How can you make heaps of money from the stock market while keeping risks to the minimum?
I always believe that you should never put your money in something you do not know about eventhough everyone is dumping their money in this particular stock and prices are rushing like mad.. That would be speculating or gambling. Sounds weird. Remember the internet bubble where a lot of investors buy internet stocks like crazy just because they had been going up and up.
Warren Buffett would never gamble or speculate. He would not invest in something unless he is sure or certain of what he is investing in. The common theory is that higher risks = higher returns. However you can turn the situation to your advantage by doing research on the companies you are investing in, like warren buffett and yet make higher returns.
Warren Buffett once said 'Rule number 1, never lose money'. This is the main concept for value investing. He also said that I would rather be certain of a good result than hopeful of a great one. Wise words for value investors indeed.
So what are Warren Buffett's secrets? Below are some of his criterias
1. Identify companies with high and growing ROE
2. Identify companies with 15% growth or more in earnings
3. Identify companies with high profit margins
4. Identify companies with book value growing regularly
5. Identify companies with debt/equity ratio of 50% or lower
6. Identify companies with high intrinsic value
The criterias I have identified above can be easily identified nowadays on popular sites like moneycentral.msn.com or other popular investment software. The most important criteria of value investing is margin of safety... So how do you guarantee a margin of safety?
The secret is actually very simple. To invest in companies, sectors or industries that you are knowledgeable about. It is also known as your circle of competence. You will need to know about the relevant industries that affect the industries that these value companies are in. You will also need to know the safety, stability and tax rates of the country and which the company is in.
You should also have a well diversified portfolio, selecting stocks in industries which you specialised in.
It all boils down to the 2 simple rules of investing.
1. Never lose money
2. Do your research/homework before you invest
Check out more articles and tips at http://bewarrenbuffett.com
Tuesday, September 11, 2007
How Can you Make Heaps of Money From the Stock Market While Keeping Risks to the Minimum?
Mutual Fund Investing: Etfs and Index Funds Versus Actively Managed Mutual Funds
There are two distinct schools of thought when it comes to investing in mutual funds. One group, which I will call, “Asset Allocators”, utilizes what is commonly referred to as a top-down mutual fund investment approach. The top-down approach emphasizes the big picture by first examining the economy and condition of the broad financial markets and then evaluating individual mutual funds based on standard financial measures of comparison.
At the extreme, asset allocators may not even invest in mutual funds, believing that exchange traded funds (ETFs) are reasonable substitutes for actively managed mutual funds. Investors use ETFs for a variety of reasons but the most important and logical basis for using these financial instruments is their normally low costs, tax-efficiency, style purity as well as their specialized focus. There are many ETFs that emphasize individual parts of the market such as financials, technology and healthcare. The asset allocator who believes that technology will perform well over the next year and does not want to pay an active mutual fund manager to get this exposure would buy a technology ETF.
Asset allocators may also use index funds as a substitute for actively managed mutual funds. Index funds normally offer investors low costs, style purity and tax efficiency. Index funds strive to replicate the performance and characteristics of common benchmarks such as the S&P 500 Index and the Russell 2000 Index. Not all index funds are clones of their respective benchmarks. Some mutual fund companies design index funds to replicate the performance and characteristics of a benchmark without actually holding all of the securities in that benchmark.
The pure asset allocators prefer ETFs and index funds over actively mutual funds on the theory that mutual fund managers cannot outperform benchmarks on a consistent basis. To an asset allocator, it makes no sense to pay a mutual fund manager to under perform its benchmark. There are many financial planners and other investment professionals that utilize this approach. The use of ETFs and index funds is actually a reasonable approach if one of your goals is to create a low cost structure for your clients. On the other hand, it is not very client friendly for investment professionals to use these low cost financial instruments while still charging high fees.
Mutual Fundamentalists and Actively Managed Mutual Funds
The second group, which I will call, “Mutual Fundamentalists”, care very little about the broad market and invest almost entirely based on the fundamentals of each particular mutual fund. These somewhat rigid investors might not entirely ignore the economy and market conditions, but these issues do not drive their investment processes. Mutual fundamentalists focus on factors such as the historical performance and risk attributes of different asset classes, expenses, volatility, and especially portfolio manager and analyst backgrounds. For many mutual fundamentalists, quality of management is the most important factor when evaluating a mutual fund.
Mutual fundamentalists fully acknowledge that some passive investment strategies make sense for specific investment categories, but vigorously disagree with a blanket statement asserting that active portfolio management has no value because portfolio managers cannot outperform benchmarks. Mutual fundamentalists believe that there will always be a large group of portfolio managers who have the ability to outperform benchmarks, but that investors need to do their homework in order to find them.
Combining Asset Allocation and Mutual Fundamentalism
A better approach to mutual fund investing might be to combine the best attributes of asset allocation and mutual fundamentalism. With this approach, you could get the best of both worlds. You would have the opportunity to take advantage of changing market conditions and also have the option to select the best low cost mutual fund managers within your favored asset classes.
Whichever approach you choose, do not let mutual fund expenses weigh your returns down. Most asset allocators and mutual fundamentalists agree that high cost investments should be avoided whenever possible.
Learn How to Trade Forex Cuerrencies Like a Pro. Find What Works for You
Well, you have you decided to seek your fortune in the fantastic world of Forex currency trading?
You aren't alone, and you have probably wondered if all the myriads of "How to Make Your Fortune" books out there and the seminars you hear about have any merit? You probably also wonder about the advisability of opening an account with a Forex broker and putting up some risk capital?
