomes.

With a deep study in market trend patterns, market cycles, and the development of mathematical/cyclic algorithms in forecasting future market tops and bottoms across several time frames, the issue of trading confidence became a thing in the past. There is a lot to be said about being 75-80% plus certain that the market is going to do what you expect it to do. It is good to know that you don't have to be 100% dead-on to build your confidence about your trading decisions.

The better the timing method, the lower the risk and higher the profit potential. An excellent timing method should allow the trader to determine before making the trade what the initial risk is likely to be. It should help determine when and where a trade should be initiated. And for many, it should provide ample trading opportunities.

Each trader, as part of their quest to reign in the psychological barriers that inhibit trading success, should learn to trade the markets with greater precision and come to be confident in the timing approach.

Key timing will undoubtedly include adjusting how a trader sees market trends, such as looking for opportunities to trade 'with the trend' as opposed to trying to sell the very top of a bull or buy the very bottom of a bear trend.

So in order to build trader confidence, learn effective market timing techniques that encourage trading 'with-the-trend' in order to keep risk low (helps control fear) and increase profit potential (no need to be greedy), along with good money-managing.

Of course if I left this article at this point without providing some information about Key Timing, it would leave many dissatisfied. So I will include my biased opinion about precision timing. Our trading membership (http://www.amazingaccuracy.com) specializes in precision market timing. Our trade setups are based on FDates, a proprietary mathematical/cyclical approach to calculate when to expect the market to make swing tops and bottoms in advance, coupled with a simple procedure to determine when and where to place our trades as well as know what our initial risk will be prior to putting on the trade. As mentioned earlier in this article, these are the things we need to build our confidence in the trading decisions we make.

Rick J. Ratchford has been trading since 1989 and since 1996 is an Analyst for ProfitMax Trading Inc., a membership for traders specializing in the advance forecasting of market tops and bottoms for Precision Timing the Futures, Commodity and Forex markets.

http://www.amazingaccuracy.com

"Know Today the Market Turns of Tomorrow!"

Tab Cards Took A Bum Rap In Florida Election And Still Are The Best Method For Voting

We had the following published in the Cleveland Plain Dealer, during the recount of the tab cards votes in Florida:

.....Having a background in tab cards, I find it befuddling as to how this vote-counting mess can keep going on in Florida.

Tab cards are made of paper that is ever-changing depending on its surroundings. Tab cards - particularly perforated ones- were designed and made for machine processing. Their life span of accuracy is limited, especially considering how they've been handled so far in Florida. I guarantee that every manual recount will have a different result. ( If you took a deck of tab cards and slapped them on the side of a desk, you would have a different result, almost every time you did it. )

I can't believe, based on what I see on TV, that anyone can trust any outcome after the way these cards have been counted, stacked and rearranged. After all this manipulation, the cards are damaged goods. Even paper and stock card manufacturers would have a difficult time determining voter intent. Even if those who have handled the recount so far were replaced by impartial laymen in the court system, not much more objectitve reality will be reached as to who voted for whom.

Someone should call in experts if these legal maneuvers continue. In any other court situations, we always have the evidence tested for its validity. In Florida, it somehow was automatically assumed that the holes and chads will tell the story no matter where, when and how the tab cards were manipulated. Only God now knows the real count after the way the cards were manually handled.

( Written during the Florida recount in Dec. 2000.)

( It a sad commentary that this process was used to verify the election and even more sad that a data processing tool that was used for many years by major corporations by the millions during the most prosperous time in our history was foolishly rejected. Tab cards remain the best inexpensive method for voting but simple procedures must be followed. )

The tab punched card still remains the best way for voting. The card itself is a unit record. It is a physical hard record based on a manual punching of a card. For many years, companies ran their businesses with tab cards. However, all data was considered to be "raw data" until the data was verified in a separate pass. The tab card was called a unit record because the data on it was physically limited to the individual card. In any other electronic processing this is not case. Bits and bytes are only electronic pulses in a flow of a records. They can be a very long one based on arbitrary choices. Data or pulses can be changed at any time at will or by accident.

With the old tab card system, most of all data was verified. This should have been the case with the tab card voting machines. Tab cards were designed to be a machine run processes and not handled manually. Perforated cards that were hand punched were manually handled but after the fact, the rest of the operations were run by machines. In storage of any length of time, the cards were compressed because card stock is subject to the environment in many ways.

The only thing missing from the manual card voting systems was a verification pass. This could be a simple efficient inexpenvise step. The voter would punch out the holes beside their selection as they always have and then view a simple display - it could be video screen or even something simpler. The voter would then view their selections on the display and then press a verification button that everthing is OK. There would then be two records of the event - the card itself and the verified information in a simple computer fashion. The votes could then be tallied in batch mode with each batch having its own record. It could then go to a larger computer to process all the data but still have the original voting records in tact from the separate procedure, if there are any questions.

In the Florida voting problems, nothing was for sure once the cards were manually counted. Stock cards are paper products and paper is a dynamic element subject to its surrounding. For example, the cards only in boxes, that were transported in hot trucks in the Florida sun, were subject to many things. The cards could warp and popped the chads in an automatic response to the heat. Moisture also affects stock cards and could cause a horizontal or vertical bending of the card automatically. That is why it was nonsensical to watch all those people on TV checking the cards by hand. The data was still raw without any verfication process to back up the original voting selection. With all the manual handling only God really knew what was the original situation. With a simple second verification process, none of this would have been needed and the hard copy only had to compare with the verification after the fact with the clicking of the verification button on a simple display being the result of the individual voter action.

Compare this with a touch screen sophisticated computer devices. Bits and bytes of data are dynamic subject to changes at any time. The simple dynamics of card stock is easy to control. Electronic pulses are not.

For more real world information see Tapart News and Art that Talks at http://tapsearch.com/tapartnews and view the editorial art featured at Tapart News in one place at http://arklineart.fotopages.com

The author was a National Accounts Manager for several major corporations which used millions of tab cards for all kinds of processing for many years. He worked out of a tab card manufacturing plant. Similar tab perforated cards as used with voting machines were used for many applications including inventory control and for re-ordering from end user locations. "KISS" prinicple was followed - meaning Keep It Simple Stupid...... Some of the same information was published in a top newspaper story in about 2000. Email contact at tapin@safe-mail.net or go to http://tapsearch.com/tapartnews

Mens Skin Care Products

A while ago, men had to steal a bit of our wives, girlfriends or even sisters face cleanser or moisturizer. Of course we know it wasn't because we like to put on make up or play dress up. It's because we want to look good, clean and attractive for women. However, now a days companies are finally starting to respond to men's interest in skin care and today we have a variety of men skin care products on the market. Statistics show that just in the United States, men spend more than 4 billion dollars per year on grooming products.

I know some of you guys may still me tempted to just use whatevers in the bathroom mirror cabinet, but you have to realize that a man's skin and woman's skin is very different. The mens skin care products made today are designed specifically for men and our skin.

A man's skin is about 20 percent thicker than woman's, and its a lot more firm than hers because we have more collagen and elastin. Unfortunately, men have more active sebaceous glands; this means our skin tends to be oilier. Also, due to regular shaving, men's facial skin tends to get dehydrated.

While taking care of your skin sounds girlish, it'll actually get you more attention from the ladies because youre taking care of your appearance and more specifically your facial skin. Trust me, good skin doesn't go unnoticed. So it's time to stock up on some quality men skin care products and you can get these babies either online or at most local stores. Below I picked out some moisturizers for men that I would recommend. Remember, all of these products where mad for men and theres nothing girly going on here.

-Zirh Protect: Face Moisturizer
This is the ultimate environmental defense lotion for your face. It contains an effective moisturizer that leaves no oily film, improves your skins texture and slows your skins aging. Unlike many face lotions that contain mineral oil which may cause acne, this moisturizer will give you no problems.

-Brave Soldier: Brave Face
Brave Face immediately soothes, cools, and reduces irritation and redness after shaving. Healing botanicals such as soy amino acids and marine extracts helps enrich and stimulate your skins own natural balance. Personally, I use this moisturizer all the time after shaving and it really does what it says.

-Sharps Barber & Shop Daily: Prep Skin Tuning Lotion
This super hi-tech lotion has a controlled release system that delivers all day moisture without the greases. The company strives to a modern approach to the traditional barbershop, getting guys all cleaned up and ready for action.

-Jack Black: Line Smoother Face Moisturizer
This ultra-lightweight moisturizer helps fight the signs of aging. Natural fruit acids and vitamins help minimize fine lines, wrinkles and skin discoloration by gently sloughing off the top layer of skin, revealing younger, smoother skin beneath. The formula soaks in fast, with no greasy after feel. My favorite feature is that it's fragrance free and colorant free.

-Men Science: Advanced Face Lotion
This high-performance moisturizer, formulated with advanced water binding agents and skin refining ingredients, helps renew and restore your complexion while nurturing and protecting it. The ultra light, oil-free formula absorbs immediately and is by far one of my favorite light lotions.

There are tons of quality mens skin care products on the market today. I would suggest that you try various products, so you can see which is best for your type of skin. Of course this doesn't mean skin care has to be your lifes priority, remember that this only takes up a couple of minutes after your shower and the benefits, such as getting more attention for girls, are definitely worth it.

Joqtan A. is an expert writer for Mens Skin Care Products. A site concentrating on men skin care tips, advice and product reviews for men of all skin colors.

Why A High Quality Auto Sound System Is A Great Investment In Your Automobile

For those people who love music and like to take it with them, there are many systems that you can plug your music right in to. It doesn't matter what kind of mp3 player you may have all of the newer stereos have the plug in for the mp3 connect.

Many of us know that bringing an mp3 player around with you everywhere you go is a lot better then bringing a book full of CDs with you. It is also a good tool because a lot of people only like one or two songs from a CD so now you can just download the certain ones you want directly to your mp3. Having a sound system that you can just plug your mp3 up to is better then having a ton of CDs.

I don't know about you but I am totally fascinated by audio books. You will learn that these books can teach you about your audio that you may have and teach you how to fix them if they may become broken. So if youre going on a trip and somehow your stereo stops working you might be able to fix it using the book you had brought with you. You might also be able to fix something you had wanted to fix for a while.

I typically try to find books that kids like so they are not bored the whole trip. This gets them to start reading and so they are not really worried about the, are we there yet part. Great sound systems dont only sound good but they make the music that you are listening to sound a lot better and cleaner. This is not only true when it comes to news or just talk shows but it is also good for everything you might think of when it comes to music.

When you start looking for the perfect sound system for you be sure to look for the one with all the things you want including all the features you may be looking for. You can find systems today that have a built in GPS or DVD player or radios, mp3s anything you can think of can most likely be in a sound system too. Pick the sound system you really want and try and make it last as long as possible and enjoy it for as long as it lasts because you may never find one like it again A premium sound system is something that will stay with your car until it dies or you trade it in but try to make your choice long before you are looking to trade it in. At the same time a system is a good reason to keep the vehicle longer instead of trading it in. I wouldnt even bother installing a premium sound system in a car if I was just going to trade it in so if you are going to be trading your car in and think you may get a better deal because of it having a good sound system think again. The idea is to install a sound system so you will have it to listen to for a long time.

Gregg Hall is an author living in Navarre Beach, Florida. Find more about audio systems as well as car care products at http://www.autopartsandaccessoriesplus.com

Commodities - An Overview

Commodities are products traded solely on the basis of price. The products are undifferentiated products, goods or services that are not traded based on quality and features, only on price. Historically, commodities were items of value, of uniform quality that were produced in large quantities by many different producers. The items from each different producer were considered equivalent. Commodities are defined by an underlying contract and standard, rather than the quality of the product.

History

Chicago was the birth place of the first commodities market, way back in the 1840s. Farmers would bring their wheat to the market and exchange it for good, hard cash. Futures contracts developed from there. A farmer would contract with a dealer to sell a set amount of produce to him at a set date for a set price. It was comforting for both parties the farmer knew how much he was going to get paid and the dealer knew exactly how much he was going to pay for these commodities.

This practice of commodities trading evolved over the years that ensued. The farmer would decide not to sell and cede the contract to another farmer to fulfil, or the dealer might decide that he did not want the produce anymore and then on-sell the contract to another dealer.

Naturally supply and demand entered the equation. If the harvests were poor, the produce would fetch a much higher price and if the crops were abundant, a leaner price prevailed. Before long, speculators were in on the act. They started trading the futures contracts in the hope of buying the commodities at a low price and selling these for a handsome profit.

What defines a successfully tradeable commodity?

To successfully trade, commodities must:
Be standardized. If the commodities industrial or agricultural, it must be unprocessed. Have an adequate shelf-life, if these are agricultural.

There should be sufficient fluctuation in supply and concomitantly price. The reason for this is that without the risk factor, profits are meagre and unappetising. Examples of commodities are: electricity, wheat, chemicals, metals, pork bellies, RAM chips, labour and currency.