Read almost any article on the subject of investing and you will get the sense that even though they point out the risk of failure, their 'tools' and/or strategies will turn you into a BIG winner!
Well Good luck! Although there are many excellent programs out there that DO work as advertised, what they don't tell you is: WHAT is going to WORK for YOU?
Every one of the Forex guru's approach to this learning task is a "one size fits all" approach. Unfortunately (or fortunately depending on your take on this) we are NOT alike in most ways. Only the greed/fear syndrome seems fairly constant amongst all participants.
We all have different attitudes, likes, dislikes, wants, needs, ad infinitum. So, what would appear doable for one may be totally impossible or total confusion to another.
Some have the patience to watch grass grow and take their profits at mowing time, while others need the thrill of the daily hunt and kill to bring home the bacon. And then there are all those that fall somewhere between these extremes.
There is probably truth in most any of the myriad of 'how to's' out there, but you will have to search out and find what works for you. Remember what works for me won't necessarily work for you. Also know that the crowd is usually wrong so you have to find something that few others are doing.
Now, I know that I haven't given you much of substance to this point. But here is what I do recommend.
If the Forex markets appeal to you, start purchasing and reading the various sources that you come across. Most all have a money back guarantee. If they don't, forget them. Find what appeals to you and reject what doesn't make sense and get your money back. Test and utilize what makes sense to you.
Open a practice account with a broker. Most brokers have free practice accounts that you can actually trade using the actual data feeds and trading platforms that actual traders use. You actually get experience in trading and get the 'feel' of how it works.
A word of warning: Although the results you get from this 'practice trading' mirrors precisely what you would have made with real money, it does not account for the 'greed/fear' syndrome. Only risking real money that you have earned will expose you to that evil beast.
The emotions of fear, greed and ego have ruined more trading accounts than any other factor. Just look at how people get trampled out of the stock market when it takes a dump, while those with a sound investment plan just dollar cost average their way to success in the long haul ignoring the inevitable downturns.
Believe it or not, you will find that which resonates with you will work and won't cost you an arm and leg to find it. Do NOT put out your money for expensive training programs unless they also have a guarantee. Remember, they are selling information and there is no guarantee on the time you might waste on their program(s). Your time IS valuable.
I have been profiting in the Forex markets for some time, but I know that what I focus on is not what 90% of Forex traders look at. I won't 'advertise' it as a 'system' since I know that most woundn't get it, nor should they, but it works for me.
There are just too many ways that do work for those that take the time, perseverance and energy to find what works for them. Some may stumble on what works for me, and succeed but that would just be a coincidence.
For resources and more info on the Forex markets take a look at http://profit-in-forex.com. I think that YOU can succeed in this money maker as well as anyone! I feature the best Forex resources that makes sense to me, but understand, what makes sense to me might be rubbish for you and vice versa.
You just have to find what make sense and works for you! Happy hunting!
Helpful Bankruptcy Advice
It seems that financial problems are occurring more commonly today than ever before. Before you make any quick decisions you should explore all of your alternative options to bankruptcy. There are laws that are changing to make bankruptcy difficult in certain areas because there are massive amounts of bankruptcies occurring.
There are so many places that offer bankruptcy advice to those who seem to be on the road to filing. You should consult a highly qualified representative from a well-known company to help you understand all of your problems and options. These companies have a main objective that is to help you deal with the complications involved in handling your financial issues.
You can find companies that offer you several options that you didn’t even know were available. One such option is the IVA that basically gives you the ability to write off your debt in less than five years.
With this option you are required to create a legal contract between you and all of your creditors. The CVA also requires that you and your creditors create a contract. You still may have to provide a settlement or create a compromise while you cease trading.
If you feel that you are headed towards bankruptcy then you should locate an administrator to give you quality advice and help you with your financial issues. An administrator will help you manage your company’s affairs, business, and property. It is always important to invest in a well-qualified administrator.
Another important option for you is liquidation. This may keep you from having to file for bankruptcy. Liquidation allows you to sell of all of your assets in an attempt to pay off your existing debts. If this option still will not clear up your financial issues than bankruptcy is the only alternative by getting your debts legally discharged.
Important Bankruptcy Advice
If you are headed towards bankruptcy or have creditors bothering you at all hours of the night then you should know that there is a much easier approach to dealing with your financial situation. There are many options that you ha before having to take on the stigma of bankruptcy.
If you are one of the many people who are seeking bankruptcy information and advice then there are many companies that are more than capable of helping you. These companies offer you multiple options for resolving your financial issues prior to heading off to bankruptcy court. If you find that you have entered bankruptcy there are a few things that you should be aware of.
The first thing that you should do when you are heading towards bankruptcy is pay off as many creditors as you can with your business assets. You need to set up meetings with an administrator or liquidator who can help you divide up all of your remaining assets so that you can resolve issues with your creditors in order of priority.
If you feel that you are near bankruptcy then you want to please as many creditors as possible. You want to pay special attention to the creditors with the most importance. Find an administrator or liquidator who can help you come up with a fair resolution that will make all of the companies involved happy.
Even after you have paid off your creditors with your remaining assets by means of liquidation you may still need to file for bankruptcy. In this type of case you may find that some of your creditors will need to be included in this bankruptcy. None of these creditors will receive any money from you. You are trying to get your remaining debt discharged so that these creditors won’t bother you any more.