Difference between commodities and stocks The main difference between stocks and futures contracts from a trading perspective is that, unlike stocks, which you could keep for a very long time, commodities are held for a very short time only. Futures contracts are used to hedge commodity price-fluctuation risks or to take advantage of price movements, instead of trading the actual cash commodities.

How are commodities traded? Commodity Future and option trading take place at exchanges such as the Chicago Board of Trade, Euronext.liffe, London Metal Exchange and the New York Mercantile Exchange, and other online trading systems. At the exchanges, areas are provided, each designated for a different futures contract. Those trading on the floor must be members of the exchange and registered with the Commodity Futures Trading Commission. Those traders, who are not members, work through brokerage firms who are.

To conclude Commodity future option trading is both complex and risky, so the shoe may not necessarily fit just anybodys foot. If you are considering commodity future option trading, you should evaluate how much you are prepared to lose should push come to shove. Choose a trading method that you are comfortable with and that is best suited to achieving your objectives. The bottom line in commodity future option trading is that, if you exercise good judgment and manage your risks effectively, commodities trading are likely to richly reward your efforts!

Discover awesome, proven techniques for trading online; stocks, shares, currencies, FOREX etc. for both the novice and experienced trader at http://www.TradingOnline4u.com

Investers Cautious As Release Nears

Since Apple's initial announcement of the iPhone in early January, Apple Inc. shares have gone up in price by roughly 40 percent, peaking recently at an all-time high of $127. But with all the buzz surrounding the iPhone, surprisingly, many investors are leaning away from Apple stock.

You may wonder how the ubiquitous buzz surrounding the device can be a deterrent for investors. One would tend to think that any form of media and consumer attention for a product would do nothing but good for a product. However, in this case, the buzz may be TOO good. With expectations for the device higher than any consumer electronics device in recent memory (save perhaps the Playstation 3, and we all know how that went over), some major investors are left to speculate that Apple cannot possibly live up to them.

Hedge fund manager Jay Somaney is just one of a bevy of such investors. Its time to take some money off the table, said Somaney, who plans to sell as much as half of his shares prior to the June 29 release date. Somaneys reasoning also echoed concerns from stock traders nationwide, "There's just no way reality is going match the hype."

Past incidents of super-hyped disappointment include Microsofts Xbox System which continues to lose money for the company despite its widespread popularity, leaving Microsoft to garner much of the revenue from the system through licensing agreements and software titles. Last years Christmas season release of the PS3 left purchasers upset as the system was plagued with bugs and lacked significant software titles.

While the iPhone will certainly have its kinks to work out, initial sales forecasts for the device are strong. However, it is the long-term feasibility of the product that has investors concerned for Apples overall stock growth. If Apple is able to provide superior service when addressing potential issues and continue to develop improvements on subsequent generations, stock analysts see Apples stock with a potential of reaching as much as $160 before June of next year.

Perhaps, the key to Apples long-term iPhone success is the integration of business enterprising software; specifically, the need for Microsoft Exchange Server capability. While Steve Jobs maintains that the iPhone is the all-in-one super device, it will necessitate the advantages of a Windows Mobile device before it can truly eliminate the working business persons Pocket PC or Blackberry.

Apple may need to take a page out of its own book. When users were first allowed to run windows simultaneously with OS X on the companys consumer computers, Apple was praised for opening its doors to an endless amount of software titles and usability. If the iPhone is able to run a virtual version of the new and improved Windows Mobile 6, it will have a fighting chance at achieving long-term stability in the smartphone market. Until then, many sentiments will be aligned with Jay Somaney: sell , sell, sell!

Jordan Corning is a mobile enterprise solutions enthusiast. An analyst with Minneapolis based consulting firm ITR Group, Jordan enjoys exploring new ways in which mobile technology can offer significant contributions to the business, educational, and consumer worlds. For more info, visit the ITR Group website @ http://www.itrgroupinc.com or visit his blog @ http://www.iphailure.com

10 Sure-Fire Phrases That Will Increase Your Website Traffic

1. "Bookmark This Web Site Now" Tell your visitors to bookmark your web site. They may see your web site listed in their bookmarks and visit again. You should also give then a good reason to bookmark your site. For example tell them you add new content everyday.

2. "Subscribe To Our Free E-zine" Tell your visitors to subscribe to your e-zine. When they subscribe you'll capture their e-mail address. Every time they read your e-zine, it will remind them to return to your site.

3. "Participate On Our Discussion Board" Ask your visitors to participate on your online discussion board. By participating they will meet other people. By meeting other people, they will revisit your web site on a regular basis to stay in contact with them.

4. "Sign Our Guestbook" Ask your visitors to sign your guest book. When people sign your guestbook you may get valuable feedback or constructive criticism on how to improve your web site. This may help you increase traffic to your web site.

5. "Use Our Free Content On Your Site Or In Your E-zine" Allow your visitors to use your articles on their own web site or in their e-zine. Just ask them to include your resource box. This will spread your advertising all over the internet.

6. "Refer This Web Site To A Friend" Ask your visitors to refer your web site to a friend(s). They may know someone that would benefit from visiting your web site.

7. "Fill Out Our Online Survey" Ask visitors to fill out your online survey or questionnaire. You could use it to get valuable feedback on ways to improve your web site to increase traffic.

8. "Enter Our Contests" Ask your visitors to enter your online contest or sweepstakes. People love to win stuff, and they will visit your web site to try.

9. "Give Away Our Freebie To Your Visitors" Allow your visitors to give away your online freebies to people that visit your web site. Include your ad on the freebie and those freebies will multiply your traffic.

10. "Join Our Affiliate Program" Allow your visitors to make money selling your products or services. This will increase your traffic because they will link to your web site.

Be sure to visit http://www.rushhourwebtraffic.com/rhwt.html for 12 online videos detailing dirt-cheap easy ways to drive tons more traffic to your website... FAST!

BONUS: Here are 5 High Powered Ways To Increase Your Traffic

1. Trade links with other web sites. They should be related to the subject of your web site. Instead of trading links, you could also trade banner ads, half page ads, classified ads, etc.

2. Start an e-zine for your web site. When people read each issue they'll be reminded to revisit your web site. They'll see your product ad more than just once which will increase your orders.

3. Form an online community. It could be an online message board, e-mail discussion list or chat room. When people get involved in your community they will regularly return to communicate with others.

4. Write articles and submit them to e-zines, web sites and magazines that accept article submissions. Include your business information and web address at the end of the article.

5. Give away an electronic freebie with your ad on it. Allow your visitors to also give the freebie away. This'll increase your ad exposure and attract people to your web site at the same time.

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Well Managed Investing Risks Bring Rewards!

"Risk comes from not knowing what you're doing!" Warren Buffett (1930 - )

We often listen to people who hesitate to invest in the stock market because they fear risk. There are older people who fear that a stock crash could leave them destitute. There are young couples who pine for a new home but worry that an investment loss could kill their chances.

For any investor, risk is a fact of life!

Whenever an opportunity opens up for you to make an investment profit, you also face the fear of the possibility of suffering an investment loss. Even with "safe" kinds of investments, such as bank deposits, there is a risk that the rate you earn will not exceed the rate of inflation.

Often, these fears are rooted in a misunderstanding of what risk is. Those who understand market risks --and properly evaluate their ability to tolerate them-- can supercharge their investment portfolios by embracing a certain amount of uncertainty!

In the financial world, risk translates to uncertainty and it's measured by standard deviation from the norm.

Many individuals would say the riskier investment is the first, because their principal would be in greater jeopardy. But to professionals, the first investment is merely stupid --not risky--because it's a sure thing to lose!

Still, what worries many is that you never know when the stock market is going to dive. What if it falls right before you need to sell?

Most individuals measure risk as their chance of loss, but we measure risk by the variability of returns!

In other words, because stocks have higher average returns, you can suffer some losses and still end up vastly ahead over the long run.

There's only one situation in which adding stocks to your portfolio doesn't make sense--when you don't have time to let the market work for you.

In any given year, you have about a 1 in 4 chance of taking a loss in the stock market. If one year or less is as long as you plan to invest, stocks boil down to a gamble.

But if your time horizon is five years or more, there's a very good chance that putting at least a portion of your money in stocks will boost the performance of your investments!

One question you have to resolve is the kind of investment risk you're comfortable taking. The choice ranges from conservative to aggressive, with a broad middle ground between the extremes.

Conservative Investing: Means putting money where there's little risk to principal.

Moderate Investing: Means taking risks by putting money into growth stocks and bonds.

Aggressive or Speculative Investing: Means taking a possible risk of losing part of your investment in exchange for the possibility of making a larger profit.

The ideal risk equalizer is that you should work for balance among the various risk categories.

One of your concerns should also be that if you invest too conservatively, you won't have enough money down the road to afford your goals even if you've been diligent in following your plan.

Another concern is that by taking too many chances you risk losing too much of your capital.

Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of http://www.greekshares.com

Copyright 2005 I.E.C. Haramis

haramis@greekshares.com
http://www.greekshares.com

Are You Getting Scared?

Are you getting scared by another potential Chinese stock meltdown? On Tuesday 27th February 2007, Shanghai stock market plunged by 8.8% and it brings the world market with it. Back home, the Dow Jones Industrial Average plunged more than 400 points while the Nasdaq Composite index weakened by 99 points. It is long overdue. Chinese Exchange Traded Funds such as Xinhua China 25 index (FXI) and Greater China Fund Inc. (GCH) plunged 9.9% and 13.7% respectively. The Chinese market has leaped 130% in 2006 and trading at all time high before the precipitous fall. As an investor, what adjustment should you make in case similar drop occur in the future?

Well, the answer is nothing. If you have been investing in stocks below fair value, the recent drop should make your stock is a more compelling opportunity. Let me revisit what fair value of a common stock is quickly. When interest rate in your local bank is 4% and the 10 year treasury bond yields 5%, your common stock should yield more than that. Some wants 6%, others may want 7% from their common stock yield. In the case of 7% yield from a common stock, the fair value of a common stock under this circumstance is when it reaches a Price Earning ratio of (1/ 7%) = 14.28. This means that for a stock trading at $ 14.28, its profit per share should be at least $ 1.00.

That is fair value in brief. Our job as investors however is to buy stocks that is trading below fair value, not at fair value. Fair value is the point when we sell our investment. Thus, even when other markets are doing bad, your stock is already trading below fair value anyway and other investors may in fact flee to undervalued common stocks when things turn sour.

Therefore, during the market correction, you should watch out for potential investments that you have always want to buy but at a lower price. For example, some potential common stocks for investment that fell include: Novell Inc. (NOVL), Dell Inc. (DELL), Advance Micro Devices Inc. (AMD) or perhaps OmniVision Technologies Inc. (OVTI). You can be sure that stocks with highest Price Earning ratio tends to fall the hardest in a brute sell off.

The moral of the story is don't get scared. You also need to know the fair value of your common stock before pressing that buy button. Once you have done the proper research, you will be less likely to be panic and sell at an unfortunate time. Oh yes, it does take time. There is no free lunch.

Novice Investing is the online investing guide for beginners. You can also submit investing articles here

Daytrading And How To Get Started

One working definition of a Day Trader is, A person whose goal is to make his or her profits from a security in the shortest amount of time [preferably during a single day.] Though this definition is simplified, the day-to-day job of a Day Trader is a far more complex series of events and strategies that must be learned and implemented.

My description of daytrading has largely been based on past experiences with the markets, as well as the changes in the markets and the global economies themselves. Keep in mind; the stock market is not your friend. Much like war, in day trading and/or short-term investing, you are pitting your wits against every other person in the market. Every dollar you make is on the back of someone else's losses. Your goal is to win with your investments and your trading, and that requires someone else to lose. Try to make sure it's not you. Never forget that, and you'll be off to a much better start in the markets.

How risky is daytrading? Well, before you read on any further, imagine taking about $10,000 in crisp, brand new one hundred dollars bills out into the backyard. Put them on the ground and douse them in lighter fluid. Then strike a match. Don't burn your money just yet, but just stand there. That's about how risky daytrading is.

Always remember: at any given time, when you are daytrading for a living, you are risking probably that much money (if not quite a bit more), and your money is in perhaps just as much risk. While we are not suggesting that you actually set fire to your money in the backyard, our analogy is fairly accurate. If that bothers you, then perhaps you might consider another line of work, or a good mutual fund, because I don't know any good day traders that haven't seen at least $10,000 go up in a puff of smoke during market hours. It's simply unrealistic to expect to be able to trade professionally and profitably from day one. Mistakes will be made; lessons will be learned; money will be lost as you learn. It's a never-ending process to a large degree. In fact, the day you feel you have mastered the markets, that's the day you get your head handed to you.