Sell More, Get More, Go Offshore
Imagine being open to a wider market with more products to sell without having to pay sky-rocketing taxes! Isn’t it too good to believe? But that’s how it is with offshore eCommerce—it’s just magic. You get to sell more, find more and grow more if you’re planning to have an offshore business. This has its thrilling advantages, which explains why it is so popular in today’s world.
With offshore eCommerce, you can sell as many products as may be is available in the world. In fact, sometimes you will be able to sell more products from offshore than what you do from within the bounds of the strict legalities of your country. The sale of life-saving drugs (LSDs), for instance, is banned in the US but you are legally free to buy them from an online marketer and have it delivered in the US.
There are many such products which find its access closed in one country but can be procured via an offshore business. Handicrafts, regional tokens, certain food items, and clothing fall under this list of products which can be resold online and with profit. The Latin Americans, in particular, make the most of it by selling local products. The Asians closely follow suit in this practice. Africans use their native handicrafts in the international businesses. And there are more people’s groups involved in extracting the benefits of offshore eCommerce everyday.
Every country you visit, you can keep an eye on unique products, which you can sell online or make a part of your offshore company and earn money against it. Being in a Free Trade Zone, you get to sell products tax free, thus reaping higher margins on profit. You can buy products from anywhere in the world and have them sold offshore online to the rest of the planet. This means that you do not have to pay tax to the US government for products sold online from US.
Offshore eCommerce has umpteen benefits in its folds. If you are selling products which are manufactured in a nation different from yours, you can still have it shipped and carry on all the operations from offshore, or through your offshore website. You money gets accumulated into your offshore banking account. You can keep your profit, pay back the manufacturer and handle every single step of the sale comfortably online. And all these, without having to pay any taxes!
There are endless possibilities in offshore businesses. You get to sell more, earn more and prosper more even when you are only virtually operational. That’s the biggest advantage. However, before setting up a company or an offshore residence or heading straight for tax-free profits, ensure you are free from all legal restrictions of your country.
Understand your Currencies
In the forex markets, it is important to understand the nature of the currencies you are trading. It is worth knowing the characteristics of the currency pairs, since each of them exhibit distinct identities. There is a fact that most of the currencies might exhibit similar movement patterns, which can help a trader confirm price movements. Trader can look at two pairs of currencies that have almost similar or completely opposite price movement patterns to get better predictions. Let take an example of the close relation between the EUR/USD & USD/CHF.
The price movements of these two currency pairs are absolute mirror images. In short, they have an inverse relationship. If EUR/USD is rallying, then USD/CHF should have downward movement, and vice-versa.
How can traders take advantage of this? The most obvious fact is that one must not trade both the currencies at the same time. If one is long the EUR/USD, logically one should not be long the USD/CHF at the same time, since the USD/CHF would have a downward movement.
Neither is it wise to take opposing trades on these two pairs, because if the trade goes wrong, then the trader would incur losses in both the trades (although the trader also might have double profit if the trade goes right, but anyway, in forex trading, we focus on how to not get loss first).
Ideally, one should trade either of the two pairs. The best way to take advantage of this fact is to cross-check a trade by looking for confirmation factors on the other pair. If a trader is planning to take a long position in the EUR/USD, he can look for a similar short setup on the USD/CHF. If such an opposite setup is present in the USD/CHF, it only adds further credence to his long EUR/USD trade. It is just a check.
There are other currency pairs also which exhibit a close relation. This fact serves as a good rule of thumb to estimate the movement of the particular currency. Thus it is worth studying these relationships to gain a higher edge in the market. As you know, sometimes a basic knowledge can also serve as a turning point between failure and success.
Visit his site http://www.profitguideforex.com/ for more details
Credit Crunch Explained
Everyone is talking about this ‘Credit Crunch’ but what exactly do they mean? What are they referring to?
Basically, it refers to a specific period when capital is difficult to obtain and hence people also talk about liquidity drying up. In this specific economic period, which is considered to be recessionary, banks and investors are very hesitant to lend out any funds and therefore the price of debt products keeps on moving up.
Due to this drying up of liquidity and increased cost of capital, it becomes more and more difficult for companies, institutions and/or individuals to borrow new funds. Not only can this result in halting growth, payment defaults and increased bankruptcies but it can have a devastating ripple effect on the whole economy.
Investing in Troubled Times
The Enterprising Investor is always on the lookout for value and always ready to be greedy when others are fearful. Despite the fact that we feel that the current correction is far from being over, we encourage investors to make a shortlist of stocks which they would have loved to buy but just didn’t manage to do so at reasonable prices.
Once you have made this list, track these stocks and identify what price you would be comfortable paying for a share in the business: as a long-term investor, you main concern should be to buy shares at prices which you are comfortable with and not to time the bottom of the market. As Emerson said: “The great man is he who in the midst of the crowds keeps with perfect sweetness the independence of solitude.”
For example:
* you may have been following Goldman Sachs (GS) and kicking yourself for not having bought some shares. This is a great company with extremely solid fundamentals and a money making machine with an impeccable track record and pedigree. Do you feel the correction that Mr. Market has applied to the whole financial sector is justified for Goldman who is now trading at a multiple of under 10?
* or had you been following USG Corporation (USG) only to see it spike after news of the big position Warren Buffett had taken in the company? Despite the fact that Berkshire reduced the stake, did you know that they were buying shares all the way down to 46 USD… they might still be buying….
The bottom line is, don’t panic, keep your thinking hats on and keep on doing your homework!
Who Would Have Thought It? - Betonmarkets
Who would have thought it? A recent financial cartoon depicted two Wall Street traders on their way to work in conversation. The speech marks read "It turns out poor people with bad credit can't afford to buy a new home. Who knew?"
You can take this line as meaning that Wall Street failed to see the dangers, or more sarcastically; that it knew the dangers but ploughed on ahead because the returns were so great. Either way, it highlights the issues at the centre of the recent financial storms, says BetOnMarkets.com's Michael Wright.
There have been "sub prime loan time bomb" warnings, for a long term before the markets collapsed. However while stock markets kept on going up, such concerns were brushed aside. Equity markets around the world, with the exceptions of the sharp corrections in February and March, had marched consistently higher since the summer of 2006. The Dow Jones broke through its all time pre-internet bubble crash high, while other indices were also at, or near their record highs.
So what changed? It is difficult to pin point a single event that finally caused equity markets to plunge as they did in July and August. It is more akin to a scene in a cartoon when the character runs off a cliff, and keeps on running in mid air until they look down, and then they begin to fall. Whatever actually started the fall, it seems that this "contagion" has spread to many areas that were previously thought to be unconnected.
Mortgage companies have recently been hit with the double whammy, of falling house prices, and rising defaults. The Case-Schiller Home Price Index recently posted a record annual decline. For the first time in a long while, year on year house price changes, were negative in every one of the cities measured. Some major mortgage companies have filed for bankruptcy protection, while others had to draw on their emergency credit lines, as more and more customers have defaulted on their home loans. The industry is going into the 3rd stage of the boom to bust cycle, which is called 'lawsuits' with borrowers suing the lenders, and visa versa.
Recently we saw an unprecedented "flight to safety" as investors feared a run on the banks. The complicated way that debt has been parceled up means that nobody really knows exactly who is exposed to what. Investors fled with near panic to assets which have little or no perceived risk attached to them such as US Treasury Bills.
European banks have been particularly hard hit and Alexander Stuhlmann of Germany's Landesbank was recently quoted as saying that "The German banks' situation is not uncritical". The interbank lending rate shot up, as financial institutions eyed each other with suspicion. With lenders raising the margin requirements, some traders had to shore up their margins with either adding more cash, or liquidating their positions at discount prices. Lastly the earnings have been coming in a little weaker then predicted and some companies such as Wal Mart have lowered their outlook for the up and coming quarters.
The big question is whether the US Federal reserve will cut rates as many are predicting and hoping, or whether it will maintain is hawkish stance on inflation. Fed Futures point to the chances an FOMC rate cut as being likely. Assuming that this is indeed the case, more questions arise: If the Fed cut interest by a quarter percent, will it be enough to stem the flow of negative business and consumer sentiment? Will it be enough to power the US Indices back above their recent highs? Will it stop the US housing market slump? Will it stem the rising number of credit card defaults?
The answer to all of the above is possibly yes, but perhaps not in a hurry. The world's number one economy may indeed go on to recover from this scare, but there may now be too much fear for a broad based rally, as we saw in the months leading up to the recent drop.
Using Betonmarkets.com you can potentially profit from this bearish to neutral outlook. By placing something called a 'no touch' bet, you can win if the market continues to go down, stays flat or rises slowly. By placing this no touch level above the current price of the S&P 500 you can profit from further falls or an anemic bounce. A no touch bet on the S&P500 with a 30 day term with a trigger placed above the 52 week high or 120 points higher from where it is now returns around 10%.
Value-growth Screen
We have decided to start to post a series of screening criteria to give readers some ideas when looking for interesting investing opportunities. The purpose of these ‘screens’ is to not to give you a final and preset ‘screen’ but to propose an initial foundation to build on and add your own input.
This first post is aimed at trying to identify ‘value’ Small-Caps with growth potential:
* Small-Caps tend to have higher rates of returns, growing faster than large-cap companies and typically using profits for expansion rather than to pay dividends. We will only take into account companies whose market value is between 500 million and 1 billion USD.
* Low P/E ratio firms tend to produce higher returns. We will only take into account P/E ratios under 17.
* Socks that are cheaper relative to their book value tend to earn higher total returns. We will only take into account P/B ratios equal or under industry average.
* Rerun on Equity, 5-year average over 15%. This is an important profitability ratio to ensure a strong track record. On top of this, for future profitability expectations: Earnings per Share (EPS) growth for the next 5 years of at least 15%.
* Last but not least, to take into account financial leverage, a Debt to Equity ratio equal or under the Industry Average.
Furthermore, if you are using the MSM Money Deluxe Stock Screener, you can also add the MSN rating as an additional parameter to look through the companies that come up in your screen. Hopefully, this will give you a good place to start.
Good Screening!