In the years I have traded, I have seen many people come and go. I've seen people make and lose large sums of money very quickly. I have made and lost large sums of money very quickly! I've seen stocks go from pennies to hundreds of dollars and back again, taking traders and investors for a ride in both directions. And yet, still, in all the years I have been in this business, I am sure of only one thing about the stock market--that I have not seen it all yet. If anyone claims to have all the answers about the stock market, or claims to be the only person you should listen to - run, don't walk away from them and/or their services.

One of the most frequently asked questions is, How much capital do I need? It is a somewhat difficult question to answer. How much do you really need in order to start day trading? How big a "stake" (a term used to refer to your starting capital) is required to get going? The only answer is that it's different for each person, and it's something you must consider for yourself before you start. However, I personally feel, in general, you should have enough trading capital to purchase between 500 to 1000 shares of any given stock. Ideally, this would be without having to use margin.

If you are in the habit of trading $40 to $80 stocks, this could mean you need as much as $40,000 to start. At the same time, one can trade with as little as $10,000 and get their feet wet. It also doesn't hurt to have enough capital to diversify into several different positions (two to five generally) at one time - each with say 300 to 500 shares. Just remember, if you are starting small, keep your expectations realistic. Certainly, someone trading with $10,000 to $20,000 is going to have a much more difficult time generating $1,000 per day than someone using $100,000 or more. As long as you keep this in perspective, it will help keep you grounded as you begin learning.

When you get into the bigger leagues of day trading, then it's nice to be able to "step on" (i.e. purchase or short) a "block" or two of stock. This would be generally defined as 10,000 shares of stock. This typically is going to require $500,000 or more of trading capital, plus some use of margin in limited situations and for a limited time. When you reach this level, it's easy to see how daytrading can become quite profitable (and quite risky!). A few points (or even a few fractions) across 10,000 shares can return quite a bit of money quite rapidly. Just remember it goes both ways; you can quickly lose quite a bit as well.

As you can see there's no right or wrong answer with regard to how much you need to start. Simply keep your objectives in perspective and reasonable. This will go a long way to giving you a good start in the markets. Also understand that if you are starting small, factoring in things such as equipment fees and transaction costs may become much more important.

Good luck in the markets!

No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included.

Ray Johns is the founder and Senior Market Editor of Daytraders.com, Proudly serving day traders & short-term investors since 1996, at http://www.daytraders.com

Daytraders.com is the publishers of the award winning Morning Stock Market Report and the home of the Internets finest real time trading desk. Ray has been on the forefront of trading and investing in the markets and has appeared as a guest on a number of radio and television shows including CNBCs Market Talk. If you would like a free trail of the newsletter and the live trading desk log on to Daytraders.com. Comments and questions can be sent to articles@daytraders.com

Ways To Invest Money-How To Make A Fortune No Matter Which Investment You Choose

Many people today want to know the best ways to invest money today to help them get rich overnight. Unfortunately, rarely is there such a thing. You can certainly can make a lot of money with your investments, but they will often take some time.

Unfortunately, most investors arent willing to wait to make their money. They want it all now. Thats why we see so many investors losing a fortune on the stock market today.

When they invest, they arent doing so for the long term. They just want a quick buck and then get out.

In contrast, the worlds top investors view all their investments (whether it be in real estate the stock market) as a long term cash flow stream. Instead of looking for ways to invest money where they can get in and make a $100,000 overnight, they are only interested if it will provide long term residual income.

The vast majority of investors dont think this way. For instance, in the market, a typical investor might look at a stock and see that its been going up for the past week.

They wont check out the companies financial records or what kind of future potential it has. All they will look at is the stock price. If this is going up, they invest.

The worlds top investors do not do this. They will generally only invest in a company if it has exhibited a long profitable history and its future outlook looks promising. Only then will they put down their money.

This same mentality applies with real estate. Most people think that real estate investors make their money buy buying for a certain price and turning around and immediately selling it for $100,000 more.

While some do partake in this activity, the vast majority will only invest if the long term profits look good. They will usually invest in order to rent it to a tenant and obtain a long term passive income stream.

Therefore, no matter what field you are looking to start investing in, whether it be real estate or the stock market, always remember this: dont get lured in by fast profits. Yes, such events do occur, but more often than not it is simply catching lighting in a bottle. Very often, the investors who you hear about who make a killing overnight just about always lose it all in another investment shortly after.

The real wealthy investors are always looking for long term income in their investments. If it isnt there, they will simply wait and go on to the next. The best ways to invest money is always looking for long term profits, not a quick buck.

To learn to invest money and for other investing advice, try checking out http://www.online-investing-tips.com. This is a popular investment site that gives money investment advice to help you achieve financial freedom.

A Butterfly Flaps Its Wings, Chaos Theory And The Financial Markets

According to Chaos Theory, a seemingly irrelevant action can precipitate, and contribute to, a major event. The right set of factors comes together and a major event takes place.

It's easy to imagine a fanciful chain of events that would initiate a market move.

A housewife attends to her crying child who has tripped over the newspaper, and in doing so, leaves the refrigerator open during an unseasonably warm day. It breaks down, and the family needs a new one.

To get funds for a new refrigerator and some added home repairs, she sells off a large chunk of IBM stock that her parents gave her as a wedding present.

By pure chance, at the moment that she sells the stock, a specialist monitoring the action gets it in his head that the sale of a large chunk of stock means something, so he sells off his positions in the tech sector.

Next, a financial reporter sees the sale and tries to interpret it. He reports that it reflects a shortage of silicon and suggests investors unload their tech stocks immediately.

Many people follow his advice and a massive sell off takes place.
Perhaps it seems a little unlikely that all of this can happen, but you get the idea.

Just like how scientists claim, according to Chaos Theory, that a butterfly can start a hurricane, you can imagine that a few key seemingly minor events can start a major market move

Is It Economic Factors? Or Fear And Greed?
Many investors view the markets from a traditional long-term buy-and-hold strategy. They look at the markets in terms of fundamental variables, such as consumer confidence, demand, and general economic factors that impact a stock price.

If a company makes profits that are in high demand, the price goes up.

Market timers though, realize that many market moves are the result of psychological factors, such as opinions or emotions of fear and greed. In the short-term, anything can happen, and it is vital to keep this in mind.

Nothing is certain in the markets, but is this something to worry about?

Not if you take precautions. By precautions, we mean "following a strategy that uses the ups and downs (trends) of the market itself to generate buy and sell signals."

This way you are always in the current trend, never miss a trend, and are never trading against the market's trend.

Worry Can Be The Doom Of Market Timers
Indeed, a potential chaotic event can be a good thing.