Stock Trading - an Introduction to Stock Trading Systems & Strategies
A lot of stock traders will tell you that a stock trading strategy is very often said to be the same as a stock trading system that is designed to be used and traded in the stock market. But a stock trading strategy does involve a complete system that includes not only entry and exit rules, but stock selection, risk control and money management. For the technical stock trader, the technical approach to a stock trading strategy is based mainly on price action. The "bottom-up" stock trading strategy is the most popular fundamental method employed by analysts. You should always remember that a good stock trading strategy is both simple and practical. Once the set of rules and guidelines that make the overall stock trading strategy have been identified and followed by a stock trader, the trader must remember to remain open-minded so that the trading strategy can be fine tuned and adjusted to new conditions in the stock market.When trading stocks using technical analysis, your trading plan will specify the conditions and requirements for entering and exiting trades. A good stock trading strategy will specify the optimum number of shares to be trade at a given time. Money management is at the heart of a good stock trading strategy. Stock traders who use a good solid stock trading strategy know and understand that money management is the absolute key to continued growth in their trading account. For this reason the money management component of a stock trading system has often been called "the golden rule to stock trading". No matter which stock trading strategies you use and trade remember to: stay unemotional and never invest with money you need for rent, the mortgage, bills, or food. By analyzing your habits and behaviors, you can greatly improve your stock trading strategy. Poor stock trading strategy behaviors are usually caused by uncontrolled emotional reactions, while others are just simply the result of bad stock trading habits. Your trading goal is to make your stock trading strategy systematic, logical and habitual at all times. By studying and looking closely at market conditions to determine the current trend for the market, a successful trader is then able to prepare the best stock trading strategy to be used for the following day. Armed with this market information and his trading plan in hand, the trader is less likely to be influenced by uncontrolled emotions. By being completely aware of your trading and by continually working to improve your stock trading strategy, you will soon develop and find the set of behaviors that will make trading success a habit for you. Stock screening is a basic stock trading strategy and tool that involves the trader screening the entire universe of securities for potentially favorable stocks for trading. Some traders like to use moving averages in their stock screening. For example, the trader may be looking for stocks that are in an uptrend and are above their 200 day and 50 day moving averages. The use of moving averages in a trading strategy is very simple and this technique is most suited to markets and stocks which trend well. While other stock traders look for stocks that are ready to breakout from a pullback.A word about Market Equilibrium follows. It is said to be obtained when the market price of a stock or security represents the average intrinsic estimates of all traders and investors. While the term Market Efficiency means that the more efficient the market is, then the greater the degree that stock or security price reflect all the information available which may influence the price of the stock or security.If your stock trading strategy is not suited to short-term market conditions; you should quickly adapt your strategy, and if necessary, do not trade. Short term trading combined with long term stock investing should be part of your trading plan if you want to build wealth while trading stocks.
Forex Currency Trading Explained -- Fx Trading
FOREX MARKET HOURSAt 7:00 pm Sunday, New York time, trading begins as markets open in Tokyo, Japan. Next, Singapore and Hong Kong open at 9:00 pm EST, followed by the European markets in Frankfurt (2:00 am), and then London (3:00 am). By 4:00 am, the European markets are in full swing, and Asia has concluded their trading day. The U.S. markets open first in New York around 8:00 am Monday, as Europe winds down. Australia will take over around 5:00 pm, and by 7:00 pm Tokyo is ready to re-open.All times are quoted in Eastern Standard Time (New York).FX or Forex, currency trading is the trading of one currency against another. In terms of trading volume, the currency exchange market is the world's largest market, with daily trading volumes in excess of $1.5 trillion US dollars. This is orders of magnitude larger than the bond or stock markets. The New York Stock Exchange, for example, has a daily trading volume of approximately $50 billion. Currencies are traded for hedging and speculative purposes. Various market participants such as individuals, corporations, and institutions trade forex for one or both reasons. Corporate treasurers, private individuals and investors have currency exposures during the the regular course of business. The FXTrade Platform is an ideal platform to hedge any such exposure. An investor, who has bought a European stock and expects the EUR exchange rate to decline, can hedge his currency exposure by selling the EUR against the USD. Currency markets are ideally suited for speculative trading. The foreign exchange market has a daily volume in excess of 1.5 trillion USD, which is 50 times the size of the transaction volume of all the equity markets taken together. This makes the foreign exchange market, by far, the most liquid and efficient financial market of the world. Thanks to its efficiency, there is little or no slippage of market price for the execution of even large buy and sell orders. Traders are able to take advantage of intra-day volatility thanks to the low spreads and enter positions for short time periods, such as minutes and hours. Unlike equity trading, where restrictions limit a trader's ability to profit from a market down turn, there are no such constraints on currency trading. Currency traders can take advantage of both up and down trends thus increasing their profit potential.The most commonly traded currencies are: USD, EUR, JPY, GBP, CHF, CAD and AUD.The most commonly traded currency pair is EUR/USD.Forex Symbol Guide Symbol Currency Pair Trading Terminology GBP/USD British Pound / US Dollar "Cable" EUR/USD Euro / US Dollar "Euro" USD/JPY US Dollar / Japanese Yen "Dollar Yen" USD/CHF US Dollar / Swiss Franc "Dollar Swiss", or "Swissy" USD/CAD US Dollar / Canadian Dollar "Dollar Canada" AUD/USD Australian Dollar / US Dollar "Aussie Dollar" EUR/GBP Euro / British Pound "Euro Sterling" EUR/JPY Euro / Japanese Yen "Euro Yen" EUR/CHF Euro / Swiss Franc "Euro Swiss" GBP/CHF British Pound / Swiss Franc "Sterling Swiss" GBP/JPY British Pound / Japanese Yen "Sterling Yen" CHF/JPY Swiss Franc / Japanese Yen "Swiss Yen" NZD/USD New Zealand Dollar / US Dollar "New Zealand Dollar" or "Kiwi" USD/ZAR US Dollar / South African Rand "Dollar Zar" or "South African Rand" GLD/USD Spot Gold "Gold" SLV/USD Spot Silver "Silver" CURRENCY PAIRSAll currencies are assigned an International Standards Organization (ISO) code abbreviation. In currency trading, these codes are often used to express which specific currencies make up a currency pair. For example, USD/JPY refers to two currencies: the US Dollar and the Japanese Yen. SPOT FOREX Spot foreign exchange is always traded as one currency in relation to another. So a trader who believes that the dollar will rise in relation to the Euro, would sell EUR/USD. That is, sell Euros and buy US dollars. The following is guide for quoting conventions: What does it mean to be "long" or "short" a currency?Being long means buying a currency. Being short means selling a currency. If a trader goes long USD/JPY, he or she buys US Dollars and sells Japanese Yen. Buying a currency is synonymous with taking a long position in that currency. A trader takes a long position in a currency if he or she believes it will appreciate in value.If a trader goes short USD/JPY, he or she sells US Dollars and buys Japanese Yen. Selling a currency is synonymous with shorting that currency. A trader would short a currency if he or she believes it will depreciate in value.CURRENCY TRADING: BUYING AND SELLING CURRENCIESAll Forex trades result in the buying of one currency and the selling of another (currency trading), simultaneously. Buying ("going long") the currency pair implies buying the first, base currency and selling an equivalent amount of the second, quote currency (to pay for the base currency). It is not necessary to own the quote currency prior to selling, as it is sold short. A trader buys a currency pair if he/she believes the base currency will go up relative to the quote currency, or equivalently that the corresponding exchange rate will go up. Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. A trader sells a currency pair if he/she believes the base currency will go down relative to the quote currency, or equivalently, that the quote currency will go up relative to the base currency. An open trade or position is one in which a trader has either bought or sold one currency pair and has not sold or bought back an adequate amount of that currency pair to effectively close the trade. When a trader has an open trade or position, he/she stands to profit or lose from fluctuations in the price of that currency pair.Forex is the backbone of all international capital transactions. Compared to the slim profit margins rendered in other areas of commercial banking, huge profits are generally produced in a matter of minutes form minor currency market movements. Some banks generate 60% of their profits from trading currency aggressively.Trading volume has been growing at a rate of 25% per year since the mid-1980s and therefore it is not difficult to accept the notion that the currency market is one of the world fastest growing industries. What used to require days to accomplish in Europe or Asia now oly takes a few minutes. Needless to say, technology has changed everything and millions of Dollars are moved from one currency into another every second of every day by major banks through computers and for the average investor, with the touch of a computer key.Foreign exchange is the backbone of all international capital transactions. Compared to the slim profit margins rendered in other areas of commercial banking, huge profits are generally produced in a matter of minutes from minor currency options market movements. Some banks generate up to 60% of their profits from trading currency aggressively. Transactions in foreign currencies take place when one country's currency is purchased (exchanged) with another country's currency. The price agreed upon or negotiated for the currency purchased is referred to as the foreign exchange rate. Major commercial banks in the money market centers throughout the world are responsible for the majority of foreign currencies bought and sold. Trading volume has been growing at a rate of 25% per year since the mid-1980s and therefore it is not difficult to accept the notion that the currency options is the world's fastest growing industry. What used to require days to accomplish in Europe or Asia now only takes a few minutes. Needless to say, technology has changed everything and millions of Dollars are moved from one currency into another every second of every day by major banks through computers and for the average investor, with the touch of a phone.FOREX BASICS - What's a PIP A "pip" is the smallest increment in any currency pair. In EUR/USD, a movement from .8951 to .8952 is one pip, so a pip is .0001. In USD/JPY, a movement from 130.45 to 130.46 is one pip, so a pip is .01. CALCULATING THE WORTH OF A PIP How much in dollars is this movement worth, for example, per 10,000 Euros in EUR/USD? How much is one pip worth per 10,000 Dollars in USD/JPY? We will refer to the size, in this case 10,000 units of the base currency, as the "Notional Amount". The formula for calculating a pip value is therefore: (one pip, with proper decimal placement / currency exchange rate) x (Notional Amount) Using USD/JPY as an example, this yields: (.01/130.46) x USD 10,000 = $0.77 or 77 cents per pip Using EUR/USD as an example, we have: (.0001/.8942) x EUR 10,000 = EUR 1.1183 But we want the pip value in USD, so we then must multiply EUR 1.1183 x (EUR/USD exchange rate): EUR 1.1183 x .8942 = $1.00 This is in fact a phenomenon you will see with any currency in which the currency is quoted first (such as EUR/USD or GBP/USD): the pip value is always $1.00 per 10,000 currency units. This is why pip (or "tick") values in currency futures, where the currency is quoted first, are always fixed. Approximate pip values for the major currencies are as follows, per 10,000 units of the base currency: USD/JPY: 1 pip = $.77 (i.e. a change from 130.45 to 130.46 is worth about $.77 per $10,000) EUR/USD: 1 pip = $1.00 (.8941 to .8942 is worth $1.00 per 10,000 Euros) GBP/USD: 1 pip = $1.00 (1.4765 to 1.4766 is worth $1.00 per 10,000 Pounds) USD/CHF: 1 pip = $.59 (1.6855 to 1.6866 is worth $.59 per $10,000)SpreadThe spread is the difference between the price that you can sell currency at ( Bid) and the price you can buy currency at ( Ask). The spread on majors is usually 3 pips under normal market conditions. Market HoursThe spot Forex market is unique to any other market in the world; trading 24-hours a day. Somewhere around the world a financial center is open for business and banks and other institutions exchange currencies every hour of the day and night, only stopping briefly on the weekend. Foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their trading day and the ability to take advantage of global economic events.FOREX or The Foreign exchange rate market is an international market where various currency exchange transactions take place; this is in the shape of simultaneously buying one currency and selling another. The most commonly traded currencies are referred to as “Majors”; over 85% of daily transactions on Forex trading involve the Majors. These seven currencies are the US Currency (Dollar, USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD) and Australian Dollar (AUD). The Forex system in operation today was established in the 1970s when free currency exchange rates were introduced, this period also saw the US Dollar overtake the British Pound as the benchmark currency. Prior to this and in particular during World War II, exchange rate remained more stable. Forex trading in simplest terms is the buying of one currency and the selling of another. Forex trading, also referred to, as “FX” is open to corporations, small businesses, commercial banks, investment funds and private individuals, it is the largest financial market in the world averaging a daily turnover of over $1 trillion dollars, making it a diverse and exciting market. It is a 24-hour market enabling it to accommodate constant changing world currency exchange rates . According to New York time, trading begins at 2.15pm on Sunday in Sydney and Singapore and progresses through to Tokyo at 7pm, London at 2am and reaches New York at 8am. This leaves investors free to respond to global political, economic and social events when they take place, day or night. Unlike trading on the stock market, the forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the forex market is a 24-hour market.