The initial event that set off a market move isn't important. Who cares why the masses buy or sell, for example, as long as you take advantage of the move?

Market timers must learn to view such moves as opportunities to profit.
If you have a timing signal that is ruined by an unexpected adverse event...the chaotic nature of the markets coming to the forefront... there is no reason to worry.

In fact, it is absolutely "going to happen." Signals will go against you. Accept this and you will profit. Worry so much that you jump out of a tried and true strategy because of a losing trade or two, and you will eventually fail at timing the markets.

If you are following a trend, and it unexpectantly reverses, the (trend following) strategy will quickly reverse and place you right back on the right path.

It is necessary to accept that trading can be chaotic. Anything can happen, but it doesn't need to be a source of worry. As long as losses are kept small, and profits are allowed to run, you will beat the markets.

Worry can be the doom of market timers and traders, but if you accept the fact that uncertainty and chaos are part of the inherent nature of the markets, you will accept it when it occurs and recognize that this same chaos is what will make you profitable in the end.

A losing trade here. A losing trade there. All meaningless in the big picture. By following trends, which is FibTimer's market timing specialty, you are always profitable over time.

You profit in "all" of the big trends. By following trends with FibTimer's timing strategies, you are always with the big market moves when they occur...and there is always a big move (trend) just around the corner.

Surety Bonds Roles and Responsibility

Surety bond plays a major role in the development of the economy. In every business environment surety bonds are the most needed requirement to fulfill their aspects in a correct form. Nowadays, trends have been changed and people want to compile their requirements legally. So, every obligee requires their business to be done legally. Surety bond explains the essential factors and their requirements in the economy. The main purpose of issuing surety bonds is to give a guaranteed performance of contract. Generally, most of contractors enters in to a contract and do not complete the contract as per the terms and conditions of contract. Each party involved in the process has a defined responsibility and role with one another.

In case of breach of contract by the obligator, this surety bonds will be more helpful for the obligee to sue both principal and surety in the court of law. Surety bonds are issued in different types and at different premiums as per the requirements of the obligee. Nowadays, surety bonds are needed in all business environments. A surety bond determines the responsibility and roles of different people who are engaged in the contract. When the person engaged in the business, he is obliged to obtain a license from the department. To obtain this license, the applicant is required to procure surety bonds of many kinds as per their business. Without license, no person can engage in the business, also without surety bonds no person can obtain license from the prescribed department.

Therefore surety bonds describe the responsibility and role played in the economy. Surety bond classifies the main aspects needed for the business and provides a better solution to solve the problem. It offers responsibility to the people engaged as per their functionality and requirements. The roles and responsibility of surety bonds offers a better solution and benefit for the persons engaged. The roles and responsibility of surety bond determines the functionality and consideration of various activities involved in the process. The process will be made essential when it is organized by the contractor properly. It is the responsibility of the obligator to complete the contract within the time and contract price mentioned in the terms and condition of the contract.

The surety bond explains the roles and responsibility of the person involved in the contract, namely the principal, the owner, the surety. The obligator is a person who performs the contract as per the terms and conditions of the contract and gives a guaranteed performance to the owner. The obligee is an owner who has to make payment appropriately to the contractor within the contract time. Surety is a third party involved in the roles of surety bonds. A surety is a person who guarantees the obligee that the principal will perform the contract as per the terms and conditions of the contract. The surety explains the responsibility of the contractor to the obligee with a guaranteed compliance. When the principal fails to perform his obligation, the surety can be asked to complete the contract or pay any compensation for the loss incurred. Therefore surety bond will perform the roles and responsibility for the economy in the prescribed form.

Ron victor is an expert SEO Copywriter for Surety Bonds and Mortgage Broker Bond. Ron has written many articles for Surety Bond and to procure any information, contact him at ron.seocopywriter@gmail.com. Visit our site MVD Surety Bonds for further information.

Forex Is The Best and More Lucrative Home Based Business?

The first reason why you should trade the forex market is because it is the most lucrative home based business. Although It is not a new market, it is still unknown by non traders. It is more amazing when you know that most of the traders are not aware of the huge opportunity of the forex. The Forex or Foreign Exchange Currency Market is open to the public since 1998. With the economic situation today and the fear of most of the people worldwide to wake up a morning and be jobless, without resources to feed their family, there is an increasing need in lucrative home based business.

On another hand, it is really difficult to find a real opportunity which will allow you to make a living from your home computer. You got to put hours of recherches and invest some hard earned money, with the fear of being involved in a scam company. Let' s say you found a good opportunity, and honestly, there is a lot of legitimate business you can make a lot of money if you are serious. But, is that what you really want? Most of the opportunities on the web today, even if you make big profits, are held by someone else. That mean that when you participate in those turnkey businesses, you do not have any control.

It is really amazing to see all these people who want freedom, more time with their family and friends, more time for their favorite hobbies... and the most important, fire their boss, going the same way. To understand, they want to be free, they found that on the web you can make money and be free, all that they need, but if you look at the situation, 80% of these people fired their boss, to meet another boss on the Internet! A virtual boss, who is making them work, but they don't feel it, because they have the impression to be free, they work wherever and whenever they want, and better than all that, they have never seen their boss. People make money in these programs, they may win $5000 a month or more but actually, the owner of the program is making tons of money.

There is a way to make much more money on the web that you think now, and Internet seekers and people in general should discover trading, specially the forex market. While the word market could intimidate some people, believe it, no one must be afraid about that, and think about the difficult stock market, or commodities, futures... The forex market which is also called FX is not really as difficult as it seems. There is not that much technical vocabulary to learn, and the risk is considerably low, if you compare to the other markets like the stock for instance.

The fact that home businesses seekers should really consider is that you can choose at which time to trade, and where you want to trade; you need only an Internet connection, and that's it, you are ready to tape in the biggest market of the world with $1,5 trillion activity everyday in the same way banks and large corporation do it and it is not difficult at all. Rather it is simple, and the methods already tested by serious traders will help you in your adventure.

To trade forex, you don' t need to have a lot of money to start( just $300 will be a good start), you can trade at any time, from anywhere, with a Internet connection, you will not have an order pending because of lack of liquidity, you will not have to work all during the day.

The forex market has many advantages over the other traditional investments, and for sure, it will give you more freedom, and more money.

Get Forex Freedom. Discover a simple and powerful technique which turn $300 into $30,000 in as little as 6 Months. Master The Forex Market With The Forex Mentor

Franck Silvestre.