Advantages of Investing in a Mutual Fund
There are various advantages related to investment in a mutual fund. They are stated below:
-Diversification
When the collective funds are invested into a wide range of categories, it can help to reduce risk exposure faced by the investor.
Let's say that the funds are invested in 10 selected stocks, and 4 of the stocks perform badly, still the overall performance of your portfolio would not be that bad due to the averaging effect of the stocks' performance.
-High Liquidity
Units can be sold easily within a short period of time.
Management company is always there to repurchase the units.
-Professional Management
Since most of us do not have the flexibility and the luxury of monitoring the market at all times, it would be great to have a professional hired to sit there and make sure that your money works hard enough for you!
These fund managers are profesionally trained and have years of experience in their field of expertise, something that not every commoner would have.
-Lower Investment Cost
If you intend to invest into the stock market, a big capital should be available to you, so that you can diversify your investment. However, in mutual fund, with a small capital outlay, you can be part of the bigger investment by the management company.
Trade Forex Online!!! Make Money From the Comfort of your Home at your Leisure!!
Dear Friend you might have heard about stock trading all the while and if you are not aware about the Latest trend running around the World is Trading Forex Online.This market has a turnover of over Billion Dollar Every Day!! please note every day.This market does not close and it runs 24 hours,that means you can trade it whenever you have free time.it runs from Monday to Friday.
300 Dollars to trade
Hey!! Listen to this " YOU CAN TRADE FOREX EVEN WITH 300US$" .This account is called MINI Account where in you trade small,so as to keep your risk small and after you get the feel of the System and the Market you can trade a Major, for which the Minimum amount is US# 1000 FOR 1 Lot
Demo Account
Already Tense!!!Do not worry if you do not want to risk your money you can trade with Dummy Money.This Facility the broker provides you and you get the real terminal and you Trade Real Charts with the Dummy Money .Once you feel perfect and feel the trading terminal you can pump real money.
Free Charts
The Broker provides you with free charts, and if you want more facilities and tools called INDICATORS in Forex parlence,you can go for the paid ones.
Forex Course Forex Systems and Forex Books.
You Do know that to start any business you need to know the fundamental facts,Similarly in order to trade you need to Know about Forex chart,indicators and technical analysis and some other tools.There are many different approaches to forex trading and hence the availability of many Forex Courses ,Forex Systems and Books,
Practise
You can practise the Demo account with the Dummy Money and trade in real time and test your skills and when you feel that you have learnt all the basic tools and systems you are comfortable with .Then you can proceed to trade with REAL MONEY!!
Buy or Purchase some course materials.
Buy some basic Books and systems and become familiar with the system
Risk
Remember as with any business ,there is risk attached to forex trading so please do not trade beyond the amount which you can offored and do not trade with fear money ,means money which is required for you and your family needs for survival ,you only trade with surplus money
"TAKE ACTION"
come start your preparation from this moment ,do not postpone the issue , if you trade with common sense then there is a scope to earn money from Trading Forex Online
For a simple and step to step quest of four traders to trade forex online please visit http://trade-forex-online.blogspot.com.
Pmi Gold Corp (tsx.v:pmv): Smack Dab in the Middle of Elephant Country
PMI Gold Corp (TSX.V:PMV)
Smack Dab in the Middle of Elephant Country
By Darryl Kelley
Africa, besides being the cradle of civilization, is also host to some of the world’s oldest and richest gold mines.
Ngwenya Mountain in Swaziland hosts what is believed to be the world’s oldest mine, where early man mined hematite and specularite over 42,000 years ago.
PMI Gold's properties are all located in Ghana's Golden Triangle, an area in southwest Ghana with combined current reserves and historical gold production of 170 million ounces. Gold has been mined in Ghana for over 1000 years, and the famous AngloGold Ashanti Obuasi mine has been in continuous production for 110 years.
PMI Gold now has interests in 14 concessions in Ghana on the Asankrangwa and Ashanti Gold Belts, for a total of 669 square kilometers.
In November 2006, PMI Gold acquired the 89 square kilometre Abirem and Abore concessions - which cover the former Obotan Mine operations of Resolute Mining of Perth – from the Ghanaian government. Resolute ceased mining in 2002 after a total of 730,000 ounces of gold were produced, with 590,000 ounces mined at 2.2 g/t gold from the Nkran pit, and a further cumulative 140,000 ounces from the Adubiaso and Abore pits. The price of gold, at then less than $320 per ounce, had rendered the remaining known ore body uneconomical for further development.