Economic Data and Its Influence on the Financial Markets

The things which contribute to price levels and action in the financial markets are numerous and diverse, and their influences can vary through time, and across different markets. This article identifies the different types of Economic Data influences and the role they play.

There are two ways economic information can influence prices. The first is in the macro sense. Macroeconomic inputs include:

• Interest Rates
• Economic Growth (GDP)
• Government Budget Surpluses/Deficits
• Trade Balances
• Commodity Prices
• Relative Currency Exchanges Rates
• Inflation
• Corporate Earnings (both for individual companies and the broad collection)

These elements will generally all have long-term inputs in to the pricing of any given market. They do not tend to move in sharp, dramatic fashion, so their influences also tend to be seen over longer periods of time.

That said, the release of economic data related to the above can be seen to have serious impact in the short-term activity in the markets. This comes primarily in the form of data releases. Some of the most important are:

• Employment Data
• Trade Data
• GDP growth figures
• Consumer & Producer Inflation rates
• Retail and Wholesale Sales
• Confidence & Sentiment Readings (U. Michigan survey, etc.)
• Income & Spending
• Production
• Interest Rate policy decisions
• Earnings releases

The markets can react in very, very dramatic fashion to these releases when they are out of line with expectations. The foreign exchange market, namely the EUR/USD exchange rate, provides a striking example.

On one Friday morning at 8:30 Eastern the monthly Non-Farm Payrolls report hit the wires. This report (released on the first Friday of each month) probably provides the most short-term volatility across all market sectors of any regular economic release. When the data comes in well off of market expectations, fireworks can ensue, as was the case in the example. Over the course of about 2-3 minutes EUR/USD fell more than 20 pips, turned around and rose about 60 pips, then fell back down to near where it had been before the data was announced (a pip being 1/10,000 of a Dollar). It then proceeded to run nearly 100 pips higher in fairly steady fashion over the course of the next hour.

Here is another example, this time of T-Bond futures.

When those payroll figures were released at 8:30 the market dropped more than two full points. One point on the T-Bond futures contract is worth $1000, so each contract fell more than $2000 in about two minutes. Consider that the margin on a contract at the time was probably around $2500. That means a trader could have lost more than 80% on the trade in the blink of an eye.

It is also important to understand that in the futures pits such data events often result in fast market conditions. This means that the action is so hectic that there may literally be trading going on at several different prices in different parts of the pit. This is a risk of having open positions at the time of a major news release. The market may snap back fairly quickly, as in the chart above, but in the meantime the traders positions may have been liquidated on a stop order at a substantial loss.

Fortunately, all major economic releases are well documented. They are done on a pre-announced calendar which is readily available on any number of web sites, and of course in the business news media. In the vast majority of cases, one can also find out ahead of time from any number of sources what the expectations are for the release.

Foreknowledge of pending data events may not prevent losses which may result from unexpected figures. It will, however, allow the trader to recognize and understand when risks are increased. Make sure, especially if you are a short-term trader, to know what data is coming out. It can make a difference in your performance.

John Forman is author of The Essentials of Trading (Wiley - April 2006), and a near 20 year veteran of trading and analyzing the markets. Visit Anduril Analytics to learn more about his trading, market analysis, and research activities and to find out how you can get a copy of Anduril's free report on what every trader and investor needs to succeed.

Taking Penny Stock Risks

The term penny stocks generally refers to any stocks that trade outside the major stock exchanges and is taken as 'deprecatory'. The major stock exchanges would include: NASDAQ, AMEX, or NYSE. The term Penny stock is also often used interchangeably with small caps and nano caps. The title of penny stock however should be determined by the share price rather than the listing service or market capitalization.

Penny stocks often have market caps lower than $500 million. This makes it highly speculative for those who trade low volumes 'over the counter'. Some believe that penny stocks are difficult to sell once purchased because of the difficulty in locating quotes on particular penny stocks. Investors in these stocks are expected to understand that the loss of their entire investment is a viable risk.

Despite the risks involved, penny stocks are attractive to new investors because of the low initial price and the possibility of quick payouts of up to 100 percent in some circumstances. Just as there is the potential of high profits, that potential comes with the risk of substantial losses.

Penny stocks are considered high-risk investments. As a result investors should be aware that these stocks have a limited amount of liquidity and fraud in addition to a lack of financial reporting.

Penny stocks have fewer shareholders. This makes them less liquid than stocks of larger companies. It also means that it will buy and sell less shares. The fact that less shares are traded generally results in unpredictable stock prices. This can either make the prices rise sharply or suddenly decline. The lack of liquidity within this market leaves it wide open to exploitations by market makers, management, and other parties.

These stocks can also be difficult to sell quickly as some days there simply are no buyers.

Another reason for this lack of liquidity is the minimal listing requirements for smaller market listings as compared to NASDAQ or NYSE. Companies that have fallen below requirements for the larger exchanges have the opportunity to get listed on the OTCBB or Pink Sheets.

If you are comparing Pink Sheets to the major exchanges you might want to take note of the fact that Pink Sheets have very few regulatory requirements for those being listed. In other words, there is little protection in place for shareholders by way of accounting standards, notifications of ownerships of shares, etc.

These things combined make penny stocks very attractive tools for fraud. This does not at all mean that all stocks listed on the OTCBB are untrustworthy, it simply means that you should keep your eyes open when making deals on this market

Become a better investor with info on penny stocks funds, tips on stock market basics and help with penny stocks listing nasdaq at 1source4stocks.

Learn This Before You Trade Futures

This is REQUIRED knowledge for anyone who is thinking about or actively involved in trading futures. Not another trade should ever be placed unless you have a complete understanding of how to use options to create synthetic futures.

What is a Synthetic Future position?

It is the strategy of buying and selling options that allow you to emulate outright futures contracts.

Why would I want to emulate a futures contract using options?

For some serious account protection in the event that you caught in a market that is making limit moves against your position, and there is no trading allowing you to get out.

If you have been trading futures for any real length of time, it is likely that you have at one time or another been in a trade at the time the market goes limit up or down. Perhaps you were fortunate to be on the correct side of the move, or perhaps you had the unfortunate experience of being on the wrong side.

Being on the wrong side of a limit move can really do some serious damage to your mental well-being. The feeling of being 'trapped' comes to mind. However, this feeling need not ever happen to you as long as you understand how options can help you turn off the mounting of additional losses.