Prior to completing the mining at the Nkran pit, Resolute conducted extensive studies on the feasibility of continuing mining from underground mineralization beneath the pit. Modeling completed with a US$350 gold price suggested good potential for establishing an underground operation.
PMI Gold believes there is an exploration target of one to two million ounces of gold grading from 3.0 to 6.0 g/t below the Nkran pit based on previous deep drilling results and projections to 400 m below the deepest intersection.
Resolute had previously completed internal studies concerning underground mining scenarios to co-exist with their surface mining. These preliminary studies were based on 58 drill holes which intersected +3.0 g/t gold mineralized material below the level of the pit.
Other results from these studies indicate that:
• higher grades are contained within lower grade envelopes and dilution won't be critical;
• screen fire assay retests conducted on high grade intersections indicate a significant coarse gold component to the high grade zones which may not be reflected in the current assay database;
• metallurgical test work on drill core composites from beneath the pit indicated recoveries of +96.6% on leached concentrator tails with +75% of the gold reporting to the gravity circuit; and that the assay database may be significantly under calling the grades of the high grade lodes as the metallurgical leach tests returned a 52% upgrade over the original screened 50 gram gold fire assays;
• modeling suggests that the majority of the high grade mineralization is within structures which are vertical with good continuity horizontally and vertically;
• the Western zone, also referred to as the Galamsey Reef, remains open to the south and at depth.
Two major near vertical gold bearing structures have been partially outlined by the previous drilling - called the Western and Eastern high-grade lodes. Most of the deep diamond core drilling targeted these lodes under the south end of the pit.
Using a top assay cut of 30.0 g/t gold and estimating true widths to be 55% of the mineralized intersection lengths, 30 drill intersections beneath the level of the pit exceed 22.5 gram gold per tonne metres.
These intersections have an average indicated true width of 4.40 metres and weighted average gold grade of 10.02 g/t gold. The deepest down plunge intersection was 8.80 metres true width, grading 8.15 g/t gold, and located 326 metres below the pit.
With gold above $600 per ounce, this historic, non-43-101 compliant data certainly lends itself to the compelling logic of focused development, and that is precisely what is underway at the site.
According to company CEO Douglas MacQuarrie, “Gold mineralization has been outlined to a depth of 425 metres below the pit with true widths varying from 20 to 45 metres. Within this bulk mineralized zone there are significant high grade drill intersections including 7.0 metres of 12.28 g/t Au; 8.0 metres of 10.00 g/t Au; 5.0 metres of 23.00 g/t Au; and 4.0m of 10.00 g/t Au. In order to prove the viability of this zone for bulk or selective mining, further detailed drilling will be required, preferably from underground drill stations as suggested by RSG Global in their recent concept study report on the Nkran mineralization.”
Highlights from the drill results announced last week include 44.5 m of 2.61 g/t gold in hole NK07-001 which tested the down dip extension of the Nkran pit orebody 330 m below the base of the previously mined pit; and 2.7 m of 8.91 g/t gold in NK07-005 collared 170 m to the south of the southern end of the pit.
And if there is any doubt as to the potential for an ‘elephantine’ sized orebody at Obotan, consider this:
If you were to draw a circle 120 km in radius from the center of the Obotan concession, it would enclose in the neighborhood of 80 million ounces of as yet un-mined gold, with one deposit measuring in excess of 10 million ounces gold, and the AngloGold Ashanti mine, which still contains an estimated 25 million ounces of gold and is currently under rehabilitation to permit mining to over 3 km in depth! Newmont, Goldfields, GoldenStar, and RedBack all have operating mines and juniors Central African Gold (Bibiani), Keegan (Bonte) and Perseus (Ayanfuri) are all defining orebodies for near term production.
This article is intended for informational purposes only and should not be considered as a recommendation to buy stock in any company. Although the author has made efforts to verify the information contained herein, the accuracy of all the information cannot be guaranteed. As always, it is recommended that you commit considerable time to completing your due diligence before buying stocks in publicly traded companies. A fee has been paid for the creation and distribution of this article.
Asset Allocation – What it Is, Why it is Important
For many people. Asset allocation means diversification. However, it is not as easy as buying four separate mutual funds and allocating 25% of each mutual fund -this not what true asset allocation is.
True asset allocation is based on the principals in Modern Portfolio Theory (MPT). In 1952, Harry Markowitz wrote a thesis that showed proper diversification in a portfolio will lower risk, (or volatility) per a given unit of reward. Markovitz later went on to be presented the Nobel Prize in Economics for his work based on this thesis.
Why is this important? Simply put, it allows an investor to optimize a portfolio for the level of risk he or she is comfortable with, while providing guidance on what level of return should be associated with that risk. Separate asset classes correlate differently with each other. A mutual fund that invests in technology companies is going to perform in a different manner than a fund invested in US Treasury bonds.
For example, a mutual fund invested in equities will carry more risk than a US Treasury bond. Overtime, the mutual fund should provide an investor a greater return than the bond, since it is taking on more risk, thus a greater reward.
This idea becomes the backbone of the efficient frontier. The efficient frontier allows an investor to find the point where maximum return can be achieved for a level of risk (referred to as standard deviation.
By using the efficient frontier, one will be able to optimize a portfolio to maximize return at a risk level comfortable to an investor.