Back in 1993, the lumber market found itself trading limit up for several days. Traders that were short lumber futures at that time were unable to buy back their contracts in order to exit the market. Those that were not familiar with using options to create synthetic futures positions suffered devastating losses. Each contract accumulated losses totaling nearly $9000 until some very limited trading occurred. If the short trader was unable to offset his position at that time, the trader was then stuck for more limit up moves that eventually totaled about $25,000 per contract!

However, those traders that understood how to use options as synthetic futures positions were able to stop the bleeding the very first limit up day. By using options to create a synthetic long futures position, this offset the short position effectively removing the trader from any additional losses.

How do you create a Synthetic futures position?

If you want to create a synthetic long position, you would Buy an ATM (at-the-money) CALL and Sell an ATM PUT at the same strike price. If you want to create a synthetic short position, you would Buy an ATM PUT and Sell an ATM CALL at the same strike.

Why not just purchase the option rather than selling one also?

This question has been asked of me in the past. If the market was limit up and you were short, why not just buy a CALL option in the event prices continued limit up the next day or so? The answer is simple: A larger than necessary loss.

With the example just outlined, while buying the CALL would protect you against additional losses if the market were to continue limit up, it would be very expensive and the cost would be added to what you have already lost due to the limit move. By selling a PUT at the same strike, the premium you collect will offset the premium you paid for the CALL. There may be a slight difference in price between the two options due to the increased volatility, but if you create the synthetic at the time of the first limit move, it will be much more manageable than if you wait and suffer additional limit moves against you. The spread in premium between the two options will of course be added to your overall losses, but you will then have effectively offset your position from any further losses.

How does it work?

So say you are short futures and the market goes limit up. The price is currently 350 in Soybeans. You Buy a 350 CALL @ $900 and Sell a 350 PUT @ $825. The cost of the synthetic to you is $75 in this case. Your short futures is now offset by the synthetic long option position. If price continued higher, the CALL would cover it. If prices stopped moving limit up and actually moved down, the short futures would cover the short PUT option. Therefore, you have effectively offset your position at 351.50 (the additional 1.50 covers the $75 cost of the option spread).

Before you trade futures, or continue to do so, be sure you understand how synthetic future positions are created using options. Also, if you find yourself on the wrong side of a limit move, do not hesitate to put on the position. The longer you wait, you more you may end up paying for the premium spread.

Learn more on how to lower your risk and increase your profit potential with other free articles found at our Precision Timing of the Futures Commodity and Forex Markets site.

Forex - Trading With The Stop Loss And Trailing Stop

There are various risk management tools available to the trader in the foreign exchange (FOREX) market. Two of the most common ones are the stop loss and the trailing stop. What are they and what are they used for? Are they necessary for successful trading? This article will help you to understand these concepts and provide answers to these questions.

Stop Loss
The platforms provided by many online FOREX brokers contain built-in features such as the stop loss and the trailing stop to help manage certain risks inherent in trading. A stop loss is a feature which allows the trader to pre-determine the price level at which the position will be automatically closed should the market move unfavorably against the open position. The primary benefit of the stop loss is to put a cap on the amount of loss a trader is willing to suffer. A well-placed stop loss is an essential component of an effective trading strategy. There are, however, traders who trade without a stop loss or trade with the stop loss set improperly. Both of these approaches are courting disaster.

Day traders will typically have a different approach to setting a stop loss than those who take long-term positions. Because they are more interested in making quick profits resulting from small market movements, the day traders will typically utilize a smaller stop loss. In contrast, the wider stop is favored by long-term traders who are less concerned with the smaller moves of currency prices, including the temporary reversals present in the trend. Such price reversals would normally trigger the smaller stop loss of the short-term or day trader. Positions taken by long-term traders may be open for several days or longer, experiencing a fair number of reversals on the way to the take-profit target. Consequently, the wider stops would be preferable to this breed.

Trailing Stop
A trailing stop is often utilized in connection with the stop loss. Indeed, it would be futile to attempt the trailing stop without first setting the stop loss. That is because the main purpose of the trailing stop is to move the stop loss incrementally in the direction of the profit target as the currency price moves way. Such has the effect of incrementally bagging profits while the position remains open. The original stop loss level cannot be reached by the price reversal without the traders position having first been closed automatically at the new stop loss level made possible by the trailing stop.

In a news trading situationgenerally characterized by rapid price movementa trader would ideally utilize the smallest incremental trailing stop allowed. The smaller the trailing stop, the more possibility there is for making and keeping pips without being subjected to the vagaries of whipsaws or other rapid reversals in currency price. As in the case of the stop loss itself, a smaller trailing stop would be favored by the short-term trader. For example, instead of waiting for the price to move 20 pips before the stop loss is moved and the 20-pip profit realized, the trader can realize profits earlier by setting the trailing stop at 10 pips, with the expectation of bagging 10 pips with each 10-pip move in the currency price. Although it would be a traders dream to have a trailing stop as low as 1 or 5, the lowest to be found on any brokers platform is probably 10. Still, by utilizing a well-place stop loss with the appropriate trailing stop, a trader can invest profitably and minimize the inevitable risks while preserving precious trading capital.

If you are ready to change your future by stepping into the exciting world of trading FOREX, go to http://www.winningtradersassociation.com for more information. Author 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

Exchange Traded Funds

As the name put forward, Exchange Traded Funds are a blend of a stock and a mutual fund, in the logic that:

Similar to 'mutual funds' they contain a set of particular stocks - e.g. an index like Nifty, or a commodity - e.g. gold; and

Similar to equity shares they are 'traded' on the stock exchange on real-time basis. How it works?

In usual mutual funds, one buy/sell units directly from/to the primary market. First the money is collected from the investors to form the corpus. The fund managers then use this corpus to put together and manage the appropriate portfolio/ asset allocation based on the risk profile chosen.

Whenever you would like to redeem your units, a part of the portfolio is sold and you get paid for your units. The units in conventional mutual funds are, consequently, called 'in-cash' units. But in Exchange Traded Funds, we have somewhat called the 'authorized participants' .They will first deposit all the shares that comprise the index with the AMC and receive what is called the 'creation units' from the AMC. While these units are formed by depositing underlying shares, they are called 'in-kind' units.

Payback of investing in Exchange Traded Funds
Handy to trade as it can be bought/sold on the stock exchange at any time of the day when the market is open.
You can short-sell and ETFs or buy on margin or even purchase one unit, which is not possible with mutual funds.
Exchange Traded Funds are without interest managed, have low sharing costs and negligible managerial charges. For this reason most Exchange Traded Funds have lesser expense ratios than usual mutual funds.
Exchange traded funds are not something which is directly managed by the fund managers. Therefore, does not depend on the fund managers.

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